<PAGE>
As filed with the Securities and Exchange Commission on January 27, 2000
Registration No. 333-94233
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT NO.1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
ONESOFT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 2389 54-1771616
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
1505 Farm Credit Drive, Suite 100
McLean, Virginia 22102
(703) 821-9190
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------
James W. MacIntyre, IV
Chief Executive Officer
OneSoft Corporation
1505 Farm Credit Drive, Suite 100
McLean, Virginia 22102
(703) 821-9190
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------
With copies to:
Jonathan L. Kravetz, Esq. Stephen A. Riddick, Esq.
Mintz, Levin, Cohn, Ferris, Brobeck, Phleger & Harrison LLP
Glovsky and Popeo, P.C. 701 Pennsylvania Ave., N.W.
One Financial Center Suite 220
Boston, MA 02111 Washington, D.C.
(617) 542-6000 (202) 220-5214
--------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are being offered or
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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 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 registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
--------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Amount of
Title of Shares to Be Registered Aggregate Offering Price (1) Registration Fee (2)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.001 par
value per share.......... $70,000,000 $18,480
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act.
(2) Previously paid to the SEC.
--------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion. Dated January , 2000
[LOGO OF ONESOFT]
- --------------------------------------------------------------------------------
Shares
Common Stock
- --------------------------------------------------------------------------------
This is the initial public offering of OneSoft Corporation and we are offering
shares of our common stock. We anticipate that the initial public offering
price will be between $ and $ per share.
We have applied to have the shares we are offering approved for quotation on
the Nasdaq National Market under the symbol "ONSF."
Investing in our common stock involves risks. See "Risk Factors" beginning on
page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
<TABLE>
<CAPTION>
Per Share Total
<S> <C> <C>
Public Offering Price $ $
Underwriting Discounts and Commissions (1) $ $
Proceeds to OneSoft $ $
</TABLE>
-----
(1) Our "Underwriting" section contains more information about the
compensation of the underwriters.
We and certain selling stockholders have granted the underwriters a 30-day
option to purchase up to additional shares of common stock to cover any
over-allotments. We will not receive any proceeds from the sale of shares of
common stock by selling stockholders.
Deutsche Banc Alex. Brown
SG Cowen
Friedman Billings Ramsey
SoundView Technology Group
The date of this Prospectus is , 2000.
<PAGE>
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 common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock. In this prospectus, "OneSoft,"
"we," "us" and "our" refer to OneSoft Corporation (unless the context otherwise
requires).
Until , 2000, all dealers that buy, sell or trade our common stock,
whether or not participating in this offering, may be required to deliver a
prospectus. This requirement is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 3
Special Note Regarding Forward-Looking Statements and Industry Data...... 15
Use of Proceeds.......................................................... 15
Dividend Policy.......................................................... 15
Capitalization........................................................... 16
Dilution................................................................. 17
Selected Consolidated Financial Data..................................... 18
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 20
Business................................................................. 29
Management............................................................... 50
Certain Relationships and Related Transactions........................... 60
Principal and Selling Stockholders....................................... 63
Description of Capital Stock............................................. 66
Shares Eligible for Future Sale.......................................... 69
Underwriting............................................................. 72
Legal Matters............................................................ 75
Experts.................................................................. 75
Where You Can Find Additional Information................................ 75
Index to Consolidated Financial Statements............................... F-1
</TABLE>
----------------
"OneSoft," "OneCommerce," "PrimeCommerce," "Internet Commerce Opportunity
Assessment" and "iCOA," and "Rapid Solution Deployment" and "RSD" are
trademarks and service marks of OneSoft Corporation. All other trademarks or
tradenames referred to in this prospectus are the property of their respective
owners.
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding OneSoft and the common stock being sold in this offering
and our financial statements and notes thereto appearing elsewhere in this
prospectus.
Our Business
We develop and provide Internet commerce application software and services
that enable our clients to rapidly build, grow, and extend their online
businesses. The core of our solution is OneCommerce, our application software
built on the eXtensible Markup Language standard, or XML. We designed
OneCommerce for scalable operation on the Microsoft operating platform.
OneCommerce enables enterprises to intelligently and dynamically interact with
their customers and trading partners over the Internet to exchange information,
provide services, and complete business-to-business and business-to-consumer
transactions. We primarily deliver OneCommerce as an outsourced application
service, which shortens our clients' time-to-market and minimizes their need to
make substantial investments to develop and maintain their own Internet
commerce, or e-commerce, Web sites.
In order to succeed in the Internet commerce marketplace, both traditional
companies and Internet-only businesses are investing heavily in Internet
infrastructure software solutions. We believe that our market opportunity
derives from the need for a solution that:
. provides comprehensive functionality across key business processes;
. supports XML, an emerging standard for Internet commerce;
. rapidly adapts to changing business and technology requirements; and
. is designed for delivery on an outsourced basis.
We believe that our solution, comprised of OneCommerce and a broad array of
enabling services, responds to these needs. OneCommerce manages Web site
content, provides personalized visitor experiences, processes orders, delivers
customer support, and integrates with internal and external business
applications. We believe we have developed the only XML-based Internet commerce
application software. We have designed our solution to be offered by us and our
partners on an outsourced basis. Widely-respected companies involved with
Internet commerce such as Microsoft and USWeb/CKS have endorsed OneCommerce as
one of the industry's top few solutions for large-scale Internet commerce. Our
clients include Alloy Online, ePhones, Espanol.com, Maytag, Phillips
Publishing, SmartCruiser.com, The Mark Group, and WeightWatchers.com.
Our objective is to provide the software infrastructure that supports a
leading share of commerce conducted over the Internet. We intend to do this by
expanding our range of application services to include additional software
functionality and value-added services. We also intend to contribute to and
leverage the emerging technology standards upon which we have built
OneCommerce. Further, we plan to expand our distribution channels to include a
broad range of application service providers, systems integrators, and other
professional services companies.
Our executive offices are located at 1505 Farm Credit Drive, McLean,
Virginia 22102. Our telephone number is (703) 821-9190. Our Web site is located
at http://www.onesoft.com. Information contained on our Web site is not a part
of this prospectus.
1
<PAGE>
The Offering
<TABLE>
<CAPTION>
Common stock offered by OneSoft...................... shares
<C> <S>
Common stock to be outstanding after this offering.. shares
Use of proceeds..................................... General corporate
purposes, including
working capital. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol.............. ONSF
</TABLE>
The number of shares of our common stock that will be outstanding after this
offering is based on the number of shares outstanding on December 31, 1999, and
assumes no exercise of the underwriters' over-allotment option, and the
conversion into common stock of all of our preferred stock outstanding on that
date. It also assumes the filing of our amended and restated certificate of
incorporation immediately following the closing of this offering. It excludes
shares issuable upon exercise of subject options at a weighted-average
exercise price of $ per share and warrants at a weighted-average
exercise price of $ per share and additional shares available for issuance
under our stock plans as of December 31, 1999.
Summary Consolidated Financial Data
(in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended Nine Months
December 31, Ended September 30,
------------------------------- --------------------
1995 1996 1997 1998 1998 1999
------ ------ ------ -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues................ $ -- $2,074 $2,005 $ 1,556 $ 1,290 $ 4,647
Gross profit............ -- 616 606 495 664 1,533
(Loss) income from
operations............. (8) 48 (614) (3,764) (1,808) (16,121)
Net (loss) income....... (8) 49 (601) (3,590) (1,695) (15,827)
Net (loss) income
available to
shareholders........... (8) 49 (601) (3,608) (1,707) (16,845)
Basic and diluted net
loss per share......... $(0.00) $ 0.02 $(0.10) $ (0.60) $ (0.29) $ (2.79)
Weighted average common
shares-basic and
diluted................ 3,000 3,000 5,832 5,969 5,966 6,028
Pro forma basic and
diluted net loss per
share.................. $ (0.44) $ (1.46)
Pro forma weighted
average common shares-
basic and diluted...... 8,182 10,851
<CAPTION>
September 30, 1999
------------------------------
Pro Pro Forma
Actual Forma As Adjusted
-------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.................... $ 22,998 $22,998
Working capital.............................. 22,244 22,244
Total assets................................. 30,608 30,608
Long term debt and capital lease
obligations................................. 85 85
Redeemable preferred stock................... 44,098 --
Stockholders' (deficit) equity .............. (18,617) 25,481
</TABLE>
The unaudited pro forma balance sheet data above reflects the conversion of
all classes of preferred stock into common stock as of September 30, 1999. See
Note 11 of Notes to Consolidated Financial Statements. The unaudited pro forma
as adjusted balance sheet data above reflects the receipt of the net proceeds
from the sale of the shares of common stock in this offering at an
assumed initial public offering price of $ per share, after deducting
estimated underwriting discounts and commissions and estimated offering
expenses.
2
<PAGE>
RISK FACTORS
This section highlights specific risks with respect to an investment in our
business. Investing in our common stock involves a high degree of risk. We also
caution you that this prospectus includes forward-looking statements that are
based on management's beliefs and assumptions and on information currently
available to management. You should carefully consider the risks described
below and the other information in this prospectus before purchasing the common
stock.
Risks Related to Our Business
We have had recent losses and will incur substantial future losses that may
depress our stock price
We have incurred significant losses since 1997, including losses of
approximately $600,000 and $3.6 million for the years ended December 31, 1997
and 1998, respectively, and $15.8 million for the nine months ended September
30, 1999. Our losses have resulted in an accumulated deficit of approximately
$21.2 million as of September 30, 1999. We expect to substantially increase our
sales and marketing, research and development, and general and administrative
expenses. We anticipate incurring substantial losses for the next several
years. As a result, we will need to generate significant additional revenues to
achieve and maintain profitability in the future. Any significant shortfall of
revenues in relation to our expectations or any material delay in client
licenses would have an immediate adverse effect on our business. We are not
certain when we will become profitable. Even if we do achieve profitability, we
may not sustain or increase profitability on a quarterly or annual basis.
Failure to achieve or maintain profitability will materially and adversely
affect the market price of our common stock.
We expect our quarterly revenues and operating results to fluctuate
Our revenues and operating results are likely to vary significantly from
quarter to quarter. The factors that will affect our quarterly operating
results include:
. fluctuations in demand for our products and services;
. the timing of our application software and services sales;
. the timing of our application software implementations;
. increased expenditures for sales and marketing, research and development
and administration;
. the timing and introduction of new software by us or our competitors;
and
. the mix of services provided, and whether we or our channel partners
provide these services.
If revenue falls below our expectations in a quarter and we are not able to
quickly reduce our spending in response, our operating results for that quarter
could be harmed. It is likely that in some future quarter our operating results
may be below the expectations of public market analysts and investors and, as a
result, the price of our common stock may fall.
3
<PAGE>
Only a small number of clients have licensed our application software, and our
Internet commerce solution may never achieve broad market acceptance
We first introduced the XML-based version of OneCommerce in April 1999 and
delivered a second major release in November 1999. To date, only a limited
number of clients have licensed OneCommerce and an even smaller number are
operational on the most recent version. Therefore, we have not demonstrated
broad market acceptance of OneCommerce. If OneCommerce does not gain broad
market acceptance, or if OneCommerce fails to meet customer expectations, our
business would be harmed.
A large portion of our revenues are currently derived from a limited number of
clients
Five of our clients accounted for 71% of our revenues for the year ended
December 31, 1998. Five of our clients accounted for an aggregate of 57% of our
revenues for the nine months ended September 30, 1999. Although we believe that
our client concentration will decrease as we continue to build our client base,
we expect that a small number of clients will continue to account for a
substantial portion of revenues in the near term. As a result, our inability to
secure additional significant clients during a given period or the loss of any
one major client could adversely affect our business.
All of our revenues are directly related to a single family of relatively new
applications with few clients to date, and our business will suffer if these
offerings are not commercially successful
Our OneCommerce family of application services and related professional
services account for substantially all of our revenues to date, and we expect
these application services and professional services to continue to account for
most of our revenues for the foreseeable future. If our current limited
offerings are not commercially successful, our business will suffer. We may not
successfully develop or market any enhanced or new application services in the
future, which would limit our ability to increase revenues.
In the emerging marketplace of Internet commerce, our application services
and professional services involve a new approach to the conduct of online
business. As a result, intensive marketing and sales efforts may be necessary
to educate prospective clients regarding the uses and benefits of our
application services and our professional services, thereby generating demand.
Companies that have already invested substantial resources in other methods of
conducting business may be reluctant to adopt a new approach that may replace,
limit or compete with their existing systems. Accordingly, a viable market for
our application services and professional services may not emerge or be
sustainable.
We anticipate the need to raise additional capital in the future, and if we
cannot meet future capital requirements, our business will be harmed
We currently anticipate that the net proceeds from this offering, together
with our existing working capital will be sufficient to meet our anticipated
working capital and capital expenditure requirements through at least the next
12 months. The time period for which we believe our capital is sufficient is an
estimate; the actual time period may differ materially as a result of a number
of factors, risks and uncertainties which are described herein. We may need to
raise additional funds in the future through public or private debt or equity
financings in order to:
. continue rapid expansion of our business;
. acquire complementary businesses or technologies;
4
<PAGE>
. develop new products or services; or
. respond to competitive pressures.
Additional financing may not be available on terms favorable to us, if at
all. If adequate funds are not available or are not available on acceptable
terms, we will not be able to take advantage of opportunities, develop new
products or services, or otherwise respond to unanticipated competitive
pressures. In such case, our business could be harmed.
We are growing rapidly and effectively managing our growth may be difficult
From January 1, 1999 to December 31, 1999, we grew from 72 to 264 employees,
our revenues increased dramatically, and we intend to continue to grow. If we
are successful, this growth will place a significant strain on the ability of
our management team to execute our business plan. In addition, significant
investments in personnel, management systems, and resources will be required.
There will also be significant additional administrative burdens placed on our
management team as a result of our status as a public company. We are upgrading
our financial accounting and planning systems, our project management systems,
our sales force automation systems, and installing a new customer relationship
management system. The installation and incorporation of these systems into our
management processes will place a significant burden on our management team and
our information technology staff, and these systems may not be effective once
implemented. If we do not manage this growth effectively, our business will
suffer.
We depend on our key personnel and we may not be able to fill other key
management positions
Our performance is substantially dependent on the continued services and on
the performance of our executive officers and other key employees, particularly
James W. MacIntyre, IV, our chief executive officer, Frederick C. Hawkins, III,
our chief financial officer, and Thomas E. Young, our senior vice president of
marketing and sales. The loss of the services of any of our key employees, or
an inability to hire other key members of management could materially and
adversely affect our business.
Our long sales cycle makes our quarterly results difficult to forecast
accurately
Our application services and professional services are complex and often
involve significant investment decisions by prospective clients. As a result,
our sales process is often lengthy for reasons which include the following:
. prospective clients often evaluate several possible alternative
solutions from other software vendors, systems integrators, and internal
development efforts;
. we typically must extensively educate the potential client about our
Internet commerce solution; and
. our clients frequently must seek multiple internal approvals to reach a
purchase decision due to the key role Internet commerce solutions may
play in their business.
Our sales cycle may be subject to a number of significant delays over which
we have little or no control. Our long sales cycle makes it difficult for us to
predict the quarter in which we will complete a particular sale. Because of
sales delays, our revenues and operating results may vary from period to
period. As a result, period-to-period comparisons of our results of operations
may not be meaningful, and you should not rely on them as an indication of
future performance.
5
<PAGE>
The market for our solutions is new and rapidly developing and may fail to
mature into a sustainable market
The Internet commerce market is new and rapidly evolving. It is not clear
whether the developing infrastructure will be adequate to support increased
Internet commerce, or whether our customers will be successful in using our
application software and services to conduct their commercial operations
online. Consequently, the demand for our application services and professional
services in the Internet commerce market is uncertain. Our business will suffer
if our application services and professional services are not widely accepted
in the Internet commerce software market.
If broad market acceptance of XML does not develop, our business could be
harmed
OneCommerce is currently based in large part on XML, an emerging technology
standard for sharing data. It is possible that a competing standard perceived
to be superior could replace XML. If that happens, the market may not accept an
XML-based application and our future results would suffer. If a new standard
were perceived to be superior, our application software might not be compatible
with the new standard or we might not be able to develop a product using a new
standard in a timely manner. Consequently, a failure of XML to achieve broad
market acceptance or the introduction of a competing standard perceived to be
superior in the market could harm our business.
We are dependent on the acceptance and use of Microsoft operating systems and
Internet technologies
We designed OneCommerce to run only on Microsoft operating systems and
Internet technologies. However, to date a majority of large-scale Internet
commerce sites have used other operating systems such as UNIX or Linux. We
cannot be certain that the Microsoft operating systems and Internet
technologies will achieve wide market acceptance as an easily scalable
operating platform for large-scale Internet commerce solutions. If a
significant number of potential clients do not want to use the Microsoft
operating systems and Internet technologies, we will be forced to develop
products that run on other operating systems or Internet servers. Moreover, any
change to the Microsoft operating systems or Internet technologies could
require us to modify our application services and could cause us to delay
upgrades and releases. Any decline in the market acceptance of the Microsoft
operating systems and Internet technologies for any reason, including as a
result of errors or delayed introduction of enhancement or upgrades, could harm
our business.
If we are forced to develop new application services in response to these
risks, we will be required to commit a substantial investment of resources, and
we may not be able to successfully develop or introduce new applications on a
timely or cost-effective basis, or at all, which could lead potential customers
to choose alternatives to our solution.
We are dependent on marketing, technology, and distribution relationships, and
if these relationships are not successful, our growth may be limited
We rely on marketing, technology, and distribution relationships with a
variety of companies, which, in part, generate leads for the sale of our
Internet commerce application services. These relationships include:
. vendors of key technology platforms;
. systems integrators and consulting firms;
. vendors of complementary Internet commerce software; and
. application service providers, or ASPs.
6
<PAGE>
Not all of our channel partner and alliance partner relationships are
documented in writing, and some are governed by agreements that can be
terminated by either party with little or no prior notice. We may not be able
to maintain these relationships and enter into additional relationships that
will provide timely and cost-effective distribution of OneCommerce.
Moreover, these relationships are not exclusive. If the partners with whom
we have relationships are not successful in selling and implementing systems
that include our application services, or if they more vigorously promote
competing solutions or technologies, our growth could be adversely affected.
We may fail to establish and maintain beneficial strategic relationships
We intend to establish additional strategic relationships with key
participants in the Internet commerce industry to increase our application
software and services sales. There is intense competition for these
relationships, and we may not be able to enter into these relationships on
commercially reasonable terms or at all. In the event of a dispute among
potential partners, it is possible that we could be drawn into litigation aimed
at preventing us from continuing our relationship with either party. Even if we
enter into relationships with other Internet commerce vendors, they themselves
may not attract significant numbers of customers. Accordingly, we may not
realize additional sales from these relationships. Moreover, we may have to
expend significant resources to establish these relationships. Our inability to
enter into new strategic relationships and expand our existing ones could harm
our business.
We face intense competition, which could adversely affect our sales and
profitability
The Internet commerce application software and professional services market
is intensely competitive, highly fragmented, characterized by rapid
technological change and significantly affected by new product and service
introductions. Recent acquisitions of several of our competitors by large
software companies and other market activities of industry participants have
increased the competition in our market. We compete with other Internet
commerce software vendors including Art Technology Group, BroadVision,
OpenMarket, Vignette, InterWorld, and others. We also compete with application
server products and their vendors including IBM and its Websphere products, the
Sun-Netscape Alliance and its products, Allaire Corporation and its products,
among others. A number of these competitors have significantly greater
financial, technical, marketing and other resources than we have and have been
in business longer than we have. Many competitors also have greater brand
recognition and more customers than we do. Competitors may therefore have the
capability to support marketing endeavors that are more extensive than ours or
to adopt pricing and terms that are more aggressive than ours.
Many of our key personnel are new to our company and may not work together
successfully
A number of people on our management team and sales force have joined
OneSoft in the last 12 months. Our management team has limited experience
working together. Our future performance will depend, in part, on our ability
to integrate successfully our newly hired executive officers into our
management team, and our ability to develop an effective working relationship
among management. Our executive officers, who have worked together for only a
short time, may not be successful in working together or managing our company.
Any disaffection or disaccord among executive officers, or between our officers
and our board of directors, could affect our ability to make strategic
decisions. In addition, we are rapidly hiring sales personnel with limited
experience marketing our services and working with our sales force. If our key
personnel are unable to market our services and work together successfully, our
business could be harmed.
7
<PAGE>
Competition for employees in our industry, and in our geographic region, is
intense, and we may not be able to hire or retain employees
We believe we will need to attract, retain and motivate talented management
and other highly skilled employees to be successful. Competition for skilled
personnel in our industry and in our geographic region is intense. If we are
unable to retain our key employees or attract, assimilate or retain other
highly qualified employees in the future, the growth of our business will not
meet future expectations.
If we fail to develop new products and services in the face of our industry's
rapidly evolving technology, our future results may be adversely affected
The market for Internet commerce application software and related services
is subject to rapid technological change, changing customer needs, frequent new
product introductions and evolving industry standards that may render existing
applications and services obsolete. Our growth and future operating results
will depend in part upon our ability to enhance existing applications and
develop and introduce new application software or components that:
. exploit technological advances in the marketplace;
. meet changing customer requirements;
. achieve market acceptance;
. integrate successfully with third party software; and
. respond to competitive products.
Our research and development efforts have required, and are expected to
continue to require, substantial investment. We may not possess sufficient
resources to continue to make the necessary investments in technology. In
addition, we may not successfully identify new software opportunities and
develop and bring new software to market in a timely and efficient manner. If
we are unable, for technological or other reasons, to develop and introduce new
and enhanced software in a timely manner, we may lose existing customers and
fail to attract new customers, which could result in a decline in revenues.
Our application software may contain defects, which can result in reduced
sales, increased service and warranty costs, and liability to our clients
Our application software may contain errors that become apparent when they
are introduced or when the volume of usage increases. Errors in our software,
implementation errors, including those caused by third parties, or other
performance difficulties could result in decreased sales of our software,
increased service and warranty costs, and liability to our clients, which could
have an adverse effect on our business. Although we carry errors and omissions
insurance, such insurance may not cover all liability claims made against us.
Our risk of liability to clients is particularly pronounced because of our
belief that our application software will be critical to their operations.
Intellectual property claims against us can be costly and result in the loss of
significant rights
Other parties may assert infringement or unfair competition claims against
us. Any claim, with or without merit, could result in significant litigation
costs and distraction of management. Some of our competitors have been issued
U.S. patents on certain aspects of their electronic commerce software products.
Although we do not believe that we are infringing on any such patent rights,
those companies may claim that we are doing so. If any such claim was made
against us, our business could be harmed, particularly if we are unsuccessful
in defending such claim. If we are forced to defend any such claim, whether it
is
8
<PAGE>
with or without merit or is determined in our favor, then we may face costly
litigation, diversion of technical and management personnel, or delays in
future application software releases. We may also be required to enter into
costly and burdensome royalty and licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
us, or at all.
We have received correspondence from attorneys representing our former chief
technology officer, asserting that he invented certain technology incorporated
in our pending patent application and that our use of any of this technology
infringes on his ownership rights. Should litigation arise from this matter,
the results are unpredictable, and we cannot guarantee that we will preserve
the right to use the proprietary technology asserted to be owned by the former
employee. If we are precluded from using such technology or are found to be
infringing the former employee's proprietary rights, our business could be
materially damaged. See "Business--Intellectual Property and Proprietary
Rights."
We rely on our intellectual property rights and if we are unable to protect
these rights, we may face increased competition
We rely on a combination of patent, copyright, trademark, and trade secret
laws and restrictions on disclosure to protect our intellectual property
rights. We have applied to register 95 trademarks in the United States,
including "OneSoft", "OneCommerce", "PrimeCommerce", and "Internet Commerce
Opportunity Assessment", among others. We also have filed a patent application
claiming proprietary inventions used in our software architecture. We cannot be
certain that trademark registrations or patents will issue from these
applications. Moreover, even if they do, unauthorized persons may attempt to
copy or otherwise obtain and use our intellectual property. Monitoring
unauthorized use of our intellectual property is difficult, and we cannot be
certain that the steps we have taken will be effective to prevent unauthorized
use. In addition, our business activities may infringe on the proprietary
rights of others, and, from time to time, we have received and may continue to
receive, claims of infringement against us.
Litigation may be necessary to enforce our intellectual property rights, to
protect our trade secrets, or to determine the validity and scope of the
proprietary rights of others. Litigation could subject us to significant
liability for damages and invalidation of our proprietary rights. These
lawsuits, regardless of their success, would likely be time consuming and
expensive to resolve, and would divert management's time and attention away
from our business.
We generally enter into confidentiality or license agreements with our
employees and consultants, and control access to and distribution of our
intellectual property, documentation, and other proprietary information.
Despite our efforts to protect our proprietary rights from unauthorized use or
disclosure, unauthorized parties may attempt to disclose, obtain, or use our
solutions or intellectual property. We cannot assure you that the steps we have
taken will prevent misappropriation of our solutions or intellectual property,
particularly in foreign countries where laws or law enforcement practices may
not protect our proprietary rights as fully as in the United States.
Acquisitions may disrupt or otherwise have a negative impact on our business
We may acquire or make investments in complementary businesses, products,
services or technologies on an opportunistic basis when they will assist us in
carrying out our business strategy. Growth through acquisitions has been a
successful strategy used by other technology companies. We do not have any
present understanding, nor are we conducting any negotiations, relating to any
such acquisition or investment. If we acquire a company, then we
9
<PAGE>
could have difficulty in assimilating that company's personnel and operations.
In addition, the key personnel of the acquired company may decide not to work
for us. If we acquire products, services or technologies, we could have
difficulty in assimilating them into our operations. These difficulties could
disrupt our ongoing business, distract our management and employees and
increase our expenses. Furthermore, we may have to incur debt or issue equity
securities to pay for any future acquisitions, the issuance of which could be
dilutive to our existing stockholders. In addition, these securities may have
rights, preferences or privileges senior to those of our existing stockholders.
We intend to expand our international sales efforts but do not have substantial
experience in international markets
We intend to expand our international sales efforts in the future. We have
very limited experience in marketing, selling, and supporting our application
software and services abroad. Expansion of our international operations will
require a significant amount of attention from our management and substantial
financial resources. If we are unable to grow our international operations
successfully and in a timely manner, our business could suffer. Doing business
internationally involves additional risks, particularly:
. unexpected changes in regulatory requirements, taxes, trade laws, and
tariffs;
. restrictions on repatriation of earnings;
. differing intellectual property rights and protections;
. differing labor regulations;
. political and economic uncertainty or instability in some regions;
. greater difficulty in staffing and managing foreign operations; and
. fluctuating currency exchange rates.
Risks Related to Our Industry
We depend on the growth in the use of the Internet for business
Our future success depends heavily on the increased use of the Internet for
business. Although the Internet is experiencing rapid growth in the number of
users and traffic, this growth is a recent phenomenon and may not continue. The
failure of the Internet to continue to grow and develop as a commercial or
business medium could harm our business. The acceptance and use of the Internet
for commerce could be limited by a number of factors such as the growth and use
of the Internet in general, the relative ease of conducting transactions on the
Internet, concerns about transaction security, and taxation of transactions on
the Internet.
We depend on the speed and reliability of the Internet to enable the growth of
Internet commerce
The recent growth in Internet traffic has caused frequent periods of
decreased performance. If Internet usage continues to grow rapidly, its
infrastructure may not be able to support these demands and its performance and
reliability may decline. If outages or delays on the Internet occur frequently
or increase in frequency, Internet commerce could grow more slowly or decline,
which may reduce the demand for our Internet software application services. The
ability of OneCommerce and our professional services to satisfy our clients'
needs is ultimately limited by and depends upon the speed and reliability of
the Internet. Consequently, the emergence and growth of the market for our
application services and our
10
<PAGE>
professional services depends upon improvements being made to the entire
Internet infrastructure to alleviate overloading and congestion. If these
improvements are not made, the ability of our clients to utilize our solutions
will be hindered, and our business may suffer.
Breaches of security on the Internet may slow the growth of Internet commerce
and limit our growth
A significant barrier to market acceptance of Internet commerce and
communication is the concern regarding the secure exchange of valuable and
confidential information over public networks. Anyone who is able to circumvent
security measures could misappropriate proprietary, confidential customer
information or cause interruptions in our clients' operations. Our clients may
be required to incur significant costs to protect against security breaches or
to alleviate problems caused by breaches, reducing their demand for our
application services. A well-publicized breach of security could deter
consumers and businesses from using the Internet to conduct transactions that
involve transmitting confidential information. The failure of the security
features of our application software to prevent security breaches, or well-
publicized security breaches affecting the Web in general, could significantly
harm our business.
Unplanned system interruptions and capacity constraints could reduce our
ability to provide hosting services and could harm our business and our
reputation
Our clients have in the past experienced some interruptions with our hosted
network. We believe that these interruptions will continue to occur from time
to time. These interruptions could be due to hardware and operating system
failures. We expect a substantial portion of our revenues to be derived from
customers who use our hosted network. As a result, our business will suffer if
we experience frequent or long system interruptions that result in the
unavailability or reduced performance of our hosted network or reduce our
ability to provide remote management services. We expect to experience
occasional temporary capacity constraints due to sharply increased traffic,
which may cause unanticipated system disruptions, slower response times,
impaired quality and degradation in levels of customer service. If this were to
continue to happen, our business and reputation could be seriously harmed.
Our success largely depends on the efficient and uninterrupted operation of
our computer and communications hardware and network systems. Substantially all
of our computer communications systems are located in Northern Virginia. Our
systems and operations are vulnerable to damage or interruption from fire,
earthquake, power loss, telecommunications failure and similar events.
We have entered into service agreements with some of our clients that
require minimum performance standards, including standards regarding the
availability and response time of our remote management services. If we fail to
meet these standards, our clients could terminate their relationships with us
and we could be subject to contractual monetary penalties. Any unplanned
interruption of services may harm our ability to attract and retain clients.
We rely on relationships with, and the system integrity of, our hosting
partners
Some of our hosted network consists of data centers hosted by our partners.
Accordingly, we rely on the speed and reliability of the systems and networks
of these hosting partners. If our hosting partners experience system
interruptions or delays or other problems, or if we do not maintain or develop
relationships with hosting partners, our business could suffer.
11
<PAGE>
Increasing governmental regulation of the Internet and Internet commerce could
limit the market for our products
A number of legislative and regulatory proposals under consideration by
federal, state, local, and foreign governmental organizations may lead to laws
or regulations concerning various aspects of the Internet such as taxation of
goods and services provided over the Internet, pricing, content and quality of
goods and services. Legislation and anticipated legislation could dampen the
growth in Internet usage and decrease or limit its acceptance as a
communications and commercial medium. If enacted, these laws and regulations
could limit the market for our products and services. In addition, existing
laws could be applied to the Internet. Legislation or application of existing
laws could expose companies involved in Internet commerce to increased
liability, which could limit the growth of Internet commerce generally, and
limit demand for our application software and services, in particular.
Government regulation of the collection and use of personal data could reduce
demand for our products and services
Our Internet application software connects to and analyzes data from various
applications, including Internet applications, which enable businesses to
capture and use information about their customers. Government regulation that
limits our clients' use of this information could reduce the demand for our
products. A number of jurisdictions have adopted, or are considering adopting,
laws that restrict the use of customer information from Internet applications.
The European Union has required that its member states adopt legislation that
imposes restrictions on the collection and use of personal data on the
Internet. They also must adopt legislation limiting the transfer of personally-
identifiable data to countries that do not impose equivalent restrictions. The
United States Department of Commerce and the European Union are negotiating
safe-harbor regulations for U.S.-based Internet commerce companies, but have
not yet reached agreement. In the United States, the Children's Online Privacy
Protection Act was enacted in October 1998. The Federal Trade Commission has
enacted rules implementing this legislation imposing disclosure obligations on
Internet sites collecting personally-identifiable data from children under the
age of 13. These rules become effective in April. In addition, the Federal
Trade Commission is investigating privacy practices of businesses that collect
information on the Internet. These and other privacy-related initiatives could
reduce demand for some of the Internet applications with which OneCommerce
operates, and could restrict the use of some of the features of OneCommerce in
some Internet commerce applications. Either scenario could potentially result
in reduced demand for our application software and services.
Our business could be harmed by Year 2000 compliance issues
Many currently installed computer systems, software products, and other
control devices are not capable of distinguishing 21st century dates from 20th
century dates. As a result, some computer systems, software products, and
control devices used by companies may fail to perform properly because of this
Year 2000 processing error. This type of Year 2000 error could directly or
indirectly cause system failures or miscalculations that could disrupt
operations, including among other things a temporary inability to process
transactions, issue invoices, or engage in similar normal business activities.
Significant uncertainty exists in the Internet software applications
industry concerning the potential effects associated with compliance. Although
we believe that each of our material systems is Year 2000 compliant, we have
not yet determined whether all of the systems of our suppliers, business
partners or clients are Year 2000 compliant. Accordingly, we cannot predict the
extent to which our clients' and their business partners' systems and
applications are Year 2000 compliant. If these systems are not Year 2000
compliant, our business could be harmed.
12
<PAGE>
In addition, we believe that the purchasing patterns of clients and
potential clients may be affected by Year 2000 issues in a variety of ways.
Many companies have been expending significant resources to correct or patch
their current software systems for Year 2000 compliance. Those expenditures may
continue or increase, resulting in reduced funds available to purchase Internet
application software such as that offered by OneSoft.
Risks Related to This Offering
Internet-related stock prices are especially volatile and this volatility may
depress our stock price
The stock market, and specifically the stock prices of Internet-related
companies, has been very volatile. This volatility is often not related to the
operating performance of the companies. This broad market volatility and
industry volatility may reduce the price of our common stock, without regard to
our operating performance. Investors may not be able to resell their shares of
our common stock following periods of volatility because of the market's
adverse reaction to such volatility.
Securities class action litigation has often been brought against companies
experiencing volatility in the market price of their securities. Litigation
brought against us could result in substantial costs to us in defending against
a lawsuit and management's attention could be diverted from our business.
Because certain existing stockholders own a large percentage of our voting
stock, other stockholders' voting power may be limited
Following consummation of this offering, it is anticipated that our
officers, directors, and their affiliates will beneficially own or control
approximately % of our common stock. In combination with entities owning 5% or
more of our outstanding shares of common stock, this group will control
shares of common stock, or % of the outstanding shares of our stock. As a
result, if such persons act together, they will have the ability to control all
matters submitted to our stockholders for approval, including election and
removal of directors and the approval of any merger, consolidation, or sale of
all or substantially all of our assets. These stockholders may make decisions
that are adverse to your interests. See our discussion under the heading
"Principal Stockholders" for more information about ownership of our
outstanding shares.
Management may apply the proceeds of this offering to uses that do not increase
our profits or market value
Our management has broad discretion as to how to spend the proceeds from
this offering and may spend these proceeds in ways with which our stockholders
may not agree. Our management has not determined how a substantial portion of
the offering proceeds will be allocated among the various uses. Accordingly,
the net proceeds may be used for corporate purposes that do not increase our
profitability or our market value. Until the proceeds are needed, we plan to
invest them in investment-grade, interest-bearing securities. The failure of
management to apply these proceeds effectively could harm our business. See
"Use of Proceeds."
Future sales of shares of our common stock could cause the price of our shares
to decline
If our shareholders sell substantial amounts of our common stock, including
shares issued upon the exercise of outstanding options and warrants, in the
public market following the
13
<PAGE>
offering, then the market price of our common stock could fall. Restrictions
under the securities laws and certain lock-up agreements limit the number of
shares of common stock available for sale in the public market. The holders of
shares of common stock and warrants and options for an aggregate of
shares of common stock have agreed not to sell any such securities for 180
days after the offering without the prior written consent of Deutsche Bank
Securities Inc. However, Deutsche Bank Securities Inc. may, in its sole
discretion, release all or any portion of the securities subject to such lock-
up agreements.
We may file a registration statement to register all shares of common stock
under our stock option plans shortly after completion of this offering. After
such registration statement is effective, shares issued upon exercise of stock
options will be eligible for resale in the public market without restriction.
Anti-takeover provisions and our right to issue preferred stock could make a
third-party acquisition of us difficult
We are a Delaware corporation. Anti-takeover provisions of Delaware law
could make it more difficult for a third party to acquire control of us, even
if such change in control would be beneficial to shareholders. Our restated
certificate of incorporation provides that our board of directors may issue
preferred stock without shareholder approval. In addition, our restated bylaws
provide for a classified board, with each board member serving a staggered
three-year term. The issuance of preferred stock, the existence of a classified
board, and other provisions in the charter and under Delaware law could make it
more difficult for a third party to acquire us.
You will incur immediate and substantial dilution in the book value of your
investment
The initial public offering price is substantially higher than the pro forma
net book value per share of our outstanding common stock. If you purchase
shares of our common stock, you will incur immediate and substantial dilution
in the amount of $ per share. If the holders of outstanding options or
warrants exercise those options or warrants, you will experience further
dilution.
14
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
AND INDUSTRY DATA
We make many statements in this prospectus under the captions "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business," and elsewhere that are
forward-looking and are not based on historical facts. These statements relate
to our future plans, objectives, expectations, and intentions. We may identify
these statements by the use of words such as "believe," "expect," "anticipate,"
"intend," and "plan," and similar expressions. These forward-looking statements
involve a number of risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those we discuss in "Risk Factors" and
elsewhere in this prospectus. These forward-looking statements speak only as of
the date of this prospectus, and we caution you not to rely on these statements
without also considering the risks and uncertainties associated with these
statements and our business that are addressed in this prospectus.
This prospectus contains estimates of market growth related to the Internet.
These estimates have been included in studies published by nationally-known
market research firms. These estimates assume that certain events, trends and
activities will occur. If any of these market studies are wrong about any of
their assumptions, then their market estimates may also be wrong.
USE OF PROCEEDS
Our net proceeds from the sale of the shares of common stock we are
offering, at an assumed initial offering price of $ per share, are estimated
to be approximately $ million after deducting underwriting discounts and
commissions and estimated offering expenses payable by us. We expect to use the
net proceeds for sales and marketing expansion, research and development
activities, and other general corporate purposes, including capital
expenditures.
The amounts and timing of our actual expenditures will depend on numerous
factors, including market acceptance of our application services and
professional services, the amount of proceeds actually raised in this offering,
the amount of cash generated by our operations, and competition. We may also
use a portion of the net proceeds from this offering for the acquisition of, or
investment in, companies, technologies or assets that complement our business.
However, we have no present understandings, commitments, or agreements to enter
any potential acquisitions or investments. Further, we have not determined the
amounts we plan to spend on any of the areas listed above or the timing of
these expenditures. As a result, our management will have broad discretion to
allocate the net proceeds from this offering. Pending application of the net
proceeds, we intend to invest them in short-term, interest-bearing, investment-
grade securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on shares of our capital
stock. We intend to retain any future earnings to finance future growth and do
not anticipate paying any cash dividends in the future. Payment of future
dividends, if any, will be at the discretion of our board of directors after
taking into account various factors, including our financial condition,
operating results, current and anticipated cash needs, and plans for expansion.
15
<PAGE>
CAPITALIZATION
The following table shows:
. our actual capitalization as of September 30, 1999;
. our capitalization as of that date on a pro forma basis to give effect
to the conversion of all preferred stock outstanding as of September 30,
1999 into common stock upon the closing of this offering; and
. our pro forma capitalization as adjusted to reflect our receipt of the
net proceeds from the sale of shares of common stock offered by us
at the assumed initial public offering price of $ per share and after
deducting underwriting discounts and commissions and estimated offering
expenses.
<TABLE>
<CAPTION>
September 30, 1999
--------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Lease obligations, long-term portion......... $ 85 $ 85
Redeemable convertible preferred stock (non-
cumulative), par value $0.01 per share;
9,757,031 shares authorized; 9,681,158
shares issued and outstanding, actual; no
shares issued and outstanding, pro forma and
pro forma as adjusted....................... 44,098 -- --
Stockholders' equity:
Common stock, par value $0.001 per share;
20,242,969 shares authorized; 6,081,070
shares issued and outstanding, actual;
15,762,228 shares issued and outstanding
pro forma and shares issued and
outstanding pro forma as adjusted.......... 6 16
Additional paid-in capital.................. 4,529 48,617
Deferred stock compensation................. (1,978) (1,978)
Accumulated deficit......................... (21,174) (21,174)
-------- --------
Total stockholders' (deficit) equity....... (18,617) 25,481
-------- --------
Total capitalization....................... $ 25,566 $ 25,566 $
======== ======== ====
</TABLE>
The outstanding share information shown in the table excludes the following
shares:
. 3,356,480 shares of common stock issuable upon the exercise of
outstanding stock options granted as of September 30, 1999 under our
Amended and Restated 1997 Employee, Director and Consultant Stock Option
Plan, at a weighted average exercise price of $1.50 per share; and
. 643,520 additional shares of common stock available for future grant
under our Amended and Restated 1997 Employee, Director and Consultant
Stock Option Plan, as of September 30, 1999.
16
<PAGE>
DILUTION
Our pro forma net tangible book value as of September 30, 1999, was $25.5
million, or $1.62 per share of common stock. Pro forma net tangible book value
per share represents the amount of our total tangible assets, less total
liabilities, divided by the number of shares of common stock outstanding as of
September 30, 1999, after giving effect to the conversion of all outstanding
shares of preferred stock and warrants into shares of common stock upon
completion of this offering. After giving effect to the receipt of the net
proceeds from the sale of shares of our common stock offered in this offering
at an assumed initial public offering price of $ per share, and after
deducting underwriting discounts and commissions, and the estimated offering
expenses, our pro forma net tangible book value as of September 30, 1999 would
have been $ million, or $ per share of common stock. This represents an
immediate increase in pro forma net tangible book value of $ per share to our
existing stockholders and an immediate dilution of $ per share to new
investors at the assumed initial public offering price. The following table
illustrates the per share dilution:
<TABLE>
<S> <C>
Assumed initial public offering price per share............................ $
Pro forma net tangible book value per share as of September 30, 1999..... 1.62
Increase per share attributable to new investors.........................
Pro forma net tangible book value per share after the offering
----
Dilution per share to new investors........................................ $
====
</TABLE>
The following table summarizes, as of September 30, 1999, on the pro forma
basis described above, the number of shares of common stock purchased from us,
the total consideration paid to us, and the average price per share paid by
existing stockholders and by new investors purchasing shares of common stock in
this offering, before deducting underwriting discounts and commissions and the
estimated offering expenses:
<TABLE>
<CAPTION>
Shares
Purchased Total Consideration Average
-------------- ---------------------- Price
Number Percent Amount Percent Per Share
------ ------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... % $ % $
New investors..................
--- --- --------- --------- ---
Total........................ 100% 100%
=== === ========= ========= ===
</TABLE>
The foregoing discussion and tables assumes no exercise of any outstanding
stock options or warrants as of September 30, 1999. As of September 30, 1999,
there were options and warrants outstanding to purchase a total of 3,417,131
shares of our common stock with a weighted-average exercise price of $1.53 per
share. If any of these options and warrants are exercised, there will be
further dilution to new public investors. Please see Note 6 to the financial
statements for more information about these options and warrants.
If the underwriters exercise their over-allotment in full, the following
will occur:
. the number of shares of common stock held by existing stockholders will
be reduced to approximately % of the total number of shares of common
stock to be outstanding after this offering; and
. the number of shares of common stock held by the new investors will
increase to shares, or % of the total number of shares of common
stock to be outstanding immediately after this offering. See "Principal
Stockholders."
17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and related notes and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, which are included elsewhere in this prospectus. The consolidated
statement of operations data for each of the three years in the period ended
December 31, 1998 and our consolidated balance sheet data as of December 31,
1997 and 1998 are derived from our consolidated financial statements that have
been audited by Ernst & Young LLP, independent auditors, and are included
elsewhere in this prospectus. The consolidated balance sheet data as of
December 31, 1995 and 1996 and the consolidated statement of operations data
for the year ended December 31, 1995 are derived from the unaudited
consolidated financial statements not included in this prospectus and include,
in the opinion of management, all adjustments, consisting only of normal
recurring adjustments, that are necessary. The consolidated balance sheet data
as of September 30, 1999 and the consolidated statement of operations data for
the nine months ended September 30, 1998 and 1999 are derived from unaudited
consolidated financial statements included elsewhere in this prospectus and
include, in the opinion of management, all adjustments, consisting only of
normal recurring adjustments, that are necessary for the fair presentation of
our financial position and results of operations for those periods. Historical
results are not necessarily indicative of future results. The pro forma
consolidated balance sheet data as of September 30, 1999 is unaudited and
reflects the assumed conversion of all outstanding shares of preferred stock
into common stock upon the completion of this offering. The unaudited pro forma
as adjusted balance sheet data above reflects the receipt of the net proceeds
from the sale of the shares of common stock offered by OneSoft at an assumed
initial public offering price of $ per share after deducting the estimated
underwriting discounts and commissions and offering expenses.
18
<PAGE>
<TABLE>
<CAPTION>
Years Ended Nine Months Ended
December 31, September 30,
----------------------------------------- ---------------------
1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenue:
Application services... $ -- $ 240 $ 171 $ 561 $ 462 $ 1,071
Professional services.. -- 1,834 1,835 995 828 3,576
--------- --------- --------- --------- --------- ----------
Total revenues......... -- 2,074 2,006 1,556 1,290 4,647
Cost of revenues........ -- 1,458 1,400 1,061 626 3,115
--------- --------- --------- --------- --------- ----------
Gross profit............ -- 616 606 495 664 1,532
Operating expenses:
Research and
development costs..... -- -- 255 1,044 664 2,814
Sales and marketing
expenses.............. -- -- -- 1,190 434 7,549
General and
administrative
expenses.............. 8 568 955 2,012 1,365 4,744
Stock and stock option
compensation expense.. -- -- 10 12 9 2,546
--------- --------- --------- --------- --------- ----------
Total operating
expenses.............. 8 568 1,220 4,258 2,472 17,653
--------- --------- --------- --------- --------- ----------
Income (loss) from
operations............. (8) 48 (614) (3,763) (1,808) (16,121)
Interest income........ -- -- 17 169 113 291
Interest expense....... -- -- (18) (14) (9) --
Minority interest...... -- 1 14 18 9 3
--------- --------- --------- --------- --------- ----------
Net income (loss)....... (8) 49 (601) (3,590) (1,695) (15,827)
========= ========= ========= ========= ========= ==========
Accretion of preferred
stock.................. -- -- -- 18 12 1,017
--------- --------- --------- --------- --------- ----------
Net income (loss)
available to
shareholders........... $ (8) $ 49 $ (601) $ (3,608) $ (1,707) $ (16,844)
========= ========= ========= ========= ========= ==========
Basic and diluted net
income (loss) per
share.................. $ (0.00) $ 0.02 $ (0.10) $ (0.60) $ (0.29) $ (2.79)
========= ========= ========= ========= ========= ==========
Weighted average shares
used in computing basic
and diluted net income
(loss) per share....... 3,000,000 3,000,000 5,832,278 5,968,736 5,965,692 6,027,792
========= ========= ========= ========= ========= ==========
Pro forma basic and
diluted net loss per
share.................. $ (0.44) $ (1.46)
========= ==========
Weighted average shares
used in computing pro
forma basic and diluted
net loss per share..... 8,182,430 10,850,675
========= ==========
</TABLE>
<TABLE>
<CAPTION>
December 31, September 30, 1999
------------------------- -------------------------------
Pro Forma
1995 1996 1997 1998 Actual Pro Forma As Adjusted
---- ---- ----- ------- -------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $13 $ 9 $ 733 $ 2,556 $ 22,998 $22,998 $
Working capital......... (7) 1 494 2,506 22,244 22,244
Total assets............ 13 358 1,391 4,094 30,608 30,608
Long-term debt and
capital lease
obligations............ -- -- 31 33 85 85
Redeemable convertible
preferred stock........ -- -- 1,750 7,604 44,098 --
Stockholders' (deficit)
equity................. $(7) $44 $(766) $(4,360) $(18,617) $25,481
</TABLE>
19
<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 consolidated financial statements and related notes
appearing elsewhere in this prospectus. This discussion and analysis contains
forward-looking statements that involve risks, uncertainties and assumptions.
The actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including but not
limited to those set forth under "Risk Factors" and elsewhere in this
prospectus.
Overview
We were founded in Northern Virginia in 1995, and were reincorporated in the
state of Delaware in March 1997. Initial revenues were primarily generated from
professional services and software customization provided to governmental and
non-profit organizations. Beginning in 1997, we devoted our efforts primarily
to the research, development and distribution of OneCommerce, our application
software, and related enabling services, and shifted the focus of our business
to serving commercial clients. We released version 1.0 of OneCommerce in the
third quarter of 1998. We introduced OneCommerce version 2.0, the first XML-
based implementation of our application software, in April 1999. OneCommerce
version 3.0 was released in November 1999. Throughout these periods, we
expanded our organization in key areas, particularly research and development,
marketing and sales, and deployment services. We grew from 18 employees on
December 31, 1997, to 264 full-time employees on December 31, 1999, and expect
that our growth in personnel will continue throughout 2000.
We derive revenues from two primary sources: (1) application services and
(2) professional services. Application services revenues consist principally of
license fees for our OneCommerce application software and revenues from the
following services, packaged with the licensed application software: software
maintenance, managed services including application outsourcing, technical
support and transaction services. Our professional services, delivered by our
Internet Solution Center, include strategy, deployment and solutions management
services that enable clients to plan, design, implement and monitor their
Internet commerce businesses based on OneCommerce. Professional services also
include educational services to train our distribution partners to effectively
sell, install and support our OneCommerce solution, and train our clients to
use the administrative features of our software.
Application services are priced based primarily on the expected number of
server processors, or central processing units, required to support the
anticipated level of activity on our client's Internet commerce site. These
application services are typically rendered pursuant to a software license and
associated service agreement, generally with 24 to 36 month terms. The service
agreement is priced primarily on the selection and level of services provided.
A typical new Internet commerce Web site requires a license for OneCommerce
software for a minimum level of four processor license units, and managed
services for which the client will pay a flat monthly fee and initial service-
term commitment and configuration fee. We charge additional application service
fees as our clients add processor capacity.
While the majority of our software licenses are perpetual, we currently
license and plan to continue licensing our OneCommerce software on a term
basis. We sell most software licenses packaged with managed services and
recognize license revenues ratably over the term of the managed services
agreement. We recognize software maintenance revenues and managed services
revenues on a monthly basis consistent with those agreements.
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We generally bill our professional services on a time and materials basis.
Revenues from professional services agreements that are billed on a time and
materials basis are recognized as services are provided. Revenues generated
pursuant to fixed-fee professional services contracts are recognized as
services are rendered using the percentage-of-completion method of accounting,
and cash received from customers in excess of revenues is recognized as
deferred revenues. Although currently the majority of our professional services
revenues are derived from time and materials contracts, we plan to increasingly
offer service on a fixed-fee basis.
Cost of revenues include the direct costs of application services and
professional services, which consist primarily of the salaries and benefits of
our services personnel, costs of education and training of service partners and
clients, and costs related to hosting, network and systems infrastructure, and
facilities. We anticipate a transitory decline in our gross margins from the
provision of professional services, as we incur increasing costs related to the
development of packaged service offerings, and to the training of our indirect
channel partners to use these packaged service offerings to deploy and support
our OneCommerce solution.
Sales and marketing expenses consist primarily of salaries and commissions
for our direct and indirect sales force, promotional expenses including
expenses for advertising and trade shows, and the facilities costs for our
various sales offices. We market and sell our application and professional
services through our sales force, and application services through indirect
sales and distribution channels. Sales through indirect distribution channels
began in August 1999, accounting for an immaterial amount of revenues for the
nine months ended September 30, 1999. We intend to increase our use of indirect
channel partners as a means to broaden the distribution of our Internet
commerce solution and related services. Our sales and marketing team of 56
persons focuses on the North American market, and we intend to establish an
international sales presence in 2000. All sales to date have been domestic.
Research and development expenses consist primarily of salaries for
development personnel, and the related costs associated with the research,
development and enhancement of our software and service offerings, as well as
quality assurance and testing. Our current policy is to recognize these
expenses in the period incurred. We expect the absolute dollar amount of these
expenses to grow substantially as we continue to invest a significant
percentage of our revenues in these activities.
General and administrative expenses consist principally of salaries and
benefits for executive and managerial personnel, as well as expenses for
facilities, recruiting, legal services, financial services, and other
professional services. We expect these expenses to continue to increase as we
expand our operations. In addition, we anticipate that we will incur greater
general and administrative costs associated with our reporting obligations as a
public company.
Stock and stock option compensation expenses consist of the non-cash
compensation recorded in connection with the granting of options to employees
and non-employees. We recorded expenses of $9,622, $12,047 and $305,000 during
the years ended December 31, 1997 and 1998 and the nine months ended September
30, 1999 as a result of the issuance of stock options to employees with
exercise prices less than the fair market value of our common stock at the date
of issuance.
For the nine months ended September 30, 1999, we recorded $2.2 million of
expense related to the fair value of the options issued to non-employees. Four
hundred thousand dollars of this amount related to services performed during
1999 by non-employees. The remaining $1.9 million resulted from the issuance of
an option to a consultant for the purchase of 250,000 shares of common stock
with an exercise price of $0.552 per share. These 250,000
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options vest upon this individual meeting certain sales goals prior to December
2000 as discussed in the option agreement. We have accounted for these 250,000
options under SOP 96-18 and accordingly recorded an expense using variable
accounting for the options through September 30, 1999.
We have experienced substantial net losses since our inception due to the
significant costs incurred to develop our software and related intellectual
property, to recruit and train personnel for our growing operations, as well as
other expenses related to the development of our business and brand. As of
September 30, 1999, we had an accumulated deficit of approximately $21.2
million. We anticipate that our operating expenses will increase substantially
in future quarters as we increase sales and marketing operations, develop new
distribution channels, fund greater levels of research and development, and
support and improve operational and financial systems. Accordingly, we expect
to continue to incur additional losses for the foreseeable future.
Results of Operations
The following table sets forth the percentage of total revenues represented
by various items of revenues and expenses during the periods indicated:
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
-------------- ---------------
1997 1998 1998 1999
----- ------ ------ ------
<S> <C> <C> <C> <C>
Percentage of Total Revenues:
Revenues:
Application services....................... 8.5 % 36.1 % 35.8 % 23.0 %
Professional services...................... 91.5 63.9 64.2 77.0
----- ------ ------ ------
Total revenue.......................... 100.0 100.0 100.0 100.0
Cost of revenues........................... 69.8 68.2 48.5 67.0
----- ------ ------ ------
Gross profit............................... 30.2 31.8 51.5 33.0
Operating expenses:
Research and development.................. 12.7 67.1 51.5 60.6
Sales and marketing....................... 0.0 76.5 33.7 162.5
General and administrative................ 47.6 129.3 105.8 102.1
Stock and stock option compensation....... 0.5 0.8 0.7 54.8
(Loss) from operations..................... (30.6) (242.0) (140.2) (346.9)
Interest income (expense), net............. 0.0 10.0 8.1 6.2
Net loss................................... (29.9)% (230.8)% (131.4)% (340.6)%
===== ====== ====== ======
</TABLE>
Nine Months Ended September 30, 1998 Compared to September 30, 1999
Application services revenues. Application services revenues increased
138.1% from $462,000 in the nine months ended September 30, 1998 to $1.1
million in the nine months ended September 30, 1999. The increase reflects the
continued development of our direct and indirect distribution channels, as well
as our ongoing investment in research and development to enhance our
application services offerings. For the nine months ended September 30, 1998,
application service revenues comprised 36% of our total revenues, while
application service revenues comprised 23% of total revenues for the comparable
period in 1999.
Professional services revenues. Professional services revenues increased
335.3% from $828,000 in the nine months ended September 30, 1998 to $3.6
million in the comparable period of 1999. This expansion reflects the increased
number of deployments of our OneCommerce software and application services.
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Cost of revenues. Cost of revenues increased 395.2% from $626,000 during the
nine months ended September 30, 1998 to $3.1 million in the nine months ended
September 30, 1999. This increase reflects the increase in salary and benefits
associated with the addition of new employees to staff our Internet Solution
Center and network operations center, as well as increased investments in
infrastructure to support the greater demand for our applications services and
professional services. The increase in costs during the nine months ended
September 30, 1999 also reflects the education and training of our distribution
partners with the intention of preparing them to deploy our application
services. We plan to continue expanding our services capacity through both
hiring and infrastructure investments and, accordingly, expect the cost of
revenue to increase in absolute dollars.
Research and development expenses. Research and development expenses
increased 321.7% from $664,000 during the nine months ended September 30, 1998
to $2.8 million during the nine months ended September 30, 1999. The increase
in research and development expenses was due to the hiring of additional
personnel and to other expenses associated with the development of new products
and services, specifically for the development and release of version 3.0 of
our OneCommerce software application. Full-time research and development
personnel grew from 10 employees as of September 30, 1998 to 39 employees as of
September 30, 1999. We plan to continue expanding our research and development
organization and expect to increase the dollar amount of expenses in this area.
Sales and marketing expenses. Sales and marketing expenses increased
1,628.1% from $434,000 during the nine months ended September 30, 1998 to $7.5
million during the nine months ended September 30, 1999. The increase in sales
and marketing expenses resulted primarily from higher labor, recruiting,
benefits, travel and, promotional costs associated with the hiring of
additional sales and marketing personnel and the expansion of our sales
organization. Full time sales and marketing personnel grew from 9 employees as
of September 30, 1998, to 27 employees as of September 30, 1999. We plan to
continue expanding our sales and marketing organization, and therefore expect
our sales and marketing expenses to increase during the next fiscal year.
General and administrative expenses. General and administrative expenses
increased 235.7% from $1.4 million in the nine months ended September 30, 1998
to $4.7 million in the nine months ended September 30, 1999. The increases in
general and administrative expenses were primarily due to infrastructure
investments in systems and personnel required to support our expanded
operations and larger number of customer related transactions. Our full-time
general and administrative personnel grew from 8 employees as of September 30,
1998 to 37 employees as of September 30, 1999. We expect general and
administrative expenses to increase in absolute dollar amounts in 2000 as we
continue to add personnel to support expanding operations related to the growth
of our business and assume the reporting requirements of a public company.
Stock and stock option compensation expenses. We recorded stock option
related compensation expenses of $9,034 and $2.5 million in the nine months
ended September 30, 1998 and 1999, respectively. These amounts result from (1)
the exercise prices of options granted to employees being less than the fair
value of our common stock underlying those options on the respective grant
dates, and (2) the fair value of stock options granted to non-employees. The
increase was primarily the result of our issuance of options to non-employees
resulting in $1.9 million of expense during the nine months ended September 30,
1999 whereas there were no significant issuance of options to non-employees
during the nine months ended September 30, 1998.
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Net interest income. Net interest income increased 176.2% from $105,000 in
the nine months ended September 30, 1998 to $290,000 in the comparable period
in 1999. This change reflects increased interest income due to the greater cash
balances held by us during 1999.
Year Ended December 31, 1997 Compared to 1998
Application services revenues. Application services revenues increased
228.1% from $171,000 in 1997 to $561,000 in 1998. The increase reflects the
results of increased sales and marketing activities, as well as continued
development of our application service offerings. For the 1997 fiscal year,
application service revenues comprised 9% of our total revenues, while
application service revenues comprised 36% of total revenues during 1998.
Professional services revenues. Professional services revenues decreased
44.7% from $1.8 million in 1997 to $995,000 in 1998. This decrease reflected
the ongoing shift in business focus from being a provider of services primarily
to government sector clients in our first year of operation to focusing on
providing Internet commerce solutions to clients in the commercial sector.
Professional services revenues decreased during this period of transition
because revenues from new Internet commerce clients had not yet offset the
decrease in revenues from government-related clients as we shifted our sales
and marketing efforts away from the non-profit sector.
Cost of revenues. Cost of revenues decreased 21.4% from $1.4 million during
1997 to $1.1 million in 1998. As we continued to shift our focus from serving
clients in the non-profit sector towards clients in the commercial-sector, we
shifted service-related personnel to the research and development group in
order to develop our version 1.0 of our OneCommerce product.
Research and development expenses. Research and development expenses
increased 293.7% from $254,000 in 1997 to $1.0 million in 1998. The increase in
research and development expenses was due to the hiring of additional personnel
and to other expenses associated with the development of new products and
services, particularly our development efforts associated with version 2.0 of
our OneCommerce software application which began during the second half of
1998.
Sales and marketing expenses. We had no sales and marketing expenses in 1997
and $1.2 million of sales and marketing expenses in 1998. The increase in sales
and marketing expenses resulted from our initial efforts to develop a sales and
marketing organization, as we began the transition from a consulting oriented
professional services business to a company focused on developing, marketing
and selling Internet commerce infrastructure solutions.
General and administrative expenses. General and administrative expenses
increased 109.4% from $955,000 in 1997 to $2.0 million in 1998. The increase in
general and administrative expenses was primarily due to increased staffing
required to support our expanded operations and customer related transactions
and increased professional services costs.
Stock and stock option compensation expenses. We recorded stock option
related compensation of $9,622 in 1997 and $12,047 in 1998. These amounts
resulted from the exercise price of options granted to employees being less
than the fair value of the common stock underlying those options.
Interest income. Interest income increased from a net expense of $1,000 in
1997 to net other income of $156,000 in 1998 due to greater cash balances held
by us during 1998.
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Year Ended December 31, 1996 Compared to 1997
Application services revenues. Application services revenues decreased 28.8%
from $240,000 in 1996 to $171,000 in 1997. This decrease primarily reflects
fewer sales of our software applications to government and non-profit related
entities. For the 1996 fiscal year, application service revenues comprised 12%
of our total revenues, while application services revenues comprised 9% of
total revenues during 1997.
Professional services revenues. Professional services revenues were
virtually unchanged between 1996 and 1997, totaling approximately $1.8 million
in each year. This is reflective of the company's early focus on developing its
distribution capabilities into the commercial sector while reducing new sales
to government related customers.
Cost of revenues. Cost of revenues decreased 6.7% from $1.5 million in 1996
to $1.4 million in 1997. This decrease in cost of revenues reflects a
corresponding decrease in revenues for the respective periods.
Research and development expenses. We had no research and development
expenses during 1996 and $254,000 of research and development expenses in 1997.
The increase in research and development expenses was due to the hiring of
personnel and to other expenses associated with the development of new products
and services, particularly our development efforts associated with version 1.0
of our OneCommerce software application.
Sales and marketing expenses. We incurred no sales and marketing expenses in
either 1996 or 1997. During 1996, our first year of operations, we were focused
entirely on rendering application services and professional services to a
limited number of clients. In 1997, we focused on development of our
OneCommerce software application, which led to the commencement of sales and
marketing activities the following year.
General and administrative expenses. General and administrative expenses
increased 67.8% from $569,000 in 1996 to $955,000 in 1997. The increase in
general and administrative expenses was primarily due to increased staffing
required to support our expanded operations and increased professional services
costs.
Stock and stock option compensation expenses. We recorded no stock option
compensation in 1996 and approximately $10,000 of stock option compensation in
1997 due to the issuance of options to employees with exercise prices less than
the fair value of the common stock underlying the options.
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Quarterly Results of Operations
The following table sets forth consolidated statement of operations data for
each of the seven quarters beginning with the quarter ended March 31, 1998
through the quarter ended September 30, 1999. This quarterly information is
unaudited but has been prepared on the same basis as the annual consolidated
financial statements. In the opinion of our management, it reflects all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair representation of the information for the periods presented. This
statement of operations data should be read in conjunction with our
consolidated financial statements and related notes included elsewhere in this
prospectus. Operating results for any quarter are not necessarily indicative of
results for any future period.
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------------------------------------------
March 31, June 30, September 30, December 31, March 31, June 30, September 30,
1998 1998 1998 1998 1999 1999 1999
--------- -------- ------------- ------------ --------- -------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Application services... $ 158 $ 222 $ 82 $ 99 $ 116 $ 353 $ 602
Professional services.. 220 172 436 167 917 1,025 1,634
----- ----- ------ ------- ------- ------- -------
Total revenues......... 378 394 518 266 1,033 1,378 2,236
Cost of revenues........ 124 178 324 435 512 819 1,783
----- ----- ------ ------- ------- ------- -------
Gross profit............ 254 216 194 (169) 521 559 453
Operating expenses:
Research and
development........... 163 191 310 380 412 898 1,504
Sales and marketing.... 76 69 289 756 1,256 1,937 4,356
General and
administrative........ 291 567 507 647 1,000 1,316 2,428
Stock and stock option
compensation.......... 3 3 3 3 1,195 460 891
----- ----- ------ ------- ------- ------- -------
Total operating
expenses.............. 533 830 1,109 1,786 3,863 4,611 9,179
Loss from operations.... (279) (614) (915) (1,955) (3,342) (4,052) (8,726)
Interest income........ 25 19 69 56 50 57 183
Interest expense....... -- (7) (2) (5) -- -- --
Minority interest...... -- 8 1 9 1 1 1
----- ----- ------ ------- ------- ------- -------
Net loss................ $(254) $(594) $ (847) $(1,895) $(3,291) $(3,994) $(8,542)
===== ===== ====== ======= ======= ======= =======
</TABLE>
The increase in application services revenues from the three months ended
September 30, 1998 through the three months ended September 30, 1999 was
primarily due to the growing market acceptance of our OneCommerce application
software. The declining gross margin during the period from the three months
ended March 31, 1999 through the three months ended September 30, 1999 was
primarily due to the expansion of our services organization and the support and
training provided to channel partners that deploy our software. The increase in
sales and marketing expenses from the three months ended June 30, 1998 through
the three months ended September 30, 1999 was primarily due to increases in the
hiring of sales personnel and increasing sales resulting in increased
commissions and promotional activities. Specifically, during the period ended
September 30, 1999, sales and marketing expenses also increased over the June
30, 1999 quarter primarily due to the launch of a significant marketing
campaign.
Liquidity and Capital Resources
Historically, we have funded our operations primarily through the private
sale of equity securities. From inception through December 1, 1999, we raised
$43.3 million from the private sale of common and preferred stock.
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We used $12.4 million of cash in operating activities during the nine months
ended September 30, 1999. This represents a cash operating loss and changes in
working capital items consisting primarily of cash provided by accounts
payable, accrued expenses, and other current liabilities offset by increases in
accounts receivable, and other current assets.
Our investing activities used cash of $2.6 million in the first three
quarters of 1999. Net cash used in investing activities in this period was
primarily the result of capital expenditures for computer and communications
equipment, purchased software, office equipment, furniture, fixtures and
leasehold improvements.
Our cash and cash equivalents totaled $23.0 million at September 30, 1999.
In October 1999, we conducted a final closing of our private placement of
Series C convertible preferred stock, raising an additional $2.8 million. Based
on our current business plan, we believe that existing cash and cash
equivalents, the proceeds from the October private placement and the proceeds
from this initial public offering will be sufficient to meet our working
capital and capital expenditure requirements at least through the 12 months
following the completion of this offering. However, we may need to raise
additional funds during this period, and we cannot be certain that we will be
able to obtain additional financing on acceptable terms, if at all. If we
cannot raise required funds on acceptable terms, we may not be able to develop
or enhance our products, take advantage of future opportunities or respond to
competitive pressures or unanticipated requirements.
Quantitative and Qualitative Disclosure about Market Risk
We do not have operations subject to risks of foreign currency fluctuations
or changes in interest rates, nor do we use derivative financial instruments in
our operations or investment portfolio. Our long-term debt consists primarily
of capital leases which have fixed interest rates ranging from 6.4% to 25.0%.
We invest our cash and cash equivalents in investment grade, highly liquid
investments, consisting of money market instruments and bank certificates of
deposit. We anticipate investing our net proceeds from this offering in similar
investment grade and highly liquid investments pending their use as described
in this prospectus.
Impact of Year 2000
Many currently installed computer and communications systems and software
products are unable to distinguish between 20th century dates and 21st century
dates. This situation could result in system failures or miscalculations
causing disruptions in the operations of any business. As a result, many
companies' software and computer and communications systems may need to be
upgraded or replaced to comply with such year 2000 requirements.
Our Year 2000 Testing and Licensing. We have tested all of our products for
Year 2000 compliance. The testing method employed was derived from our review
and analysis of the Year 2000 testing practices of other software vendors,
relevant industry Year 2000 compliance standards and the specific functionality
and operating environment of our Internet software solution. The tests were run
on all supported platforms as each version was released, and include testing
for date calculation and internal storage of date information with test numbers
starting in 1999 and going over into the Year 2000. Based on these tests, we
believe our Internet commerce software application to be Year 2000 compliant
with respect to date calculations and internal storage of date information.
In certain cases, we have warranted that the use or occurrence of dates on
or after January 1, 2000 will not adversely affect the performance of our
products with respect to four digit date-dependent data or the ability to
create, store, process and output information related
27
<PAGE>
to such data. If any of our licensees experience Year 2000 problems as a result
of their use of our OneCommerce products, those licensees could assert claims
for damages. Our standard licensing agreement provides that if our products do
not perform to their specifications, we will correct such problems or issue
replacement software. If these corrective measures fail, we must refund the
license fee associated with the non-performing products. Our standard software
license agreement limits our liability to the amount of the license fee paid.
To date, we have not received any Year 2000 related claims on our products.
Our Internal Systems. Although we do not have a formal contingency plan to
address year 2000 issues, we worked internally and with third party vendors to
assure that we are prepared for the year 2000. We inventoried our internal
software and hardware systems, as well as products and services provided by
vendors. These systems include those related to product delivery, customer
service, internal and external communications, accounting and payroll.
Nevertheless, we cannot adequately test the Year 2000 readiness of such third
parties. The failure of any of these third parties to be Year 2000 ready could
result in a deterioration in the performance of our network or other systems,
or a complete system failure, which would have a material adverse effect on our
business, financial condition, results of operations and the price of our
common stock. Additionally, data service providers who rely on the Internet
could face serious disruptions arising from the Year 2000 issue. We are also
subject to external forces that might generally affect industry and commerce,
such as utility Year 2000 compliance failures and related service
interruptions. All of these factors could have a material adverse effect on our
business, financial condition, results of operations and the price of our
common stock.
Clients. The ability of our clients to receive our services depends on the
readiness of their computer equipment and the equipment and services of
communications and other third party vendors. We do not currently have any
information concerning the Year 2000 readiness status of our clients. Any Year
2000 compliance problem experienced by our clients could decrease demand for
our products that could seriously harm our business and operating results. If
our current or future clients fail to achieve Year 2000 readiness, it could
have a material adverse effect on our business, financial condition, results of
operations and the price of our common stock.
Costs/Contingency Plans. We do not anticipate our expenses for our Year 2000
compliance to be material. However, the cost of developing and implementing a
comprehensive contingency plan, if necessary, could be material. We have not
developed a contingency plan to address situations that may result if either we
or third parties upon whom we rely, are unable to achieve Year 2000 readiness.
Recent Accounting Pronouncements
In March 1998, the Accounting Standards Executive Committee issued Statement
of Position, or SOP, 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". SOP 98-1 requires companies to
capitalize certain qualifying computer software costs which are incurred during
the application development stage and amortize them over the software's
estimated useful life. We were required to adopt SOP 98-1 effective January 1,
1999. Management believes that the adoption of SOP 98-1 will not have a
material impact on our consolidated financial position or results of
operations.
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<PAGE>
BUSINESS
Our Company
We develop and provide Internet commerce application software and services
that enable our clients to rapidly build, grow, and extend their online
businesses. The core of our solution is OneCommerce, our application software
built on the XML standard, a technology unavailable when early e-commerce
software products were developed. We designed OneCommerce for scalable
operation on the Microsoft operating platform. OneCommerce enables enterprises
to intelligently and dynamically interact with their customers and trading
partners over the Internet to exchange information, provide services, and
complete business-to-business and business-to-consumer transactions.
OneCommerce supports the core business processes required to conduct Internet
commerce, including Internet marketing and sales, order processing, and
customer relationship and content management. Our innovative use of XML also
allows OneCommerce sites to be easily integrated to a wide variety of Internet-
connected business applications, online services, and content sources.
We primarily deliver OneCommerce as an outsourced application service, which
shortens our clients' time-to-market and minimizes their need to make
substantial investments in the hardware, software, and technical personnel
required to support their own Internet commerce Web sites. Clients purchase
additional application software licenses and services from us as their site
traffic and transaction volumes grow. This business model allows us to benefit
from our clients' success. Our clients include mid-sized and large traditional
businesses that are deploying e-commerce Web sites to augment their existing
sales channels as well as new enterprises that are building Internet-only sales
channels. We currently serve over 40 clients from the retail and distribution,
media and entertainment, manufacturing, and business services industries.
Industry Overview
The Internet is dramatically changing the way that business is conducted.
Companies, their customers, suppliers, partners, and distributors now have the
means to more fully automate and extend the reach of their businesses. As a
result, Internet commerce is growing exponentially. Forrester Research
estimates that revenue from Internet commerce will increase from $43 billion in
1998 to $1.3 trillion in 2003. This anticipated growth will have a profound
effect on virtually every industry throughout the industrialized world. Not
only have industry giants embraced Internet commerce by allocating large
budgets to developing Internet commerce sales channels, but also thousands of
pure Internet-based businesses have emerged in just a few years. Internet
commerce is progressively eliminating traditional barriers to entry, eroding
geographic boundaries and increasing customer choice and power. Entirely new
business models now pose competitive threats to traditional market leaders.
These competitive pressures force businesses to continuously advance their
Internet commerce capabilities. As a result, businesses require infrastructure
solutions to grow and develop their Internet commerce businesses.
Challenges in Implementing Internet Commerce
Companies seeking to build or enhance their Internet commerce capabilities
face numerous challenges. These include:
. Need for speed and agility. In the crowded and rapidly changing
environment of Internet commerce, companies that can quickly deploy
their Internet commerce sites and adapt those sites to changes in
business and technology have a distinct competitive advantage.
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<PAGE>
. Integrating multiple sales and supply channels. To be effective,
traditional businesses migrating to Internet commerce must plan,
implement and adapt their Internet sites while maintaining their
traditional business base. For example, manufacturers may decide to sell
directly to consumers via the Internet. At the same time, they must
retain their relationships with and provide incentives to their
traditional retailers, who may also develop their own competing Internet
commerce strategies. These business-to-consumer and business-to-business
interaction models must often be implemented within the same Internet
commerce site. In addition, the site must be integrated with multiple
systems, suppliers, and partners.
. Lack of expertise and facilities. Most companies lack the necessary
skilled technical personnel to effectively develop and operate their
Internet commerce businesses. Additionally, most companies entering the
Internet commerce arena do not have the facilities to operate their
Internet commerce site at their own locations.
. Selecting and integrating multiple technologies. Companies must select
from a wide variety of software applications to build and maintain a
competitive Internet commerce site. These applications are often stand-
alone programs produced by different vendors. As a result, they do not
integrate and communicate easily with each other, lack a common method
for integrating with existing information systems, and are costly to
maintain.
. Risk of obsolescence. Companies need a scalable Internet commerce
infrastructure to accommodate greater traffic and adapt to evolving
market and technology requirements. Without these capabilities, often
referred to as scalability and extensibility, companies face costly and
time-consuming rebuilding of their Internet commerce sites, which can
result in a loss of market opportunities. According to a Boston
Consulting Group study, the average retail Internet commerce site
undergoes a major reconstruction approximately every 20 weeks, and
annual site development and maintenance costs average 15% of annual
revenue.
. Justifying Internet commerce investment based on financial
return. Deploying and maintaining an Internet commerce site is
expensive. GartnerGroup reports that the average cost to develop and
launch an Internet commerce site was $1.0 million in 1999. Businesses
often incur higher costs of ownership over time due to application
upgrades and new technology developments. In order to quantify the
investment in Internet commerce and maximize the return on that
investment, companies need tools to model and measure the financial
performance of their Web site and to assess the likely outcomes of
contemplated new sites, changes, and upgrades.
The Industry's Response
We believe that two key industry trends are acting to alleviate some of the
challenges faced by companies implementing Internet commerce strategies:
Broad acceptance of standards-based technologies
A relatively recent standard for Internet commerce has emerged in eXtensible
Markup Language, or XML, that defines a universal method for structuring and
communicating data via the Internet and between software applications. We
believe that XML will be a key enabler for conducting Internet commerce and
will ease the burden of systems integration between companies. XML was formally
recommended by the World Wide Web Consortium as a standard in February 1998.
Since then, a number of industry leaders, including IBM, Microsoft, Oracle, and
Sun Microsystems have announced support for XML.
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Unlike HyperText Markup Language, which is the standard currently used in
most Internet applications, XML permits data to be coded for content rather
than solely for presentation. Descriptive tags are attached to each piece of
data so applications can understand the meaning of the data and process it
accordingly. This coding difference allows applications to examine and
manipulate data contained in a document. This feature eliminates the need for
re-keying data and the need for customized programs that translate and format
information sent and received across the Internet.
At the same time, data from independent sources indicates an increasing
number of businesses run their business applications on the Microsoft operating
platform.
Outsourcing the operation of Internet commerce sites
As enterprises conduct more of their business over the Internet, the
investment in systems and technical support necessary to provide the
functionality and reliability required in today's market environment increases.
More businesses are turning toward a new breed of service provider for Internet
application outsourcing services. For a monthly fee, these providers, commonly
referred to as application service providers, or ASPs, provide clients the
functionality they require, together with agreed-upon levels of reliability and
scalability through an established, sophisticated technical infrastructure and
staff. ASPs run software applications for their clients on closely monitored,
centralized facilities equipped with software to manage site capacity and
backup communications lines and power. By using an outsourced service such as
an ASP, a company can improve its time-to-market without making the substantial
initial and ongoing investment in technology and support staff necessary to
support a technology-enabled business process. International Data Corporation
estimates that the worldwide market for application outsourcing will grow from
$23 million in 1998 to over $2 billion in 2003, a 144% compound annual growth
rate.
The market opportunity for managed Internet commerce application software
In recent years, software vendors have introduced a range of applications
for Internet commerce sites for one or more functions. These functions include
tasks such as personalizing the content of a site to the profile of the
visitor, processing orders, providing online customer service, monitoring the
traffic through a site and providing reports about the performance of the site.
These applications have met some of the challenges of Internet commerce
businesses because they offer functionality that is specifically relevant to
Internet commerce. International Data Corporation projects that the Internet
commerce application market will grow from $444 million in 1998 to $13 billion
in 2003, a 96% compound annual growth rate.
Despite the growth of the Internet commerce applications market, we believe
the majority of applications do not address all the critical needs of Internet
commerce businesses. Few of these applications are designed to take full
advantage of the emerging XML standard or the efficiencies of Microsoft
Internet technologies. In addition, most existing applications were not
designed to be offered to customers on an outsourced basis by ASPs. We believe
that businesses requiring Internet commerce solutions have recognized these
trends in the market. We expect that they will seek to purchase applications
that offer an integrated solution for their Internet commerce software
requirements, both now and as their Internet commerce businesses evolve.
Further, we believe that many Internet commerce businesses will choose to
purchase their Internet commerce solution on an outsourced basis to reduce the
initial expenditure and to take advantage of the expertise and facilities of an
ASP. Lastly, we believe that many purchasers of the early generation products
on the market today will seek to replace these products to improve the
financial performance of their Internet commerce sites.
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Our Solution
OneSoft provides Internet commerce application software and managed
services, collectively called application services, to businesses seeking to
conduct business-to-business and business-to-consumer transactions via the
Internet. Our solution provides businesses the infrastructure to rapidly build,
grow, and extend their Internet commerce businesses, which assists them to
generate revenue, reduce costs, and optimize the value of their Internet
commerce sites. We believe that our solution provides the following advantages
to our clients:
. Comprehensive integrated Internet commerce application suite. The core
of our solution is our software application, OneCommerce. It provides
integrated functionality in the critical business processes of Internet
commerce: personalized marketing and selling, order processing, customer
care, decision support, and integration with partners and suppliers.
This comprehensive solution eliminates the time and expense of
integrating and maintaining multiple technologies from different
vendors. The integration of these functions within one software solution
also facilitates the capture of extremely detailed information about Web
site visitor behavior. With that knowledge, businesses can improve
customer acquisition and retention rates, resulting in increased sales.
Businesses can also use this information to model and assess likely
outcomes and financial results of potential site changes and upgrades.
. Internet application architecture designed for delivery on an outsourced
basis. We designed our software architecture to support outsourced
delivery by our channel partners, such as ASPs and other Internet
hosting companies, and by our Internet Solution Center. Our architecture
enables our channel partners to implement a scalable and extensible
managed service offering for their clients. This outsourcing model
reduces the expense and risk for clients to launch and manage a fully
operative Internet commerce site. This approach also allows clients to
leverage the expertise and facilities of our channel partners and
OneSoft rather than investing in additional personnel and technical
resources.
. XML-based architecture. OneCommerce is the first Internet commerce
software application based entirely on XML for both internal sharing of
data between system components, and external system-to-system
communications. This use of XML provides the capability to easily
integrate new functions and technologies, as well as to extend existing
ones, without expensive site reconstruction or system modifications. We
achieve this extensibility as a result of our component-based
application software design and use of XML. Each of the components can
be independently modified while still properly interacting with all
other components in the system.
. Software optimized to leverage widely-used Microsoft Internet
technologies. OneCommerce is specifically designed to work with
Microsoft operating systems and related Microsoft Internet software.
This aspect of our design allows our clients to build on their existing
technology investments. Our clients also benefit from Microsoft's multi-
billion dollar investments in software research and development, while
capturing the price-to-performance advantage of Microsoft's Internet
software platform.
. Managed services for Internet commerce. As additional support for
Internet commerce businesses, we provide a broad array of services
necessary to manage a Web site, through our channel partners and through
our Internet Solution Center. We offer software applications management
and provide technical support. In addition, we can provide hosting
services and Internet connectivity. We also enable Internet commerce
transaction services such as payment processing and order fulfillment.
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Our Strategy
We are a pioneer in bringing new Internet commerce solutions to market and
in developing new services to deliver those solutions. Our objective is to
provide the software infrastructure that supports a leading share of commerce
conducted over the Internet. We believe we can become a leading provider of
Internet commerce software and services through the following strategies:
Leverage new modes of application delivery via the Internet. We have
designed OneCommerce to be delivered either as a licensed software application
to clients for on-site use or as an application service offered by us or a wide
range of our partners. We believe that an application service will address the
key challenges faced by Internet commerce businesses: time-to-market and
startup costs. Accordingly, we believe that most Internet commerce software
applications will be offered as a service in the future. On December 9, 1999,
we announced a major strategic alliance with the world's leading Internet
professional services company, USWeb/CKS, to provide our Internet commerce
applications as an outsourced service. We believe we can leverage the
outsourcing capabilities of our software architecture, and alliances such as
our relationship with USWeb/CKS, to generate additional sales of our
application services.
Expand sales presence and market coverage through direct sales and strategic
alliances. We intend to expand our direct sales presence and support services
across the United States and in major international markets. In addition, we
plan to strengthen our distribution efforts by forming additional alliances
with leading providers of complementary software and services. These include
ASPs, systems integrators, Web design firms, and Internet strategy consulting
firms. We expect to cultivate these relationships and others like them to:
. leverage our sales and marketing efforts for increased lead generation
and revenues from a larger base of clients;
. increase the number of trained professionals who can perform
implementation and application management services for clients, thereby
increasing the potential distribution volume of our software;
. gain business expertise in targeted industries to assist clients with
site implementations and to provide input for solutions development; and
. obtain technical expertise for developing new software functionality and
capabilities.
Broaden our range of application functionality and services. We currently
offer functionality for the critical processes of Internet commerce. We intend
to add new functionality such as support for Web sites that act as marketplaces
for interest-specific products and content, and offer additional value-added
services such as automated outbound targeted marketing campaigns. We expect to
implement our expansion through internal development, partnerships and
strategic acquisitions.
Focus on delivering economic success to our clients. We believe that we have
identified several key indicators, or metrics, of financial performance for
Internet commerce sites. We incorporate in our Internet application software
the ability to track, analyze, and customize these performance metrics. We plan
to continue to focus on performance metrics as Internet commerce evolves. Based
on these metrics, we will continue to develop tools and techniques to evaluate
Internet commerce business opportunities and performance. We plan to extend our
existing analytical software capabilities to provide interactive decision-
making models that forecast potential return based on different Web site
configurations and features. In addition, we expect to continue to prioritize
our software development efforts based on areas we
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<PAGE>
identify as providing the most significant contributions to the financial
success of Internet commerce businesses in order to promote our clients' and
our own competitive advantage.
Products and Services
We offer our clients a broad array of application software and services that
enable them to rapidly build, grow and extend their Internet commerce
businesses. We provide these application services directly through our Internet
Solution Center, as well as through a growing number of partners supported by
our Internet Solution Center. We also focus on combining application software
and services into packaged solutions for delivery by our distribution partners.
We typically charge for application services based on the amount of computing
capacity, that is, number of processors, required to support a specific volume
of concurrent site visitors and transactions.
Our application software and services are described below.
OneCommerce
OneCommerce is our application software that gives companies the power to
deploy, manage and grow all aspects of their Internet commerce business. In
December 1999, the world's leading Internet professional services company,
USWeb/CKS, selected OneCommerce to provide an end-to-end hosted Internet
commerce service to its customers. Microsoft Corporation, one of the foremost
innovators in the development of Internet technologies, recommends OneCommerce
as an outstanding choice for companies deploying large-scale Internet commerce
businesses. In addition, service firms that implement Internet commerce
solutions voted OneCommerce "Best New Product" at the 1999 Breakaway Xchange
Conference, sponsored by CMP Media, Inc., a leading high technology publishing
firm.
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We have designed OneCommerce to provide our clients the advantages of
flexibility, extensibility and scalability as their Internet commerce
businesses grow and evolve. OneCommerce achieves these attributes by separating
critical application functions into independent components that can be easily
arranged and modified, while remaining fully integrated, through our innovative
use of XML. This enables OneCommerce to be quickly adapted to many business-to-
business, as well as business-to-consumer, models. The OneCommerce software
framework and product features are described below:
[CHART APPEARS HERE]
The graphic below illustrates the OneCommerce software framework. The graphic
diagrams how the four major areas of OneCommerce interact with each other. The
four major areas- Intelligent Customer Interactions, Internet Business
Optimization and Control, Business Systems Integration, and OS.XML-are depicted
as layered bars demonstrated the interaction between the areas. Detailed
functional capabilities are displayed for the Intelligent Customer Interaction
and the Business Optimization and Control areas. These elements are shown as a
series of rectangular boxes stacked in two parallel columns around a tall
rectangle called e-business Intelligence. On either side of the large box are
icons that represent online customers and partners, and business management.
The core technology of OneCommerce is comprised of four major areas: (1)
Intelligent Customer Interactions; (2) Internet Business Optimization and
Control; (3) Business Systems Integration; and (4) OneSoft Internet commerce
vocabulary called OS.XML. These areas are described in detail in the following
sections.
Intelligent Customer Interactions. OneCommerce intelligently manages
interactive sessions conducted with Web site visitors and with information
systems on the Internet. Our application software tailors the navigational
choices available to site visitors based on their preferences and recent site
activity, as well as the financial objectives of the Internet commerce site.
The ability to conduct personalized interactions with site visitors, which we
refer to as an interaction model, creates a customized site experience for the
site visitor. Using a variety of techniques, these models dynamically route
visitors towards revenue-generating activities on the site. Each interaction
model can dynamically combine any of the functionality provided by the
OneCommerce application. OneCommerce-powered sites can simultaneously
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support multiple types of site visitors from the same Web site. For example, a
single Web site using OneCommerce can simultaneously support large numbers of
unique interactions with different types of retail consumers, wholesalers, and
other business partners. Current functional capabilities include:
<TABLE>
<CAPTION>
OneCommerce Functionality Summary of Business Capabilities
<S> <C>
. Present any type of customer with any type of
merchandising content. This includes product descriptions,
articles, banner advertisements, links to related sites
and community features such as chat rooms.
Content Management . Organize, store, and manage any type of Web content that
can be defined using XML and stored in a database.
. Structure and arrange the Web site with unlimited
variations based on affinity profiles.
. Develop and test content changes prior to moving those
changes to the active Web site.
- --------------------------------------------------------------------------------
. Gather and store customer information provided by the
customer.
. Create and continually update profiles based on site
activity using proprietary algorithms, called affinity
profiles.
Targeted Marketing . Present up-sell and cross-sell promotions to customers
and Site Personalization once they have selected products to review.
. Target and personalize the presentation of products and
content to site visitors based on their individual
affinity profiles.
- --------------------------------------------------------------------------------
. Allow site visitor to exchange information and communicate
directly by participating in online bulletin boards, chat
sessions and group discussions, conferences, and events.
Community . Collaborate with site users in the creation and
publication
of site content.
- --------------------------------------------------------------------------------
. Create an order of multiple products and services from the
same Web site for visitors.
. Determine availability of products for sale by accessing
inventory records in real time.
Sales and Order Processing . Input and process customer payment information in real-
time to complete a sales order.
. Create, save, process, and track multiple orders for each
customer.
. Simultaneously support business-to-business and business-
to-consumer sales interactions within the same Web site.
- --------------------------------------------------------------------------------
. Enables client personnel to engage in online interactions
with site visitors.
. Manage personal account profiles, submit online inquiries,
and register comments and complaints at any point during
the buying process.
Customer Account and . Deliver self-service order tracking and customer account
Relationship and profile maintenance.
Management
. Maintain detailed records of a customer's interactions
over
multiple visits to the site.
- --------------------------------------------------------------------------------
. Define and create custom application functionality for an
Internet commerce site.
Application Customizations . Carry forward modifications when clients upgrade to new
releases.
</TABLE>
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<PAGE>
Internet Business Optimization and Control. OneCommerce provides the ability
to monitor and report business performance metrics such as total number of
visitors and visitor-to-order conversion rates. This capability enables non-
technical business managers to make frequent and rapid site adjustments to
improve business performance. These changes are made through easy-to-use, Web-
based workstations, called Role-Centric Workstations. Most application software
alternatives limit business managers to making minor modifications such as
creating a new sales promotion. OneCommerce allows managers to make substantive
changes in their Internet business model without redesigning or reprogramming
the Web site application code, thereby saving significant time and cost.
Descriptions of the standard Role-Centric Workstations provided with
OneCommerce are listed below:
<TABLE>
<CAPTION>
Role-Centric Workstation Summary of Site Management Capabilities
<C> <S>
. Provide a personalized location where sit managers tailor
their use of Role-Centric Workstations.
. Maintain the account structure and profile of management
users.
OneWorkstation . Modify capabilities from one or more of the Workstations
to suit a particular business role.
. Tailor Workstations to support customized application
functionality.
- --------------------------------------------------------------------------------------
. Define, create, edit, and delete site content.
. Provide "drag and drop" capability to create bundles of
products or content, and define product features.
ContentStation . Manage product inventory, administer shipping and handling
charges, and implement taxation rules on products and
services.
- --------------------------------------------------------------------------------------
. Provide real-time access to site performance and financial
metrics.
CommandStation . Present site performance and financial information to
business managers through comprehensive and flexible
reports.
- --------------------------------------------------------------------------------------
. View customer and market segment profiles.
MarketStation . Create up-sell, cross-sell, and targeted merchandising
programs.
. Create and target promotions and discounts based on both
product categories and customer profiles.
- --------------------------------------------------------------------------------------
. Process customer inquiries and quickly resolve order
issues.
SalesStation . Provide real-time searching and updating of specific
customer orders, including payment authorization, shipping
information, order and item level details, and returns
processing.
. Tracking, updating, and processing of customer online
inquiries.
- --------------------------------------------------------------------------------------
. Create and maintain structure for customer account
profiles and access privileges.
AccountStation . Provide real-time updating and modification of accounts in
response to customer inquiries.
- --------------------------------------------------------------------------------------
. Create and maintain Workstation user profiles.
AdminStation . Control permissions and authority to make changes to
various parts of the site.
. Tailor Workstations to support combinations of roles and
responsibilities in individual Internet commerce
businesses.
</TABLE>
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Business Systems Integration. OneCommerce incorporates a flexible framework
of XML-based application programming interfaces, or APIs. This framework
represents an XML vocabulary for Internet commerce, which we call OS.XML. Our
framework supports the integration of software applications, content and data
sources, and value-added services. Benefits include ease of information
formatting, presentation, and communication between systems. OneCommerce
provides prepackaged APIs to leading business application systems and services.
These can include:
. business applications like enterprise resource planning, or ERP;
. content sources, such as corporate databases, streaming audio and video,
or streaming news feeds;
. Internet-based services such as the OrderTrust network for order and
payment processing, and SkyAlland Marketing for outsourced customer
service; and
. other Internet commerce sites including retail sites, online malls,
corporate purchasing sites, and business-to-business trading exchanges.
OS.XML: The Vocabulary of Internet Commerce. OS.XML is a flexible data
representation of content types, rules, and transactions required for Internet
commerce. OneCommerce was designed to easily support integration to external
systems, services, and data sources through its unique use of XML. OneCommerce
software components, called Connector Components, are used to translate
formatted data into OS.XML files when received from or sent to sources outside
OneCommerce. OneCommerce can combine site graphics, navigation, and
functionality with any form of data using OS.XML. OS.XML information can be
manipulated by any of the components within OneCommerce without additional
formatting. As a result, OneCommerce can support and interact with any number
of XML vocabularies developed for specific business processes or industries.
Examples of these are Ariba's cXML, CommerceOne's Commerce Business Library,
known as CBL, Microsoft's BizTalk, the Universal Commerce Language and
Protocol, known as UCLP, as well as OneSoft's own OS.XML.
Our Internet Solution Center
Our Internet Solution Center, or ISC, supports distribution, deployment, and
operation of our software. The ISC combines managed application and transaction
services, "best practices," and software applications into packaged service
offerings that lower a business' cost of entry into Internet commerce and
accelerates their time-to-market. The ISC plays a critical role in the
expansion of our distribution programs by delivering deployment, sales
training, and technical support to partners, allowing them to quickly and
effectively market and implement our solutions. By supporting a completely
outsourced solution, the ISC offers our clients, both directly and through our
partners, a cost-effective approach to building and operating their Internet
commerce business. The services provided by the ISC are broken into three
categories: application software outsourcing services, transaction services,
and professional services.
Application Software Outsourcing Services. For monthly fees and service-term
commitments, mid-to-large sized businesses and our distribution partners can
obtain comprehensive outsourced Internet commerce services and infrastructure
through our 24 x 7 x 365 network operations center, as well as application
management services. Our application software outsourcing services include the
following:
. Network Operations Services provide partners and clients with outsourced
system services, including secure facilities, hardware, configuration
and maintenance, high speed Internet connectivity, and network
infrastructure.
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. Application Management Services provide partners and clients with the
installation, ongoing monitoring, and proactive maintenance of the
OneCommerce software application, Microsoft Internet technologies, and
complementary software applications. We provide these application
management services to partners and clients from our network operations
center or through our ASP partners.
. Support Services provide partners and clients with technical support,
and routine software maintenance services. Our staff manages issue
resolution through a carefully prescribed support process that serves
both clients and partners. We also distribute electronic software
updates that keep partners and clients current with the latest version
of OneCommerce.
Transaction Services. Our transaction processing capabilities provide
reliable, secure, and efficient options for processing a variety of Internet
commerce transactions. Through our partners, we currently offer two categories
of transaction services:
. Payment Processing Services support our Internet commerce partners and
clients with the ability to accept and process most major payment card
transactions, electronic fund transfers, or other types of financial
transactions.
. Order Processing and Other Transaction Services enable our partners and
clients to accept and process order transactions, including monitoring
and reporting status, supplier relationships and fulfillment and
distribution.
Professional Services. The ISC provides Internet commerce strategy and
deployment services to our partners and clients. Partners and clients benefit
from professional services expertise at every stage of the systems lifecycle
and training in each discipline as well.
. Strategy Services provides partners and clients with the tools and
knowledge, called an Internet Commerce Opportunity Assessment, or iCOA,
to assess and plan their Internet commerce initiatives from a financial,
competitive market analysis, and business process perspective.
. Deployment Services provides partners and clients with experienced
solution development, creative design, and application integration to
deploy OneCommerce software using our Rapid Solutions Deployment
methodology, or RSD, that facilitates the successful and consistent
deployment of our comprehensive Internet commerce solutions.
. Solutions Management provides partners and clients with project
management, quality assessment, and best practices to ensure initial and
ongoing success of a business' Internet commerce initiative. Partners
and clients benefit from the best practices of this group and the
service it provides to augment their post-deployment, in-house
capability as an outsourced full-service technology partner.
. Educational Services provides training to our partners to effectively
sell, deploy and support our OneCommerce solution. We also educate our
Internet commerce clients to implement their own OneCommerce solutions.
Each of our training courses offers evaluation and certification
testing. We incorporate best practices into our curriculum from product
development, professional services, sales and marketing and managed
services groups to provide a quality experience that provides
concentrated product learning and actual sales and deployment scenarios.
As of December 31, 1999, 73 partner associates have completed initial
training.
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<PAGE>
Sales and Marketing
Sales Strategy
We market and sell our application services through both direct and indirect
sales channels. As of December 31, 1999, our sales organization was comprised
of 32 individuals all of whom were based in North America, including 13
business development directors and six inside sales personnel, all of whom
carry quotas. Our main sales office is located at our headquarters in McLean,
Virginia. We also recently opened sales offices in Los Angeles and New York
City. Our sales cycle typically takes 90 days to complete. Our sales team
collaborates with prospective clients to determine their requirements for a
proposed Internet commerce solution, which can then be incorporated into one or
more detailed technical product reviews.
A key element of our strategy is to leverage our channel and alliance
partners for the distribution of our application services. We target mid-to-
large sized companies and new businesses planning to use the Internet as a
significant business channel. We primarily target companies in the retail and
distribution, media and entertainment, manufacturing, and business services
industries.
An additional element of our strategy is expansion of our international
activities. We currently market and sell our products primarily in North
America. We intend to broaden our presence in international markets by
developing an international sales force, leveraging current strategic partners
with global presence, and by entering into additional distribution agreements.
We expect to open sales offices in London and Miami within the next 12 months.
Marketing Strategy
As of December 31, 1999, we had 13 employees engaged in a variety of
marketing activities, including strategy development, corporate and product
marketing, market research, and market launch. We use a broad mix of programs
and target our efforts in areas including:
. brand-building and marketplace awareness;
. generating and developing client leads;
. educating the market on the advantages of OneSoft's application
services;
. utilizing our strategic partnerships and major clients to endorse our
solution for target markets; and
. building and enhancing relationships with press, media, and industry
analysts.
We produce a variety of materials, including brochures, white papers,
presentations, and demonstrations, as well as managing several corporate Web
sites. We leverage our strategic partners in our efforts through joint
marketing activities.
Channel and Alliance Partners
A key element of our strategy is to establish strategic alliances to assist
us in marketing, selling, and developing client Internet commerce systems.
These relationships help to increase market penetration of our application
service offerings. We develop and maintain significant working relationships
with vendors that we believe will contribute to our ongoing success. These
relationships fall into four categories: strategic alliances, ASPs, systems
integrators, and complementary solution vendors.
We work closely with these partners and intend to continue to develop
relationships of this nature. Our strategic alliances are managed by a team of
partner managers. As of December 31, 1999 there were six individuals
recruiting, qualifying, and supporting the OneSoft alliance partners.
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Strategic Alliances
In April 1999, we formed a partnership with Microsoft Corporation creating
the OneSoft Commerce Partner, or OCP, program for Microsoft Certified Solution
Providers, called MCSPs. We created this program to enable a limited number of
the over 15,000 MCSPs worldwide to distribute our application services. As part
of this partnership, we co-market with Microsoft the combined solution of
OneSoft and Microsoft products. We are currently training and certifying OCPs
on the sale and deployment of our OneCommerce Internet commerce software
application and enabling services.
In December 1999, we announced the formation of an alliance with USWeb/CKS,
the world's leading Internet professional services firm. Our alliance enables
USWeb/CKS to deliver a packaged Internet commerce infrastructure solution in a
hosted environment that will also include enterprise resource planning services
for Internet commerce businesses, customer relationship management and
knowledge management. This strategic alliance enables us to reach a wider group
of customer opportunities based on USWeb/CKS brand recognition and market share
in the industry.
OneCommerce is optimized to operate on the Compaq DISA architecture and we
belong to the Compaq NonStop e-Business Alliance. Through this program, our
development team continually works jointly with Compaq to increase the
performance and scalability of our Internet commerce architecture. This program
provides access to partners and distribution channels to some of the largest
companies in the world that are using Compaq as their preferred hardware
vendor.
Application Service Providers
We partner with ASPs and Internet hosting providers such as USWeb/CKS and
Exodus Communications to support the industry trend toward delivering software
as a service. Our Internet Solution Center provides our ASP partners with
training, deployment tools and support. These ASPs also provide businesses with
direct client support, end-user support, and maintenance services from a
central point of contact. This eliminates the need for businesses to develop or
acquire software and hardware or employ technical personnel to support this
system.
Systems Integrators
We partner with a broad range of systems integrators to deliver services to
our clients. They are required to maintain a level of proficiency in our
products. Through our OCP program, systems integrators receive deployment
training, sales and deployment tools, packaged solution templates, and other
support necessary to become proficient implementers of our application
software.
Set forth below is a list of systems integrators with which we have
relationships:
AppNet, Inc.
Compaq Computer Corporation
Compass Technology Management
Digital Boardwalk
International Software Solutions, Inc.
M1 Software
Sierra Systems
SoftNet Systems Corporation
Surebridge
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Complementary Solution Vendors
We partner with vendors that have complementary Internet commerce product
and service offerings in order to support the delivery of comprehensive
solutions to our clients. We support these partnerships through a combination
of joint marketing, training, and development. These vendors have developed
software or services that address elements of Internet commerce infrastructure
needed by a particular industry or for a particular business process.
Set forth below is a partial list of organizations with which we have
relationships:
<TABLE>
<C> <S>
AB&C Group Direct response, physical fulfillment, and warehousing
service provider
eShare Customer interaction and management software application
provider
OrderTrust Network-based order and payment processing provider
Smith-Gardner Direct marketing and catalog marketing enterprise resource
planning customer management software application provider
SkyAlland Marketing Customer loyalty management outsourced service provider
</TABLE>
Clients
We have provided our application services to over 40 clients. These clients
include both traditional "bricks-and-mortar" companies and Internet-only
companies in the retail and distribution, media and entertainment,
manufacturing, and business services industries. The following table represents
all clients as of December 31, 1999 who have licensed OneCommerce or its
predecessor products, and who have contracted for services in an amount
totaling at least $50,000.
<TABLE>
<CAPTION>
Retail &
Distribution Media & Entertainment Manufacturing Business Services
- ------------------ --------------------- ------------- -----------------
<S> <C> <C> <C>
Alloy Online Eruptor Entertainment Maytag Ehomes
Allpets.com Phillips Publishing ETRAV
ePhones.com SmartCruiser
Espanol.com
Mark Group
SpaConcepts
WeightWatchers.com
</TABLE>
Case Studies
The following case studies illustrate the challenges faced by representative
clients in deploying their Internet commerce applications, and the benefits
derived from using OneCommerce. In each case, the client licensed our
application software, contracted for outsourced application services, and used
the services of our Internet Solution Center to launch their Web site and
integrate their site with their internal business systems.
Alloy Online, Inc. Alloy Online, www.alloy.com, provides online communities,
content and commerce to Generation Y, the 56 million Americans between the ages
of 10 and 24 who account for more than $250 billion of annual disposable
income. Alloy markets its products to this influential generation through the
Internet and mail-order catalogues.
As Alloy's business became more complex, Alloy was forced to look for a
replacement for its original Internet commerce solution. Its legacy Internet
infrastructure software had neither the scalablility nor flexibility to meet
its changing business needs. Alloy also wanted to reduce the time its
executives spent addressing technical issues, allowing the company to execute
on its business model.
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OneSoft replaced Alloy's system with a comprehensive software solution
provided on an outsourced basis. OneCommerce's extensible architecture provided
the direct marketing, customer support and business content management
capabilities required to support Alloy's growing community and commerce
demands. This comprehensive solution provided the Internet commerce
infrastructure that Alloy used as it became a leader in its industry by
creating a Generation Y portal with 1.6 million registered users.
ePhones. ePhones, www.ePhones.com, is an online provider of wireless
products and services. ePhones was formerly known as Totally Wireless, a
"bricks-and-mortar" seller of wireless phones and products that wanted to move
its business online.
ePhones sought an Internet commerce solution that would allow it to provide
customers with products from over 43 carriers and rate plans with over 100,000
different phone/rate combinations. The solution it desired needed to support
dynamic pricing, an enhanced, geographically calibrated search feature, a help
feature that would allow customers to search for the best prices available, a
personalization feature that would support up-sell and cross-sell
opportunities, and multiple customer interaction capabilities.
OneSoft provided comprehensive software supporting direct marketing, selling
and customer support. ePhones, then branded as Totally Wireless, went online
using our OneCommerce solution in May 1999. OneSoft's solution provided the
flexibility to manage content and the complexity of the product offerings. The
cross-selling ability of OneCommerce was particularly important because of the
multitude of features that accompany each product. In the first three months
online, sales increased by 36% and site traffic jumped 82%.
In addition, the extensibility inherent in OneCommerce enabled ePhones to
completely re-brand its business without tearing down and rebuilding the
existing Totally Wireless site.
SmartCruiser. SmartCruiser.com, www.smartcruiser.com, is the first online
cruise site with a booking engine that offers consumers the lowest price on a
wide variety of cruise vacations from fourteen leading cruise lines.
SmartCruiser.com required a solution that provided its customers the
convenience and efficiency of researching a wide variety of cruise vacations by
date, destination, and cruise line, as well as the ease of purchasing their
cruise vacation online.
SmartCruiser.com contracted with us for our OneCommerce application software
and managed services. Our Internet Solution Center delivered the site in less
than 90 days, and manages site operations on an outsourced basis. Using
OneCommerce, SmartCruiser.com created a catalog of cruise offerings,
established an Internet-based target marketing and sales program, and
streamlined the reservations process. The site also integrates to multiple
systems from various airline, hotel and cruise companies and enables
SmartCruiser.com to use Role-Centric Workstations to update site content.
SmartCruiser.com has quickly grown its online business by using OneCommerce.
The number of site hits increased 295% and the number of unique users increased
127% in the first five weeks. In addition, the number of return users increased
100% in the first six weeks.
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Competition
Our competitors vary in size, in the scope and breadth of their products and
services, and in their technical, financial and human resources. We have three
primary sources of competition:
. in-house development efforts by potential clients and systems
integration firms that build very customized solutions using development
platform application server products;
. Internet application software vendors such as Art Technology Group,
BroadVision, InterWorld, OpenMarket and Vignette; and
. vendors of platform application server products, such as IBM and the
Sun-Netscape Alliance.
In addition, we face potential competition from vendors of other Internet
commerce software applications as they expand the functionality of their
product offerings. These vendors may include Allaire Corporation and other
vendors of software designed to enable Internet commerce or management of
customer relationships.
Principal competitive factors include:
. quality, breadth and depth of application offerings;
. product robustness and extensibility;
. openness of technology architecture, including adherence to industry
standards;
. ease of deployment and maintenance;
. time-to-market;
. quality of services and customer support; and
. ability to effectively provide applications as a service.
Although we believe that our solutions compete favorably with respect to
these factors, our market is new and rapidly evolving. Many of our competitors
have substantially greater capital resources, research and development
programs, sales and marketing forces and customer bases to whom they can sell
their products and services. We may not be able to maintain our competitive
position against current and potential competitors.
Technology
We designed OneCommerce specifically for Internet commerce using a
component-based architecture that operates on Microsoft Internet technologies
and Compaq's Distributed Internet Server Array hardware configuration, known as
DISA.
OneCommerce components communicate using our XML vocabulary for Internet
commerce, which we call OS.XML. This unique application of XML simplifies
integration to external systems, preserves information during transaction
processing, and protects technological investment by allowing the system to be
cost effectively modified over time.
The OneCommerce architecture enables sites to cost-effectively scale to meet
increasing site user traffic and transaction activity. It also provides a
reliable foundation for delivering outsourced Internet commerce application
software.
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The Fundamental Elements of Internet Commerce -- a Component Based Architecture
The OneCommerce architecture has been designed to support any Internet
commerce interaction between an online customer or partner and an Internet
commerce business. This architecture is based on five essential elements:
The OneCommerce Component-Based Architecture
[GRAPH APPEARS HERE]
The graphic below illustrates the OneCommerce Component-Based Architecture.
The components called Presentation, Interaction, Transaction, Integration and
Information are displayed in a column of separate boxes. Arrows between the
boxes illustrate how they interact with each other and external systems and
databases. The external systems are displayed on the right side of the
graphic. The Integration Component is displayed as the Connector Component
boxes in the graphic.
In order to effectively conduct Internet commerce, an Internet commerce
solution must address all five of the above elements. In typical Internet
commerce solutions, however, these elements are not separated as discrete
components that can be individually modified or combined. This limits the
ability to support the varying and emerging business process requirements of
Internet commerce.
We believe we have overcome this problem by designing a software
architecture that both separates these five essential elements and provides
Internet commerce businesses with a
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framework within which the elements and components can be modified and combined
in any way. We describe below the five elements, how they work, and their
benefits.
1. Presentation. Presentation Models control how information and interactive
site options are displayed to Web site visitors. Presentation Models capture
the information to be processed and return results to the visitor based on his
or her affinity profile. Presentation Models are written in the eXtensible
Stylesheet Language, or XSL, and can reference existing HTML, and MIME files.
XSL translates OS.XML data for presentation and interprets site input data into
OS.XML for processing. Unlike most alternative Internet commerce solutions,
OneCommerce can format and deliver the same information for separate and proper
display on PC screens, wireless devices, cellular phones or printers.
2. Interaction. Interaction Models allow Internet commerce businesses to
define and control interactions with online users and remote systems based on a
combination of the visitor or system's affinity profile and the business
objectives of the client. Most existing Internet commerce solutions are limited
by preprogrammed online customer interactions, but OneCommerce allows
businesses to differentiate and evolve their sites based on online customer
experiences. Interaction Models are written in industry-standard scripting
languages, including Java Script or VisualBasic Script.
3. Transaction. Transaction Components provide application functionality in
our transactional format. The functionality supported includes searching,
controlling access, processing payments, profiling, and targeting product and
content offers. These components process data stored in either OneCommerce or
external data sources to complete actions requested by online visitors or
remote systems. Transaction Components do not perform data access themselves,
but rather process OS.XML data provided by Information or Connection
Components. This means that new functionality can be easily added as new
Transaction Components without requiring modifications to the data sources or
any of the other OneCommerce components as long as the new component can
receive and send formatted OS.XML. In contrast, most existing solutions make it
difficult to expand the site's functionality without costly modifications to
the site or its underlying databases.
4. Integration. Connector Components make the data and functionality of
external systems available to OneCommerce and vice versa. These components
interact with all external services, systems, and data repositories through the
communication of data and instructions in OS.XML format. By receiving and
transforming data from external business systems to OS.XML, the Connector
Components make the data immediately accessible to all components within the
OneCommerce application, eliminating the time and cost of complex application
integration.
5. Information. Information Components store and manage all data and data
definitions utilized within the OneCommerce system. These components support a
standard set of functionality accessed via the Transaction Components and are
responsible for data and data definition management and storage. Information
Components essentially transform into OS.XML data extracted from and inserted
into standard Open DataBase Connectivity, or ODBC, compliant databases and data
sources. By using Information Components to perform this transformation,
storage, searching and retrieval of information can be optimized for
performance on individual databases while still leveraging OS.XML within
OneCommerce. Information Components are optimized for Microsoft's SQL Server
7.0, however they can operate on any ODBC compliant database, again simplifying
the process if integration with alternative external databases is required.
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Technology Foundation for Outsourced Applications
Transactional Internet Application Architecture
OneCommerce is a transactional system. This means that rather than locking
an online customer to the same server for the duration of his or her session,
OneCommerce can treat every request or "click' as a distinct transaction.
OneCommerce can process these transactions across multiple servers while
recognizing that they collectively comprise a single site visitor session. The
transaction record is stored safely in a secure database, and if the customer
interacts with a different server for the next 'click', the customer's session
information is immediately accessible on the new server. This has a number of
advantages for operating an Internet commerce site in an outsourced
environment.
. Any customer interaction can occur on any server and customers can be
directed to the server with the least load for every individual
transaction or "click';
. User requests are evenly distributed across all available servers
utilizing hardware more efficiently;
. Customer session data is stored in a secure database and is
instantaneously restored in the event of transaction or hardware
failure; and
. Detailed activity logs are created which improve the accuracy and value
of financial reporting and analysis.
Industry Standard Platforms
OneCommerce is designed and optimized for Microsoft Internet technologies
and the Compaq DISA hardware configuration. Microsoft Internet technologies
provide an integrated platform consisting of operating system, Internet
connectivity, secure transaction monitoring, and database software that would
typically require several products from different vendors to duplicate.
OneCommerce operates on top of these capabilities, eliminating the need to
integrate or manage upgrades for multiple products.
The DISA architecture is a method for arranging multiple Internet
application servers in such a way that they support high volume transaction
processing. This method of setting up servers allows adding new servers for
additional capacity without stopping site operations. DISA also limits the risk
of losing data or service if any one server has technical problems. DISA
enables Internet commerce businesses to quickly and easily scale for increasing
customer demand by adding servers. For example, a small DISA system may start
with two application servers, then scale up to 20, 30, or more servers, as site
traffic and transaction volumes increase, without interrupting site operations.
Research and Development
We have invested substantial resources in research and development
activities. The majority of our activity consists of adding new competitive
product features, integrating complementary solutions, and delivering new
product releases as we expand into supporting new vertical markets and business
models.
We license and integrate certain third-party technologies and products into
OneCommerce through licensing agreements. We continually evaluate additional
third-party technologies for integration into our product line. We believe that
our future success depends in large part on our ability to enhance existing
products, develop new products, and maintain technological leadership. We
expect to continue to devote substantial resources to our research and
development activities.
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As of December 31, 1999, there were 39 employees and 19 contractors in our
product development organization. Our development team is located at our
headquarters in McLean, Virginia.
We had no research and development expenses in the year ended December 31,
1996, $0.3 million in the year ended December 31, 1997, $1.0 million in the
year ended December 31, 1998, and $2.8 million in the nine months ended
September 30, 1999. Our policy is to expense research and development expenses
as incurred.
Intellectual Property and Proprietary Rights
Our success and ability to compete depend upon on our ability to develop and
protect the proprietary aspects of our technology and to operate without
infringing on the proprietary rights of others. We rely on a combination of
patent, trademark, trade secret, and copyright law and contractual restrictions
to protect our proprietary technology. These legal protections afford only
limited protection for our technology. We seek to protect our source code for
our software, documentation, and other written materials under trade secret and
copyright laws. We license our software pursuant to signed license agreements
and "clickthrough" or "shrink wrap" agreements, which impose restrictions on
the licensee's ability to use the software such as prohibiting reverse
engineering and limiting the use of copies. We also seek to avoid disclosure of
our intellectual property by requiring employees and consultants with access to
our proprietary information to execute confidentiality agreements.
We have filed a provisional patent application with the United States Patent
and Trademark Office covering inventions within OneCommerce. We have applied
for trademark and service mark registration for over 95 marks, including
"OneSoft" and "OneCommerce". We also have rights to 362 domain names.
Despite our efforts to protect our proprietary rights, unauthorized parties
may attempt to copy aspects of our products or to obtain and use information
that we regard as proprietary. Policing unauthorized use of our products is
difficult, and while we are unable to determine the extent to which piracy of
our software exists, software piracy can be expected to be a persistent
problem. Litigation may be necessary in the future to enforce our intellectual
property rights, to protect our trade secrets, to determine the validity and
scope of our patents or the proprietary rights of others, or to defend against
claims of infringement or invalidity. Any such resulting litigation could
result in substantial costs and diversion of resources and could have a
material adverse effect on our business. Our means of protecting our
proprietary rights may not be adequate or our competitors may independently
develop similar technology. See "Risk Factors--We rely on our intellectual
property rights and if we are unable to protect those rights, we may face
increased competition."
We have received correspondence from attorneys representing our former chief
technology officer, asserting that he invented certain technology incorporated
in our pending patent application and that our use of any of this technology
infringes on his ownership rights. We believe this assertion lacks merit, and
we intend to vigorously defend against any legal action that might be brought
with respect to this matter. We further believe that if the former employee is
found to be an inventor of some of the technology claimed in our pending patent
application, he will also be found to have invented that technology while
employed by us. As such, we do not believe that we would be excluded from using
this technology. Nevertheless, should litigation arise from this matter, the
results are unpredictable, and we cannot guarantee that we will preserve the
right to use the proprietary technology asserted to be owned by the former
employee. See "Risk Factors--Intellectual property claims against us could be
costly and result in the loss of significant rights."
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Employees
As of December 31, 1999, we had a total of 264 employees. Of our employees,
39 were in research and development, 56 in sales and marketing, 113 in
services, and 56 in finance and administration. Our future success will depend
in part on our ability to attract, retain and motivate highly qualified
technical and management personnel, for whom competition is intense. From time
to time, we also employ independent contractors to support our research and
development efforts. Our employees are not represented by any collective
bargaining unit, and we have never experienced a work stoppage. We believe our
relations with our employees are good.
Properties
Our headquarters are located in a leased facility in McLean, Virginia,
consisting of approximately 90,000 square feet. The McLean facility is expected
to meet our needs through March 2000, at which time we intend to expand our
facilities by entering into one or more additional leases. We have also leased
space for our network operation center in Annandale, Virginia and space for
sales and support personnel in New York, New York and Santa Monica, California.
Legal Proceedings
There are no material legal proceedings pending against our company.
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MANAGEMENT
Directors, Executive Officers and Key Employees
The following table shows the name, age and position of each of our
executive officers and directors as of the date of this prospectus.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
James W. MacIntyre, IV 32 Chairman of the Board, President and Chief
....................... Executive Officer
Frederick C. Hawkins, 35 Chief Financial Officer and Senior Vice President
III.................... of Finance
Thomas E. Young......... 34 Senior Vice President of Marketing and Sales
Peter M. Jones.......... 42 Executive Vice President of Corporate Development
Jeffrey M. MacIntyre.... 30 Senior Vice President of Services and Director
Eric D. Waller.......... 34 Vice President of Product Development
Randall V. Pevin........ 35 Vice President of Operations
Henry D. Barratt, Jr. 47
(1) (2)................ Director
A. Douglas Peabody (1) 47
....................... Director
Justin Hall-Tipping (1) 43
(2).................... Director
Stephen P. Rader........ 44 Director
Thomas R. Hitchner (2).. 48 Director
Carlos E. Cisneros...... 34 Director
</TABLE>
- --------
(1)Member of the Audit Committee.
(2)Member of the Compensation Committee.
James W. MacIntyre, IV is the founder of OneSoft and has served as our
president and chief executive officer since our inception in 1995. Mr.
MacIntyre has served as our chairman of the board since January 1996. From
October 1994 to January 1995, Mr. MacIntyre served as president of Convergence,
Inc., a developer of Internet application systems. Mr. MacIntyre has over 12
years of management experience in product design, development, marketing and
sales of software and networking products. He also established the organization
and operations of TGF Technologies, Inc., which is now one of the largest
Internet service providers in northern New England, and which recently was
acquired by OneMain.com, Inc. Mr. MacIntyre holds a B.A. in philosophy and
economics from the University of Vermont. Jeffrey M. MacIntyre is the brother
of James W. MacIntyre, IV.
Frederick C. Hawkins, III has served as our chief financial officer and
senior vice president of finance since November 1997. From December 1996 to
November 1997, Mr. Hawkins worked as an independent business consultant,
providing strategic planning and financing advice to Silicon Valley companies.
From 1990 to December 1996, Mr. Hawkins served as President of Advanced Health
Products, Inc., a medical products company. Mr. Hawkins holds a B.S. from The
Wharton School of the University of Pennsylvania and an M.B.A. from the
Stanford Graduate School of Business.
Thomas E. Young has served as our senior vice president of marketing and
sales since October 1999. From May 1999 to October 1999, Mr. Young was our
senior vice president of marketing. From June 1998 to May 1999, Mr. Young was
the vice president of e-Chain Technologies, a business unit of Manugistics
Group, Inc., an enterprise application vendor. While at e-Chain Technologies,
Mr. Young created and ran the e-commerce division. From 1995 to 1998, Mr. Young
managed Manugistics' global product marketing, product management, and North
American business development. From 1993 to 1995, Mr. Young was the manager of
business development at Manugistics. Prior to this, Mr. Young worked at
Andersen Consulting
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for over four years. Mr. Young holds a B.S. in mechanical engineering from the
University of Maryland and completed graduate work in high tech marketing at
Stanford University.
Peter M. Jones joined OneSoft in May 1999 and has served as our executive
vice president of corporate development since December 1999. From December 1994
to May 1999, Mr. Jones was an independent strategy consultant for several
companies in the United States and Europe. Mr. Jones holds a B.A. in
mathematics from Oxford University and an M.B.A. from Harvard Business School.
Jeffrey M. MacIntyre has served as our senior vice president of services and
a member of the board of directors of OneSoft since November 1997. Mr.
MacIntyre joined OneSoft in March 1997 in connection with the merger of
InterFlowww Enterprises Inc., a software development company he co-founded.
From April 1996 to March 1997, Mr. MacIntyre was a project management
consultant for Convergence, Inc., a developer of Internet applications. From
June 1996 to March 1997, Mr. MacIntyre was the president of InterFlowww, where
he was responsible for business formation and management. From August 1994 to
March 1996, Mr. MacIntyre was a business process design consultant for Andersen
Consulting. Mr. MacIntyre holds a B.A. in English, with a concentration in
management information systems, from the University of Vermont. James W.
MacIntyre, IV is the brother of Jeffrey M. MacIntyre.
Eric D. Waller has served as our vice president of product development since
June 1999. From March 1999 to June 1999, Mr. Waller served as our senior
manager of product engineering. From August 1997 to March 1999, Mr. Waller was
the director of commercial products of Reliable Software Technologies, a
software products and consulting company, where he was responsible for sales,
marketing, engineering and customer service. From August 1995 to August 1997,
Mr. Waller served as a product architect for Platinum Technology, Inc., an
enterprise application company, later acquired by Computer Associates
International, Inc. From April 1994 to August 1995, Mr. Waller was a senior
software engineer at Chalke, Inc., a financial software products company.
Randall V. Pevin has served as our vice president of operations since
November 1997. From October 1996 to November 1997, Mr. Pevin was a project
manager at OneSoft. From June 1994 to June 1996, Mr. Pevin served as a lead
consultant at Logical Network Services Technical Consulting, where he managed
software projects. Mr. Pevin holds a B.A. in business administration from
Central Connecticut University.
Henry D. Barratt, Jr. has served as a member of OneSoft's board of directors
since November 1997. Mr. Barratt is a managing director of Blue Water Capital,
L.L.C., a venture capital firm which he co-founded in 1996. From October 1994
to December 1995, Mr. Barratt was the president of The Drayton Company, an
investment banking firm.
A. Douglas Peabody has served as a member of OneSoft's board of directors
since August 1998. Since January 1993, Mr. Peabody has served as president of
Meigher, Peabody & Company, Inc., a general partner of Meigher Communications,
L.P., a publishing company he co-founded. From 1982 to January 1995, Mr.
Peabody worked at Inco Venture Capital Management, where he served in various
executive capacities before he was appointed president and managing principal
in April 1992. Mr. Peabody served as a director of America Online, Inc. from
1985 to 1993 and as its vice chairman from 1989 to 1993. Mr. Peabody holds an
A.B. from Dartmouth College, an M.B.A. from The Wharton School of the
University of Pennsylvania, and a J.D. from the University of Virginia School
of Law.
Justin Hall-Tipping has served as a member of OneSoft's board of directors
since July 1998. Mr. Hall-Tipping has served as managing director of SG Capital
Partners, the U.S.
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merchant banking affiliate of Societe Generale Capital Corporation, since June
1997. From May 1995 to June 1997, Mr. Hall-Tipping was director of the Data
Intelligence Group of Reuters PLC. From 1991 to May 1995, Mr. Hall-Tipping was
chief executive officer of HeartBeat Corp. Mr. Hall-Tipping holds a B.S. in
international finance and banking from City University in London and an M.B.A
from Harvard Business School.
Stephen P. Rader has served as a member of OneSoft's board of directors
since April 1999. Mr. Rader has served as a managing member of Rader,
Reinfrank & Co., LLC, a private investment firm he co-founded, since January
1997. From October 1989 to December 1996, Mr. Rader served as managing
director of Chartwell Partners, a private investment firm. Mr. Rader holds a
B.S. and a J.D. from the University of Southern California.
Thomas R. Hitchner has served as a member of OneSoft's board of directors
since August 1999. Mr. Hitchner has been a general partner of QuestMark
Partners, L.P., since November 1998. From February 1984 to November 1998, Mr.
Hitchner was an employee of Alex. Brown & Sons, Incorporated, most recently as
a managing director and a member of its private equity group. Mr. Hitchner is
also a director of Zapme! Corporation. Mr. Hitchner holds a B.A. from Harvard
University.
Carlos E. Cisneros has served as a member of OneSoft's board of directors
since July 1999. Since 1996, Mr. Cisneros has been the chief executive officer
and the chairman of the board of the Cisneros Television Group. Since 1998,
Mr. Cisneros has been the vice chairman of Ibero American Media Partners.
Since 1991, Mr. Cisneros has been the executive vice president of Venevision
International, Inc. Mr. Cisneros is also a director of El Sitio Inc. Mr.
Cisneros holds a B.A. in political science from American University.
Board Composition
We currently have eight directors. Prior to the closing of this offering,
holders of our Series A preferred stock were entitled to nominate and elect
two directors while holders of our Series B preferred stock and our Series C
preferred stock were each entitled to nominate and elect one director. Messrs.
Barratt, Jr. and Hall-Tipping were nominated by the Series A preferred
stockholders, Mr. Rader was nominated by the Series B preferred stockholders,
and Mr. Hitchner was nominated by the Series C preferred stockholders. Each of
these persons serves on our board of directors pursuant to these preferred
stock nominating and election rights. The holders of our common stock, voting
as a separate class, were entitled to elect four members of our board of
directors, to be nominated by Mr. MacIntyre, IV. Messrs. MacIntyre, IV,
MacIntyre, and Cisneros serve on our board of directors pursuant to these
rights, with one vacancy. In addition, Mr. Peabody serves as a non-affiliated
director, nominated by the board of directors and elected by the stockholders.
Upon the closing of this offering, these board representation rights will
terminate and no stockholders will have any special rights with respect to
board representation.
Prior to the closing of this offering, directors are elected by the
stockholders at each annual meeting of stockholders and serve for one year or
until their successors are duly elected and qualified. Our restated
certificate of incorporation and restated bylaws, to be effective upon the
closing of this offering, provide that our board of directors will be divided
into three classes, as nearly equal in size as possible with staggered three-
year terms. The division of the three classes, the initial directors and their
respective expiration dates are as follows:
. the class I directors will be Messrs. Barratt, Jr., Hall-Tipping, and
MacIntyre, and their term will expire at the annual meeting of
stockholders to be held in 2001;
. the class II directors will be Messrs. Hitchner, Peabody, and Rader, and
their term will expire at the annual meeting of stockholders to be held
in 2002; and
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. the class III directors will be Messrs. Cisneros and MacIntyre, IV, and
their term will expire at the annual meeting of stockholders to be held
in 2003.
At each annual meeting of stockholders beginning with the annual meeting to
be held in 2001, the successors to directors whose terms expire will be elected
to serve from the time of election and qualification until the third annual
meeting following election, or until their successors have been duly elected
and qualified, or until their earlier resignation or removal. In addition, the
authorized number of directors may be changed only by resolution of the board
of directors. Any additional directorships resulting from an increase in the
number of directors will be distributed among the three classes so that, as
nearly as possible, each class will consist of one-third of the directors. The
classification of our board of directors may have the effect of discouraging or
making it more difficult for a third party to acquire control of OneSoft.
Board Committees
Our board of directors has an audit committee and a compensation committee.
Audit Committee. The current members of our audit committee are Messrs.
Barratt, Jr., Hall-Tipping and Peabody. Our audit committee reviews, acts on,
and reports to the board of directors with respect to various auditing and
accounting matters, including the selection of our independent auditors, the
scope of the annual audits, fees to be paid to the auditors, the performance of
our independent auditors and our accounting practices.
Compensation Committee. The current members of our compensation committee
are Messrs. Barratt, Jr., Hall-Tipping and Hitchner. Our compensation committee
determines the salaries and incentive compensation of our officers and provides
recommendations for the salaries and incentive compensation of our other
employees. The compensation committee also administers our Amended and Restated
1997 Employee, Director and Consultant Stock Option Plan.
Compensation Committee Interlocks and Insider Participation
The voting members of our compensation committee of the board of directors
are Messrs. Barratt, Jr., Hall-Tipping and Hitchner, none of whom has, at any
time since our formation, been an officer or employee of OneSoft. No executive
officer of OneSoft currently serves, or in the past has served, as a member of
the board of directors or compensation committee of any entity that has one or
more executive officers serving as a member of our board of directors or
compensation committee. Prior to the formation of the compensation committee,
the board of directors as a whole made decisions relating to the compensation
of our executive officers.
Director Compensation
Our directors do not receive cash compensation for their services as
directors but are reimbursed for their reasonable and necessary expenses
incurred in attending board meetings.
In June 1998, we granted to Mr. Peabody, one of our directors, an option to
purchase 100,000 shares of common stock at an exercise price of $0.552 per
share. Mr. Peabody exercised this option in full in April 1999. These shares
are subject to restrictions that terminate upon completion of this offering.
In October 1998, we granted to Blue Water Strategic Fund I, L.L.C. a non-
qualified stock option to purchase 25,000 shares of common stock at an exercise
price of $0.552 per share. Mr. Henry D. Barratt, Jr., one of our directors, is
a managing director of Blue Water Capital,
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L.L.C., a venture capital firm which is the managing member of Blue Water
Strategic Fund I, L.L.C. The option to Blue Water Strategic Fund I L.L.C. was
immediately exercisable upon the grant, and terminates in October 2008.
Key Person Life Insurance
We have purchased and presently maintain a key person life insurance policy
in the amount of $2,000,000 on the life of James W. MacIntyre, IV, in favor of
OneSoft.
Executive Compensation
The following table shows all compensation awarded to, earned by, or paid to
our Chief Executive Officer and our other most highly compensated executive
officers or former executive officers who earned at least $100,000 for services
rendered to OneSoft in all capacities during the year ended December 31, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------------
Annual
Compensation (1) Securities
----------------- Underlying
Name and Principal Position Salary Bonus Options
- --------------------------- -------- -------- ------------
<S> <C> <C> <C>
James W. MacIntyre, IV......................... $221,539 $ 54,044 --
President and Chief Executive Officer
Richard Borenstein............................. 125,769 138,517 100,000
Former Senior Vice President of World Wide
Sales (2)
Frederick C. Hawkins, III...................... 150,756 87,250 --
Senior Vice President of Finance and Chief
Financial Officer
Jeffrey M. MacIntyre........................... 117,692 48,551 --
Senior Vice President of Services
Randall V. Pevin............................... 93,077 25,833
Vice President of Operations
Thomas E. Young................................ 92,308 90,320 220,000
Senior Vice President of Marketing and Sales
</TABLE>
- --------
(1) The columns for "Other Annual Compensation" and "All Other Compensation"
have been omitted because there is no such compensation required to be
reported.
(2) Mr. Borenstein ceased to be an executive officer of OneSoft on or about
October 1,1999. His full-time employment with us terminated on December 31,
1999.
54
<PAGE>
Option Grants in 1999
The following table contains information concerning the stock option grants
made to each of the individuals listed in the Summary Compensation Table during
the fiscal year ended December 31, 1999. These options were granted pursuant to
our Amended and Restated 1997 Employee, Director and Consultant Stock Option
Plan and are incentive stock options.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates Of
Stock Price
Appreciation
Individual Grants For Option Term (3)
-------------------------------------------------- --------------------
Number Of % Of Total
Shares Options
Underlying Granted To Exercise
Options Employees In Price Expiration
Name Granted 1999(1) Per Share (2) Date 5% 10%
---- ---------- ------------ ------------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
James W. MacIntyre, IV.. -- -- -- -- -- --
Richard Borenstein...... 250,000(4) 8.7% $0.552 3/30/00 -- --
Frederick C. Hawkins,
III.................... -- -- -- -- -- --
Randall V. Pevin........ -- -- -- -- -- --
Jeffrey M. MacIntyre.... -- -- -- -- -- --
Thomas E. Young......... 200,000(5) 6.9% $0.552 9/17/09 -- --
20,000(6) 0.7% $11.00 12/30/09 -- --
</TABLE>
- --------
(1) The percentage shown under this column is based on options to purchase
shares of our common stock granted to employees, consultants and directors
of OneSoft under our Amended and Restated 1997 Employee, Director and
Consultant Stock Option Plan during 1999.
(2) The exercise price may be paid in cash or in shares of common stock valued
at fair market value on the exercise date. All stock options were granted
with an exercise price equal to the fair market value of the common stock
on the date of grant, as determined by the board of directors.
(3) Assumes appreciation of the common stock at a rate of 5% and 10% per year
over the 10-year option period as mandated by the rules and regulations of
the Securities and Exchange Commission, and does not represent our estimate
or projection of the future value of the common stock. The actual value
realized may be greater or less than the potential realizable values set
forth in the table.
(4) This option has vested for the exercise of 100,000 shares.
(5) The options vest over a three-year period beginning on the first
anniversary of the date of employment, May 3, 1999, and expire on the tenth
anniversary of the date of grant.
(6) The options vest over a four-year period beginning on the first
anniversary of the date of grant, December 30, 1999.
Option Exercises
None of the individuals listed in the Summary Compensation Table exercised
any options to purchase securities of OneSoft during the year ended December
31, 1999.
55
<PAGE>
Year-end Option Values
The following table sets forth information with respect to the aggregate
value of options held by each executive officer named in the Summary
Compensation Table as of December 31, 1999. The potential value of the
unexercised in-the-money options at fiscal year end is based on the value of $
per share, the anticipated initial public offering price of our shares of
common stock, less the per share exercise price.
We have rights to repurchase the shares issued on exercise of these options
upon termination of the optionee's employment, death or disability. These
rights of repurchase will terminate upon the consummation of this offering. All
options were granted at an exercise price equal to the fair market value of our
common stock on the date of grant, as determined by our board of directors.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options at
at December 31, 1999 December 31, 1999
---------------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
James W. MacIntyre, IV.. 38,670 19,330 $ --
Richard Borenstein...... 100,000 --
Frederick C. Hawkins,
III.................... 200,000 100,000
Randall V. Pevin........ 98,750 66,250
Jeffrey M. MacIntyre.... 34,670 17,330
Thomas E. Young......... -- 220,000
</TABLE>
The columns for number of shares acquired on exercise and value received
have been omitted because there were no option exercises by the individuals
listed in the Summary Compensation Table for the year ended December 31, 1999.
Employee Benefit Plans
Amended and Restated 1997 Employee, Director and Consultant Stock Option
Plan. The following description of OneSoft's Amended and Restated 1997
Employee, Director and Consultant Stock Option Plan is a summary of the
material terms of the plan.
The purpose of the plan is to enhance the profitability and value of OneSoft
for the benefit of its stockholders by enabling OneSoft to offer to employees,
directors and consultants stock based incentives. This is a means to both
increase the ownership of OneSoft held by those individuals in order to
attract, retain and reward them and strengthen the mutual interests between
those individuals and the stockholders of OneSoft. The plan authorizes the
grant of options to purchase shares of common stock to employees, directors and
consultants of OneSoft and its affiliates. Under the plan, OneSoft may grant
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986 and non-qualified stock options. Incentive stock options
may only be granted to employees of OneSoft.
The plan was approved by OneSoft's board of directors and its stockholders
in March 1997 and subsequently amended by the board of directors and
stockholders in August 1999, and January 2000. A total of 5,000,000 shares are
reserved for issuance under the plan. As of December 31, 1999, 231,750 shares
had been issued as the result of the exercise of options, 3,682,483 shares were
subject to outstanding options, and 1,085,767 shares were available for future
grants. The plan is administered by the compensation committee of the board of
directors. Subject to the provisions of the plan, the committee has authority
to determine the employees, directors and consultants of OneSoft who are to be
awarded options and the terms of these awards, including:
56
<PAGE>
. the number of shares subject to an option;
. when the option becomes exercisable;
. the option exercise price per share; and
. the duration of the option.
Incentive stock options must have an exercise price equal to at least 100%,
110% if the grant is to a stockholder holding more than 10% of OneSoft's voting
stock, of the fair market value of a share on the date of the award and
generally have a duration of 10 years, five years if the grant is to a
stockholder holding more than 5% of OneSoft's voting stock. Terms and
conditions of awards are in written agreements between OneSoft and the holders
of the options. Awards under the plan may not be made after the tenth
anniversary of the date of its adoption but awards granted before that date may
extend beyond that date.
If the employment with OneSoft of the holder of an incentive stock option is
terminated for any reason other than as a result of the holder's death or
disability or for "cause" as defined in the plan, the holder may exercise the
option, to the extent exercisable on the date of termination of employment,
until the earlier of the option's specified expiration date and 90 days after
the date of termination. If an option holder dies or becomes disabled, both
incentive and non-qualified stock options may generally be exercised, to the
extent exercisable on the date of death or disability, by the option holder or
the option holder's survivors until the earlier of the option's specified
termination date and one year after the date of death or disability. If an
option holder's employment with OneSoft is terminated for cause, all
outstanding and unexercised options are immediately forfeited.
Employment Agreements
We have entered into employment agreements with James W. MacIntyre, IV,
Frederick C. Hawkins, III and Jeffrey M. MacIntyre which contain non-
disclosure, assignment of inventions, non-competition and non-solicitation
restrictions and covenants. These agreements provide for annual base salaries,
subject to increase by the board of directors, and allow for additional annual
bonus compensation upon the meeting of certain mutually agreed upon business
objectives. Current salaries are $240,000 for James W. MacIntyre, IV, $175,000
for Frederick C. Hawkins, III and $150,000 for Jeffrey M. MacIntyre. These
agreements automatically renew annually unless either we, or they, provide
written notice of intention not to renew an agreement. Pursuant to his
agreement, we granted Mr. Hawkins incentive stock options to purchase 300,000
shares of our common stock under our Amended and Restated 1997 Employee,
Director and Consultant Stock Option Plan at an exercise price of $0.552 per
share. These options vest quarterly over a period of three years.
Additionally, we have entered into employment-at-will letter agreements with
Randall V. Pevin and Thomas E. Young, which also contain non-disclosure,
assignment of inventions, non-competition and non-solicitation restrictions and
covenants. These letter agreements provide for annual base salaries, subject to
increase by the board of directors. The agreement with Mr. Young allows for
annual bonus compensation upon the meeting of certain mutually agreed upon
business objectives. Pursuant to our agreement with Mr. Young, we granted him
incentive stock options to purchase 200,000 shares of our common stock at an
exercise price of $0.552 per share under our Amended and Restated 1997
Employee, Director and Consultant Stock Option Plan. These options vest
annually over a period of three years.
Our employment agreement with James W. MacIntyre, IV provides that if we
terminate his employment without "cause," as defined in the agreement, he
terminates his employment with "good reason," as defined in the agreement, or
we fail to renew his agreement, such that
57
<PAGE>
he is employed with us less than three years, he will be entitled to severance
pay equal to 100% of his annual base salary, plus 100% of his annual bonus,
paid in twelve monthly installments from the date of termination, plus fringe
benefits for twelve months from the date of termination. If Mr. MacIntyre IV's
employment is terminated after three years or more of employment, by reason of
any of the above conditions, we will pay him one-half of his annual salary plus
one-half of his bonus, paid in six monthly installments from the date of
termination, plus fringe benefits for six months from the date of termination.
Our employment agreements with Frederick C. Hawkins, III and Jeffrey M.
MacIntyre provide that if we terminate their employment without "cause," as
defined in the agreements, they terminate their employment with "good reason,"
as defined in the agreements, or we fail to renew their agreements, such that
they are employed with us less than three years, they will be entitled to
severance pay equal to one-half of their annual base salaries, plus one-half of
his annual bonus in the case of Mr. Hawkins, paid in six monthly installments
from the date of termination, plus fringe benefits for six months from the date
of termination. If the terminations of Messrs. MacIntyre, IV, Hawkins or
MacIntyre are voluntary, other than for "good reason," by OneSoft for cause or
as a result of death or disability, we have no obligation to pay severance
beyond the individual's accrued and unpaid base salary and bonus up to the date
of termination. Our letter agreements with Mr. Pevin and Mr. Young have no
severance provisions.
Severance Agreement
We have entered into a severance agreement with Richard Borenstein pursuant
to which we agreed to pay Mr. Borenstein a lump sum of $42,000 upon termination
of his full-time employment with us on December 31, 1999. Additionally, we will
pay his fringe benefits until March 31, 2000. As Mr. Borenstein has a H-1B visa
to work for OneSoft, our severance agreement with him contains provisions
outlining assistance that OneSoft may provide to him in modifying his H-1B
visa. At the time of our termination of his full-time employment Mr. Borenstein
held a fully vested option to purchase 100,000 shares of our common stock at an
exercise price of $0.552 per share. This option expires on March 30, 2000.
Indemnification of Directors and Executive Officers and Limitation of Liability
Our restated certificate of incorporation limits the liability of our
directors to the maximum extent permitted by Delaware law. Delaware law
provides that a director of a corporation will not be personally liable for
monetary damages for breach of fiduciary duty as a director, except for
liability:
. for any breach of the director's duty of loyalty to OneSoft or our
stockholders;
. for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
. under Section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; or
. for any transaction from which the director derived an improper personal
benefit.
As permitted by Delaware law, our restated bylaws provide that we must
indemnify our directors and executive officers to the fullest extent permitted
by Delaware law and advance expenses, as incurred, to our directors and
executive officers to defend any action for which rights of indemnification are
provided. In addition, our restated certificate of incorporation and restated
bylaws also permit us to grant such rights to indemnification to our employees
and agents. Our restated bylaws also provide that we may enter into
indemnification agreements with our directors and officers and purchase
insurance on behalf of any person whom we are
58
<PAGE>
required or permitted to indemnify. We have obtained liability insurance for
our officers and directors.
The limitation of liability and indemnification provisions in our restated
certificate of incorporation and restated bylaws may discourage stockholders
from bringing a lawsuit against directors for breach of their fiduciary duty.
They may also reduce the likelihood of derivative litigation against directors
and officers, even though an action, if successful, might benefit us and other
stockholders. Furthermore, a stockholder's investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against
directors and officers as required by these indemnification provisions.
Presently, there is no pending litigation or proceeding involving any of our
directors, officers or employees for which indemnification is sought, nor are
we aware of any threatened litigation that may result in claims for
indemnification.
59
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
On November 1, 1995, in connection with the formation and initial financing
of Global Exchange Inc., a Virginia corporation, our predecessor in interest,
James W. MacIntyre, IV, our chairman, president and chief executive officer,
purchased 250 shares of the common stock of Global Exchange Inc. for an
aggregate purchase price of $250. On March 18, 1997, InterFlowww Enterprises,
Inc., a Vermont corporation, merged with and into Global Exchange Inc. pursuant
to a plan of merger approved by Global Exchange Inc.'s and InterFlowww's
stockholders and boards of directors as of March 17, 1997. Pursuant to the plan
of merger, each share of InterFlowww common stock was converted into 11.2
shares of Global Exchange Inc.'s common stock. On March 31, 1997, upon our
reincorporation in Delaware, each share of common stock of Global Exchange Inc.
was converted into 300 shares of our common stock. James W. MacIntyre, IV, a
principal stockholder of InterFlowww, and Jeffrey M. MacIntyre, our senior vice
president of services and the president and a principal stockholder of
InterFlowww, received 2,250,000 shares and 420,000 shares, respectively, of our
common stock (on a post-reincorporation basis) upon consummation of the
InterFlowww merger. Jeffrey M. MacIntyre joined OneSoft and became a director
and our senior vice president of services following the merger.
In April 1996, Global Exchange Inc. employed William Langdon as chief
financial officer. In June 1997, we terminated Mr. Langdon's employment with
us, and we executed a settlement agreement with him. Under the settlement
agreement, we paid Mr. Langdon $80,000 and agreed to pay him an additional
$30,000 within 60 days of an initial public offering of our capital stock.
In August 1996, we formed Sports Warehouse, Inc., a Delaware corporation. On
August 9, 1996, Sports Warehouse, Inc. granted Bakersville Holdings Limited 48
shares of its common stock. Carlos E. Cisneros, a member of our board of
directors, is a beneficial owner of Bakersville Holdings. On April 17, 1997, we
entered into a shareholders agreement with Bakersville Holdings with regard to
Sports Warehouse, Inc. Pursuant to this agreement, Bakersville Holdings
invested an additional $50,000 in Sports Warehouse in exchange for, among other
things, the right to convert its $150,000 aggregate investment in Sports
Warehouse into shares of our common stock at the time of our initial public
offering at a conversion factor which would assume a compounded annual return
on the $150,000 investment calculated at 20% per year from the date of the
agreement. Following receipt of notice from us regarding our proposed initial
public offering, Bakersville Holdings converted its shares in Sports Warehouse
valued at $244,800 into 24,480 shares of our common stock on November 23, 1999.
We dissolved Sports Warehouse effective January 13, 2000.
Indebtedness of Management
In December 1997, we lent $412,333 to Frederick C. Hawkins, III, our chief
financial officer and senior vice president of finance, in connection with his
purchase of 750,000 shares of our common stock, at a price of $0.552 per share,
from William Robertson, a former majority stockholder. The loan, secured by a
pledge of the 750,000 shares of Mr. Hawkins' OneSoft common stock and other
assets, accrues interest at the rate of 6.02% per annum, and is payable on or
after the first to occur of December 1, 2002, the sale of substantially all of
our assets, or a sale of the collateral pledged as security for the loan. The
largest amount of Mr. Hawkins' loan that was outstanding during the year ended
December 31, 1999 was $467,585.80.
60
<PAGE>
In August 1999, we lent $500,000 to James W. MacIntyre, IV, our president
and chief executive officer, secured by a pledge of 100,000 shares of Mr.
MacIntyre's OneSoft common stock. The loan accrues interest at the rate of
5.43% per annum and is payable on or before August 13, 2002. The largest amount
of Mr. MacIntyre's loan that was outstanding during the year ended December 31,
1999 was $510,357.91.
Directors and Executive Officers
On April 12, 1998, our Board of Directors voted to appoint A. Douglas
Peabody as a Director of OneSoft. In June 1998, we granted Mr. Peabody an
immediately exercisable non-qualified stock option to purchase 100,000 shares
of our common stock at the price of $0.552 per share. On April 12, 1999, Mr.
Peabody exercised his option in full.
On November 7, 1997, we granted Frederick C. Hawkins, III, an incentive
stock option to purchase 300,000 shares of our common stock under our Amended
and Restated 1997 Employee, Director and Consultant Stock Option Plan at a
price of $0.552 per share. These options vest quarterly over a period of three
years.
On October 6, 1997, we granted James W. MacIntyre, IV, a non-qualified stock
option to purchase 58,000 shares of our common stock under our Amended and
Restated 1997 Employee, Director and Consultant Stock Option Plan at a price of
$0.552 per share. These options vest quarterly over a period of three years.
On October 6, 1997, we granted Jeffrey M. MacIntyre, a non-qualified stock
option to purchase 52,000 shares of our common stock under our Amended and
Restated 1997 Employee, Director and Consultant Stock Option Plan at a price of
$0.552 per share. These options vest quarterly over a period of three years.
On May 5, 1997, October 6, 1997 and October 16, 1998 we granted Randall V.
Pevin incentive stock options to purchase 35,000, 30,000, and 100,000 shares,
respectively. Each of these options had exercise prices of $0.062 per share,
$0.552 per share, $0.552 per share, respectively. The first two above-listed
options vest quarterly over a period of three years, and the third option vests
bi-annually over a period of two years.
On May 3, 1999 and December 30, 1999 we granted Thomas E. Young, incentive
stock options to purchase 200,000 and 20,000 shares, respectively. These
options have exercise prices of $0.552 per share and $11.00 per share,
respectively. The first option vests over a three year period. The second
option vests over a four year period.
On March 8, 1999 and September 17, 1999, we granted Eric D. Waller,
incentive stock options to purchase 5,000 and 25,000 shares, respectively.
These options have exercise prices of $0.552 per share and $4.00 per share,
respectively. Both of the options vest over a four year period.
On September 2, 1999 we granted Peter M. Jones, an incentive stock option to
purchase 300,000 shares of our common stock under our 1997 Amended and Restated
1997 Employee, Director and Consultant Stock Option Plan, at a price of $4.00
per share. These options vest annually over a three year period.
Series A Convertible Preferred Stock Offerings
In November 1997, March 1998 and June 1998, we raised gross proceeds of
approximately $7.6 million from the issue and sale of a total of 3,192,530
shares of Series A preferred stock in a private placement to two investors.
Blue Water Strategic Fund I, L.L.C. and SGC Partners II
61
<PAGE>
LLC, each a five percent beneficial holder of our common stock, purchased all
of the shares of Series A preferred stock. Blue Water Strategic Fund I
purchased shares of Series A preferred stock at the prices of $2.28 and $2.41
per share. SGC Partners II purchased shares of Series A preferred stock at a
price of $2.41 per share. Henry D. Barratt, Jr., one of our directors, is a
managing director of Blue Water Capital, L.L.C., the managing member of Blue
Water Strategic Fund I, and was elected to our board of directors pursuant to
an investor rights agreement, the provisions of which that relate to the
election of directors will terminate upon the closing of this offering. Justin
Hall-Tipping, one of our directors, is a managing director of SG Capital
Partners, the managing member of SGC Partners II LLC and was elected to our
board of directors pursuant to an investor rights agreement, the provisions of
which that relate to the election of directors will terminate upon the closing
of this offering.
Series B Convertible Preferred Stock Offering
In February 1999, we raised gross proceeds of approximately $7.5 million
from the issue and sale of a total of 2,023,857 shares of Series B convertible
preferred stock in a private placement to two investors at a price of $3.706
per share. Rader Reinfrank Holdings No. 2 and SGC Partners II LLC, each a five
percent beneficial holder of our common stock, purchased all of the shares of
Series B convertible preferred stock. Stephen P. Rader, one of our directors,
is a managing member of Rader Reinfrank & Co., LLC, the general partner of
Rader Reinfrank Investors, L.P., general partner of Rader Reinfrank Holdings
No. 2. Justin Hall-Tipping, a member of our board of directors, is the managing
director of SG Capital Partners, the managing member of SGC Partners II LLC.
Messrs. Rader and Hall-Tipping were elected to our board of directors pursuant
to an investor rights agreement, the provisions of which that relate to the
election of directors will terminate upon the closing of this offering.
Series C Convertible Preferred Stock Offering
In August 1999 and October 1999, we raised gross proceeds of approximately
$32.2 million from the issue and sale of a total of 4,891,253 shares of Series
C convertible preferred stock in a private placement to 20 investors at a price
of $6.59 per share. QuestMark Partners, L.P., a five percent beneficial
stockholder of OneSoft, purchased a total of 1,517,451 shares of Series C
convertible preferred stock. Thomas R. Hitchner, one of our directors, is a
general partner of QuestMark Partners, L.P., and was elected to our board of
directors pursuant to an investor rights agreement, the provisions of which
that relate to the election of directors will terminate upon the closing of
this offering.
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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table presents information regarding the beneficial ownership
of OneSoft's common stock as of December 31, 1999, and as adjusted to reflect
the sale of the common stock in this offering, by:
. each person, or group of affiliated persons, known to us to be the
beneficial owner of more than 5% of our common stock;
. each of our directors;
. each executive officer listed in the Summary Compensation Table above;
and
. all current directors and executive officers of OneSoft as a group.
Beneficial ownership for purposes of the following table is determined in
accordance with the rules of the Securities and Exchange Commission and is not
necessarily indicative of beneficial ownership for any other purpose. In
computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock issuable upon the
exercise of options that are currently exercisable or exercisable within 60
days of December 31, 1999 are deemed to be outstanding. These shares, however,
are not considered outstanding for purposes of computing the percentage
ownership of any other person.
Except as indicated in the footnotes below, we believe that the persons and
entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned by them, subject to community property
laws where applicable. Percentage of ownership is based on 16,314,490 shares of
common stock outstanding as of December 31, 1999, assuming conversion of all
outstanding preferred stock into common stock, and shares of common stock
outstanding after completion of the offering. This table assumes no exercise of
the underwriters' over-allotment option. Unless otherwise indicated in the
footnotes, the address for each of the individuals listed in the table is c/o
OneSoft Corporation, 1505 Farm Credit Drive, Suite 100, McLean, VA 22102.
<TABLE>
<CAPTION>
Percentage of
Outstanding
Shares
Beneficially
Number Owned
of Shares -----------------
Beneficially Before After
Name of Beneficial Owner Owned Offering Offering
- ------------------------ ------------ -------- --------
<S> <C> <C> <C>
Executive Officers and Directors:
James W. MacIntyre, IV (1)..................... 3,304,406 20.2%
Richard Borenstein (2)......................... 100,000 * *
Frederick C. Hawkins, III (3).................. 962,700 5.8
Thomas E. Young................................ -- * *
Randall V. Pevin(4)............................ 98,750 * *
Jeffrey M. MacIntyre (5)....................... 459,000 2.8
Henry D. Barratt, Jr. (6)...................... 1,896,130 11.6
A. Douglas Peabody............................. 100,000 * *
Justin Hall-Tipping (7)........................ 3,125,382 19.2
Stephen P. Rader (8)........................... 1,815,096 11.1
Thomas R. Hitchner (9)......................... 1,517,451 9.3
Carlos E. Cisneros (10)........................ 365,100 2.2
All directors and executive officers as a group
(12 persons) (11)............................. 13,744,015 81.7
Other 5% Stockholders:
Blue Water Strategic Fund I, L.L.C. (6)........ 1,896,130 11.6
SGC Partners II LLC (7)........................ 3,125,382 19.2
Rader Reinfrank Holdings No. 2 (8)............. 1,815,096 11.2
QuestMark Partners, L.P. (9)................... 1,517,451 9.3
</TABLE>
63
<PAGE>
- --------
* Represents beneficial ownership of less than 1%.
(1) Consists of shares held of record by Mr. MacIntyre. Includes 43,500 shares
subject to currently exercisable options. Does not include shares of common
stock over which Mr. MacIntyre has voting control pursuant to an
irrevocable proxy that terminates upon the completion of this offering.
(2) Consists of 100,000 shares subject to currently exercisable options. Mr.
Borenstein ceased being an executive officer of the Company on or about
October 1,1999. Mr. Borenstein's full time-employment with us terminated on
December 31, 1999.
(3) Consists of 200,000 shares subject to currently exercisable options, and
25,000 shares that will be exercisable within 60 days of this offering.
(4) Includes 98,750 shares subject to currently exercisable options.
(5) Includes 39,000 shares subject to currently exercisable options.
(6) Consists of 1,871,130 shares owned by Blue Water Strategic Fund I, L.L.C.
Mr. Barratt, a director of OneSoft, is a Managing Director of Blue Water
Capital, L.L.C., the managing member of Blue Water Strategic Fund I. This
number also includes 25,000 shares subject to currently exercisable
options. Blue Water Capital has sole voting and investment power with
respect to these shares. Mr. Barratt expressly disclaims beneficial
ownership of these shares, except to the extent of his pecuniary interest
therein. The address for Blue Water Capital, L.L.C. and Blue Water
Strategic Fund I, L.L.C. is 8300 Greensboro Drive, Suite 1210, McLean,
Virginia 22102.
(7) Consists of 3,125,382 shares owned by SGC Partners II LLC. Mr. Hall-
Tipping, a director of OneSoft, is a managing director of SG Capital
Partners, the managing member of SGC Partners II LLC. SG Capital Partners
has sole voting and investment power with respect to these shares. Mr.
Hall-Tipping expressly disclaims beneficial ownership of these shares,
except to the extent of his pecuniary interest therein. The address for SGC
Partners II LLC and SG Capital Partners is 1221 Avenue of the Americas, New
York, New York 10020.
(8) Consists of 1,815,096 shares owned by Rader Reinfrank Holdings No. 2. Mr.
Rader, a director of OneSoft, is a managing member of Rader Reinfrank &
Co., LLC, the General Partner of Rader Reinfrank Investors, L.P., General
Partner of Rader Reinfrank Holdings No. 2, a California general
partnership. Rader Reinfrank & Co., has sole voting and investment power
with respect to these shares. Mr. Rader expressly disclaims beneficial
ownership of these shares, except to the extent of his pecuniary interest
therein. The address for Rader Reinfrank Holdings No. 2 and Rader Reinfrank
& Co., LLC is 9465 Wilshire Boulevard, Suite 950, Beverly Hills, California
90212.
(9) Consists of 1,517,451 shares owned by QuestMark Partners, L.P. Mr.
Hitchner, a director of OneSoft, is a general partner of QuestMark
Partners. QuestMark Partners has sole voting and investment power with
respect to these shares. Mr. Hitchner expressly disclaims beneficial
ownership of these shares, except to the extent of his pecuniary interest
therein. The address for QuestMark Partners, L.P. is One South Street,
Suite 800, Baltimore, Maryland 21202.
(10) Consists of 365,100 shares owned by Bakersville Holdings Limited. Mr.
Cisneros, a director of OneSoft, is a beneficial owner of Bakersville
Holdings. Bakersville Holdings has sole voting and investment power with
respect to these shares. The address for Bakersville Holdings Limited is
1900 Avenue of the Stars, Suite 2100, Los Angeles, CA 90067.
(11) Includes 531,250 shares subject to currently exercisable options. See
footnotes (1) through (9) above.
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<PAGE>
In the event that the underwriters' over-allotment option is exercised in
full, the beneficial ownership of certain stockholders will change as follows:
<TABLE>
<CAPTION>
Shares
Beneficially
Number of Owned After
Shares Offered the Offering
in the Over- --------------
allotment Number Percent
-------------- ------ -------
<S> <C> <C> <C>
James W. MacIntyre, IV (1)........................
Bakersville Holdings Limited (2)..................
Eugene Choi (3)...................................
Frederick C. Hawkins, III (4).....................
Jeffrey M. MacIntyre (5)..........................
South Street LLC (6)..............................
Andrew Wright (7).................................
</TABLE>
- --------
* Less than 1%
(1) See footnote (1) above.
(2) See footnote (10) above.
(3) Prior to this offering, Eugene Choi, an employee of ours, owned shares of
our common stock.
(4) See footnote (3) above.
(5) See footnote (4) above.
(6) Prior to this offering, South Street LLC, a holder of Series C preferred
stock, owned 37,936 shares of our common stock.
(7) Prior to this offering, Andrew Wright, a holder of Series C preferred
stock, owned 75,873 shares of our common stock.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon completion of this offering, we will be authorized to issue 50,000,000
shares of common stock, par value $.001 per share, and 5,000,000 shares of
preferred stock, par value $.001 per share, of which there will be shares
of common stock and no shares of preferred stock outstanding. As of December
31, 1999, and assuming the conversion of all outstanding shares of convertible
preferred stock into shares of common stock upon the closing of this offering,
there were outstanding 16,314,490 shares of common stock held of record by 57
stockholders. In addition, as of December 31, 1999 there were outstanding
options to purchase 3,682,483 shares of common stock, and outstanding warrants
to purchase 60,651 shares of common stock.
Common Stock
Holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders and do not have
cumulative voting rights. Subject to preferences that may be applicable to any
outstanding shares of preferred stock, holders of common stock are entitled to
receive ratably such dividends, if any, as may be declared by our board of
directors out of funds legally available. All outstanding shares of common
stock are fully paid and nonassessable, and the holders of common stock have no
preferences or rights of conversion, exchange, preemption or redemption. In the
event of any liquidation, dissolution or winding-up of our affairs, holders of
common stock will be entitled to share ratably in our assets that are remaining
after payment or provision for payment of all of our debts and obligations, and
after liquidation payments to holders of outstanding shares of preferred stock,
if any.
Preferred Stock
Upon the closing of this offering, all of our outstanding shares of
preferred stock will convert into 10,107,640 shares of common stock. These
shares of preferred stock will no longer be authorized, issued or outstanding
after completion of this offering.
The board of directors has the authority to issue 5,000,000 shares of
preferred stock in one or more series and to fix the rights, preferences,
privileges and restrictions granted to or imposed upon the preferred stock,
including dividend rights, conversion rights, terms of redemption, liquidation
preference, sinking fund terms and the number of shares constituting any series
or the designation of a series, without any further vote or action by the
stockholders. The board of directors, without stockholder approval, can issue
preferred stock with voting and conversion rights which could adversely affect
the voting power of the holders of common stock. The issuance of preferred
stock could have the effect of delaying, deferring or preventing a change in
control of OneSoft. We have no present plan to issue any shares of preferred
stock. See "Anti Takeover Effects of Various Provisions of Delaware Law and
OneSoft's Restated Certificate of Incorporation and Restated Bylaws."
Warrants
As of the date of this prospectus, a warrant to purchase a total of 60,651
shares of our common stock is held by Deutsche Bank Securities Inc. The warrant
was issued to Deutsche Bank Securities Inc. as partial consideration for their
services as placement agent for the private placement of our Series C
convertible preferred stock in August and October 1999. This warrant is
currently exercisable at an exercise price of $6.59 per share and may be
exercised on a cashless basis. It expires on October 5, 2004. The number of
shares for which the warrant described above is exercisable is subject to
adjustment upon changes in our capital structure,
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<PAGE>
including stock splits, combinations or dividends and reclassifications,
exchanges or substitutions. The warrant carries certain registration rights.
See "Registration Rights--Warrant Holder."
Registration Rights
Common Stockholders. On the date 180 days after the completion of this
offering, the holders of 13,426,546 shares of common stock or their transferees
will have certain rights to cause us to register these shares under the
Securities Act of 1933. We may be required to effect up to two such demand
registrations, at our expense. We will not be required to effect such a
registration if the anticipated gross proceeds of the shares to be registered
are expected to be less than $25 million. In addition, the holders of these
shares will have the right to cause us to register these shares, at our
expense, on a Form S-3, provided that we are eligible to use this form. We may
be required to effect up to four such registrations, except that, if we have
effected all four registrations and the holders of registration rights have not
yet requested a demand registration, we may be required to effect five such
registrations. We will not be required to effect such a registration if the
anticipated gross proceeds of the shares to be registered are expected to be
less than $5.0 million. If we propose to register any of our securities under
the Securities Act, either for our own account or for the account of other
security holders, other than in connection with an employee stock benefit plan
or certain business combinations involving us, the holders of 16,372,490 shares
of common stock, including 58,000 shares of common stock to be issued upon the
exercise of options and, in the case of an underwritten offering, 60,651 shares
of common stock to be issued upon the exercise of a warrant, will be entitled
to notice of the registration and will be entitled to include, at our expense,
their shares of common stock. All of these registration rights, except for
those in favor of the warrant holder, will terminate on the earlier of August
13, 2006 or when a holder is able to sell all of its shares pursuant to Rule
144 under the Securities Act in any 90-day period. These registration rights
are subject to certain conditions and limitations, including the right of the
underwriters of an offering to limit the number of shares included in any such
registration under certain circumstances.
Warrant Holder. Pursuant to the terms of the warrant, the holder of the
warrant to purchase a total of 60,651 shares of common stock is entitled to
specified rights with respect to the registration of its shares of common stock
under the Securities Act. Subject to various and customary exceptions, if we
propose to register shares of the common stock under the Securities Act in an
underwritten public offering, the holder is entitled to notice of the
registration and is entitled to include its shares of common stock issuable
upon the exercise of the warrant in the registration at our expense. The
underwriters have the right to limit the number of warrant shares included in
any such registration.
Anti-Takeover Effects of Various Provisions of Delaware Law and OneSoft's
Restated Certificate of Incorporation and Restated Bylaws
After the closing of this offering, we will be subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law. In general,
Section 203 prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the interested stockholder attained that status
with the approval of the board of directors or unless the business combination
is approved in a prescribed manner. "Business combinations" include mergers,
asset sales and other transactions resulting in a financial benefit to the
interested stockholder. Generally, an "interested stockholder" is a person who,
together with his affiliates and associates, owns, or within the prior three
years did own, 15% or more of the corporation's voting stock. This
67
<PAGE>
statute could prohibit or delay the accomplishment of mergers or other takeover
or change of control attempts with respect to OneSoft and, accordingly, may
discourage attempts to acquire us.
In addition, our restated certificate of incorporation and restated bylaws
that will be in effect upon the closing of this offering, the relevant
provisions of which are summarized below, may delay, defer or prevent a tender
offer or takeover attempt that a stockholder might consider in its best
interest, including those attempts that might result in a premium over the
market price for the shares held by stockholders.
Classified Board of Directors. Following the completion of this offering,
our board of directors will be divided into three classes serving staggered
three-year terms. Consequently, approximately one-third of the board of
directors will be elected each year. These provisions are likely to increase
the time required for stockholders to change the composition of our board of
directors. For example, in general, at least two annual meetings will be
necessary for stockholders to effect a change in the majority of our board of
directors.
Advance Notice Requirements for Stockholder Proposals and Director
Nominees. Our restated bylaws provide that, for nominations to the board of
directors or for other business to be properly brought by a stockholder before
a meeting of stockholders, the stockholder must first have given timely notice
of the proposal in writing to our Secretary. For an annual meeting, a
stockholder's notice generally must be delivered not less than 45 days nor more
than 75 days prior to the anniversary of the preceding year's mailing date. For
a special meeting, the notice must generally be delivered not later than the
later of 90 days prior to the special meeting or 10 days following the day on
which public announcement of the meeting is first made. Detailed requirements
as to the form of the notice and information required in the notice are
specified in our restated bylaws. If it is determined that business was not
properly brought before a meeting in accordance with our bylaw provisions, such
business will not be conducted at the meeting.
Stockholder Action, Special Meeting of Stockholders. Our restated
certificate of incorporation does not permit our stockholders to act by written
consent. As a result, any action to be effected by our stockholders must be
effected at a duly called annual or special meeting of the stockholders.
Special meetings of the stockholders may be called only by our board of
directors.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is .
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Before this offering, there was no public market for our common stock. An
active public market for our common stock may not develop or be sustained after
this offering. Future sales of substantial amounts of common stock, including
shares issued upon exercise of outstanding options or warrants, in the public
market after this offering could adversely affect the prevailing market price
of our common stock and could impair our ability to raise equity capital in the
future. In addition, since a limited number of shares will be available for
sale immediately after this offering due to the contractual and legal
restrictions on resale described below, sales of substantial amounts of our
common stock in the public market after the restrictions lapse could adversely
affect the prevailing market price and our ability to raise equity capital in
the future.
Upon completion of this offering, we will have outstanding shares of
common stock, based on shares outstanding at December 31, 1999, assuming no
exercise of the underwriters' over-allotment option and no exercise of
outstanding options or warrants. Of this number, all of the shares sold in this
offering will be freely tradable in the public market without restriction or
further registration under the Securities Act, unless those shares are
purchased by any of our affiliates. An affiliate of OneSoft is a person that
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, OneSoft. Our current affiliates
include the individuals and entities that hold more than 10% of our stock
listed under "Principal Stockholders" as well as our other executive officers
and directors.
The remaining shares of common stock held by existing stockholders are
deemed "restricted securities" as defined under Rule 144 promulgated under the
Securities Act. Restricted securities may not be sold publicly unless they are
registered under the Securities Act or are sold pursuant to Rule 144 or another
exemption from registration. Of these shares, shares are subject to lock-up
agreements with the underwriters or directly with us, under which all of our
directors and officers and stockholders holding more than 1% of our common
stock have agreed not to transfer or dispose of, directly or indirectly, any
shares of common stock or any securities convertible into or exercisable or
exchangeable for shares of common stock, for a period of 180 days after the
date of this prospectus. Deutsche Bank Securities Inc., in some instances
together with us, may release the shares subject to the lock-up agreements in
whole or in part at any time with or without notice. Subject to these lock-up
agreements, the shares of common stock outstanding upon completion of this
offering will be available for sale in the public market as follows:
<TABLE>
<CAPTION>
Days After the Effective Shares Eligible
Date for Sale Comment
- ------------------------ --------------- ------------------------------------------------
<S> <C> <C>
On Effectiveness........ Freely tradable shares sold in this offering and
shares saleable under Rule 144(k) that are not
subject to the 180 day lock-up
90 days................. Additional shares saleable under Rules 144 and
701 that are not subject to the 180 day lock-up
180 days................ The 180 day lock-up is released and these
additional shares are saleable under Rule 144
(subject, in some cases, to volume limitations),
or Rule 144(k)
More than 180 days...... Restricted shares that are held for less than
one year and are not yet saleable under Rule 144
</TABLE>
69
<PAGE>
Rule 144
In general, under Rule 144, beginning 90 days after the date of this
prospectus, stockholders of OneSoft that have beneficially owned their shares
for at least one year, but less than two years, and affiliates of OneSoft that
have beneficially owned their shares for any period of more than one year or
who have purchased OneSoft shares in the open market, would be entitled to sell
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, equal to
approximately shares immediately after this offering; or
. the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice of sale with the SEC.
Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us.
Rule 144(k)
Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner except one of our affiliates,
is entitled to sell those shares without complying with the volume limitation
or the manner of sale, public information or notice provisions of Rule 144.
Rule 701
In general, under Rule 701 of the Securities Act, any of our employees,
officers, directors, consultants or advisors who purchased shares from us in
connection with a compensatory stock or option plan or other written agreement
is eligible to resell those shares 90 days after the effective date of this
offering in reliance on Rule 144, but without compliance with certain
restrictions, including the holding period contained in Rule 144. However,
shares issued pursuant to Rule 701 are subject to lock-up agreements and will
only become eligible for sale at the earlier of the expiration of the 180-day
lock-up agreements or the obtaining of the prior written consent of Deutsche
Bank Securities Inc.
Registration Rights
At any time more than six months after the closing of this offering, the
holders of shares of our common stock and shares of our common stock
issuable upon the exercise of outstanding options and warrants, or their
transferees, will be entitled to rights to register their shares under the
Securities Act. See "Description of Capital Stock--Registration Rights."
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.
Stock Options
Promptly following this offering, we will file a registration statement
under the Securities Act covering all shares of common stock subject to
outstanding options or options reserved for issuance under our Amended and
Restated 1997 Employee, Director and Consultant Stock Option Plan. Based on the
number of shares subject to options outstanding or reserved for issuance under
this plan at December 31, 1999, this registration statement would cover
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<PAGE>
approximately shares. The registration statement will automatically become
effective upon filing. Accordingly, subject to Rule 144 volume limitations
applicable to our affiliates, shares registered under the registration
statement will be available for sale in the open market immediately and
shares registered under the registration statement will be available for sale
in the open market immediately after the 180-day lock-up agreements expire.
Warrants
As of December 31, 1999, we had outstanding a warrant to purchase 60,651
shares of common stock. When this warrant is exercised and the exercise price
is paid in cash, the shares must be held for one year before they can be sold
under Rule 144. This warrant also contains "net exercise provisions." These
provisions allow the holder to exercise the warrant for a lesser number of
shares of common stock in lieu of paying cash. The shares of common stock
issued in a "net exercise" could be publicly sold under Rule 144 immediately
after exercise, subject to the 180-day lock-up period.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the
underwriters, named below through their representatives Deutsche Bank
Securities Inc., SG Cowen Securities Corporation, Friedman, Billings, Ramsey &
Co., Inc. and SoundView Technology Group, Inc. have severally agreed to
purchase from OneSoft the following respective number of shares of common stock
at the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this prospectus.
<TABLE>
<CAPTION>
Number of
Underwriter Shares
- ----------- ---------
<S> <C>
Deutsche Bank Securities Inc. .......................................
SG Cowen Securities Corporation......................................
Friedman, Billings, Ramsey & Co., Inc................................
SoundView Technology Group, Inc. ....................................
---
Total..............................................................
===
</TABLE>
The underwriting agreement provides that the obligations of the underwriters
are subject to certain conditions precedent and that the underwriters will
purchase all shares of the common stock offered hereby, other than those
covered by the over-allotment option described below, if any of such shares are
purchased.
The underwriters propose to offer the shares of common stock to the public
at public offering price set forth on the cover page of this prospectus and to
dealers at a price that represents a concession not in excess of $ per share,
under the public offering price. The underwriters may allow, and these dealers
may re-allow, a concession of not more than $ per share to other dealers.
After the initial public offering, representatives of the underwriters may
change the offering price and other selling items.
We, and the selling stockholders, have granted the underwriters an option,
to purchase up to and additional shares of common stock, respectively at the
public offering price less the underwriting discounts and commissions set forth
on the cover page of this prospectus. This option is exercisable not later than
30 days after the date of this prospectus. The underwriters may exercise this
option only to cover over-allotments made in connection with the sale of the
common stock offered hereby. To the extent the underwriters exercise this
option, each of the underwriters will become obligated, subject to conditions,
to purchase approximately the same percentage of additional shares of common
stock as the number of shares of common stock offered hereby. We and the
selling stockholders will be obligated, pursuant to the option, to sell these
additional shares of common stock to the underwriters to the extent the option
is exercised. If any additional shares of common stock are purchased, the
underwriters will offer the additional shares on the same terms as those on
which the shares are being offered.
We have requested that, of the shares of common stock to be sold in this
offering, up to shares be offered at the price to the public set forth on
the cover page of this prospectus to our directors, officers, employees and
business associates. As a result, the number of shares of common stock
available for sale to the general public will be reduced to the extent these
persons purchase the reserved shares. The underwriters will offer to the
general public, on the same basis as the other shares to be sold in this
offering, any reserved shares that were not purchased.
The underwriting fee is equal to the public offering price per share of
common stock less the amount paid by the underwriters to us per share of common
stock. The underwriting fee is
72
<PAGE>
% of the initial public offering price. We have agreed to pay the
underwriters the following fees, assuming either no exercise or full exercise
by the underwriters of the underwriters' over-allotment option:
<TABLE>
<CAPTION>
Total Fees
-----------------------------------------
Without Exercise of With Full Exercise of
Fee Per Over-Allotment Over-Allotment
Share Option Option
------- ------------------- ---------------------
<S> <C> <C> <C>
Fees paid by OneSoft..........
</TABLE>
In addition, we estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $ .
We and the selling stockholders have agreed to indemnify the underwriters
against some specified types of liabilities, including liabilities under the
Securities Act and to contribute to payments the underwriters may be required
to make in respect of any of these liabilities.
Each of our officers and directors and certain of our stockholders and
holders of options and warrants to purchase our stock, have agreed not to
offer, sell, contract to sell or otherwise dispose of, or enter into any
transaction that is designed to, or could be expected to, result in the
disposition of any portion of our common stock held by these persons for a
period of 180 days after the effective date of the registration statement, of
which this prospectus is a part, without the prior written consent of Deutsche
Bank Securities Inc. This consent may be given at any time without public
notice. We have entered into a similar agreement with the representatives of
the underwriters.
Transfers or dispositions can be made during the lock-up periods in the case
of gifts for estate planning purposes where the donee signs a lock-up
agreement.
The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.
To facilitate the offering of our common stock, the underwriters may engage
in transactions that stabilize, maintain or otherwise affect the market price
of our common stock. Specifically, the underwriters may over-allot shares of
our common stock in connection with this offering, thus creating a short
position in our common stock for their own account. A short position results
when an underwriter sells more shares of common stock than that underwriter is
committed to purchase. Additionally, to cover the over-allotments or to
stabilize the market price of our common stock, the underwriters may bid for,
and purchase, shares of our common stock in the open market. Finally, the
representatives, on behalf of the underwriters, may also reclaim selling
concessions allowed to an underwriter or dealer if the underwriting syndicate
repurchases shares distributed by that underwriter or dealer. Any of these
activities may maintain the market price of our common stock at a level above
that which might otherwise prevail in the open market. These transactions may
be effected on the Nasdaq National Market or otherwise. The underwriters are
not required to engage in these activities and, if commenced, may end any of
these activities at any time.
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to shares for friends and family members of our
executive officers and other persons that are affiliated with companies with
whom we have a business relationship, such as executives of companies that
market, sell or otherwise promote our products. None of these shares will be
subject to lock-up agreements.
The number of shares of our common stock available for sale to the general
public will be reduced to the extent these reserved shares are purchased. Any
reserved shares that are not
73
<PAGE>
purchased by these persons will be offered by the underwriters to the general
public on the same basis as the other shares in this offering.
The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.
SG Cowen Securities Corporation holds 2,071,400 shares of our Series A
preferred stock, 674,619 shares of our Series B preferred stock, and 379,363
shares of our Series C preferred stock through their affiliate Societe Generale
Capital Corporation. Deutsche Bank Securities Inc. served as placement agent in
connection with our Series C preferred stock financing and was paid a cash
placement agent fee. Deutsche Bank Securities Inc. received warrants for the
purchase of 60,651 shares of our common stock.
Pricing of this Offering
Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock has
been determined by negotiation among us and the representatives of the
underwriters. Among the primary factors considered in determining the public
offering price were:
. prevailing market conditions;
. our results of operations in recent periods;
. the present stage of our development;
. the market capitalizations and stages of development of other companies
that we and the representatives of the underwriters believe to be
comparable to our business; and
. estimates of our business potential.
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<PAGE>
LEGAL MATTERS
The validity of the common stock offered by this prospectus will be passed
upon for us by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston,
Massachusetts. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. and certain
of its members have options to purchase a total of 156,000 shares of our common
stock. Certain issues will be passed upon for the underwriters by Brobeck,
Phleger & Harrison LLP, Washington, D.C.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements at December 31, 1997 and 1998, and for each of the three years in
the period ended December 31, 1998, as set forth in their report. We have
included our financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-l under the Securities Act of 1933 regarding the common
stock offered by us. This prospectus does not contain all of the information
included in the registration statement and the exhibits filed as part of the
registration statement. Particular items are omitted in accordance with the
rules and regulations of the Securities and Exchange Commission. For further
information with respect to OneSoft and the common stock offered by this
prospectus, reference is made to the registration statement and its exhibits
and schedules. You may review a copy of the registration statement, including
exhibits, at the Securities and Exchange Commission located at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, Seven World Trade Center, 13th
Floor, New York, New York 10048 or Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of all or any part of the
registration statement may be obtained from that office after payment of fees
prescribed by the Securities and Exchange Commission. The Securities and
Exchange Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission at
http://www.sec.gov. Please call the Securities and Exchange Commission at 1-
800-SEC-0330 for further information on the operation of the public reference
rooms.
Upon receipt of a request by an investor or his or her representative prior
to , 2000 (25 days after the date of this prospectus), we shall transmit
or cause to be transmitted promptly, without charge, a paper copy of the
prospectus.
We intend to provide our stockholders with annual reports containing
financial statements audited by an independent public accounting firm and to
make available to our stockholders quarterly reports containing unaudited
financial data for the first three quarters of each year.
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<PAGE>
ONESOFT CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors............................................. F-2
Consolidated Balance Sheets................................................ F-3
Consolidated Statements of Operations...................................... F-4
Consolidated Statements of Stockholders' Equity............................ F-5
Consolidated Statements of Cash Flows...................................... F-6
Notes to Financial Statements.............................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
OneSoft Corporation
We have audited the accompanying consolidated balance sheets of OneSoft
Corporation as of December 31, 1998 and 1997, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of OneSoft Corporation at
December 31, 1998 and 1997 and the results of its operations and its cash flows
for each of the three years ended December 31, 1998, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
May, 26 1999
McLean, VA
F-2
<PAGE>
ONESOFT CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30, 1999
---------------------- ------------------------
1997 1998 Actual Pro Forma
---------- ---------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents... $ 733,366 $2,555,843 $22,998,177 $22,998,177
Accounts receivable, net of
allowance.................. 82,489 392,193 2,878,278 2,878,278
Other receivables........... -- 193,257 -- --
Other current assets........ 11,890 161,317 1,392,138 1,392,138
---------- ---------- ----------- -----------
Total current assets........ 827,745 3,302,610 27,268,593 27,268,593
Notes receivable--related
party...................... 412,333 441,036 964,518 964,518
Other non-current assets.... -- -- 646,825 646,825
Property and equipment,
net........................ 150,751 350,826 1,728,295 1,728,295
---------- ---------- ----------- -----------
Total assets................ $1,390,829 $4,094,472 $30,608,231 $30,608,231
========== ========== =========== ===========
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable............ $ 160,419 $ 306,515 $ 2,279,720 $ 2,279,720
Accrued payroll............. 83,426 415,527 1,783,667 1,783,667
Other current liabilities... 39,293 34,033 41,780 41,780
Deferred revenue............ -- -- 762,758 762,758
Capital lease obligations--
current.................... 26,991 40,231 157,057 157,057
Notes payable--related
party...................... 24,000 -- -- --
---------- ---------- ----------- -----------
Total current liabilities... 334,129 796,306 5,024,982 5,024,982
Capital lease obligations--
noncurrent.................. 31,099 33,489 84,912 84,912
Minority interest............ 41,351 20,911 17,692 17,692
Redeemable convertible
preferred stock; $0.01 par
value, 9,757,031 shares
authorized, 766,770,
3,192,530, 9,681,158 and 0
issued and outstanding...... 1,750,000 7,604,034 44,097,760 --
Stockholders' (deficit)
equity:
Common stock; $0.001 par
value, 20,242,969 shares
authorized, 5,950,620,
5,977,570, 6,081,070 and
15,762,228 shares issued
and outstanding............ 5,951 5,978 6,081 15,760
Additional capital.......... -- 1,644 4,528,710 48,616,791
Unearned stock option
compensation............... (50,614) (38,567) (1,978,076) (1,978,076)
Accumulated deficit......... (721,087) (4,329,323) (21,173,830) (21,173,830)
---------- ---------- ----------- -----------
Total stockholders'
(deficit) equity........... (765,750) (4,360,268) (18,617,115) 25,480,645
---------- ---------- ----------- -----------
Total liabilities and
stockholders' (deficit)
equity..................... $1,390,829 $4,094,472 $30,608,231 $30,608,231
========== ========== =========== ===========
</TABLE>
F-3
<PAGE>
ONESOFT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
----------------------------------- -------------------------
1996 1997 1998 1998 1999
---------- ---------- ----------- ----------- ------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Application services...... $ 240,100 $ 170,891 $ 560,890 $ 462,227 $ 1,071,005
Professional services..... 1,834,165 1,834,509 994,668 827,677 3,575,566
---------- ---------- ----------- ----------- ------------
Total revenues.......... 2,074,265 2,005,400 1,555,558 1,289,904 4,646,571
Cost of revenues............ 1,457,841 1,399,554 1,061,011 626,102 3,114,557
---------- ---------- ----------- ----------- ------------
Gross profit................ 616,424 605,846 494,547 663,802 1,532,014
Operating expenses:
Research and development
costs.................... -- 254,456 1,044,358 663,819 2,813,519
Sales and marketing
expenses................. -- -- 1,190,009 434,320 7,549,367
General and administrative
expenses................. 568,517 955,454 2,011,916 1,364,808 4,744,263
Stock and stock option
compensation expense..... -- 9,622 12,047 9,034 2,545,529
---------- ---------- ----------- ----------- ------------
Income (loss) from
operations................. 47,907 (613,686) (3,763,783) (1,808,179) (16,120,664)
Other income (expenses):
Interest income........... -- 16,902 169,128 113,711 290,284
Interest expense.......... (133) (17,615) (13,514) (9,067) --
---------- ---------- ----------- ----------- ------------
(133) (713) 155,614 104,644 290,284
---------- ---------- ----------- ----------- ------------
Net income (loss) before
taxes and minority
interest................... 47,774 (614,399) (3,608,169) (1,703,535) (15,830,380)
Provision for income taxes.. -- -- -- -- --
Minority interest in
consolidated subsidiaries.. 736 13,893 17,967 9,018 3,219
---------- ---------- ----------- ----------- ------------
Net income (loss)........... $ 48,510 $ (600,506) $(3,590,202) $(1,694,517) $(15,827,161)
Accretion of preferred
stock...................... -- -- 18,034 12,139 1,017,346
---------- ---------- ----------- ----------- ------------
Net income (loss) available
to shareholders............ 48,510 (600,506) (3,608,236) (1,706,656) (16,844,507)
========== ========== =========== =========== ============
Income (loss) per share
basic and diluted.......... $0.02 $(0.10) $(0.60) $(0.29) $(2.79)
========== ========== =========== =========== ============
Pro forma loss per share
basic and diluted.......... $(0.44) $(1.46)
=========== ============
Weighted average shares used
in calculation of basic and
diluted income (loss) per
share...................... 3,000,000 5,832,278 5,968,736 5,965,692 6,027,792
========== ========== =========== =========== ============
Weighted average shares used
in calculation of Pro forma
loss per share............. 8,182,430 10,850,675
========== ========== =========== =========== ============
</TABLE>
F-4
<PAGE>
ONESOFT CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Unearned Total
----------------- Stock Additional Accumulated Stockholders'
Shares Amount Compensation Capital Deficit Equity (Deficit)
--------- ------ ------------ ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1995................... 3,000,000 $3,000 $ -- $ -- $ (12,376) $ (9,376)
Net income............. -- -- -- -- 48,510 48,510
--------- ------ ----------- ---------- ------------ ------------
Balance, December 31,
1996................... 3,000,000 3,000 -- -- 36,134 39,134
Recapitalization....... 3,360,000 3,360 -- (3,360) -- --
Sale of common stock... 340,620 341 -- 199,659 -- 200,000
Issuance of stock
options............... -- -- (60,236) 60,236 -- --
Amortization of
unearned stock option
compensation.......... -- -- 9,622 -- -- 9,622
Repurchase of common
stock................. (750,000) (750) -- (256,535) (156,715) (414,000)
Net loss............... -- -- -- -- (600,506) (600,506)
--------- ------ ----------- ---------- ------------ ------------
Balance, December 31,
1997................... 5,950,620 5,951 (50,614) -- (721,087) (765,750)
Exercise of stock
options............... 26,950 27 -- 1,644 -- 1,671
Amortization of
unearned stock option
compensation.......... -- -- 12,047 -- -- 12,047
Accretion of preferred
stock................. -- -- -- -- (18,034) (18,034)
Net loss............... -- -- -- -- (3,590,202) (3,590,202)
--------- ------ ----------- ---------- ------------ ------------
Balance, December 31,
1998................... 5,977,570 5,978 (38,567) 1,644 (4,329,323) (4,360,268)
Exercise of stock
options............... 103,500 103 -- 57,028 -- 57,131
Issuance of stock
options............... -- -- (2,244,868) 4,470,038 -- 2,225,170
Amortization of
unearned stock
compensation.......... -- -- 305,359 -- -- 305,359
Accretion of preferred
stock................. -- -- -- -- (1,017,346) (1,017,346)
Net loss............... -- -- -- -- (15,827,161) (15,827,161)
--------- ------ ----------- ---------- ------------ ------------
Balance at September 30,
1999................... 6,081,070 $6,081 $(1,978,076) $4,528,710 $(21,173,830) $(18,617,115)
========= ====== =========== ========== ============ ============
</TABLE>
F-5
<PAGE>
ONESOFT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
---------------------------------- -------------------------
1996 1997 1998 1998 1999
--------- ---------- ----------- ----------- ------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Operating activities
Net income (loss)...... $ 48,510 $ (600,506) $(3,590,202) $(1,694,517) $(15,827,161)
Adjustments to
reconcile net income
(loss) to net cash
Provided by (used in)
operating activities:
Depreciation........... 10,690 27,395 118,543 49,901 833,325
Amortization of
unearned stock
compensation.......... -- 9,622 12,047 9,035 2,545,529
Minority interest...... (736) (13,893) (17,967) (6,700) (3,219)
Changes in operating
assets and
liabilities:
Accounts receivable... (305,718) 223,233 (309,704) (358,016) (2,486,085)
Other receivables..... -- -- (193,257) (77,400) 193,257
Other current assets.. -- (11,463) (149,427) 5,461 (1,877,648)
Accounts payable...... 195,935 (28,438) 146,096 (111,249) 1,973,205
Accrued payroll....... 56,732 26,696 332,101 213,329 1,368,140
Other current
liabilities.......... 34,220 7,293 (4,796) 36,954 924,579
--------- ---------- ----------- ----------- ------------
Net cash provided by
(used in) operating
activities............ 39,633 (360,061) (3,656,566) (1,933,202) (12,356,078)
--------- ---------- ----------- ----------- ------------
Investing activities
Acquisition of property
and equipment......... (53,777) (48,474) (260,887) (125,932) (2,042,545)
Minority interest
contribution to Sports
Warehouse, Inc........ -- 50,000 -- -- --
Notes receivable--
related party......... -- (412,750) (46,286) -- (523,482)
--------- ---------- ----------- ----------- ------------
Net cash used in
investing activities.. (53,777) (411,224) (307,173) (125,932) (2,566,027)
--------- ---------- ----------- ----------- ------------
Financing activities
Repurchase of common
stock................. -- (414,000) -- -- --
Exercise of stock
options............... -- -- 1,671 1,671 57,131
Sale of common stock... -- 200,000 -- -- --
Sale of redeemable
preferred stock, net
of offering costs..... -- 1,750,000 5,836,000 5,836,000 35,476,380
Payments of capital
lease obligations..... -- (34,230) (27,455) (56,345) (169,072)
Repayment of notes
payable--related
party................. -- (30,000) (24,000) -- --
Borrowings under notes
payable--related
party................. 10,000 24,000 -- -- --
--------- ---------- ----------- ----------- ------------
Net cash provided by
financing activities.. 10,000 1,495,770 5,786,216 5,781,326 35,364,439
--------- ---------- ----------- ----------- ------------
Net (decrease) increase
in cash............... (4,144) 724,485 1,822,477 3,722,192 20,442,334
Cash at beginning of
year.................. 13,025 8,881 733,366 733,366 2,555,843
--------- ---------- ----------- ----------- ------------
Cash at end of year.... $ 8,881 $ 733,366 $ 2,555,843 $ 4,455,558 $ 22,998,177
========= ========== =========== =========== ============
</TABLE>
F-6
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Organization
OneSoft, Inc. ("The Company") is a leading provider of Internet commerce
software and services that enable businesses to use the Internet as a commerce
channel with their customers, partners and suppliers. The Company was
incorporated in Virginia in November 1995 and in June 1997 the Company merged
with a shell company resulting in the surviving company being incorporated in
Delaware. The shareholder ownership percentages of the Company were the same
both prior and subsequent to this transaction. From inception, the Company has
conducted development efforts resulting in the creation of "OneCommerce", our
Internet commerce software, and the services used to deploy the application for
our business customers. In 1997 the Company began licensing its software, which
has evolved into offering companies a comprehensive solution to efficiently
build, grow and extend their Internet commerce businesses rapidly and cost-
effectively, thus maximizing their revenue opportunities. The Company holds a
70% equity interest in Sports Warehouse, Inc. which it has consolidated for
financial statement purposes.
Recapitalization
During the first quarter of 1997, the Company acquired all of the
outstanding common stock of Interflowww, Inc. for 3,360,000 shares of the
Company's founders share. Interflowww, Inc. was majority owned by a shareholder
of the Company, and its limited operations since inception had been funded
entirely by OneSoft.
Interim Financial Information (Unaudited)
The historical financial information and pro forma information as of
September 30, 1999 and for the nine months ended September 30, 1998 and 1999 is
unaudited but includes all adjustments, consisting of only normal recurring
adjustments, that in the opinion of management is necessary for a fair
presentation of the Company's financial position, operating results, and cash
flows for such periods. Operating results for the nine month period ended
September 30, 1999 are not indicative of results to be expected for fiscal year
of 1999 or any future period.
Principles of Consolidation
All significant intercompany accounts and transactions have been eliminated
in consolidation.
Revenue Recognition
The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants' Statement of Position 97-2, "Software Revenue
Recognition" ("SOP 97-2"), as amended by Statement of Position 98-4, "Deferral
of the Effective Date of a Provision of SOP 97-2" ("SOP 98-4"). The Company
derives revenue from application and professional services. Applications
services revenues consist primarily of license fees, software maintenance fees
and fees for managed services that include application outsourcing, technical
support and transaction services. The Company derives revenue from the
provision of professional services that assist clients in the planning, design
and implementation of their Internet commerce business.
F-7
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
1. Organization and Significant Accounting Policies (continued)
Revenues from license fees is recognized when persuasive evidence of an
agreement exists, delivery of the product has occurred, no significant company
obligations with regard to installation or implementation of the software
remain, the fee is fixed or determinable and collection is probable. Revenues
on arrangements with customers that are not the ultimate end user (primarily
resellers) is recognized upon receipt of a reseller report of the sale and the
Company's shipment of the licensed software. Advanced payments are recorded as
deferred revenue until the product is shipped, services are delivered or
obligations are met. The Company's products do not require significant
customization.
Revenue related to maintenance is recognized on a straight line basis over
the period maintenance is provided. Professional services revenue, which is
substantially time and materials related, is recognized as the services are
provided.
In December 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-9, "Modification of SOP 97-2, Software Revenue
Recognition, With Respect to Certain Transactions" ("SOP 98-9"). SOP 98-9
requires use of the "residual method" for recognition of revenues when vendor-
specific objective evidence exists for undelivered elements but does not exist
for delivered elements of a software arrangement. The Company will be required
to comply with the provisions of SOP 98-9 for transactions entered into
beginning January 1, 2000. The Company does not believe that the adoption of
SOP 98-9 will have a material effect on its financial position or results of
operations.
Stock Split
In 1998, the Company declared a 10 to 1 stock split of its common stock. On
March 1, 1999, the Company declared an additional 10 to 1 stock split of its
Series A preferred stock. Accordingly all prior period stock balances have been
restated to reflect the stock splits as if both splits had occurred at the
beginning of the earliest period presented.
Fair Value of Financial Instruments
The Company considers the recorded value of its financial assets and
liabilities, consisting primarily of cash, accounts receivable, notes
receivable, current liabilities and capital lease obligations to approximate
the fair value of the respective assets and liabilities at December 31, 1997
and 1998.
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
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ materially from those estimates.
Concentration of Credit Risk
Financial instruments which subject the Company to concentrations of credit
risk primarily consist of cash, cash equivalents and accounts receivable. The
Company maintains its cash and cash equivalents principally in domestic
financial institutions of high credit standing.
F-8
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
1. Organization and Significant Accounting Policies (continued)
The Company's accounts receivable are derived primarily from the sale of
software products and related services. The Company performs ongoing credit
evaluations of its customers and generally does not require collateral.
At December 31, 1997 and 1998 and September 30, 1999, five customers
accounted for approximately 86%, 88%, and 76% respectively of the total
accounts receivable balance.
Income Taxes
The Company accounts for taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (SFAS 109). Under SFAS 109,
deferred tax liabilities and assets are determined based on the differences
between the financial statement and tax basis of assets and liabilities using
enacted rates expected to be in effect during the year in which the
differences reverse.
Property and Equipment
Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful life of the asset, ranging from
three to five years. Leasehold improvements are depreciated over the lesser of
the useful life of the addition or the lease term.
Product Development
The Company expenses research and development costs as they are incurred.
Product development costs for the years ended December 31, 1996, 1997 and 1998
and nine months ended September 30, 1998 and 1999 were $0, $254,456,
$1,044,358, $663,819 and $2,813,519, respectively.
Reclassification
Certain prior year balances have been reclassified to conform with the 1998
presentation.
2. Accounts Receivable & Other Receivables
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
December 31,
------------------ September 30,
1997 1998 1999
-------- -------- -------------
<S> <C> <C> <C>
Billed receivables......................... $100,511 $369,447 $3,075,361
Unbilled receivables....................... 15,959 103,280 --
Allowance for possible losses.............. (33,981) (80,534) (197,083)
-------- -------- ----------
Total...................................... $ 82,489 $392,193 $2,878,278
======== ======== ==========
</TABLE>
Other receivables consist of amounts reimbursable to the Company primarily
as the result of equipment leases.
F-9
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
3. Notes Receivable--Related Party
On December 1, 1997, the Company loaned an officer of the Company $412,333
to purchase 750,000 shares of the Company's common stock from a third party.
The note is due on December 1, 2002, accrues interest at 6.02% per annum, and
is secured by the 750,000 shares of OneSoft common stock and other assets. At
December 31, 1998, the outstanding loan is $441,036 consisting of principal of
$412,333 and accrued interest of $28,286. At September 30, 1999, the
outstanding loan is $460,948 consisting of principal of $412,333 and accrued
interest of $48,615.
On August 13, 1999 the Company loaned an officer of the Company $500,000.
The loan is due on August 13, 2002, accrues interest at 5.43% per annum, and
is secured by shares of the Company's common stock. At September 30, 1999 the
outstanding loan is $503,570 consisting of principal of $500,000 and accrued
interest of $3,570.
4. Property and Equipment
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
------------------ September 30,
1997 1998 1999
-------- -------- -------------
<S> <C> <C> <C>
Equipment................................ $152,885 $216,075 $ 502,438
Furniture................................ 10,943 101,304 251,293
Leasehold improvements................... 24,591 36,502 937,738
Software................................. -- 153,573 507,785
-------- -------- ----------
188,419 507,454 2,199,254
Less accumulated depreciation and
amortization............................ (38,085) (156,628) (470,959)
-------- -------- ----------
Total.................................... $150,334 $350,826 $1,728,295
======== ======== ==========
</TABLE>
5. Notes Payable
At December 31, 1997, the Company had unsecured notes payable of $24,000 to
a company controlled by a stockholder of the Company. This note was due on
demand and accrued interest at a rate of 9.5 % per annum. This note was paid
in full during 1998.
The Company paid interest of approximately $0, $7,615, $13,500, $9,066 and
$26,648 related to all of its notes payable and capital leases for the years
ended December 31, 1996, 1997 and 1998 and the nine months ended September 30,
1998 and 1999, respectively.
6. Stockholders' Equity and Redeemable Convertible Preferred Stock
Common Stock
On April 13, 1997, the Company sold 340,620 shares of common stock for
$.587 per share.
On December 1, 1997, the Company purchased 750,000 shares of common stock
from a former officer of the Company for $414,000.
F-10
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
6. Stockholders Equity and Redeemable Convertible Preferred Stock (continued)
Redeemable Convertible Preferred Stock
On November 14, 1997, the Company sold 766,770 shares of Series A Mandatory
Redeemable Convertible Preferred Stock for proceeds of $1,750,000.
On March 13, 1998, the Company sold 147,220 shares of Series A Mandatory
Redeemable Convertible Preferred Stock for proceeds of $336,000.
In June 1998, the Company sold 2,278,540 shares of Series A Mandatory
Redeemable Convertible Preferred Stock for proceeds of $5,500,000.
On March 1, 1999 the Company sold 2,023,857 shares of Series B Mandatory
Redeemable Convertible Preferred Stock for proceeds of $7.5 million. In
conjunction with this sale, the Company declared a 10 to 1 stock split for
series A preferred stock. All prior period stock balances have been restated to
reflect the stock split as if it had occurred at the beginning of the earliest
period.
On August 13, 1999 the Company sold 4,464,771 shares of Series C Mandatory
Redeemable Convertible Preferred Stock for net proceeds of approximately $29.4
million.
All classes of the Company's Mandatory Redeemable Convertible Preferred
Stock (collectively referred to as the "Preferred Stock") convert into an
equivalent number of common shares at the holders discretion at any time after
issuance. The Preferred Stock is entitled to dividends, payable if and when
declared by the board of directors. The Preferred Stock has voting rights on an
as if converted basis. The Preferred Stock will convert into common stock if
the Company is sold or holds a public offering of equity securities, as defined
in the agreement. The Preferred Stock has certain anti-dilutive and future
registration provisions as defined in the agreement. The Preferred Shares have
liquidation preferences over common shares. Accretion of the preferred shares
for the year ended December 31, 1998 and the nine months ended September 30,
1999, respectively. 1999 was $18,034 and $1,017,346, respectively.
Stock Options
Statement of Financial Accounting Standard (SFAS) No. 123, "Accounting for
Stock-Based Compensation," requires a fair value based methodology of
accounting for all stock option plans. The Company has elected to follow APB 25
and related interpretations in accounting for its employee stock options and
has provided pro forma fair value disclosure under SFAS No. 123. Under APB 25,
because the exercise price of the Company's stock options equal or exceed the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.
During 1997, the Company adopted the 1997 Stock Option Plan (the "Plan").
Under the Plan, 3,000,000 shares of common stock are reserved for issuance.
During 1999, the Company's Board of Directors increased the number of shares of
common stock that can be issued under the Plan to 4,000,000. Options under the
Plan may be of two types: non qualified stock options and incentive stock
options. All employee options expire after 3 months from the employee
termination date. Options vest over periods not to exceed 5 years and the
contractual term of the options is 10 years from the date of grant. At December
31, 1997 and 1998 and September 30, 1999 the Company had 1,908,960, 1,351,510
and 643,520 options available for grant under the plan.
F-11
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
6. Stockholders Equity and Redeemable Convertible Preferred Stock (continued)
The Company recorded expense of $9,622, $12,047 and $320,359 during the
years ended December 31, 1997 and 1998 and the nine months ended September 30,
1999 as a result of the issuance of stock options to employees with exercise
prices less than the fair market value of the Company's common stock at the
date of issuance.
The Company recorded an additional $2,225,170 of expense related to the fair
value of the options issued to non-employees. Of this amount $363,170 related
to services performed during 1999 by non-employees and $1,862,000 of the
balance resulted from the issuance to a consultant of an option for 250,000
shares of common stock with and exercise price of $0.552 per share. These
options vest upon this individual meeting certain sales goals, prior to
December of 2000, pursuant to the option agreement. The Company has accounted
for these options under SOP 96-18 and accordingly recorded the variable
accounting for the options through September 30, 1999.
Pro forma information regarding net income is required by SFAS No. 123, and
has been determined as if the Company had accounted for its stock options under
the fair value method of that statement. The fair value for these options was
estimated at the date of grant using the minimum valuation method and the
following assumptions: risk free interest rate 6%; a dividend yield of 0%; and
weighed average expected life of 4 years. For purposes of pro forma disclosure,
the estimated fair value of the options is amortized to expense over the
options' vesting period.
The weighted average fair values of the options granted in 1997 with a stock
price equal to the exercise price and with a stock option price greater than
the exercise price is $0.14 and $0.44 per share, respectively. The weighted
average fair values of the options granted in 1998 with a stock price equal to
the exercise price is $0.14 per share. The weighted average fair values of the
options granted in 1999 with a stock price equal to the exercise price and with
a stock price greater than the exercise price are $1.53 and $3.39 per share,
respectively.
<TABLE>
<CAPTION>
Nine Months
Year Ended December Ended
31, September
---------------------- 30,
1997 1998 1999
--------- ----------- ------------
<S> <C> <C> <C>
Pro forma net loss................... $(609,822) $(3,653,083) $(17,060,591)
Pro forma basic and diluted net loss
per share(1)........................ $(0.10) $(0.61) $(2.83)
</TABLE>
- --------
(1) The pro forma net loss reflects the pro forma weighted outstanding shares
for the years ended December 31, 1997 and 1998 and the nine months ended
September 30, 1999. See note 11.
F-12
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
6. Stockholders Equity and Redeemable Covertible Preferred Stock (continued)
The Company's stock option activity and related information is as follows:
<TABLE>
<CAPTION>
Weighted-
Average
Number of Exercise
Options Price
--------- ---------
<S> <C> <C>
Outstanding at January 1, 1997......................... -- $ --
Granted............................................... 1,091,040 0.53
Exercised............................................. -- --
Forfeited............................................. -- --
--------- -----
Outstanding at December 31, 1997....................... 1,091,040 0.53
Granted............................................... 853,150 0.53
Exercised............................................. (26,950) 0.06
Canceled/Forfeited.................................... (268,750) 0.49
--------- -----
Outstanding at December 31, 1998....................... 1,648,490 0.55
Granted............................................... 2,156,490 2.10
Exercised............................................. (103,500) 0.55
Canceled/Forfeited.................................... (345,000) 1.04
--------- -----
Outstanding at September 30, 1999...................... 3,356,480 $1.50
========= =====
Exercisable at December 31, 1998...................... 615,416 $0.55
========= =====
Exercisable at September 30, 1999..................... 1,131,049 $0.55
========= =====
</TABLE>
The following table summarizes information about stock options outstanding
at September 30, 1999
<TABLE>
<CAPTION>
September 30, 1999 September 30, 1999
Options Outstanding Options Exercisable
--------------------- ---------------------
Weighted- Weighted-
Average Average
Range of Number Exercise Number Exercise
Exercise Price Outstanding Price Exercisable Price
- -------------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Less than $1.00..................... 2,576,950 $0.47 1,116,299 $0.45
$1.00 to $4.00...................... 377,000 3.97 -- --
$4.01 to $8.00...................... 402,530 5.45 14,750 5.90
--------- ---------
3,356,480 1,131,049
========= =========
</TABLE>
The average remaining contractual lives for options outstanding at December
31, 1998 and September 31, 1999 was 9 years and 8 years respectively.
7. Income Taxes
At December 31, 1998, the Company had a net operating loss carryforwards for
tax purposes of approximately $3.9 million, which principally expires in 2018.
The timing and manner in which the operating loss carryforward may be utilized
in any year by the Company will be limited by the Company's ability to generate
future earnings and certain other provisions of the US tax code.
F-13
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
7. Income Taxes (continued)
Net deferred tax assets at December 31, consist of:
<TABLE>
<CAPTION>
1997 1998
--------- -----------
<S> <C> <C>
Net operating loss carryforward...................... $ 211,284 $ 1,507,510
Allowance for bad debts.............................. 13,592 32,214
Other................................................ 2,057 25,558
Valuation allowance.................................. (226,933) (1,565,282)
--------- -----------
Net deferred tax asset............................... $ -- $ --
========= ===========
</TABLE>
As the Company does not have a history of consistent earnings and no
assurance can be made of future earnings, a valuation allowance in the amount
of the deferred tax asset has been recorded.
A summary of items which cause the recorded income taxes to differ from the
statutory Federal income tax rate is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------
1997 1998
----------- ------------
<S> <C> <C>
Tax expense (benefit) at statutory Federal
rate........................................... $ (208,896) $ (1,226,777)
Effect of:
State income tax, net......................... (36,864) (216,490)
Stock issuance costs.......................... -- 55,164
Other......................................... 18,827 49,755
Increase in valuation allowance............... 226,933 1,338,348
---------- ------------
Income tax expense (benefit).................... $ -- $ --
========== ============
</TABLE>
The Company paid no income taxes during the years ended December 31, 1998
and 1997 and the nine months ended September 30, 1999.
8. Leases
The Company currently leases office space and equipment under non-cancelable
operating leases. The future minimum lease payments under non-cancelable
operating leases at December 31, 1998 are as follow:
<TABLE>
<CAPTION>
Fiscal Year
-----------
<S> <C>
1999................................................................ $243,300
2000................................................................ 210,694
2001................................................................ 86,171
--------
Total............................................................... $540,165
========
</TABLE>
F-14
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
8. Leases (continued)
The Company currently leases equipment and furniture under non-cancelable
capital leases. The future minimum lease payments under non-cancelable capital
leases at December 31, 1998 are as follow:
<TABLE>
<CAPTION>
Fiscal Year
- -----------
<S> <C>
1999................................................................... $48,749
2000................................................................... 24,626
2001................................................................... 10,085
Thereafter............................................................. --
-------
Total minimum lease payments........................................... 83,460
Less amount representing interest...................................... 9,740
-------
Present value of minimum lease payments................................ 73,720
Less current portion of capital lease obligation....................... 40,231
-------
Non-current portion of capital lease obligation........................ $33,489
=======
</TABLE>
Rent expense for the years ended December 31, 1996, 1997, 1998 and the nine
months ended September 30, 1998 and 1999 was approximately $64,000, $67,000,
$122,000, $68,500 and $496,081, respectively.
9. 401(k) Plan
The Company has a 401(k) Plan for the benefit of all employees who meet
certain eligibility requirements. The plan documents provide for the Company to
make defined contributions as well as matching and other discretionary
contributions, as determined by the Board of Managers. The Company contributed
$0, $4,777, $0 and $0 to the plan for the years ended December 31, 1996, 1997,
1998 and the nine months ended September 30, 1999, respectively.
F-15
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
10. Earnings Per Share
The following table sets forth the computation of historical basic and
diluted earnings per share:
<TABLE>
<CAPTION>
Nine months Ended
Year Ended December 31, September 30,
---------------------------------- -------------------------
1996 1997 1998 1998 1999
---------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Numerator:
Net income (loss)..... $ 48,510 $ (600,506) $(3,590,202) $(1,694,517) $(15,827,161)
Accretion on preferred
shares............... -- -- (18,034) (12,139) (1,017,346)
---------- ---------- ----------- ----------- ------------
Net income available
to shareholders...... $ 48,510 $ (600,506) $(3,608,236) $(1,706,656) $(16,844,507)
========== ========== =========== =========== ============
Denominator:
Weighted average
common shares........ 3,000,000 5,832,278 5,968,736 5,965,692 6,027,792
Effect of dilutive
securities:
Stock option........ -- -- -- --
Preferred stock..... -- -- -- --
---------- ---------- ----------- ----------- ------------
Weighted average
common shares basic
and diluted.......... 3,000,000 5,832,278 5,968,736 5,965,692 6,027,792
========== ========== =========== =========== ============
</TABLE>
The effect of the exercise of options or preferred stock would be dilutive
for years ended December 31, 1997 and 1998 and the nine months ended September
30, 1998 and 1999. There were no dilutive securities outstanding during 1996.
11. Pro Forma Balance Sheet and Earnings Per Share (unaudited)
The pro forma balance sheet reflects the conversion of all classes of
preferred stock as of September 30, 1999.
The pro forma earning per share reflects the conversion of the all classes
of preferred stock as of the beginning of the respective periods presented.
The following table sets forth the components of pro forma basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Year Ended December Nine Months Ended
31, 1998 September 30, 1999
------------------- ------------------
<S> <C> <C>
Numerator:
Net income (loss)................. $(3,590,202) $(15,827,161)
Denominator:
Weighted average common shares.... 5,968,736 6,027,792
Conversion of preferred shares.... 2,213,694 4,822,883
----------- ------------
Pro forma weighted average common
shares basic and diluted......... 8,182,430 10,850,675
=========== ============
</TABLE>
F-16
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
12. Commitments & Contingencies
The Company has entered into employment agreements with its Chief Executive
Officer ("CEO"), Chief Financial Officer ("CFO") and the Senior Vice President
of Services ("VP of Services") which contain non-disclosure, assignment of
inventions, non-competition and non-solicitation restrictions and covenants.
These agreements provide for current annual base salaries of $240,000, $175,000
and $150,000 for the CEO, CFO and VP of Services respectively, subject to
increase by the board of directors, and allow for additional annual bonus
compensation based on the meeting of certain mutually agreed upon business
objectives and as defined in the agreements. The agreements automatically renew
annually unless either the Company or these executives, provide written notice
of intention not to renew an agreement. In addition these agreements provide
for certain severance benefits to these executives as defined in the
agreements.
The Company also is involved in other legal proceedings in the ordinary
course of its business. In the opinion of management, these proceedings involve
amounts that would not have a material effect on the financial position or
results of operations of the Company if such proceedings were disposed of
unfavorably.
13. Events Subsequent to auditors opinion (unaudited)
On October 5,1999, the Company sold 426,482 shares of Series C Redeemable
Convertible Preferred Stock for net proceeds of approximately $2.8 million. In
conjunction with this transaction the Company issued an investor a warrant to
purchase 60,651 shares of common stock with an exercise price of $6.59 for
assistance in selling the preferred stock.
F-17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth an itemization of all estimated expenses, all
of which we will pay, in connection with the issuance and distribution of the
securities being registered:
<TABLE>
<CAPTION>
Underwriter Amount
----------- ------
<S> <C>
SEC Registration Fee.................................................. $
Nasdaq National Market Listing Fee....................................
NASD Fee..............................................................
Printing and engraving expenses.......................................
Legal fees and expenses...............................................
Accounting fees and expenses..........................................
Blue Sky qualification fee and expenses...............................
Transfer agent and registrar fees.....................................
Miscellaneous.........................................................
</TABLE>
Item 14. Indemnification of Directors and Officers.
Our amended and restated certificate of incorporation (the "Charter")
provides that we shall indemnify and advance expenses to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as amended
from time to time, to each person who is or was one of our directors or
officers and the heirs, executors and administrators of such a person. Any
expenses, including attorneys' fees, incurred by a person who is or was one of
our directors or officers, and the heirs, executors and administrators of such
a person in connection with defending any such proceeding in advance of its
final disposition shall be paid by us; provided, however, that if Delaware law
requires an advancement of expenses incurred by an indemnitee in his capacity
as a director or officer, and not in any other capacity in which service was or
is rendered by such indemnitee, including, without limitation, service to an
employee benefit plan, shall be made only upon delivery to us of an undertaking
by or on behalf of such indemnitee, to repay all amounts so advanced, if it
shall ultimately be determined that such indemnitee is not entitled to be
indemnified for such expenses. Notwithstanding the aforementioned
indemnification provisions, we may, at the discretion of our chief executive
officer, enter into indemnification agreements with directors or officers.
Section 145 of Delaware law provides that a corporation has the power to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, other than an action by or in the right of the corporation,
by reason of the fact that such director or officer or former director or
officer is or was a director, officer, employee or agent of the corporation,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by them in connection with such
action, suit or proceeding, if such person shall have acted in good faith and
in a manner reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
provided that such person had no reasonable cause to believe his or her conduct
was unlawful, except that, if such action shall be in the right of the
corporation, no such indemnification shall be provided as to any claim, issue
or matter as to which such person shall have been judged to have been liable to
the corporation unless and to the extent that the Court of Chancery of the
State of Delaware, or any court in which such suit or action was brought, shall
determine
II-1
<PAGE>
upon application that, in view of all of the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as such
court shall deem proper.
The amended and restated certificate of incorporation contains a provision
to limit the personal liability of our directors to the fullest extent
permitted by Section 102(b)(7) of Delaware law, as amended. In addition, the
restated bylaws provide that we shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, other than an action by us or in our right, by reason of the
fact that he is or was one of our directors, officers, employees or agents, or
is or was serving at our request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to our best interests, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
As permitted by Delaware law, the amended and restated certificate of
incorporation, which will be filed prior to the completion of the offering,
provides that, subject to certain limited exceptions, none of our directors
shall be liable to us or our stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (1) for any breach of the
director's duty of loyalty to us or our stockholders, (2) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (3) for the unlawful payment of dividends on or redemption or
repurchase of our capital stock or (4) for any transaction from which the
director derived an improper personal benefit. The effect of this provision is
to limit our ability and our stockholders' ability through stockholder
derivative suits on our behalf to recover monetary damages against a director
for the breach of certain fiduciary duties as a director, including breaches
resulting from grossly negligent conduct. In addition, the amended and restated
certificate of incorporation and Restated bylaws provide that we shall, to the
fullest extent permitted by Delaware law, indemnify all of our directors and
officers and that we may, to the extent permitted by Delaware law, indemnify
our employees and agents.
We have agreed to indemnify the underwriters against certain liabilities,
including civil liabilities under the Securities Act.
Item 15. Recent Sales of Unregistered Securities.
Set forth in chronological order is information regarding shares of common
stock issued, and options and warrants granted, by the registrant within the
past three years. Also included is the consideration, if any, received by the
registrant for such shares and options and information relating to the section
of the Securities Act or rule of the Securities and Exchange Commission under
which exemption from registration was claimed.
Certain Grants and Exercises of Stock Options
The issuance of the securities described below were exempt from registration
under the Securities Act in reliance on Rule 701 promulgated under Section 3(b)
of the Securities Act, as transactions not involving a public offering or
transactions pursuant to compensatory benefit plans and contracts relating to
compensation as provided under Rule 701.
In March 1997, the registrant's Amended and Restated 1997 Employee, Director
and Consultant Stock Option Plan was approved and adopted by the board of
directors and stockholders of the registrant. In August 1999 and January 2000,
the board of directors and
II-2
<PAGE>
stockholders of the registrant approved and adopted amendments to the plan that
increased the total number of shares of common stock for which options may be
granted under the plan. Since March 1997, options to purchase a total of
4,820,150 shares of common stock have been granted, 905,917 shares of which
have been cancelled. As of December 31, 1999, 231,750 of these options had been
exercised.
In March 1997, we issued an incentive stock option to purchase 81,000 shares
of our common stock at an exercise price of $0.062 per share to one consultant
in exchange for services rendered to OneSoft.
In February 1999, we issued a non-qualified stock option to purchase 75,000
shares of our common stock at an exercise price of $0.552 per share to three
consultants in exchange for services rendered to OneSoft.
In April 1999, we issued 100,000 shares of our common stock to one board
member at $0.552 per share.
Issuances of Capital Stock
The sale and issuance of the securities described below were deemed to be
exempt from registration under the Securities Act pursuant to Section 4(2)
and/or Regulation D promulgated thereunder.
(1) In March 1997, we issued 840,000 shares of our common stock to three of
our employees, including one of our senior vice presidents, in connection with
the merger of InterFlowww Enterprises, Inc. into Global Exchange, Inc., our
predecessor in interest.
(2) In April 1997, we issued and sold 340,620 shares of our common stock in
a private placement to one investor for $200,000
(3) In November 1997, March 1998, and June 1998 the registrant issued and
sold a total of 3,192,530 shares of Series A convertible preferred stock in a
private placement to two investors at a price per share of $2.283 and
$2.4138264 for gross consideration of approximately $7.6 million.
(4) In February 1999, the registrant issued and sold a total of 2,023,857
shares of Series B convertible preferred stock in a private placement to two
investors at a price per share of $3.705793 for gross consideration of
approximately $7.5 million.
(5) In August 1999 and October 1999 the registrant issued and sold a total
of 4,891,253 shares of Series C convertible preferred stock in a private
placement to twenty investors at a price per share of $6.59 for gross
consideration of approximately $32.2 million. We granted the exclusive agent
for this private placement, Deutsche Bank Securities Inc., a five-year, non-
cancelable and non-transferable warrant to purchase 60,651 shares of our common
stock at the equivalent of the offering price.
(6) In November 1999, we issued 24,480 shares of our common stock to one of
our investors upon conversion of its 30% interest in Sports Warehouse, Inc.
II-3
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
*1.1 Form of Underwriting Agreement
3.1 Form of Amended and Restated Certificate of Incorporation of OneSoft
Corporation
3.2 Form of Amended and Restated Bylaws of OneSoft Corporation
*4.1 Form of Common Stock Certificate of OneSoft Corporation
4.2 See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws of the
Registrant defining the rights of holders of common stock of the
Registrant
4.3 Warrant to Purchase 60,651 shares of common stock of OneSoft
Corporation issued to Deutsche Bank Securities Inc.
*5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. with
respect to the legality of securities being registered
*10.1 Amended and Restated 1997 Employee, Director and Consultant Stock
Option Plan
10.2 Employment Agreement between James W. MacIntyre, IV and the Registrant
*10.3 Employment Agreement between Frederick C. Hawkins, III and the
Registrant
10.4 Employment Agreement between Jeffrey M. MacIntyre and the Registrant
10.5 Employment Letter Agreement from the Registrant to Randall Pevin
10.6 Employment Letter Agreement from the Registrant to Thomas E. Young
10.7 Third Amended and Restated Investor Rights Agreement dated as of
August 13, 1999 by and among the Registrant, the holders of Series A
Preferred Stock, the holders of Series B Preferred Stock, the holders
of Series C Preferred Stock and the holders of Common Stock.
10.8 Form of Incentive Stock Option Agreement of the Registrant
10.9 Form of Non-Qualified Stock Option Agreement of the Registrant
10.10 Separation Agreement by and between the Registrant and Richard
Borenstein
10.11 Settlement Agreement by and between the Registrant and William Langdon
10.12 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 4,595 square feet, Annadale, Virginia
10.13 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 1,860 square feet, Annadale, Virginia
10.14 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 3,720 square feet, Annadale, Virginia
10.15 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 1,476 square feet, Annadale, Virginia
10.16 Sublease by and between Dover Corporation and the Registrant for a
portion of the 34th floor at 280 Park Avenue, New York, New York
10.17 Sublease by and between the Registrant and NexTel Communications, Inc.
for 70,104 square feet in McLean, Virginia
10.18 Regus Business Centre Service Agreement by and between the Registrant
and Regus Business Centre for one office in Santa Monica, California
10.19 Loan and Pledge Agreement between the Registrant and James W.
MacIntyre, IV
*10.20 Loan and Pledge Agreement between the Registrant and Frederick C.
Hawkins III
+10.21 Managed Application and Services Agreement by and between the
Registrant and SmartCruiser, LLC
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
+10.22 Non-Binding Letter of Intent by and between Microsoft Corporation and
the Registrant
+10.23 Master Alliance and License Agreement by and between USWeb/CKS and the
Registrant
+10.24 Managed Application and Services Agreement between The Mark Group,
Inc. and the Registrant
+10.25 Letter of Engagement from the Registrant to Maytag Corporation
+10.26 Services Agreement by and between Phillips Publishing, Inc. and the
Registrant
+10.27 JumpStart Training Program Agreement by and between Compaq Computer
Corporation and the Registrant
+10.28 Services Agreement by and between the Registrant and Alloy Designs,
Inc.
+10.29 Managed Application and Services Agreement by and between Skyway
Communications and the Registrant
+10.30 License Agreement by and between Espanol.com, Inc. and the Registrant
+10.31 Letter of Engagement from the Registrant to The Invus Group
**23.1 Consent of Ernst & Young LLP
*23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see
Exhibit 5.1)
**24.1 Powers of Attorney (See Signature Page)
**27.1 Financial Data Schedule
</TABLE>
- --------
* To be filed by amendment.
** Previously filed with the SEC.
+ Confidential treatment requested from the SEC.
(b) Financial Statement Schedules
Financial Statements Schedules are omitted because the information is
included in the Financial Statements or notes thereto.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Amendment No.1 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
McLean, Commonwealth of Virginia, on the 19th day of January, 2000.
OneSoft Corporation
/s/ James W. MacIntyre, IV
By: _________________________________
James W. MacIntyre, IV
Chairman of the Board of
Directors,
President and Chief Executive
Officer
POWER OF ATTORNEY
We the undersigned officers and directors of OneSoft Corporation hereby
severally constitute and appoint James W. MacIntyre, IV and Frederick C.
Hawkins, III, and each of them singly (with full power to each of them to act
alone), our true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution in each of them for him and in his name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement (or any
other Registration Statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933), and to file
the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as full to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them or their or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James W. MacIntyre, IV Chairman, Chief Executive January 7, 2000
______________________________________ Officer, President and
James W. MacIntyre, IV Treasurer (principal
executive officer)
/s/ Frederick C. Hawkins, III Chief Financial Officer January 7, 2000
______________________________________ (principal financial and
Frederick C. Hawkins, III accounting officer)
/s/ Jeffrey M. Macintyre Director January 7, 2000
______________________________________
Jeffrey M. MacIntyre
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Henry D. Barratt, Jr. Director January 7, 2000
______________________________________
Henry D. Barratt, Jr.
/s/ Justin Hall-Tipping Director January 7, 2000
______________________________________
Justin Hall-Tipping
/s/ A. Douglas Peabody Director January 7, 2000
______________________________________
A. Douglas Peabody
/s/ Stephen P. Rader Director January 7, 2000
______________________________________
Stephen P. Rader
/s/ Thomas R. Hitchner Director January 7, 2000
______________________________________
Thomas R. Hitchner
/s/ Carlos E. Cisneros Director January 7, 2000
______________________________________
Carlos E. Cisneros
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
*1.1 Form of Underwriting Agreement
3.1 Form of Amended and Restated Certificate of Incorporation of OneSoft
Corporation
3.2 Form of Amended and Restated Bylaws of OneSoft Corporation
*4.1 Form of Common Stock Certificate
4.2 See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws of the
Registrant defining the rights of holders of common stock of the
Registrant
4.3 Warrant to Purchase 60,651 shares of common stock of OneSoft
Corporation issued to Deutsche Bank Securities Inc.
*5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. with
respect to the legality of securities being registered
*10.1 Amended and Restated 1997 Employee, Director and Consultant Stock
Option Plan
10.2 Employment Agreement between James W. MacIntyre, IV and the Registrant
*10.3 Employment Agreement between Frederick C. Hawkins, III and the
Registrant
10.4 Employment Agreement between Jeffrey M. MacIntyre and the Registrant
10.5 Employment Letter from the Registrant to Randall Pevin
10.6 Employment Offer from the Registrant to Thomas E. Young
10.7 Third Amended and Restated Investor Rights Agreement dated as of
August 13, 1999 by and among the Registrant, the holders of Series A
Preferred Stock, the holders of Series B Preferred Stock, the holders
of Series C Preferred Stock and the holders of Common Stock.
10.8 Form of Incentive Stock Option Agreement
10.9 Form of Non-Qualified Stock Option Agreement
10.10 Separation Agreement by and between the Registrant and Richard
Borenstein
10.11 Settlement Agreement by and between the Registrant and William Langdon
10.12 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 4,595 square feet
10.13 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 1,860 square feet
10.14 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 3,720 square feet
10.15 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 1,476 square feet
10.16 New York Lease
10.17 Sublease by and between the Registrant and NexTel Communications, Inc.
10.18 Regus Business Centre Service Agreement by and between the Registrant
and Regus Business Centre
10.19 Loan Agreement between the Registrant and James W. MacIntyre, IV
*10.20 Loan Agreement between the Registrant and Frederick C. Hawkins III
+10.21 Managed Application and Services Agreement by and between the
Registrant and SmartCruiser, LLC
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
+10.22 Non-Binding Letter of Intent by and between Microsoft Corporation and
the Registrant
+10.23 Master Alliance and License Agreement by and between the Registrant
and USWeb Corporation
+10.24 Managed Application and Services Agreement between the Registrant and
The Mark Group, Inc.
+10.25 Letter of Engagement from the Registrant to Maytag Corporation
+10.26 Services Agreement by and between the Registrant and Phillips
Publishing, Inc.
+10.27 JumpStart Training Program Agreement by and between Compaq Computer
Corporation and the Registrant
+10.28 Services Agreement by and between the Registrant and Alloy Designs,
Inc.
+10.29 Managed Application and Services Agreement by and between Skyway
Communications and the Registrant
+10.30 License Agreement by and between Espanol.com, Inc. and the Registrant
+10.31 Letter of Engagement from the Registrant to The Invus Group
**23.1 Consent of Ernst & Young LLP
*23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see
Exhibit 5.1)
**24.1 Powers of Attorney (See Signature Page)
**27.1 Financial Data Schedule
</TABLE>
- --------
* To be filed by amendment.
** Previously filed with the SEC.
+ Confidential treatment requested from the SEC.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ONESOFT CORPORATION
OneSoft Corporation (the "Corporation"), a Delaware corporation, hereby
certifies as follows:
1. The name of the corporation is OneSoft Corporation. The date of filing
of its original Certificate of Incorporation with the Secretary of State of
Delaware was March 27, 1997, under the name of "GXI, Inc.", which survived a
merger on March 31, 1997; was amended on June 5, 1997, September 3, 1997,
November 17, 1997; designated stock on March 13, 1998, was amended on April 30,
1998 and June 9, 1998; and was amended and restated on June 11, 1998, February
26, 1999, and August 13, 1999.
2. This Restated Certificate of Incorporation amends, restates and
integrates the provisions of the Certificate of Incorporation, as heretofore
amended or restated, of said Corporation and has been duly adopted in accordance
with the provisions of Sections 242 and 245 of the General Corporation Law of
the State of Delaware pursuant to a resolution adopted by the Board of Directors
of the Corporation and by written consent of stockholders of the Corporation in
accordance with Section 228 of the General Corporation Laws of the State of
Delaware.
3. The text of the Certificate of Incorporation is hereby amended and
restated to read in its entirety as follows:
FIRST: The name of the corporation is:
ONESOFT CORPORATION
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1013 Centre Road, City of Wilmington, County of New Castle;
and the name of the registered agent of the Corporation in the State of Delaware
is The Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity or carry on any business for which corporations may be organized under
the Delaware General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 55,000,000 shares, consisting
of 50,000,000 shares of common stock, par value $.001 per share (the "Common
Stock"), and 5,000,000 shares of preferred stock, par value $.001 per share (the
"Preferred Stock").
<PAGE>
The following is a statement of the relative powers, designations, special
rights, privileges, qualifications, limitations, restrictions and other matters
pertaining to the common stock and the preferred stock.
A. Common Stock.
------------
1. Dividends. Subject to the preferential rights, if any, of the
---------
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive, when and if declared by the Board of Directors, out of the assets of
the Corporation which are by law available therefor, dividends payable either in
cash, in property, or in shares of Common Stock.
2. Liquidation. In the event of any liquidation, dissolution or winding
-----------
up of the Corporation, whether voluntary or involuntary, after payment or
provision for payment of the debts and other liabilities of the Corporation and
the amounts to which the holders of any Preferred Stock shall be entitled, the
holders of Common Stock shall be entitled to share ratably in the remaining
assets of the Corporation.
3. Voting. The holders of the Common Stock are entitled to one vote for
------
each share held. There shall be no cumulative voting.
B. Preferred Stock
---------------
1. Shares of Preferred Stock may be issued in one or more series at such
time or times and for such consideration as the Board of Directors may
determine.
2. Authority is hereby expressly granted to the Board of Directors to fix
from time to time, by resolution or resolutions providing for the establishment
and/or issuance of any series of Preferred Stock, the designation of such series
and the powers, preferences and rights of the shares of such series, and the
qualifications, limitations or restrictions thereof, to the fullest extent such
authority may be conferred upon the Board of Directors under the General
Corporation Law of the State of Delaware, including, without limitation, the
authority to fix the following:
(a) The distinctive designation and number of shares comprising such
series, which number may (except where otherwise provided by the Board of
Directors in creating such series) be increased or decreased (but not below
the number of shares then outstanding) from time to time by action of the
Board of Directors;
(b) The rate of dividends, if any, on the shares of that series,
whether dividends shall be (i) non-cumulative, (ii) cumulative to the
extent earned or (iii) cumulative (and, if cumulative, from which date or
dates), whether dividends shall be payable in cash, property or rights, or
in shares of the Corporation's capital stock, and the relative rights of
priority, if any, of payment of dividends on shares of that series over
shares of any other series or class;
(c) Whether the shares of that series shall be redeemable and, if so,
the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share
payable in case of redemption (which amount may vary under different
conditions and at different redemption dates) or the
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<PAGE>
property or rights, including securities of any other corporation, payable
in case of redemption;
(d) Whether the series shall have a sinking fund for the redemption
or purchase of shares of that series and, if so, the terms and amounts
payable into such sinking fund;
(e) The rights to which the holders of the shares of that series
shall be entitled in the event of the voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, and the relative rights of
priority, if any, of payment of shares of that series in any such event;
(f) Whether the shares of that series shall be convertible into or
exchangeable for shares of stock of any other class or any other series
and, if so, the terms and conditions of such conversion or exchange,
including the rate or rates of conversion or exchange, the date or dates
upon or after which they shall be convertible or exchangeable, the period
or periods during which they shall be convertible or exchangeable, the
event or events upon or after which they shall be convertible or
exchangeable or at whose option they shall be convertible or exchangeable,
and the method (if any) of adjusting the rates of conversion or exchange in
the event of a stock split, stock dividend, combination of shares or
similar event;
(g) Whether the issuance of any additional shares of such series, or
of any shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such additional
shares of such series or shares of such other series;
(h) Whether or not the shares of that series shall have voting
rights, the extent of such voting rights on specified matters or on all
matters, the number of votes to which the holder of a share of such series
shall be entitled in respect of such share, whether such series shall vote
generally with the Common Stock on all matters or (either generally or upon
the occurrence of specified circumstances) shall vote separately as a class
or with other series of Preferred Stock; and
(i) Any other preferences, privileges and powers and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions of such series, as the Board of Directors may
deem advisable and as shall not be inconsistent with the provisions of this
Restated Certificate of Incorporation and to the full extent now or
hereafter permitted by the General Corporation Law of the State of
Delaware.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred
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<PAGE>
upon them by statute or by this Restated Certificate of Incorporation or the By-
Laws of the Corporation as in effect from time to time, the directors are hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by written ballot
unless the By-Laws of the Corporation so provide.
C. Any action required or permitted to be taken by the stockholders of
the Corporation may be effected only at a duly called annual or special meeting
of stockholders of the Corporation and not by written consent.
D. Special meetings of the stockholders may only be called by the Board
of Directors.
SEVENTH:
A. Subject to the rights of the holders of shares of any series of
Preferred Stock then outstanding to elect additional directors under specified
circumstances, the number of directors shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the Board of Directors.
B. The Board of Directors of the Corporation shall be divided into three
classes, as nearly equal in number as reasonably possible, with the term of
office of the first class to expire at the 2001 annual meeting of stockholders
or any special meeting in lieu thereof, the term of office of the second class
to expire at the 2002 annual meeting of stockholders or any special meeting in
lieu thereof, and the term of office of the third class to expire at the 2003
annual meeting of stockholders or any special meeting in lieu thereof. At each
annual meeting of stockholders or special meeting in lieu thereof following such
initial classification, directors elected to succeed those directors whose terms
expire shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders or special meeting in lieu thereof after their
election and until their successors are duly elected and qualified.
C. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the directors
then in office even though less than a quorum, or by a sole remaining director.
In the event of any increase or decrease in the authorized number of directors,
(i) each director then serving as such shall nevertheless continue as a director
of the class of which he is a member until the expiration of his current term or
his prior death, retirement, removal or resignation and (ii) the newly created
or eliminated directorships resulting from such increase or decrease shall if
reasonably possible be apportioned by the Board of Directors among the three
classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent reasonably possible,
consistent with the foregoing rule, any newly created directorships shall be
added to those classes whose terms of office are to expire at the latest dates
following such allocation and newly eliminated directorships shall be subtracted
from those classes whose terms of office are to expire at the earliest dates
following such allocation, unless otherwise provided for from time to time by
resolution adopted by a majority of the directors then in office, although less
than a quorum.
4
<PAGE>
D. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
By-Laws of the Corporation.
E. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, any director, or the entire Board of Directors, may be removed
from office at any time only for cause by the affirmative vote of the holders of
a majority of the outstanding shares of capital stock then entitled to vote at
an election of directors. A director may be removed for cause only after a
reasonable notice and opportunity to be heard by the stockholders.
EIGHTH: The Board of Directors is expressly empowered to adopt, amend or
repeal By-Laws of the Corporation. Any adoption, amendment or repeal of the By-
Laws of the Corporation by the Board of Directors shall require the approval of
a majority of the Board of Directors. The stockholders shall also have power to
adopt, amend or repeal the By-Laws of the Corporation, provided, that in
addition to any vote of the holders of any class or series of stock of the
Corporation required by law or by this Restated Certificate of Incorporation,
the affirmative vote of the holders of at least seventy percent (70%) of the
voting power of all of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required for the stockholders to adopt,
amend or repeal any provision of the By-Laws of the Corporation.
NINTH:
A. To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same now exists or may hereafter be amended, the
Corporation shall indemnify, and advance expenses to, its directors and officers
and to any person who is or was serving at the request of the Corporation as a
director, officer, trustee, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, if such person was or is
made a party to or is threatened to be made a party to or is otherwise involved
(including, without limitation, as a witness) in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, trustee,
employee or agent of another corporation, or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan, provided, that except with respect to proceedings to enforce rights to
indemnification or as is otherwise required by law, the By-Laws of the
Corporation may provide that the Corporation shall not be required to indemnify,
and advance expenses to, any director, officer or other person in connection
with a proceeding (or part thereof) initiated by such director, officer or other
person, unless such proceeding (or part thereof) was authorized by the Board of
Directors and shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such person, to repay all amounts so advanced if
it shall ultimately be determined by final judicial decision from which there is
no further right to appeal that such person is not entitled to be indemnified
for such expenses under this Article NINTH or otherwise. The Corporation, by
action of its Board of Directors, may provide indemnification or advance
expenses to employees and agents of the Corporation or other persons only on
such terms and conditions and to the extent determined by the Board of Directors
in its sole and absolute discretion.
5
<PAGE>
B. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article NINTH shall not be deemed exclusive of any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under any By-Law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
C. The Corporation shall have the 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, trustee, employee or agent of another corporation, or of
a partnership, joint venture, trust or other enterprise, 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 this
Article NINTH.
D. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article NINTH shall, unless otherwise specified when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person. The indemnification and rights to
advancement of expenses that may have been provided to an employee or agent of
the Corporation by action of the Board of Directors, pursuant to the last
sentence of paragraph 1 of this Article NINTH, shall, unless otherwise specified
when authorized or ratified, continue as to a person who has ceased to be an
employee or agent of the Corporation and shall inure to the benefit of the
heirs, executors and administrators of such person, after the time such person
has ceased to be an employee or agent of the Corporation, only on such terms and
conditions and to the extent determined by the Board of Directors in its sole
and absolute discretion. No repeal or amendment of this Article NINTH shall
adversely affect any rights of any person pursuant to this Article NINTH which
existed at the time of such repeal or amendment with respect to acts or
omissions occurring prior to such repeal or amendment.
TENTH: No director shall be personally liable to the Corporation or its
stockholders for any monetary damages for breaches of fiduciary duty as a
director, notwithstanding any provision of law imposing such liability; provided
that this provision shall not eliminate or limit the liability of a director, to
the extent that such liability is imposed by applicable law, (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 or successor provisions
of the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit. This
provision shall not eliminate or limit the liability of a director for any act
or omission if such elimination or limitation is prohibited by the General
Corporation Law of the State of Delaware. No amendment to or repeal of this
provision shall apply to or have any effect on the liability or alleged
liability of any director for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal. If the General Corporation
Law of the State of Delaware is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the General Corporation Law of the State of Delaware, as so
amended.
6
<PAGE>
ELEVENTH: The Corporation reserves the right to amend or repeal any
provision contained in this Restated Certificate of Incorporation in the manner
prescribed by the General Corporation Law of the State of Delaware and all
rights conferred upon stockholders are granted subject to this reservation,
provided that in addition to the vote of the holders of any class or series of
stock of the Corporation required by law or by this Restated Certificate of
Incorporation, the affirmative vote of the holders of shares of voting stock of
the Corporation representing at least seventy percent (70%) of the voting power
of all of the then outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to (i) reduce the number of authorized shares of
Common Stock or the number of authorized shares of Preferred Stock set forth in
Article FOURTH, or (ii) amend, alter or repeal, or adopt any provision
inconsistent with, Articles SIXTH, SEVENTH, EIGHTH, NINTH, TENTH, and this
Article ELEVENTH of this Restated Certificate of Incorporation.
TWELFTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of the General Corporation Law of the State of
Delaware or on the application of trustees in dissolution or of any receiver or
receivers appointed for this Corporation under the provisions of Section 279 of
the General Corporation Law of the State of Delaware, order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three-
fourths (3/4) in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of
Incorporation to be signed by its duly authorized officer this _____ day of
_____________, 2000.
ONESOFT CORPORATION
By: ______________________________
Name:
Title:
7
<PAGE>
EXHIBIT 3.2
ONESOFT CORPORATION
RESTATED BYLAWS
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting. An annual meeting of the stockholders, for the
election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date, and at such time as the Board of
Directors shall fix each year.
Section 2. Special Meetings. Subject to the rights of the holders of any
class or series of preferred stock of the Corporation, special meetings of
stockholders of the Corporation may be called only by the Board of Directors
pursuant to a resolution adopted by a majority of the total number of directors
authorized. Special meetings of the stockholders may be held at such place
within or without the State of Delaware as may be stated in such resolution.
Section 3. Notice of Meetings. Written notice of the place, date, and
time of all meetings of the stockholders shall be given, not less than ten (10)
nor more than sixty (60) days before the date on which the meeting is to be
held, to each stockholder entitled to vote at such meeting, except as otherwise
provided herein or required by law (meaning, here and hereinafter, as required
from time to time by the Delaware General Corporation Law or the Certificate of
Incorporation of the Corporation, as amended and restated from time to time).
When a meeting is adjourned to another place, date or time, written notice need
not be given of the adjourned meeting if the place, date and time thereof are
announced at the meeting at which the adjournment is taken; provided, however,
that if the date of any adjourned meeting is more than thirty (30) days after
the date for which the meeting was originally noticed, or if a new record date
is fixed for the adjourned meeting, written notice of the place, date, and time
of the adjourned meeting shall be given in conformity herewith. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.
Section 4. Quorum. At any meeting of the stockholders, the holders of a
majority of all of the shares of the stock entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger number may be
required by law. Where a separate vote by a class or classes is required, a
majority of the shares of such class or classes present in person or represented
by proxy shall constitute a quorum entitled to take action with respect to that
vote on that matter. If a quorum shall fail to attend any meeting, the chairman
of the meeting or the holders of a majority of the shares of stock entitled to
vote who are present, in person or by proxy, may adjourn the meeting to another
place, date, or time.
Section 5. Organization. The Chairman of the Board of Directors or, in
his or her absence, such person as the Board of Directors may have designated
or, in his or her absence, the
<PAGE>
Chief Executive Officer of the Corporation or, in his or her absence, the
President or, in his or her absence such person as may be chosen by the holders
of a majority of the shares entitled to vote who are present, in person or by
proxy, shall call to order any meeting of the stockholders and act as chairman
of the meeting. In the absence of the Secretary of the Corporation, the
secretary of the meeting shall be such person as the chairman of the meeting
appoints.
Section 6. Conduct of Business. The Chairman of the Board of Directors or
his or her designee or, if neither the Chairman of the Board nor his or her
designee is present at the meeting, then a person appointed by a majority of the
Board of Directors, shall preside at, and act as chairman of, any meeting of the
stockholders. The chairman of any meeting of stockholders shall determine the
order of business and the procedures at the meeting, including such regulation
of the manner of voting and the conduct of discussion as he or she deems to be
appropriate.
Section 7. Notice of Stockholder Business and Nominations.
A. Annual Meetings of Stockholders. Nominations of persons for election
to the Board of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who was a stockholder of
record at the time of giving of notice provided for in this Section, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Section.
B. Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the notice of meeting given pursuant to Section 2 above.
Nominations of persons for election to the Board of Directors may be made at a
special meeting of stockholders at which directors are to be elected (a) by or
at the direction of the Board of Directors or (b) provided that the Board of
Directors has determined that directors shall be elected at such meeting, by any
stockholder of the Corporation who is a stockholder of record at the time of
giving of notice of the special meeting, who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section.
C. Certain Matters Pertaining to Stockholder Business and Nominations.
(1) For nominations or other business to be properly brought before an
annual meeting by a stockholder or for nominations to be properly brought before
a special meeting, (i) the stockholder must have given timely notice thereof in
writing to the Secretary of the corporation, (ii) in the case of other business
to be brought before an annual meeting, such other business must otherwise be a
proper matter for stockholder action, (iii) if the stockholder, or the
beneficial owner on whose behalf any such proposal or nomination is made, has
provided the corporation with a Solicitation Notice, as that term is defined
below in this paragraph (C)(1) relating thereto, such stockholder or beneficial
owner must, in the case of a proposal, have delivered a proxy statement and form
of proxy to holders of at least the percentage of the corporation's voting
shares required under applicable law to carry any such proposal, or in the case
of a nomination or nominations, have delivered a proxy statement and form of
proxy to holders of at least a percentage of the corporation's voting shares
reasonably believed by such stockholder or beneficial owner to be sufficient to
elect the nominee or nominees proposed to be
2
<PAGE>
nominated by such stockholder, and must, in either case, have included with the
proxy statement the Solicitation Notice and (iv) if no Solicitation Notice
relating thereto has been timely provided pursuant to this Section, the
stockholder or beneficial holder proposing such business or nomination must not
have solicited a number of proxies sufficient to have required the delivery of
such a Solicitation Notice under this Section. To be timely, a stockholder's
notice pertaining to an annual meeting shall be delivered to the Secretary at
the principal executive offices of the corporation not later than the close of
business on the forty-fifth (45th) day nor earlier than the close of business on
the seventy-fifth (75th) day prior to the first anniversary of the preceding
year's mailing date for stockholder proxy materials; provided, however, that in
the event that the date of the annual meeting is more than thirty (30) days
before or more than sixty (60) days after the date of the annual meeting in the
preceding year, or if an annual meeting was not held in the preceding year,
notice by the stockholder to be timely must be so delivered by the later of (a)
the close of business on the ninetieth (90th) day prior to date of such
stockholders' meeting or (b) the close of business on the tenth (10th) day
following the day on which public announcement of the date of such meeting is
first made by the corporation. The stockholder's notice shall set forth: (a) as
to each person whom the stockholder proposes to nominate for election or
reelection as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case, pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); (b) as to any other business that the
stockholder proposes to bring before an annual meeting, a brief description of
the business desired to be brought before the annual meeting, the reasons for
conducting such business at the annual meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on whose behalf
the proposal is made; (c) as to the stockholder giving the notice, (i) the name
and address of such stockholder, as it appears on the corporation's books, (ii)
the class and number of shares of the corporation that are owned beneficially
and held of record by such stockholder and such beneficial owner; and (d)
whether either such stockholder or the beneficial owner intends to deliver a
proxy statement and form of proxy to holders of, in the case of a proposal, at
least the percentage of the corporation's voting shares required under
applicable law to carry the proposal or, in the case of a nomination or
nominations, to holders of at least a percentage of the corporation's voting
shares reasonably believed by such stockholder or beneficial owner to be
sufficient to elect such nominee or nominees (an affirmative statement of such
intent, a "Solicitation Notice").
(2) Notwithstanding anything in the second sentence of paragraph (C)(1) of
this Section 7 to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the corporation is increased and there is
no public announcement by the corporation naming all of the nominees for
director or specifying the size of the increased Board of Directors at least
fifty-five (55) days prior to the first anniversary of the preceding year's
mailing date for stockholder proxy materials (or, if the annual meeting is held
more than thirty (30) days before or sixty (60) days after the date of the
annual meeting in the preceding year, or if an annual meeting was not held in
the preceding year, at least one hundred (100) days prior to the date of such
stockholders' meeting,) a stockholder's notice required by this Section shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall have been delivered to the
Secretary at the principal executive office of the corporation not
3
<PAGE>
later than the close of business on the tenth (10th) day following the day on
which such public announcement is first made by the corporation.
(3) In the event the corporation calls a special meeting of stockholders
for the purpose of electing one or more directors to the Board of Directors, any
such stockholder may nominate a person or persons (as the case may be), for
election to such position(s) as specified in the corporation's notice of
meeting, if the stockholder's notice required by paragraph (C)(1) of this
Section 7 shall be delivered to the Secretary at the principal executive offices
of the corporation by the later of (a) the close of business on the ninetieth
(90th) day prior to such special meeting or (b) the close of business on the
tenth (10th) day following the day on which public announcement is first made of
the date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
D. General.
(1) Only such persons who are nominated in accordance with the procedures
set forth in this Section 7 shall be eligible to serve as directors and only
such business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Section 7. Except as otherwise provided by law or these By-Laws, the chairman of
the meeting shall have the power and duty to determine whether a nomination or
any business proposed to be brought before the meeting was made or proposed, as
the case may be, in accordance with the procedures set forth in this Section 7
and, if any proposed nomination or business is not in compliance herewith, to
declare that such defective proposal or nomination shall be disregarded.
(2) For purposes of this Section 7, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 7, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth herein. Nothing in this Section 7 shall be deemed to affect any rights (i)
of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock to elect directors under specified
circumstances.
Section 8. Proxies and Voting. At any meeting of the stockholders, every
stockholder entitled to vote may vote in person or by proxy authorized by an
instrument in writing or by a transmission permitted by law filed in accordance
with the procedure established for the meeting. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or transmission
created pursuant to this Section 8 may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the original
writing or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission. All voting, including on the election
of directors but excepting where otherwise required by law, may be by voice
vote.
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Any vote not taken by voice shall be taken by ballots, each of which shall state
the name of the stockholder or proxy voting and such other information as may be
required under the procedure established for the meeting. The Corporation may,
and to the extent required by law, shall, in advance of any meeting of
stockholders, appoint one or more inspectors to act at the meeting and make a
written report thereof. The Corporation may designate one or more persons as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate is able to act at a meeting of stockholders, the person presiding
at the meeting may, and to the extent required by law, shall, appoint one or
more inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his
ability. Except as otherwise provided in the terms of any class or series of
Preferred Stock of the Corporation, all elections at any meeting of stockholders
shall be determined by a plurality of the votes cast, and except as otherwise
required by law, all other matters determined by stockholders at a meeting shall
be determined by a majority of the votes cast affirmatively or negatively.
Section 9. No Action Without Meeting. Any action required or permitted to
be taken by the stockholders of the Corporation may be effected only at a duly
called annual or special meeting of stockholders of the Corporation and may not
be effected by written consent.
Section 10. Stock List. A complete list of stockholders entitled to vote
at any meeting of stockholders, arranged in alphabetical order for each class of
stock and showing the address of each such stockholder and the number of shares
registered in his or her name, shall be open to the examination of any such
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) 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 stock list shall also be kept at the place
of the meeting during the whole time thereof and shall be open to the
examination of any such stockholder who is present. Such list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.
ARTICLE II - BOARD OF DIRECTORS
Section 1. General Powers, Number, Election, Tenure and
Qualification.
A. The business and affairs of the Corporation shall be managed by or
under the direction of its Board of Directions.
B. Subject to the rights of the holders of any series of Preferred
Stock then outstanding to elect additional directors under specified
circumstances, the number of directors shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the Board.
C. The Board of Directors of the Corporation shall be divided into
three classes, as nearly equal in number as reasonably possible, with the term
of office of the first class to expire at the annual meeting of stockholders or
any special meeting in lieu thereof in 2001, the term of office of the second
class to expire at the annual meeting of stockholders or any special meeting in
lieu thereof in 2002, and the term of office of the third class to expire at the
annual meeting of
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stockholders or any special meeting in lieu thereof in 2003. At each annual
meeting of stockholders or special meeting in lieu thereof following such
initial classification, directors elected to succeed those directors whose terms
expire shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders or special meeting in lieu thereof after their
election and until their successors are duly elected and qualified.
Section 2. Vacancies and Newly Created Directorships. Subject to the
rights of the holders of any series of Preferred Stock then outstanding, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
may be filled only by a majority vote of the directors then in office even
though less than a quorum, or by a sole remaining director. In the event of any
increase or decrease in the authorized number of directors, (i) each director
then serving as such shall nevertheless continue as a director of the class of
which he is a member until the expiration of his current term or his prior
death, retirement, removal or resignation and (ii) the newly created or
eliminated directorships resulting from such increase or decrease shall if
reasonably possible be apportioned by the Board of Directors among the three
classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent reasonably possible,
consistent with the foregoing rule, any newly created directorships shall be
added to those classes whose terms of office are to expire at the latest dates
following such allocation and newly eliminated directorships shall be subtracted
from those classes whose terms of office are to expire at the earliest dates
following such allocation, unless otherwise provided for from time to time by
resolution adopted by a majority of the directors then in office, although less
than a quorum. In the event of a vacancy in the Board of Directors, the
remaining directors, except as otherwise provided by law, may exercise the
powers of the full Board of Directors until the vacancy is filled.
Section 3. Resignation and Removal. Any director may resign at any time
upon written notice to the Corporation at its principal place of business or to
the Chief Executive Officer, President or Secretary. Such resignation shall be
effective upon receipt unless it is specified to be effective at some other time
or upon the happening of some other event. Subject to the rights of the holders
of any series of Preferred Stock then outstanding, any director, or the entire
Board of Directors, may be removed from office at any time only for cause. A
director may be removed for cause by the holders of a majority of the shares of
the Corporation then entitled to vote at an election of a director and only
after a reasonable notice and opportunity to be heard before the stockholders.
Section 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such place or places, on such date or dates, and at such time
or times as shall have been established by the Board of Directors and publicized
among all directors. A written notice of each regular meeting shall not be
required.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board of Directors, if any, the Board of
Directors or the President and shall be held at such place, on such date, and at
such time as they or he or she shall fix. Notice of the place, date, and time of
each such special meeting shall be given to each director by whom it is not
waived by mailing written notice not less than three (3) days before the meeting
or orally, by telegraph, telex, cable or telecopy given not less than twenty-
four (24) hours before the meeting.
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Unless otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.
Section 6. Quorum. At any meeting of the Board of Directors, a majority
of the total number of members of the Board of Directors shall constitute a
quorum for all purposes. If a quorum shall fail to attend any meeting, a
majority of those present may adjourn the meeting to another place, date, or
time, without further notice or waiver thereof.
Section 7. Action by Consent. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
Section 8. Participation in Meetings By Conference Telephone. Members of
the Board of Directors, or of any committee thereof, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and such participation shall constitute presence in
person at such meeting.
Section 9. Conduct of Business. At any meeting of the Board of Directors,
business shall be transacted in such order and manner as the Board may from time
to time determine, and all matters shall be determined by the vote of a majority
of the directors present, except as otherwise provided herein or required by
law.
Section 10. Powers. The Board of Directors may, except as otherwise
required by law, exercise all such powers and do all such acts and things as may
be exercised or done by the Corporation, including, without limiting the
generality of the foregoing, the unqualified power:
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form as it may
determine, of written obligations of every kind, negotiable or non-
negotiable, secured or unsecured, to borrow funds and guarantee
obligations, and to do all things necessary in connection therewith;
(4) To remove any officer of the Corporation with or without cause, and
from time to time to devolve the powers and duties of any officer upon
any other person for the time being;
(5) To confer upon any officer of the Corporation the power to appoint,
remove and suspend subordinate officers, employees and agents;
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(6) To adopt from time to time such stock, option, stock purchase, bonus
or other compensation plans for directors, officers, employees and
agents of the Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance, retirement, and other
benefit plans for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not inconsistent with these
By-Laws, for the management of the Corporation's business and affairs.
Section 11. Compensation of Directors. Directors, as such, may
receive, pursuant to a resolution of the Board of Directors, fixed fees and
other compensation for their services as directors, including, without
limitation, their services as members of committees of the Board of Directors.
ARTICLE III - COMMITTEES
Section 1. Committees of the Board of Directors. The Board of Directors,
by a vote of a majority of the Board of Directors, may from time to time
designate committees of the Board, with such lawfully delegable powers and
duties as it thereby confers, to serve at the pleasure of the Board and shall,
for those committees and any others provided for herein, elect a director or
directors to serve as the member or members, designating, if it desires, other
directors as alternate members who may replace any absent or disqualified member
at any meeting of the committee. Any such committee, to the extent provided in
the resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending the
By-Laws of the Corporation. Any committee so designated may exercise the power
and authority of the Board of Directors 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 Delaware General Corporation Law if the resolution which
designates the committee or a supplemental resolution of the Board of Directors
shall so provide. In the absence or disqualification of any member of any
committee and any alternate member in his or her place, the member or members of
the committee present at the meeting and not disqualified from voting, whether
or not he or she or they constitute a quorum, may by unanimous vote appoint
another member of the Board of Directors to act at the meeting in the place of
the absent or disqualified member.
Section 2. Conduct of Business. Each committee may determine the
procedural rules for meeting and conducting its business and shall act in
accordance therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to members of all meetings; one-
third (1/3) of the members of any committee shall constitute a quorum unless the
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committee shall consist of one (1) or two (2) members, in which event one (1)
member shall constitute a quorum; and all matters shall be determined by a
majority vote of the members present. Action may be taken by any committee
without a meeting if all members thereof consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of such
committee.
ARTICLE IV - OFFICERS
Section 1. Enumeration. The officers of the Corporation shall consist of
a President, a Treasurer, a Secretary and such other officers as the Board of
Directors or the Chairman of the Board may determine, including, but not limited
to, a Chairman of the Board of Directors, a Chief Executive Officer, and one or
more Vice Presidents, Assistant Treasurers and Assistant Secretaries.
Section 2. Election. The Chairman of the Board, if any, the President,
the Treasurer and the Secretary shall be elected annually by the Board of
Directors at their first meeting following the annual meeting of the
stockholders. The Board of Directors or the Chairman of the Board, if any, may,
from time to time, elect or appoint such other officers as it or he or she may
determine, including, but not limited to, one or more Vice Presidents, Assistant
Treasurers and Assistant Secretaries.
Section 3. Qualification. The Chairman of the Board, if any, and any Vice
Chairman appointed to act in the absence of the Chairman, if any, shall be
elected by and from the Board of Directors, but no other officer need be a
director. Two or more offices may be held by any one person. If required by vote
of the Board of Directors, an officer shall give bond to the Corporation for the
faithful performance of his or her duties, in such form and amount and with such
sureties as the Board of Directors may determine. The premiums for such bonds
shall be paid by the Corporation.
Section 4. Tenure and Removal. Each officer elected or appointed by the
Board of Directors shall hold office until the first meeting of the Board of
Directors following the next annual meeting of the stockholders and until his or
her successor is elected or appointed and qualified, or until he or she dies,
resigns, is removed or becomes disqualified, unless a shorter term is specified
in the vote electing or appointing said officer. Each officer appointed by the
Chairman of the Board, if any, shall hold office until his or her successor is
elected or appointed and qualified, or until he or she dies, resigns, is removed
or becomes disqualified, unless a shorter term is specified by any agreement or
other instrument appointing such officer. Any officer may resign by giving
written notice of his or her resignation to the Chairman of the Board, if any,
the President, or the Secretary, or to the Board of Directors at a meeting of
the Board, and such resignation shall become effective at the time specified
therein. Any officer elected or appointed by the Board of Directors may be
removed from office with or without cause by vote of a majority of the
directors. Any officer appointed by the Chairman of the Board, if any, may be
removed with or without cause by the Chairman of the Board.
Section 5. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the Board of Directors and stockholders at
which he or she is present and shall have such authority and perform such duties
as may be prescribed by these By-Laws or from time to time be determined by the
Board of Directors. The Chairman of the Board shall also have the power and
authority to determine the compensation and duties of all officers, employees
and agents
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of the Corporation and shall have the power and authority to sign all stock
certificates, contracts and other instruments of the Corporation which are
authorized.
Section 6. President. Except for meetings at which the Chief Executive
Officer or the Chairman of the Board, if any, presides, the President shall, if
present, preside at all meetings of stockholders, and if a director, at all
meetings of the Board of Directors. The President shall, subject to the control
and direction of the Chief Executive Officer and the Board of Directors, have
and perform such powers and duties as may be prescribed by these By-Laws or from
time to time be determined by the Chief Executive Officer or the Board of
Directors. The President shall have power to sign all stock certificates,
contracts and other instruments of the Corporation which are authorized. In the
absence of a Chief Executive Officer, the President shall be the chief executive
officer of the Corporation and shall, subject to the direction of the Board of
Directors, have general supervision and control of its business and shall have
general supervision and direction of all of the officers, employees and agents
of the Corporation.
Section 7. Chief Executive Officer. The Chief Executive Officer shall be
the chief executive officer of the Corporation and shall, subject to the
direction of the Board of Directors, have general supervision and control of its
business. Unless otherwise provided by resolution of the Board of Directors, in
the absence of the Chairman of the Board, if any, the Chief Executive Officer
shall preside at all meetings of the stockholders and, if a director, meetings
of the Board of Directors. The Chief Executive Officer shall have general
supervision and direction of all of the officers, employees and agents of the
Corporation.
Section 8. Vice Presidents. The Vice Presidents, if any, in the order of
their election, or in such other order as the Board of Directors may determine,
shall have and perform the powers and duties of the President (or such of the
powers and duties as the Board of Directors may determine) whenever the
President is absent or unable to act. The Vice Presidents, if any, shall also
have such other powers and duties as may from time to time be determined by the
Board of Directors.
Section 9. Treasurer and Assistant Treasurers. The Treasurer shall,
subject to the control and direction of the Board of Directors, have and perform
such powers and duties as may be prescribed in these By-Laws or be determined
from time to time by the Board of Directors. All property of the Corporation in
the custody of the Treasurer shall be subject at all times to the inspection and
control of the Board of Directors. The Treasurer shall have the responsibility
for maintaining the financial records of the Corporation. The Treasurer shall
make such disbursements of the funds of the Corporation as are authorized and
shall render from time to time an account of all such transactions and of the
financial condition of the Corporation. Unless otherwise voted by the Board of
Directors, each Assistant Treasurer, if any, shall have and perform the powers
and duties of the Treasurer whenever the Treasurer is absent or unable to act,
and may at any time exercise such of the powers of the Treasurer, and such other
powers and duties, as may from time to time be determined by the Board of
Directors.
Section 10. Secretary and Assistant Secretaries. The Board of Directors
shall appoint a Secretary and, in his or her absence, an Assistant Secretary.
The Secretary or, in his or her absence, any Assistant Secretary, shall attend
all meetings of the directors and shall record all votes of the Board of
Directors and minutes of the proceedings at such meetings. The Secretary or, in
his or her
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absence, any Assistant Secretary, shall notify the directors of their meetings,
and shall have and perform such other powers and duties as may from time to time
be determined by the Board of Directors. If the Secretary or an Assistant
Secretary is elected but is absent from any meeting of directors, a temporary
Secretary may be appointed by the directors at the meeting.
Section 11. Bond. If required by the Board of Directors, any officer
shall give the Corporation a bond in such sum and with such surety or sureties
and upon such terms and conditions as shall be satisfactory to the Board of
Directors, including without limitation a bond for the faithful performance of
the duties of his office and for the restoration to the Corporation of all
books, papers, vouchers, money and other property of whatever kind in his or her
possession or under his control and belonging to the Corporation.
Section 12. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the President, the
Treasurer or any officer of the Corporation authorized by the President shall
have power to vote and otherwise act on behalf of the Corporation, in person or
by proxy, at any meeting of stockholders of or with respect to any action of
stockholders of any other corporation in which this Corporation may hold
securities and otherwise to exercise any and all rights and powers which this
Corporation may possess by reason of its ownership of securities in such other
corporation.
ARTICLE V - STOCK
Section 1. Certificates of Stock. Each stockholder shall be entitled to a
certificate signed by, or in the name of the Corporation by the Chairman of the
Board of Directors, or the President or a Vice President, and by the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary,
certifying the number of shares owned by him, her or it. Any or all of the
signatures on the certificate may be by facsimile.
Section 2 Transfers of Stock. Transfers of stock shall be made only upon
the transfer books of the Corporation kept at an office of the Corporation or by
transfer agents designated to transfer shares of the stock of the Corporation.
Except where a certificate is issued in accordance with Section 4 of this
Article of these By-Laws, an outstanding certificate for the number of shares
involved shall be surrendered for cancellation before a new certificate is
issued therefor.
Section 3. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders, or
to receive payment of any dividend or other distribution or allotment of any
rights or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date on
which the resolution fixing the record date is adopted and which record date
shall not be more than sixty (60) nor less than ten (10) days before the date of
any meeting of stockholders, nor more than sixty (60) days prior to the time for
such other action as hereinbefore described; provided, however, that if no
record date is fixed by the Board of Directors, 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, and, for determining
stockholders entitled
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to receive payment of any dividend or other distribution or allotment of rights
or to exercise any rights of change, conversion or exchange of stock or for any
other purpose, the record date shall be at the close of business on the day on
which the Board of Directors adopts a resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 4. Lost, Stolen or Destroyed Certificates. In the event of the
loss, theft or destruction of any certificate of stock, another may be issued in
its place pursuant to such regulations as the Board of Directors may establish
concerning proof of such loss, theft or destruction and concerning the giving of
a satisfactory bond or bonds of indemnity.
Section 5. Regulations. The issue, transfer, conversion and registration
of certificates of stock shall be governed by such other regulations as the
Board of Directors may establish.
Section 6. Interpretation. The Board of Directors shall have the power to
interpret all of the terms and provisions of these By-Laws, which interpretation
shall be conclusive.
ARTICLE VI - NOTICES
Section 1. Notices. Except as otherwise specifically provided herein or
required by law, all notices required to be given to any stockholder, director,
officer, employee or agent shall be in writing and may in every instance be
effectively given by hand delivery to the recipient thereof, by depositing such
notice in the mail, postage paid, or by sending such notice by courier service,
prepaid telegram or mailgram, or telecopy, cable, or telex. Any such notice
shall be addressed to such stockholder, director, officer, employee or agent at
his or her last known address as the same appears on the books of the
Corporation. The time when such notice is received, if hand delivered, or
dispatched, if delivered through the mail or by courier, telegram, mailgram,
telecopy, cable, or telex shall be the time of the giving of the notice.
Section 2. Waiver of Notice. A written waiver of any notice, signed by a
stockholder, director, officer, employee or agent, whether before or after the
time of the event for which notice is to be given, shall be deemed equivalent to
the notice required to be given to such stockholder, director, officer, employee
or agent. Neither the business nor the purpose of any meeting need be specified
in such a waiver. Attendance of a director or stockholder at a meeting without
protesting prior thereto or at its commencement the lack of notice shall also
constitute a waiver of notice by such director or stockholder.
ARTICLE VII -INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved
(including, without limitation, as a witness) in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or an officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "Indemnitee"), whether the basis of such proceeding is
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alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such Indemnitee in
connection therewith; provided, however, that, except as provided in Section 3
of this Article with respect to proceedings to enforce rights to indemnification
or as otherwise required by law, the Corporation shall not be required to
indemnify or advance expenses to any such Indemnitee in connection with a
proceeding (or part thereof) initiated by such Indemnitee unless such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
Section 2. Right to Advancement of Expenses. The right to indemnification
conferred in Section 1 of this Article shall include the right to be paid by the
Corporation the expenses (including attorney's fees) incurred in defending any
such proceeding in advance of its final disposition; provided, however, that, if
the Delaware General Corporation Law requires, an advancement of expenses
incurred by an Indemnitee in his capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such Indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking, by or on behalf of
such Indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal that such Indemnitee is not entitled to be indemnified for such expenses
under this Section 2 or otherwise. The rights to indemnification and to the
advancement of expenses conferred in Sections 1 and 2 of this Article shall be
contract rights and such rights shall continue as to an Indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the Indemnitee's heirs, executors and administrators. Any repeal or
modification of any of the provisions of this Article shall not adversely affect
any right or protection of an Indemnitee existing at the time of such repeal or
modification.
Section 3. Right of Indemnitees to Bring Suit. If a claim under Section 1
or 2 of this Article is not paid in full by the Corporation within sixty (60)
days after a written claim has been received by the Corporation, except in the
case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the Indemnitee may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Indemnitee shall also be entitled to be paid the expenses of
prosecuting or defending such suit. In (i) any suit brought by the Indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by the
Indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) in any suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the Corporation
shall be entitled to recover such expenses upon a final adjudication that, the
Indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the
13
<PAGE>
commencement of such suit that indemnification of the Indemnitee is proper in
the circumstances because the Indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the Indemnitee has not met such
applicable standard of conduct, shall create a presumption that the Indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the Indemnitee, be a defense to such suit. In any suit brought by the
Indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of proving that the
Indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article or otherwise shall be on the Corporation.
Section 4. Non-Exclusivity of Rights. The rights to indemnification and
to the advancement of expenses conferred in this Article shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, the Corporation's Certificate of Incorporation as amended and restated
from time to time, these By-Laws, any agreement, any vote of stockholders or
disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
Section 6. Indemnification of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses to
any employee or agent of the Corporation to the fullest extent of the provisions
of this Article with respect to the indemnification and advancement of expenses
of directors and officers of the Corporation.
ARTICLE VIII - CERTAIN TRANSACTIONS
Section 1. Transactions with Interested Parties. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board or committee thereof
which authorizes the contract or transaction or solely because the votes of such
director or officer are counted for such purpose, if:
(1) The material facts as to his or her relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
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<PAGE>
(2) The material facts as to his or her relationship or interest and as to
the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof, or the stockholders.
Section 2. Quorum. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
ARTICLE IX - MISCELLANEOUS
Section 1. Facsimile Signatures. In addition to the provisions for use of
facsimile signatures elsewhere specifically authorized in these By-Laws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof.
Section 2. Corporate Seal. The Board of Directors may provide a suitable
seal, containing the name of the Corporation, which seal shall be in the charge
of the Secretary. If and when so directed by the Board of Directors or a
committee thereof, duplicates of the seal may be kept and used by the Treasurer
or by an Assistant Secretary or Assistant Treasurer.
Section 3. Reliance upon Books, Reports and Records. Each director, each
member of any committee designated by the Board of Directors, and each officer
of the Corporation shall, in the performance of his or her duties, be fully
protected in relying in good faith upon the books of account or other records of
the Corporation and upon such information, opinions, reports or statements
presented to the Corporation by any of its officers or employees, or committees
of the Board of Directors so designated, or by any other person as to matters
which such director or committee member reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.
Section 4. Fiscal Year. Except as otherwise determined by the Board of
Directors from time to time, the fiscal year of the Corporation shall end on the
last day of January of each year.
Section 5. Time Periods. In applying any provision of these By-Laws which
requires that an act be done or not be done a specified number of days prior to
an event or that an act be done during a period of a specified number of days
prior to an event, calendar days shall be used, the day of the doing of the act
shall be excluded, and the day of the event shall be included.
Section 6. Pronouns. Whenever the context may require, any pronouns used
in these By-Laws shall include the corresponding masculine, feminine or neuter
forms.
ARTICLE X - AMENDMENTS
15
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These By-Laws may be amended or repealed by the affirmative vote of a
majority of the whole Board of Directors or by the stockholders by the
affirmative vote of seventy percent (70%) of the outstanding voting power of the
then-outstanding shares of capital stock of the Corporation, entitled to vote
generally in the election of directors, at any meeting at which a proposal to
amend or repeal these By-Laws is properly presented.
16
<PAGE>
Exhibit 4.3
THESE SECURITIES HAVE BEEN ISSUED PURSUANT TO EXEMPTIONS FOR NONPUBLIC OFFERINGS
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, THESE SECURITIES MAY NOT
BE RESOLD OR OTHERWISE DISPOSED OF UNLESS, IN THE OPINION OF COUNSEL FOR OR
SATISFACTORY TO THE ISSUER, REGISTRATION UNDER THE APPLICABLE FEDERAL OR STATE
SECURITIES LAWS IS NOT REQUIRED OR COMPLIANCE IS MADE WITH SUCH REGISTRATION
REQUIREMENTS.
Void after 5:00 p.m. New York Time, on October 5, 2004
WARRANT TO PURCHASE 60,651 SHARES OF COMMON STOCK
OF
ONESOFT CORPORATION
This is to certify that, FOR VALUE RECEIVED, DEUTSCHE BANK SECURITIES, INC.
or its registered assigns pursuant to Section (d) hereof ("Holder"), is entitled
to purchase, subject to the provisions of this Warrant, from OneSoft
Corporation, a Delaware corporation (the "Company"), Sixty Thousand Six Hundred
Fifty-One (60,651) fully paid, validly issued and nonassessable shares of Common
Stock, par value $.001 per share, of the Company ("Common Stock"), at the
exercise price of $6.59 per share until October 5, 2004. The number of shares of
Common Stock to be received upon the exercise of this Warrant and the price to
be paid for each share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares", and the exercise price of a share of Common Stock as
adjusted from time to time is hereinafter sometimes referred to as the "Exercise
Price."
(a) EXERCISE OF WARRANT; NOTIFICATION OF EXPIRATION DATE OF WARRANT. The
Warrant may be exercised as to a minimum of 60,651 Warrant Shares at any time,
until 5:00 P.M. New York time on October 5, 2004 (the "Expiration Date"),
provided, however, that if such day is a day on which banking institutions in
the State of New York are authorized by law to close, then on the next
succeeding day which shall not be such a day. The Warrant may be exercised by
presentation and surrender hereof to the Company at its principal office, or at
the office of its stock transfer agent, if any, with the Purchase Form annexed
hereto duly executed (with signature guaranteed if required by the Company or
its stock transfer agent) and accompanied by payment of the Exercise Price for
the number of Warrant Shares specified in such form and any applicable taxes.
The purchase price for any Warrant Shares purchased pursuant to the exercise of
this Warrant shall be paid in full upon such exercise in cash or by certified or
bank check or pursuant to a cashless exercise procedure whereby the Warrant
Shares issued upon exercise of this Warrant will be sold with Holder receiving
the difference between the Exercise Price and the sale price, in cash, and the
Company receiving the Exercise Price for the Warrant Shares, in cash, or any
combination of the foregoing methods of paying the Exercise
<PAGE>
Price. In the alternative, the Warrant may be exchanged for Warrant shares as
described in Section (a). As soon as practicable after each such exercise of the
Warrants, but not later than seven (7) business days from the date of such
exercise, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder or the Holder's designee, except in the case of a
cashless exercise. If the Warrant should be exercised in part only, the Company
shall, upon surrender of the Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder thereof to purchase the balance of
the Warrant Shares purchasable thereunder. In the event of a cash exercise, upon
receipt by the Company of the Warrant at its office, or by the stock transfer
agent of the Company at its office, in proper form for exercise, together with
the exercise price thereof and taxes as aforesaid in cash or certified or bank
check and the investment letter described below, the Holder shall be deemed to
be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such shares of Common Stock
shall not then be physically delivered to the Holder. In order to assure the
availability of an exemption from registration under the federal or applicable
state securities laws, the Company may condition the exercise of the Warrant
upon the Holder delivering to the Company an investment letter in the form as
customarily used by the Company from time to time in connection with the
exercise of non- registered options and warrants which are issued by the
Company. It is further understood that certificates for the Warrant Shares, if
any, to be issued upon exercise of the Warrant may contain a restrictive legend
substantially in accordance with Section (j) hereof.
(b) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants. If the Common Stock is or becomes listed on any national
securities exchange or the NASDAQ National Market System, the Company shall also
list such shares on such exchange subject to notice of issuance or maintain the
listing of its Common Stock on the NASDAQ system, as the case may be.
(c) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of the Warrant. With respect
to any fraction of a share called for upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the current market value of a share, determined as follows:
(1) If the Common Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange or listed for
trading on the NASDAQ National Market System, the current market value
shall be the last reported sale price of the Common Stock on such
exchange or system on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on such day, the
average closing bid and asked prices for such day on such exchange or
system;
(2) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current market value shall be the mean of the
last reported bid and asked
<PAGE>
prices reported by the National Quotation Bureau, Inc., on the last
business day prior to the date of the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current market value shall be an amount, not less than the book value
thereof as at the end of the most recent fiscal year of the Company
ending prior to the date of the exercise of the Warrant, determined in
such reasonable manner as may be prescribed by the Board of Directors
of the Company.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. The Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
Holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Subject to Section (j) hereof, the Holder may
transfer or assign the Warrant, in whole or in part and from time to time. Upon
surrender of this Warrant to the Company at its principal office or at the
office of its stock transfer agent, if any, with the Assignment Form annexed
hereto duly executed (with signature guaranteed, if required by the Company or
its stock transfer agent) and funds sufficient to pay any transfer tax, the
Company shall, without charge, execute and deliver a new Warrant in the name of
the assignee or assignees named in such instrument of assignment and this
Warrant shall promptly be canceled. This Warrant may be divided by or combined
with other Warrants which carry the same rights upon presentation hereof at the
principal office of the Company or at the office of its stock transfer agent, if
any, together with a written notice specifying the names and denominations in
which new Warrants are to be issued and signed by the Holder hereof. The term
"Warrant" as used herein includes any Warrants into which this Warrant my be
divided or exchanged. Upon receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and in the case
of loss, theft or destruction, of reasonable satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor, date and amount. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not the original Warrant shall
be at any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. So long as this Warrant shall be
outstanding, the Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of the Warrants shall be subject to
adjustment from time to time upon the happening of certain events as follows:
<PAGE>
(1) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of
Common Stock, (ii) issue shares of Common Stock or securities
convertible into Common Stock (other than shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock and
Series C Convertible Preferred Stock issued as of October 5, 1999, and
Common Stock, stock options, warrants or rights to purchase up to
4,000,000 shares of Common Stock available for issuance to officers,
directors and employees of the Company; (iii) subdivide or reclassify
its outstanding shares of Common Stock into a greater number of
shares, or (iv) combine or reclassify its outstanding shares of Common
Stock into a smaller number of shares, the Exercise Price in effect at
the time of the record date for such dividend or distribution, the
sale of such securities or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted as
of the effective date of such event by multiplying such Exercise Price
by a fraction, the denominator of which shall be the number of shares
of Common Stock outstanding immediately following such event and the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior thereto. For example, if the Company
declares a 2 for 1 stock distribution and the Exercise Price
immediately prior to such event was $1.00 per share, the adjusted
Exercise Price immediately after such event would be $.50 per share.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(2) Whenever the Exercise Price payable upon exercise of each Warrant
is adjusted pursuant to subsection (A) above, the number of Warrant
Shares purchasable upon exercise of the Warrant shall simultaneously
be adjusted by multiplying the number of Warrant Shares issuable upon
exercise of this Warrant by the Exercise Price in effect on the date
hereof and dividing the product so obtained by the Exercise Price, as
adjusted pursuant to subsection (1).
(3) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least $.05 in
such price; provided, however, that any adjustments which by reason of
this subsection (f) (3) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment required
to be made hereunder.
(4) Each computation required by this Section (f) for purposes of
determining whether the Exercise Price shall be adjusted shall be
performed by the Company's then engaged firm of independent certified
public accountants, which shall be a firm of recognized national
reputation (the "Accounting Firm") on the basis of the Company's
internally prepared unaudited financial statements. Such unaudited
financial statements shall be accompanied by a certificate signed by
the President and Chief Financial Officer certifying that such
unaudited statements have been prepared in accordance with GAAP on a
basis consistently applied and included all adjustments (consisting
only of normal, recurring accruals) necessary for a fair presentation
of the financial position and results of the Company as of the end
<PAGE>
each such period. The computations of the Accounting Firm shall be
final and binding on the Company and the Holder.
(5) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted
Exercise Price and adjusted number of Warrant Shares issuable upon
exercise of each Warrant to be mailed to the Holder, at its address
appearing in the Warrant Register, and shall cause a certified copy
thereof to be mailed to its transfer agent, if any.
(6) All calculations under this Section (f) shall be made to the
nearest cent or to the nearest Warrant Share, as the case may be.
(7) In the event that at any time, as a result of an adjustment made
pursuant to this Section (f) above, the Holder of this Warrant
thereafter shall become entitled to receive any shares of the Company,
other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common
Stock contained in subsection (A) above.
(8) Irrespective of any adjustments in the Exercise Price or the
number or kind of Warrant Shares purchasable upon exercise of this
Warrant, Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in
the similar Warrants initially issuable pursuant to this Agreement.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted
as required by the provisions of the foregoing Section, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Each such officer's certificate shall be
made available at all reasonable times for inspection by the Holder or any
holder of a Warrant executed and/or delivered pursuant to Section (a) or Section
(d), and the Company shall, forthwith after each such adjustment, mail, by
certified mail, a copy of such certificate to the Holder or any such holder.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock, or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any shares of any class or any
other rights, or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or
<PAGE>
voluntary or involuntary dissolution, liquidation or winding up of the Company
shall be effected, then in any such case, the Company shall cause to be mailed
by certified mail to the Holder or any holder of a Warrant executed and/or
delivered pursuant to Section (a) or Section (d), at least 15 days prior to the
date specified in (x) or (y) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x) a
record is to be taken for the purpose of such dividend, distribution or rights,
or (y) such reclassification, reorganization, consolidation, merger, conveyance,
lease, dissolution, liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other securities
shall receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification or capital reorganization of outstanding shares of Common Stock
of the Company, or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with another corporation in which
merger the Company is the continuing corporation and which does not result in
any reclassification or capital reorganization of outstanding shares of Common
Stock of the class issuable upon exercise of this Warrant) or in case of any
sale, lease or conveyance to another corporation of the property of the Company
as an entirety, the Company shall, as a condition precedent to such transaction,
cause effective provisions to be made so that the Holder or any holder of a
Warrant executed and/or delivered pursuant to Section (a) or Section (d) shall
have the right thereafter by exercising the Warrant at any time prior to the
expiration of the Warrant, to purchase the kind and amount of shares of stock
and other securities and property receivable upon such reclassification or
capital reorganization and consolidation, merger, sale or conveyance. Any such
provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in the Warrant.
The foregoing provisions of this Section (i) shall similarly apply to successive
reclassifications or capital reorganizations of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances. In the event that in
connection with any such capital reorganization or reclassification,
consolidation, merger, sale or conveyance, additional shares of Common Stock
shall be issued in exchange, conversion, substitution or payment, in whole or in
part, for a security of the Company other than Common Stock, any such issue
shall be treated as an issue of Common Stock covered by the provisions of
subsection (1) of Section (f) hereof.
(j) SECURITIES LAW COMPLIANCE
(1) The Holder of the Warrant, by acceptance hereof, acknowledges that
the Warrant and the shares of Common Stock to be issued upon exercise
hereof or conversion thereof are being acquired solely for the
Holder's own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell, transfer, assign
or otherwise dispose of this Warrant or any shares of Common Stock to
be issued upon exercise hereof or conversion thereof except under
circumstances that will not result in a violation of the Act or any
state securities laws. Upon exercise of the Warrant, the Holder shall,
if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the
<PAGE>
shares of Common Stock so purchased are being acquired solely for the
Holder's own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale.
(2) If appropriate, the Warrant and any Warrants issued upon
exercise or substitution or upon assignment or transfer pursuant to
Section (a) or Section (d), as the case may be, and all shares of
Common Stock issued upon exercise hereof or conversion thereof shall
be stamped or imprinted with legends setting forth the restrictions on
transfer arising under applicable federal and state securities laws.
(k) REGISTRATION RIGHTS UNDER THE SECURITIES ACT OF 1933
(1) Commencing the date hereof, the Company shall advise the Holder of
the Warrant or of the Warrant Shares or any then Holder of Warrants or
Warrant Shares (such persons being collectively referred to herein as
"Holders") by written notice at least 21 days prior to the filing of
any registration statement or post-effective amendment thereto
("Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), covering an underwritten public offering of
equity securities of the Company and shall register in any such
Registration Statement the number of Warrant Shares that the Holder
shall notify the Company it desires to register and shall include in
any such Registration Statement such information as may be required to
permit a public offering of such Warrant Shares by the Company's
underwriter(s). The Company shall supply prospectuses and other
documents as the Holder may reasonably request in order to facilitate
the public sale or other disposition of the Warrant Shares. The
Company shall bear the entire cost and expense of a registration of
securities initiated by it under this Paragraph (1). The Holder shall,
however, bear the fees of its own counsel and any transfer taxes and
underwriting discounts or commissions applicable to the Warrant Shares
sold by it. The Company may include other securities in any such
registration statement. The Company shall do any and all other acts
and things which may be necessary or desirable to enable the Holder to
consummate the public sale or other disposition of the Warrant Shares,
and furnish indemnification in the manner as set forth in Paragraph
(2) (a) of this Section (k), but shall not be required to qualify as a
foreign corporation to qualify the Warrant Shares for sale under the
securities laws of any state. The Holder shall furnish information and
indemnification as set forth in Paragraph (2) (b) of this Section (k).
All decisions as to whether and when to proceed with any Registration
Statement shall be made solely by the Company.
Nothwithstanding the foregoing paragraph, in the event that there is
an underwritten offering of the Company's securities offered pursuant
to said registration statement pursuant to the immediately preceding
Paragraph, the underwriter(s) shall have the right to refuse to permit
any Warrant Shares, or to limit the amount of Warrant Shares, to be
sold by the Holder to such
<PAGE>
underwriter(s) as such underwriter(s) may determine in its discretion,
and the Holder shall refrain from selling such remainder of its
Warrant Shares covered by such registration statement for the period
of one hundred eighty (180) days following the effective date and
shall also refrain at any time when notified by the Company that an
amendment or supplement to the prospectus is required. The Company
shall not be obligated to keep any Registration Statement effective
for a total of more than thirty (30) days.
(2) (a) Whenever pursuant to this Section (k) a Registration Statement
relating to the Warrant Shares is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder
of Warrant Shares covered by such Registration Statement, amendment or
supplement (such Holder being hereinafter called the "Distributing
Holder"), and each person, if any who controls (within the meaning of
the Act) the Distributing Holder, against any losses, claims, damages
or liabilities, joint or several, to which the Distributing Holder or
any such controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in any such Registration Statement or any preliminary prospectus or
final prospectus constituting a part thereof or any amendment or
supplement thereto, or arise out of or are based upon the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will
reimburse the Distributing Holder and each such controlling person for
any legal or other expenses reasonably incurred by the Distributing
Holder and each controlling person for any legal or other expenses
reasonable incurred by the Distributing Holder or such controlling
person or underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in said Registration Statement, preliminary
prospectus, final prospectus or amendment or supplement, in reliance
upon and in conformity with written information furnished by the
Distributing Holder or underwriter for use in the preparation thereof.
(b) The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed
said Registration Statement and such amendments and supplements
thereto, each person, if any, who controls the Company (within the
meaning of the Act) and the Company's underwriter(s) and each person,
if any, who controls such underwriter(s) (within the meaning of the
Act) against any losses, claims, damages or liabilities to which the
Company or any such director, officer, underwriter or controlling
person may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained
in said Registration Statement, preliminary
<PAGE>
prospectus, final prospectus, or amendment or supplement, or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the
extent, but only to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was made in said
Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement, in reliance upon and in conformity with
written information furnished by such Distributing Holder for use in
the preparation thereof; and will reimburse the Company or underwriter
or any such director, officer or controlling person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action.
(c) Promptly after receipt by an indemnified party under this
Paragraph 2 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party, give the indemnifying party notice of
the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under this Paragraph 2.
(d) In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, the extent
that it may wish, jointly with any other indemnifying party similarly
notified to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Paragraph 2 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
(e) The Company's agreements with respect to Warrant Shares in this
Section (k) shall continue in effect regardless of the exercise or
surrender of the Warrant.
(1) RIGHT TO CONVERT WARRANT INTO COMMON STOCK.
(1) Right to Convert. The Holder shall have the right to require the
----------------
Company to convert this Warrant provided in this Section (1), into
common stock (the "Net Conversion Right"). Upon exercise of the Net
Conversion Right, the Company shall deliver to the Holder (without
payment by the Holder of any Exercise Price or of any other cash or
consideration) that number of shares of Common Stock equal to the
quotient obtained by dividing (x) the value of this Warrant at the
time the Conversion Right is exercised (determined by subtracting the
aggregate Exercise Price in effect immediately prior to the exercise
of the Conversion Right from the aggregate fair market value of the
shares of Common Stock issuable
<PAGE>
upon exercise of this Warrant immediately prior to the exercise of the
Conversion Right) by (y) the fair market value of one share of Common
Stock immediately prior to the exercise of the Conversion Right.
(2) Method of Exercise. The Net Conversion Right may be exercised by
------------------
the Holder by the surrender of this Warrant at the principal office of
the Company together with a written statement specifying that the
Holder thereby intends to exercise the Net Conversion Right.
Certificates for the shares of Common Stock issuable upon exercise of
the Net Conversion Right shall be delivered to the Holder within five
(5) days following the Company's receipt of this Warrant together with
the aforesaid written statement.
(3) Determination of Fair Market Value. For purposes of this Section
----------------------------------
(f), fair market value of a share of Common Stock as of a particular
date (the "Determination Date") shall be determined in accordance with
Section (c) of this Warrant.
(m) AMENDMENTS. Neither the Warrant nor any term hereof may be changed,
waived, discharged or terminated without the prior written consent of the
Holder.
(n) NO IMPAIRMENT. The Company will not avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of any
Holder.
(o) GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of Delaware.
(p) NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by first class mail, postage
prepaid, addressed (a) if to the Holder, to Deutsche Bank Securities, Inc., 1
South Street, Baltimore, Maryland 21202, Attention: Geoffrey Stengel, III, or
(b) if to the Company, to OneSoft Corporation, 1505 Farm Credit Drive, McLean,
Virginia 22102, Attention: James W. MacIntyre, IV, or at such other address as
to the Company shall have furnished to the Holder in writing.
<PAGE>
IN WITNESS WHEREOF, OneSoft Corporation has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: October 5, 1999
ONESOFT CORPORATION
By: /s/ James W. MacIntyre, IV
---------------------------
Name: James W. MacIntyre, IV
-------------------------
Title: President
------------------------
<PAGE>
PURCHASE FORM
-------------
Dated _______________, 19___
The undersigned hereby irrevocably elects to exercise its rights pursuant
to this Warrant to the extent of purchasing ______ shares of Common Stock of
OneSoft Corporation, and hereby makes payment of $___________, in cash, in
payment of the exercise price thereof.
[The undersigned hereby irrevocably elects to exercise its rights pursuant
to this Warrant to the extent of purchasing _____ shares of Common Stock and
hereby authorizes you to deliver such shares of Common Stock for sale to
___________, and to retain from the proceeds of such sale $__________, in cash,
in payment of the exercise price thereof and to remit to the undersigned the
balance of such proceeds.]
-----------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name_____________________________________________________________
(Please typewrite or print in block letters)
Address__________________________________________________________
Signature________________________________________________________
<PAGE>
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, _________________________________________
hereby sells, assigns and transfers unto
Name______________________________________________________________
(Please typewrite or print in block letters)
Address___________________________________________________________
the right to purchase Common Stock of OneSoft Corporation (the "Company"),
represented by this Warrant to the extent of __________ shares as to which such
right is exercisable and does hereby irrevocably constitute and appoint
_____________________________ as Attorney, to transfer the same on the books of
the Company with full power of substitution in the premises.
Date ___________, 19___
Signature__________________________
<PAGE>
Exhibit 10.2
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT, dated as of March 24, 1997 (the "Effective
Date"), is by and between James W. MacIntyre, IV, (the "Executive") and Global
Exchange, Inc., a Virginia corporation with its principal offices at 7010 Little
River Turnpike, Suite 250, Annandale, Virginia 22003 (the "Company").
WHEREAS the Company desires to employ Executive as the Chief Executive
Officer and President of the Company for the period and upon the terms and
conditions hereinafter set forth; and
WHEREAS Executive desires to serve in such capacities upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the Company and Executive hereby agree as follows:
1. Employment.
----------
a) The Company will employ the Executive, and Executive agrees to be
employed by the Company, as the Chief Executive Officer and President. Executive
will have the responsibilities, duties and authority commensurate with his
position the Chief Executive Officer and President including, without
limitation, responsibility for the general management and operation of the
Company ("Responsibilities"). Executive will also have such other
responsibilities, duties and authority as may from time to time be assigned to
him by the Board of Directors of the Company (the "Board").
b) The Executive will be required to devote (i) substantially his
entire time during Company business hours as defined in then current Company
policies, plus any other reasonable time required to complete the obligations of
his Responsibilities (reasonable sick leave, holidays, vacation time and other
time and efforts not defined in this section of the Employment Agreement being
exempt from this commitment) and (ii) his best efforts to faithfully and
satisfactorily fulfill the obligations of his Responsibilities to further the
Company's best interests.
2. Term of Employment. Executive's employment hereunder shall
------------------
commence on the Effective date hereof (the "Commencement Date"). The term of
the Executive's employment hereunder shall renew automatically for additional
successive one-year periods, unless either party hereto provides written notice
of its intention not to renew the Agreement at least ninety (90) days prior to
the applicable expiration date.
<PAGE>
3. Compensation. In consideration for Executive's services under
------------
this Agreement, Executive will be (i) paid salary at an annual rate of $200,000,
subject to increases by the Board (the "Annual Salary") and (ii) an annual bonus
equal to twelve and one half percent (12.5%) of Executive's current Annual
Salary. Executive's Annual Salary shall be paid in periodic installments at such
times as salaries are generally paid to other executives of the Company and all
compensation under this agreement shall be subject to required withholdings and
deductions.
4. Vacation, Benefits and Reimbursement of Expenses.
------------------------------------------------
(a) Vacation. Executive shall be entitled to vacation commensurate
with other senior executives of the Company.
(b) Employee Benefit Plans and Other Benefits. Executive shall also be
entitled to participate in any employee benefit plans which the Company provides
or may establish for the benefit of its executives including, without
limitation, life, medical, dental and other insurance, 401(k), stock option, and
similar plans.
(c) Reimbursement of Expenses. Executive shall be entitled to
reimbursement for all ordinary and reasonable out-of-pocket business expenses
which are reasonably incurred by him in furtherance of the Company's business in
accordance with policies adopted from time to time by the Company.
5. Termination by the Executive. Executive's employment may be
----------------------------
terminated by him, by giving a written notice of at least thirty (30) days to
the Company. In the event of such a notice, the Company may elect to waive the
thirty (30) day period or any portion thereof, in which event Executive's
employment shall end as of such earlier date. For purposes of this Paragraph 5,
the Termination Date shall be such date as Executive's employment ends.
6. Termination by the Company. Executive's employment may be
--------------------------
terminated at any time by the Company (a) with Cause by a written notice to
Executive, effective immediately unless otherwise stated in such notice, which
date shall be the Termination Date therefor, (b) without Cause at any time, by a
written notice to Executive, effective ninety (90) days after the date given,
except as Executive and the Company may otherwise agree in writing, which date
of effectiveness shall be the Termination Date therefor, or (c) for death or
total and permanent disability in accordance with Paragraph 7.
For purposes of this Agreement, the term "Cause" means (i) the willful and
continued failure by Executive to substantially perform his duties hereunder, or
(ii) the willful engaging by Executive in misconduct which is materially
injurious to the Company, monetarily or otherwise, or (iii) a felony conviction
by a court of competent jurisdiction or (iv) confirmed and continuing
intoxication by alcohol or other controlled substances.
7. Termination upon Death or Disability. (a) Executive's employment
------------------------------------
by the Company shall terminate upon his death, or upon the Company's written
notice if, by virtue of total and permanent disability, Executive is unable to
perform his duties hereunder.
<PAGE>
(b) Executive shall be considered to be totally and permanently disabled
hereunder if for reasons involving mental or physical illness or physical injury
Executive is unable to or fails to perform his duties hereunder for a period of
ninety (90) consecutive calendar days or for any periods aggregating ninety (90)
days or more in any twelve (12) consecutive month period. The determination
that, by virtue of total and permanent disability, Executive is unable to
perform his duties hereunder shall be made by a physician chosen by the Company
and reasonably satisfactory to Executive (or his legal representative). The cost
of such examination shall be borne by the Company. In the event of total and
permanent disability, the Termination Date shall be the date of the Company's
written notice .
8. Payments of Compensation Upon Termination.
-----------------------------------------
(a) In the event Executive's employment hereunder shall be terminated by
the Executive other than for Good Reason (as herein after defined), by the
company for Cause, or as a result of death or total and permanent disability,
Executive shall be entitled as of the Termination Date to no compensation under
this Agreement, except as provided in Paragraph 9.
(b) In the event Executive's employment is terminated by Executive for
Good Reason, by the Company without cause or by reason of the Company's
election of non-renewal of the term under Section 2 such that Executive will not
have been employed hereunder for at least three years from the Commencement
Date, then in any of such events the Company shall pay to Executive an amount
equal to his then-current annualized salary plus his annual bonus as provided
for in Section 3, which salary-based amount shall be paid, commencing with the
first day of the month next following the month during which such termination
occurs, in twelve equal monthly installments at the times and in the manner in
which his salary had been paid during his employment and which bonus-based
amount shall be paid not later than the time of the last of such monthly salary-
based payments; provided that, if Executive's employment is terminated by reason
of the non-renewal of the term under Section 2 such that Executive will have
been employed for three years or more from the Commencement Date, the Company
shall pay to Executive an amount equal to one-half of his then-current
annualized salary plus one-half of his annual bonus, which salary-based amount
shall be paid, commencing with the first day of the month next following the
month during which such termination occurs, in six equal monthly installments at
the times and in the manner in which his salary had been paid during his
employment and which bonus-based amount shall be paid not later than the time of
the last of such monthly salary-based payments.
(c) During such twelve- or six-month period after termination of his
employment, as the case may be, the Company shall continue to pay or provide all
of the fringe benefits which it had been making available to Executive prior to
such termination or, if the provision thereof is not possible, the economic
equivalent thereof.
(d) For purposes of this Agreement, the term "Good Reason" shall mean a
diminution in the authority, compensation level (annual salary or annual bonus),
working conditions or support which Executive had or was entitled to have as of
the Commencement Date, including
<PAGE>
but not limited to any curtailment by the Board of Directors of the power of
Executive to act within his role as Chief Executive Officer and President, any
change in his title or position such that he is no longer in name or in fact the
Chief Executive Officer and President of the Company, any hiring of another
executive to whom Executive is required to report or who does not report to
Executive or to another executive who directly or indirectly reports to
Executive, any failure to nominate or elect Executive to serve as a director of
the Company, or any requirement that Executive serve as an executive of the
Company or any subsidiary or other affiliate of the Company in any location
other than the Washington, D.C. -Metroplex area or Greater New York City.
9. Accrued Compensation. In the event of any termination of
--------------------
Executive's employment for any reason, Executive (or his estate) shall be paid
such portion of Executive's Base Salary as has accrued by virtue of his
employment during the period prior to termination and has not yet been paid,
together with any amounts for expense reimbursement which have been properly
incurred in accordance with the provisions hereof prior to termination and have
not yet been paid. Such amounts shall be paid within fifteen (15) days of the
Termination Date.
10. Confidential Information, Inventions and Noncompetition.
-------------------------------------------------------
Executive shall enter into the assignment of inventions, nondisclosure and
noncompetition agreement. Notwithstanding the foregoing or any provision of such
inventions, nondisclosure and noncompetition agreement to the contrary, any
intellectual property rights which come into existence prior to the Commencement
date and which arose out of the activities of Convergence, Inc. prior to that
date except insofar as related directly to the performance of services by
Convergence Inc. for the Company (including its predecessors), and any
subsequent improvements to such intellectual property rights, shall be and
remain the property of Convergence, Inc., and not the Company's; and further,
any intellectual property rights of which Executive is the originator, whenever
originated, and which do not relate to the products or services offered or
proposed be offered by the Company shall be and remain the sole property of
Executive and not the Company.
11. General.
-------
(a) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth above or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) made by
telecopy, (iii) sent by overnight courier, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid. All notices,
requests, consents and other communications hereunder shall be deemed to have
been given either (i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth above, (ii) if made by
telecopy, at the time that receipt thereof has been acknowledged by electronic
confirmation or otherwise, (iii) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier service,
or (iv) if sent by registered or certified mail, on the fifth business day
following the day such mailing is made.
(b) Entire Agreement. This Agreement and the Exhibits hereto embody
the entire
<PAGE>
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior and concurrent oral or written
agreements and understandings relating to the subject matter hereof including
any agreement(s) to which this Agreement refers. No statement, representation,
warranty, covenant or agreement of any kind not expressly set forth in this
Agreement or the Exhibits hereto shall affect, or be used to interpret, change
or restrict, the express terms and provisions of this Agreement.
(c) Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by the
parties hereto.
(d) Waivers and Consents. The terms and provisions of this Agreement may
be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
(e) Parties. This Agreement is personal and shall in no way be subject to
assignment by Executive except as contemplated hereby. This Agreement shall be
binding upon and shall inure to the benefit of the Company and its successors
and assigns.
(f) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the law
of The Commonwealth of Virginia, without giving effect to the conflict of law
principles thereof.
(g) Severability. The parties intend this Agreement to be enforced as
written. However, if any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a duly authorized court having
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
(h) Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify, or affect the meaning or construction of any of the terms or
provisions hereof.
(i) No Waiver of Rights, Powers and Remedies. No failure or delay by a
party hereto in exercising any right, power or remedy under this Agreement, and
no course of dealing between the parties hereto, shall operate as a waiver of
any such right, power or remedy of the party. No single or partial exercise of
any right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall
<PAGE>
not constitute a waiver of the right of such party to pursue other available
remedies. No notice to or demand on a party not expressly required under this
Agreement shall entitle the party receiving such notice or demand to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the party giving such notice or demand to any other or
further action in any circumstances without such notice or demand.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
Global Exchange, Incorporated
/s/ James W. MacIntyre, IV
-------------------------------------
By: President
/s/ James W. MacIntyre, IV
-------------------------------------
James W. MacIntyre IV
Witnessed by:
/s/ Cynthia L. Allen
-------------------------------------
Cynthia L. Allen, Secretary
<PAGE>
March 24, 1997
James W. MacIntyre
Dear Mr. MacIntyre:
This letter sets forth in writing the terms of an agreement between you
(the "Employee") and Global Exchange, Incorporated, a Virginia corporation (the
"Company", which term shall include any subsidiaries and affiliates of Global
Exchange, Incorporated).
The Company and the Employee hereby acknowledge the following: (i) The
Company is currently engaged in all phases of the business of researching,
developing, owning, marketing, licensing and distributing Internet-related
computer software and providing related consulting services to its clients,
including its ForSite software; (ii) The Company has developed significant
reputation and goodwill in its industry throughout the United States and abroad;
(iii) The success of the Company's business depends upon the continued
confidentiality of its proprietary information and trade secrets; (iv) The
Employee is or will be employed by the Company in a position of trust and
confidence and in a capacity in which he has or will become familiar with the
Company's confidential information and trade secrets; (v) In the course of his
employment or through the use of Company facilities or resources, the Employee
may have or may in the future have contributed to the development of Company
trade secrets and confidential business information; and (vi) The Company and
the Employee are entering into this agreement in consideration of the employment
or continued employment of Employee, the granting of bonuses, raises or stock
options, if applicable, other good and valuable consideration, and to further
document Company policies now in effect.
In consideration of the foregoing acknowledgments and the agreements set
forth herein, the Employee and the Company hereby agree as follows:
1. The Employee will make full and prompt written disclosure to the
Company of all inventions, innovations, improvements, modifications, know-how,
discoveries and developments (the "Developments"), whether or not patentable or
copyrightable, which are conceived, made or discovered by or under the direction
of the Employee, alone or jointly with others, during the course of his
employment with the Company or as a direct or indirect result thereof, including
those made or discovered during normal working hours, on the premises of the
Company, or using Company resources, and including Developments suggested by any
work or services performed or to be performed by the Employee for the Company.
The Developments will be the sole, absolute and exclusive property of the
Company, including any copyrights and patent rights in the Developments, and
Employee hereby assigns all rights in the Developments to Company.
2. All Developments devised, made, developed or perfected after
termination of the Employee's employment are within the provisions of Paragraph
1 if conceived in whole or material part during the period of employment or with
the use of Company resources or facilities.
3. At the request and expense of the Company but without charge to the
Company, the Employee will do all acts and things as may be necessary to confirm
and vest the entire right, title and interest in the Developments in the Company
and secure to the Company full protection of the same, including without
limitation, the execution and delivery of assignments, patent applications and
other documents or papers. In order to confirm the Company's rights, the
Employee will also assign to the Company any and all copyrights and reproduction
rights to any written material prepared by the Employee in connection with his
employment.
<PAGE>
4. All Developments furnished by the Employee to the Company will be the
Employee's own and original creation except for materials in the public domain
and will not to the best of his knowledge or belief violate or infringe upon any
right, patent, copyright, trademark or right of privacy, or constitute libel or
slander against or violate any other rights of any person, firm or corporation.
5. During the Employee's period of employment with the Company and after
the voluntary or involuntary termination of such employment, whether initiated
by the Employee or the Company, the Employee will hold in the strictest
confidence and will not, without the express written authority of the Company,
directly or indirectly disclose to others, disseminate, use or publish, other
than use in the ordinary course of the Company's business, any proprietary,
secret or confidential information of the Company (which for the purposes hereof
shall include without limitation the Developments, information designated by the
Company as "proprietary," "secret," or "confidential" (or similarly designated)
and information which is not generally known to those outside of the Company),
including but not limited to any such information concerning: (a) the business
or operations of the Company or any of its clients, suppliers, customers,
consultants, licensees, or others with which it does business ("Business
Partners"), (b) any Company or Business Partner materials, apparatus, processes,
methods, ways of business, formulae, technology, research, development, customer
lists, customer requirements, supplier lists, models, computer programs, program
descriptions, flow charts, equipment designs, equipment descriptions,
documentation, records, books, technical information, blueprints, databases, or
data, or (c) the existence or betterment of, or possible new uses or
applications for, any Company or Business Partner product or service
(Collectively, "Confidential Information").
6. Upon the cessation of the Employee's employment by the Company for any
reason, he shall not take from, and will promptly return to the Company, any and
all Confidential Information and any writings or documents whatever or
reproductions thereof and any and all other information of a proprietary, secret
or confidential nature which relate in any way to the Company's operations,
business, assets, research, development, and any of the other items covered by
paragraph 5 above then in Employee's possession or control.
7. The Employee represents and warrants to the Company as follows: (i)
he is not under any obligation to any person which is inconsistent or in
conflict with this letter agreement or which would prevent, limit or impair in
any way the performance of his obligations hereunder; and (ii) he has not
disclosed and will not disclose to the Company, nor use for the Company's
benefit, any confidential information or trade secrets of any prior employer or
principal, unless and until such confidential information and trade secrets have
become public knowledge without the Employee's participation, or unless such
disclosure is permitted by any agreement with such prior employer or principal.
8. The Employee agrees that during the term of his employment with the
Company he will not: (a) directly or indirectly, either as principal, agent,
employee, consultant, officer, director, stockholder, or in any other capacity,
engage in or have a financial interest in, any business which is competitive
with the business of the Company or any of its subsidiaries or affiliates, or
(b) solicit customers of the Company in competition with the Company.
Notwithstanding Section 8(a), the Employee may continue to hold or purchase at
prevailing publicly traded rates not more than one percent (1%) of the
outstanding and issued shares of any publicly traded company which is
competitive with the business of the Company or any of its subsidiaries or
affiliates.
Notwithstanding this Section 8, the Company agrees that the Employee may,
during the term of his employment with the Company, either as an agent,
consultant, officer, director, or stockholder, provide professional services to
any business which is not competitive with the business of the Company or any of
its subsidiaries.
Without limiting the generality of the foregoing, a business will be deemed
competitive or in competition with the Company if it involves research,
development, production, manufacture, marketing, distribution, licensing, or
sale of any product which is or is intended to be directly competitive with
products being researched, developed, produced, manufactured, marketed,
distributed, licensed or sold by the Company at any time during the Employee's
employment.
-2-
<PAGE>
9. This letter agreement does not bind the Employee or the Company to any
specified period of employment, such employment being at the will of both the
Company and the Employee unless otherwise agreed in writing; and the voluntary
or involuntary termination of the Employee's employment shall not affect the
obligations of the Employee and the Company hereunder.
10. The Employee acknowledges that should he breach any of the covenants
set forth in this letter, monetary damages would not provide the Company with an
adequate remedy for such breach, and he hereby consents in addition to any
monetary award to the entry of an order in any court of competent jurisdiction
enjoining any activity constituting such a breach and requiring specific
performance of his obligations hereunder.
11. If any portion or provision of this letter agreement should be
determined by a court of competent jurisdiction to be invalid or unenforceable,
then this letter agreement is intended to and shall be valid and enforced to the
fullest extent permitted by law.
12. Nothing contained in this letter agreement shall refer to or affect
any condition of employment or other item not specifically mentioned herein.
This letter agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Virginia, and shall inure to the benefit of and be
binding upon the heirs, executors, administrators, personal representatives and
assigns of the Employee and upon the legal representatives, successors and
assigns of the Company. The Employee agrees to jurisdiction and venue in the
federal and state courts within the Commonwealth of Virginia for all disputes
and enforcement actions arising under this Agreement.
Please indicate your acceptance of the terms of this letter agreement by
signing in the place provided below, whereupon this letter agreement shall take
effect as an instrument under seal.
Very truly yours,
Global Exchange, Incorporated
By:/s/ James W. MacIntyre, IV
---------------------------
President
-----------------------
Title
Agreed to as of the date
on page 1 of this letter agreement.
/s/ James W. MacIntyre, IV
- --------------------------
James W. MacIntyre
-3-
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT, dated as of March 24, 1997 (the "Effective
Date"), is by and between Jeffery M. MacIntyre, (the "Manager") and Global
Exchange, Inc, a Virginia corporation with its principal offices at 7010 Little
River Turnpike, Suite 410, Annandale, Virginia 22003 (the "Company").
WHEREAS the Company desires to employ Manager as a Project Manager of the
Company for the period and upon the terms and conditions hereinafter set forth;
and
WHEREAS Manager desires to serve in such capacities upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the Company and Manager hereby agree as follows:
1. Employment.
----------
a) The Company will employ the Manager and Manager agrees to be employed
by the Company, as a Project Manager. Manager will have the responsibilities,
duties and authority commensurate with his position as a Project Manager
including, without limitation, responsibility for directing the certain client
projects ("Responsibilities"). Manager will also have such other
responsibilities, duties and authority as may from time to time be assigned to
him by the President or Board of Directors of the Company.
b) The Manager will be required to devote (i) substantially his entire
time during Company business hours as defined in then current Company policies,
plus any other reasonable time required to complete the obligations of his
Responsibilities (reasonable sick leave, holidays, vacation time and other time
and efforts not defined in this section of the Employment Agreement exempt) and
(ii) his best efforts to faithfully and satisfactorily fulfill the obligations
of his Responsibilities to further the Company's best interests.
2. Term of Employment. Manager's employment hereunder shall commence on
------------------
March 24, 1997 (the "Commencement Date") and continue until the first
anniversary thereof, unless terminated earlier in accordance with the terms
hereof. The term of the Manager's employment hereunder shall renew automatically
for additional successive one-year periods, unless either party hereto provides
written notice of its intention not to renew the Agreement at least ninety (90)
days prior to the applicable expiration date.
3. Compensation. In consideration for Manager's services under this
------------
Agreement, Manager will be (i) paid salary at an annual rate of $85,000, subject
to increases (the "Annual Salary") and (ii) Manger agrees to accrue $5,000 of
his annual salary until December 31, 1997, the accrued amount to be paid with
his first pay installment of the 1998 fiscal year or at such other time as
directed by the President. Manager's Annual Salary shall be paid in periodic
installments at such times as salaries are generally paid to other Managers of
the Company and all compensation under this agreement shall be subject to
required withholdings and deductions.
<PAGE>
4. Vacation, Benefits and Reimbursement of Expenses.
------------------------------------------------
(a) Vacation. Manager shall be entitled to vacation commensurate with
other senior managers of the Company.
(b) Employee Benefit Plans and Other Benefits. Manager shall also be
entitled to participate in any employee benefit plans which the Company provides
or may establish for the benefit of its Managers including, without limitation,
life, medical, dental and other insurance, 401(k), stock option, and similar
plans.
(c) Reimbursement of Expenses. Manager shall be entitled to reimbursement
for all ordinary and reasonable out-of-pocket business expenses which are
reasonably incurred by him in furtherance of the Company's business in
accordance with policies adopted from time to time by the Company.
5. Termination by the Manager. Manager's employment may be terminated by
--------------------------
him, by giving a written notice of at least ninety (90) days to the Company. In
the event of such a notice, the Company may elect to waive the ninety (90) day
period or any portion thereof, in which event Manager's employment shall end as
of such earlier date. For purposes of this Paragraph 6, the Termination Date
shall be such date as Manager's employment ends.
6. Termination by the Company. Manager's employment may be terminated at
--------------------------
any time by the Company (a) with Cause, by a written notice to Manager,
effective immediately unless otherwise stated in such notice, which date shall
be the Termination Date therefor, (b) without Cause at any time, by a written
notice to Manager, effective ninety (90) days after the date given, except as
Manager and the Company may otherwise agree in writing, which date of
effectiveness shall be the Termination Date therefor, or (c) for death or total
and permanent disability in accordance with Paragraph 7.
For purposes of this Agreement, the term "Cause" means (i) the willful and
continued failure by Manager to substantially perform his duties hereunder, or
(ii) the willful engaging by Manager in misconduct which is materially injurious
to the Company, monetarily or otherwise, or (iii) a felony conviction by a court
of competent jurisdiction or (iv) confirmed and continuing intoxication by
alcohol or other controlled substances.
7. Termination upon Death or Disability.
------------------------------------
(a) Manager's employment by the Company shall terminate upon his death, or
upon the Company's written notice if, by virtue of total and permanent
disability, Manager is unable to perform his duties hereunder.
(b) Manager shall be considered to be totally and permanently disabled
hereunder if for reasons involving mental or physical illness or physical injury
Manager is unable to or fails to perform his duties hereunder for a period of
ninety (90) consecutive calendar days or for any periods aggregating ninety (90)
days or more in any twelve (12) consecutive month period. The determination
that, by virtue of total and permanent disability, Manager is unable to perform
his duties hereunder shall be made by a physician chosen by the Company and
reasonably satisfactory to Manager (or his legal representative). The cost of
such examination shall be borne by the Company. In the event of total and
permanent disability, the Termination Date shall be the date of the Company's
written notice.
<PAGE>
8. Payments of Compensation Upon Termination.
-----------------------------------------
(a) In the event Manager's employment hereunder shall be terminated by the
Manager other than for Good Reason (as herein after defined), by the Company for
Cause or as a result of death or total and permanent disability, Manager shall
be entitled as of the Termination Date to no compensation under this Agreement,
except as provided in Section 9.
(b) In the event Manager's employment is terminated by Manager for Good
Reason, by the Company without Cause or by reason of the Company's election of
non-renewal of the term under Section 2 such that Manager will not have been
employed hereunder for at least three years from the Commencement Date, then in
any of such events the Company shall pay to Manager an amount equal one-half to
his then-current annualized salary as provided for in Section 3, which salary-
based amount shall be paid, commencing with the first day of the month next
following the month during which such termination occurs, in six equal monthly
installments at the times and in the manner in which his salary had been paid
during his employment.
(c) During such six-month period after termination of his employment, the
Company shall continue to pay or provide all of the fringe benefits which it had
been making available to Manager prior to such termination or, if the provision
thereof is not possible, the economic equivalent thereof.
(d) For purposes of this Agreement, the term "Good Reason" shall mean a
diminution in the authority, compensation level (annual salary or annual bonus),
working conditions or support which Manager had or was entitled to have as of
the Commencement Date, or the promotion date if the Manager accepts a promotion,
including but not limited to any curtailment by the Company's President, or as
appropriate the Board of Directors, of the power of the Manager to act within
his role as Project Manager or other role as defined by any accepted promotion,
any change in his title or position not accepted by the Manager as a promotion
such that he is no longer in name or in fact a Project Manager of the Company,
or any requirement that Manager serve as an Manager of the Company or any
subsidiary or other affiliate of the Company in any location other than the
Washington, D.C. - Metroplex area or Greater New York City.
9. Accrued Compensation. In the event of any termination of Manager's
--------------------
employment for any reason, Manager (or his estate) shall be paid such portion of
Manager's Base Salary as has accrued by virtue of his employment during the
period prior to termination and has not yet been paid, together with any amounts
for expense reimbursement which have been properly incurred in accordance with
the provisions hereof prior to termination and have not yet been paid. Such
amounts shall be paid within fifteen (15) days of the Termination Date.
10. General.
-------
(a) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth above or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) made by
telecopy, (iii) sent by overnight courier, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid. All notices,
requests, consents and other communications hereunder shall be deemed to have
been given either (i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth above, (ii) if made by
telecopy, at the time that receipt thereof has been acknowledged by electronic
confirmation or otherwise, (iii) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier service,
or (iv) if sent by registered
<PAGE>
or certified mail, on the fifth business day following the day such mailing is
made.
(b) Entire Agreement. This Agreement, agreements to which this Agreement
refers and the Exhibits hereto embody the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersede all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in this Agreement or the Exhibits
hereto shall affect, or be used to interpret, change or restrict, the express
terms and provisions of this Agreement.
(c) Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by the
parties hereto.
(d) Waivers and Consents. The terms and provisions of this Agreement may
be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
(e) Parties. This Agreement is personal and shall in no way be subject to
assignment by Manager except as contemplated hereby. This Agreement shall be
binding upon and shall inure to the benefit of the Company and its successors
and assigns.
(f) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the law
of The Commonwealth of Virginia, without giving effect to the conflict of law
principles thereof.
(g) Severability. The parties intend this Agreement to be enforced as
written. However, if any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a duly authorized court having
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
(h) Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify, or affect the meaning or construction of any of the terms or
provisions hereof.
(i) No Waiver of Rights, Powers and Remedies. No failure or delay by a
party power or remedy under this Agreement, and no course of dealing between the
parties hereto, shall operate as a waiver of any such right, power or remedy of
the party. No single or partial exercise of any right, power or remedy under
this Agreement by a party hereto, nor any abandonment or discontinuance of steps
to enforce any such right, power or remedy, shall preclude such party from any
other or further exercise thereof or the exercise of any other right, power or
remedy hereunder. The election of any remedy by a party hereto shall not
constitute a waiver of the right of such party to pursue other available
remedies. No notice to or demand on a party not expressly required under this
Agreement shall entitle the party receiving such notice or demand to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the party giving such notice or demand to any other or
further action in any circumstances without such notice or demand.
<PAGE>
(j) Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
Global Exchange Inc.
By: /s/ James W. MacIntyre, IV
-----------------------------------
James W. MacIntyre IV, President
/s/ Jeffrey M. MacIntyre
---------------------------------------
Jeffrey M. MacIntyre
<PAGE>
March 24, 1997
Jeffery M. MacIntyre
Dear Mr. MacIntyre:
This letter sets forth in writing the terms of the agreement between you
(the "Employee") and Global Exchange, Incorporated, a Virginia corporation (the
"Company", which term shall include any subsidiaries and affiliates of Global
Exchange, Incorporated).
The Company and the Employee hereby acknowledge the following: (i) The
Company is currently engaged in all phases of the business of researching,
developing, owning, marketing, licensing and distributing Internet-related
computer software and providing related consulting services to its clients,
including its ForSite Extranet software; (ii) The Company has developed
significant reputation and goodwill in its industry throughout the United States
and abroad; (iii) The success of the Company's business depends upon the
continued confidentiality of its proprietary information and trade secrets; (iv)
The Employee is or will be employed by the Company in a position of trust and
confidence and in a capacity in which he has or will become familiar with the
Company's confidential information and trade secrets; (v) In the course of his
employment or through the use of Company facilities or resources, the Employee
may have or may in the future have contributed to the development of Company
trade secrets and confidential business information; and (vi) The Company and
the Employee are entering into this agreement in consideration of the employment
or continued employment of Employee, the granting of bonuses, raises or stock
options, if applicable, other good and valuable consideration, and to further
document Company policies now in effect.
In consideration of the foregoing acknowledgments and the agreements set
forth herein, the Employee and the Company hereby agree as follows:
1. The Employee will make full and prompt written disclosure to the
Company of all inventions, innovations, improvements, modifications, know-how,
discoveries and developments (the "Developments"), whether or not patentable or
copyrightable, which are conceived, made or discovered by or under the direction
of the Employee, alone or jointly with others, during the course of his
employment with the Company or as a direct or indirect result thereof, including
those made or discovered during normal working hours, on the premises of the
Company, or using Company resources, and including Developments suggested by any
work or services performed or to be performed by the Employee for the Company.
The Developments will be the sole, absolute and exclusive property of the
Company, including any copyrights and patent rights in the Developments, and
Employee hereby assigns all rights in the Developments to Company.
<PAGE>
2. All Developments devised, made, developed or perfected after
termination of the Employee's employment are within the provisions of Paragraph
1 if conceived in whole or material part during the period of employment or with
the use of Company resources or facilities.
3. At the request and expense of the Company but without charge to the
Company, the Employee will do all acts and things as may be necessary to confirm
and vest the entire right, title and interest in the Developments in the Company
and secure to the Company full protection of the same, including without
limitation, the execution and delivery of assignments, patent applications and
other documents or papers. In order to confirm the Company's rights, the
Employee will also assign to the Company any and all copyrights and reproduction
rights to any written material prepared by the Employee in connection with his
employment.
4. All Developments furnished by the Employee to the Company will be the
Employee's own and original creation except for materials in the public domain
and will not to the best of his knowledge or belief violate or infringe upon any
right, patent, copyright, trademark or right of privacy, or constitute libel or
slander against or violate any other rights of any person, firm or corporation.
5. During the Employee's period of employment with the Company and after
the voluntary or involuntary termination of such employment, whether initiated
by the Employee or the Company, the Employee will hold in the strictest
confidence and will not, without the express written authority of the Company,
directly or indirectly disclose to others, disseminate, use or publish, other
than use in the ordinary course of the Company's business, any proprietary,
secret or confidential information of the Company (which for the purposes hereof
shall include without limitation the Developments, information designated by the
Company as "proprietary," "secret," or "confidential" (or similarly designated)
and information which is not generally known to those outside of the Company),
including but not limited to any such information concerning: (a) the business
or operations of the Company or any of its clients, suppliers, customers,
consultants, licensees, or others with which it does business ("Business
Partners"), (b) any Company or Business Partner materials, apparatus, processes,
methods, ways of business, formulae, technology, research, development, customer
lists, customer requirements, supplier lists, models, computer programs, program
descriptions, flow charts, equipment designs, equipment descriptions,
documentation, records, books, technical information, blueprints, databases, or
data, or (c) the existence or betterment of, or possible new uses or
applications for, any Company or Business Partner product or service
(Collectively, "Confidential Information").
Additionally, during the Employee's period of employment with the Company
and after the voluntary or involuntary termination of such employment, whether
initiated by the Employee or the Company, the Employee will hold in the
strictest confidence and will not, without the express written authority of the
Company's executive staff, directly or indirectly disclose to others,
disseminate, use or publish, other than use in the ordinary course of the
employee's duties for the Company, any proprietary, secret or confidential
information of the Company (which for the purposes hereof shall include without
limitation information designated by the Company as "proprietary," "secret," or
"confidential" (or similarly designated) and personnel or financial information
which is not generally known to the Company's staff), including but not limited
to any such information concerning: (a) the business or operations of the
Company or any of its clients, suppliers, customers, consultants, licensees, or
others with which it does business
<PAGE>
("Business Partners") or (b) any Company personnel and financial records,
processes, methods, ways of business, or documentation (Collectively,
"Confidential Information").
6. Upon the cessation of the Employee's employment by the Company for
any reason, he shall not take from, and will promptly return to the Company, any
and all Confidential Information and any writings or documents whatever or
reproductions thereof and any and all other information of a proprietary, secret
or confidential nature which relate in any way to the Company's operations,
business, assets, research, development, and any of the other items covered by
paragraph 5 above then in Employee's possession or control.
7. The Employee represents and warrants to the Company as follows: (i)
he is not under any obligation to any person which is inconsistent or in
conflict with this letter agreement or which would prevent, limit or impair in
any way the performance of his obligations hereunder; and (ii) he has not
disclosed and will not disclose to the Company, nor use for the Company's
benefit, any confidential information or trade secrets of any prior employer or
principal, unless and until such confidential information and trade secrets have
become public knowledge without the Employee's participation, or unless such
disclosure is permitted by any agreement with such prior employer or principal.
8. The Employee agrees that during the term of his employment with the
Company he will not: (a) directly or indirectly, either as principal, agent,
employee, consultant, officer, director, stockholder, or in any other capacity,
engage in or have a financial interest in, any business which is competitive
with the business of the Company or any of its subsidiaries or affiliates, (b)
induce employees of the Company or any of its subsidiaries or affiliates to join
with him in any capacity, direct or indirect, in any business in which he may be
or become interested whether or not competitive with the Company, or (c) solicit
customers of the Company in competition with the Company. Notwithstanding
Section 8(a), the Employee may continue to hold or purchase at prevailing
publicly traded rates not more than one percent (1%) of the outstanding and
issued shares of any publicly traded company which is competitive with the
business of the Company or any of its subsidiaries or affiliates.
Without limiting the generality of the foregoing, a business will be deemed
competitive or in competition with the Company if it involves the research,
development, production, manufacture, marketing, distribution, licensing, or
sale of any product which is or is intended to be directly or indirectly
competitive with or similar to products being researched, developed, produced,
manufactured, marketed, distributed, licensed or sold by the Company at any time
during the Employee's employment.
9. This letter agreement does not bind the Employee or the Company to
any specified period of employment, such employment being at the will of both
the Company and the Employee unless otherwise agreed in writing; and the
voluntary or involuntary termination of the Employee's employment shall not
affect the obligations of the Employee and the Company hereunder.
10. The Employee acknowledges that should he breach any of the covenants
set forth in this letter, monetary damages would not provide the Company with an
adequate remedy for such breach, and he hereby consents in addition to any
monetary award to the entry of an order in any court of competent jurisdiction
enjoining any activity constituting such a breach and requiring specific
performance of his obligations hereunder.
<PAGE>
11. If any portion or provision of this letter agreement should be
determined by a court of competent jurisdiction to be invalid or unenforceable,
then this letter agreement is intended to and shall be valid and enforced to the
fullest extent permitted by law.
12. Nothing contained in this letter agreement shall refer to or affect
any condition of employment or other item not specifically mentioned herein.
This letter agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Virginia, and shall inure to the benefit of and be
binding upon the heirs, executors, administrators, personal representatives and
assigns of the Employee and upon the legal representatives, successors and
assigns of the Company. The Employee agrees to jurisdiction and venue in the
federal and state courts within the Commonwealth of Virginia for all disputes
and enforcement actions arising under this Agreement.
Please indicate your acceptance of the terms of this letter agreement by
signing in the place provided below, whereupon this letter agreement shall take
effect as an instrument under seal.
Very truly yours,
Global Exchange, Incorporated
By: /s/ James W. MacIntyre, IV
___________________________
Title: CEO
_______________________
Agreed to as of the date
on page 1 of this letter agreement.
/s/ Jeffrey M. MacIntyre
________________________
Jeffrey M. MacIntyre
<PAGE>
EXHIBIT 10.5
September 27, 1996
Mr Randall V. Pevin
Dear Randy:
I am pleased to offer you a position as a Customer Support Representative for
Global Exchange, Inc. (GXI) beginning October 1, 1996. Your time will be
compensated at the rate of $14.42 per hour (annualized salary of $30,000) during
a 90 day probation period, and afterwards you will be compensated at the rate of
$15.32 per hour (annualized salary of $32,000) as earned, paid in bi-weekly
payments of 40 hours each week. You will receive a performance review after six
months and then again on your one-year anniversary. As a salaried staff member
with full benefits, you will be exempt from any overtime payment, but you will
be able to participate in all incentive programs of Global Exchange, Inc.
As a salaried employee you will be paid for 8 holidays, 80 hours of vacation,
earned at the rate of 3.0 hours per pay period and 40 hours of sick leave earned
the rate of 1.5 hours per pay period. Within two months of your employment date
(or such effective date as determined by GXI's insurance carrier), you will be
provided medical, hospitalization, and disability insurance coverage through
GXI's group insurance plan. A term life insurance policy is provided in the
amount of twice your annual salary within two months of your start date. GXI's
insurance coverage is subject to approval and acceptance by GXI's Group
Insurance Carriers. Should they deny your application for coverage under our
group policy, GXI would, accordingly, be unable to offer you insurance benefits.
If insurance rates for employees are over and above standard premium amounts,
employees will be expected to pay the difference. Currently, GXI pays 100
percent of insurance premiums. Depending on the escalation of GXI's insurance
rates, you may be asked to pay a portion of the insurance at some future date.
GXI provides worker's compensation insurance and reimburses work-related
expenses as you incur them and file expense reports with appropriate receipts.
You should understand that this employment at GXI is for an indefinite period of
time and that salary payments, benefits, and working conditions could change
from time-to-time or any time. As a condition of employment, you will need to
sign the attached GXI Ethics Policy. If the terms and conditions of employment
are acceptable to you, please sign below and return the original letter.
We would be delighted to have you as a member of our professional staff.
Sincerely,
/s/ William L. Robertson
<PAGE>
William L. Robertson
Chief Executive Officer
/s/ Randall Pevin
- -----------------
###-##-####
- -----------------
SS#
<PAGE>
May 5, 1997
Mr. Randall V. Pevin
Dear Mr. Pevin:
This letter sets forth in writing the terms of the agreement between you
(the "Employee") and GXI, Incorporated, a Delaware corporation (the "Company",
which term shall include any subsidiaries and affiliates of GXI, Incorporated).
The Company and the Employee hereby acknowledge the following: (i) The
Company is currently engaged in all phases of the business of researching,
developing, owning, marketing, licensing and distributing Internet-related
computer software and providing related consulting services to its clients,
including its ForSite Extranet software; (ii) The Company has developed
significant reputation and goodwill in its industry throughout the United States
and abroad; (iii) The success of the Company's business depends upon the
continued confidentiality of its proprietary information and trade secrets; (iv)
The Employee is or will be employed by the Company in a position of trust and
confidence and in a capacity in which he has or will become familiar with the
Company's confidential information and trade secrets; (v) In the course of his
employment or through the use of Company facilities or resources, the Employee
may have or may in the future have contributed to the development of Company
trade secrets and confidential business information; and (vi) The Company and
the Employee are entering into this agreement in consideration of the employment
or continued employment of Employee, the granting of bonuses, raises or stock
options, if applicable, other good and valuable consideration, and to further
document Company policies now in effect.
In consideration of the foregoing acknowledgments and the agreements set
forth herein, the Employee and the Company hereby agree as follows:
1. The Employee will make full and prompt written disclosure to the
Company of all inventions, innovations, improvements, modifications, know-how,
discoveries and developments (the "Developments"), whether or not patentable or
copyrightable, which are conceived, made or discovered by or under the direction
of the Employee, alone or jointly with others, during the course of his
employment with the Company or as a direct or indirect result thereof, including
those made or discovered during normal working hours, on the premises of the
Company, or using Company resources, and including Developments suggested by any
work or services performed or to be performed by the Employee for the Company.
The Developments will be the sole, absolute and exclusive property of the
Company, including any copyrights and patent rights in the Developments, and
Employee hereby assigns all rights in the Developments to Company.
<PAGE>
2. All Developments devised, made, developed or perfected after
termination of the Employee's employment are within the provisions of Paragraph
1 if conceived in whole or material part during the period of employment or with
the use of Company resources or facilities.
3. At the request and expense of the Company but without charge to the
Company, the Employee will do all acts and things as may be necessary to confirm
and vest the entire right, title and interest in the Developments in the Company
and secure to the Company full protection of the same, including without
limitation, the execution and delivery of assignments, patent applications and
other documents or papers. In order to confirm the Company's rights, the
Employee will also assign to the Company any and all copyrights and reproduction
rights to any written material prepared by the Employee in connection with his
employment.
4. All Developments furnished by the Employee to the Company will be the
Employee's own and original creation except for materials in the public domain
and will not to the best of his knowledge or belief violate or infringe upon any
right, patent, copyright, trademark or right of privacy, or constitute libel or
slander against or violate any other rights of any person, firm or corporation.
5. During the Employee's period of employment with the Company and after
the voluntary or involuntary termination of such employment, whether initiated
by the Employee or the Company, the Employee will hold in the strictest
confidence and will not, without the express written authority of the Company,
directly or indirectly disclose to others, disseminate, use or publish, other
than use in the ordinary course of the Company's business, any proprietary,
secret or confidential information of the Company (which for the purposes hereof
shall include without limitation the Developments, information designated by the
Company as "proprietary," "secret," or "confidential" (or similarly designated)
and information which is not generally known to those outside of the Company),
including but not limited to any such information concerning: (a) the business
or operations of the Company or any of its clients, suppliers, customers,
consultants, licensees, or others with which it does business ("Business
Partners"), (b) any Company or Business Partner materials, apparatus, processes,
methods, ways of business, formulae, technology, research, development, customer
lists, customer requirements, supplier lists, models, computer programs, program
descriptions, flow charts, equipment designs, equipment descriptions,
documentation, records, books, technical information, blueprints, databases, or
data, or (c) the existence or betterment of, or possible new uses or
applications for, any Company or Business Partner product or service
(Collectively, "Confidential Information").
6. Upon the cessation of the Employee's employment by the Company for any
reason, he shall not take from, and will promptly return to the Company, any and
all Confidential Information and any writings or documents whatever or
reproductions thereof and any and all other information of a proprietary, secret
or confidential nature which relate in any way to the Company's operations,
business, assets, research, development, and any of the other items covered by
paragraph 5 above then in Employee's possession or control.
-2-
<PAGE>
7. The Employee represents and warrants to the Company as follows: (i) he
is not under any obligation to any person which is inconsistent or in conflict
with this letter agreement or which would prevent, limit or impair in any way
the performance of his obligations hereunder; and (ii) he has not disclosed and
will not disclose to the Company, nor use for the Company's benefit, any
confidential information or trade secrets of any prior employer or principal,
unless and until such confidential information and trade secrets have become
public knowledge without the Employee's participation, or unless such disclosure
is permitted by any agreement with such prior employer or principal.
8. The Employee agrees that during the term of his employment with the
Company and for a period of one (1) year after the date of any voluntary or
involuntary termination of such employment, whether initiated by the Company or
the Employee, he will not: (a) directly or indirectly, either as principal,
agent, employee, consultant, officer, director, stockholder, or in any other
capacity, engage in or have a financial interest in, any business which is
competitive with the business of the Company or any of its subsidiaries or
affiliates, (b) induce employees of the Company or any of its subsidiaries or
affiliates to join with him in any capacity, direct or indirect, in any business
in which he may be or become interested whether or not competitive with the
Company, or (c) solicit customers of the Company in competition with the
Company. Notwithstanding Section 8(a), the Employee may continue to hold or
purchase at prevailing publicly traded rates not more than one percent (1%) of
the outstanding and issued shares of any publicly traded company which is
competitive with the business of the Company or any of its subsidiaries or
affiliates.
Without limiting the generality of the foregoing, a business will be deemed
competitive or in competition with the Company if it involves the performing of
services and/or the research, development, production, manufacture, marketing,
distribution, licensing, or sale of any product which is or is intended to be
directly or indirectly competitive with or similar to services performed and
products being researched, developed, produced, manufactured, marketed,
distributed, licensed or sold by the Company at any time during the Employee's
employment.
9. This letter agreement does not bind the Employee or the Company to any
specified period of employment, such employment being at the will of both the
Company and the Employee unless otherwise agreed in writing; and the voluntary
or involuntary termination of the Employee's employment shall not affect the
obligations of the Employee and the Company hereunder.
10. The Employee acknowledges that should he breach any of the covenants
set forth in this letter, monetary damages would not provide the Company with an
adequate remedy for such breach, and he hereby consents in addition to any
monetary award to the entry of an order in any court of competent jurisdiction
enjoining any activity constituting such a breach and requiring specific
performance of his obligations hereunder.
-3-
<PAGE>
11. If any portion or provision of this letter agreement should be
determined by a court of competent jurisdiction to be invalid or unenforceable,
then this letter agreement is intended to and shall be valid and enforced to the
fullest extent permitted by law.
12. Nothing contained in this letter agreement shall refer to or affect
any condition of employment or other item not specifically mentioned herein.
This letter agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Virginia, and shall inure to the benefit of and be
binding upon the heirs, executors, administrators, personal representatives and
assigns of the Employee and upon the legal representatives, successors and
assigns of the Company. The Employee agrees to jurisdiction and venue in the
federal and state courts within the Commonwealth of Virginia for all disputes
and enforcement actions arising under this Agreement.
Please indicate your acceptance of the terms of this letter agreement by
signing in the place provided below, whereupon this letter agreement shall take
effect as an instrument under seal.
Very truly yours,
/s/ James W. MacIntyre, IV
Global Exchange, Incorporated
By: James W. MacIntyre IV
CEO & President
Agreed to as of the date
on page 1 of this letter agreement.
/s/ Randall V. Pevin
- ----------------------------------
Randall V. Pevin
-4-
<PAGE>
EXHIBIT 10.6
Employment Offer
Thomas E. Young
Dear Mr. Young:
I am pleased to provide you with this offer setting forth the proposed terms and
conditions of your employment by OneSoft, Corporation (OneSoft).
1. Position. Your position will be as Senior Vice President, reporting to the
--------
President. Initially, you will be working in OneSoft's offices located at
7010 Little River Turnpike, Annandale, Virginia 22003.
2. Starting Date/Nature of Relationship. It is expected that your employment
------------------------------------
will start as of May 3, 1999 (placeholder). No provision of this letter
shall be construed to create an express or implied employment contract for
a specific period of time. Your employment will be at will, which means
that either you or OneSoft may terminate the employment relationship at any
time and for any reason.
3. Salary. Your initial salary will be at the rate of $12,500.00 per month,
------
which annualized is $150,000.00. Total first year compensation package (to
compensate for your loan) at 100% of Variable Compensation Plan is targeted
at $305,000.00. Compensation for subsequent years will target $275,000.00
at 100% of Variable Compensation Plan. Such salary shall be paid in
conformance with OneSoft's customary payroll practices as established or
modified from time to time. The MBOs driving the variable component of your
compensation will be mutually agreed upon between you and Jim MacIntyre. In
addition, OneSoft will grant you an interest free loan in the amount of
$30,000.00. This loan will be paid back from earned bonuses over a twenty-
four month period of time. $15,000.00 of which will be paid back within the
first twelve months after receipt of the loan. Salaries are currently paid
in bi-weekly installments and in arrears.
4. Incentive Stock Options. Subject to the approval of the Board of
-----------------------
Directors, you will be eligible to receive an option to purchase OneSoft
Common Stock. You will be eligible to receive an Incentive Stock Option
Agreement to purchase two hundred thousand (200,000) shares of OneSoft
Common Stock, vesting over a three year schedule. The vesting schedule is
as follows: On your first, second and third anniversary, you will vest 33%
of your options. The exercise price for the optioned OneSoft Common Stock
will be the fair market value of the Common Stock as determined by the
Board of Directors, at the time that the Board approves your options. The
incentive stock options will be subject to the restrictions set forth in
OneSoft's 1997 Employee, consultant and Director Stock Option Plan and the
Incentive Stock Option Agreement representing this option.
5. Benefits. As a salaried employee you will be paid for 8 holidays, vacation
--------
commensurate with other OneSoft executives, and one week of sick leave
earned at the rate of 1.5 hours per pay period. Within two months of your
employment date (or such effective date as determined by OneSoft's
insurance carrier), you will be provided medical, hospitalization, dental
and disability insurance coverage through OneSoft's group insurance plans.
A term life insurance policy is provided in the amount of twice your annual
salary within two months of your start date. OneSoft's insurance coverage
is subject to approval and acceptance by OneSoft's Group Insurance Carriers
and subject to the terms of its policies. Should they deny your application
for coverage under our group policy, OneSoft would, accordingly, be unable
to offer you insurance benefits. If insurance rates for employees are over
and above standard premium amounts, employees will be expected to pay the
difference.
<PAGE>
Currently OneSoft pays 100 percent of insurance premiums. Depending on the
escalation of OneSoft's insurance rates, you may be asked to pay a portion
of the Insurance at some future date. OneSoft provides worker's
compensation insurance and reimburses work-related expenses as you incur
them and file expense reports with appropriate receipts.
OneSoft retains the right to change, add or cease any particular benefit.
6. Confidentiality and Noncompetition. As a condition of employment with
----------------------------------
OneSoft, you and OneSoft will become parties to an Employee Non-Disclosure,
Noncompetition and Developments Agreement substantially in the form
presented with this letter (the "Employee Agreement").
7. General. This letter, together with the Confidential Information and
-------
Developments Agreement, will constitute our entire agreement as to your
employment by OneSoft and will supersede any prior agreements or
understandings, whether in writing or oral. This agreement may only be
amended or modified in a writing signed by both you and OneSoft.
The headings in this letter are for convenience of reference only; they are
not intended to modify or affect the meaning of any of the terms in this
letter.
This letter agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Virginia, without giving effect to its
conflict of law provisions, and shall inure to the benefit of and be
binding upon the heirs, executors, administrators, personal representatives
and assigns of the Employee and upon the legal representatives, successors
and assigns of the Company. The Employee agrees to jurisdiction and venue
in the federal and state courts within the Commonwealth of Virginia for all
disputes and enforcement actions arising under this Agreement. Any such
dispute or action shall be heard by a judge sitting without a jury, and
both parties forever waive their right to a civil jury trial with respect
thereto.
Please acknowledge your acceptance of this offer of employment and the
terms and conditions thereof by signing this letter and the Employee
Agreement, which execution will evidence your agreement with the terms and
conditions set forth herein and therein, and returning the originals to
OneSoft.
This offer of employment will expire on March 31, 1999 unless accepted by
you prior to such date.
Sincerely,
ONESOFT, CORPORATION
By: /s/ Randall V. Pevin
---------------------------------
Randall V. Pevin,
Vice President, Operations
ACCEPTED AND AGREED
- -------------------
/s/ Thomas E. Young
- -------------------
Thomas E. Young
2
<PAGE>
Confidential Information and Developments Agreement
Thomas E. Young
Dear Mr. Young:
This letter sets forth the terms of the agreement between you (the
"Employee") and OneSoft, Corporation., a Delaware corporation (the "Company",
which term shall include any subsidiaries and affiliates of OneSoft,
Corporation) regarding confidential information and developments.
The Company and the Employee hereby acknowledge the following: (i) The
Company is currently engaged in all phases of the business of researching,
developing, owning, marketing, licensing and distributing Internet-related
computer software and providing related consulting services to its client,
including its OneCommerce software; (ii) The Company has developed significant
reputation and goodwill in its industry throughout the United States and abroad;
(iii) The success of the Company's business depends upon the continued
confidentiality of its proprietary information and trade secrets; (iv) The
Employee is or will be employed by the Company in a position of trust and
confidence and in a capacity in which he has or will become familiar with the
Company's confidential information and trade secrets; (v) In the course of his
employment or through the use of Company facilities or resources, the Employee
may have or may in the future have contributed to the development of Company
trade secrets and confidential business information; and (vi) The Company and
the Employee are entering into this agreement in consideration of the employment
or continued employment of Employee, the granting of bonuses, raises or stock
options, if applicable, other good and valuable consideration, and to further
document Company policies now in effect.
In consideration of the foregoing acknowledgments and the agreements set
forth herein, the Employee and the Company hereby agree as follows:
1. The Employee will make full and prompt written disclosure to the Company
of all inventions, innovations, improvements, modifications, know-how,
discoveries and developments (the "Developments"), whether or not patentable or
copyrightable, which are conceived, made or discovered by or under the direction
of the Employee, alone or jointly with others, during the course of his
employment with the Company or as a direct or indirect result thereof, including
those made or discovered during normal working hours, on the premises of the
Company, or using Company resources, and including Developments suggested by any
work or services performed or to be performed by the Employee for the Company.
The Developments will be the sole, absolute and exclusive property of the
Company, including any copyrights and patent rights in the Developments, and
Employee hereby assigns all rights in the Developments to Company.
<PAGE>
2. All Developments devised, made, developed or perfected after
termination of the Employee's employment are within the provisions of Paragraph
1 if conceived in whole or material during the period of employment or with the
use of Company resources or facilities.
3. At the request and expense of the Company but without charge to the
Company, the Employee will do all acts and things as may be necessary to confirm
and vest the entire right, title and interest in the Developments in the Company
and secure to the Company full protection of the same, including without
limitation, the execution and delivery of assignments, patent applications and
other documents or papers. In order to confirm the Company's rights, the
Employee will also assign to the Company any and all copyrights and reproduction
rights to any written material prepared by the Employee in connection with his
employment.
4. All Developments furnished by the Employee to the Company will be the
Employee's own and original creation except for materials in the public domain
and will not to the best of his knowledge or belief violate or infringe upon any
right, patent, copyright, trademark or right of privacy, or constitute libel or
slander against or violate any other rights of any person, firm or corporation.
5. During the Employee's period of employment with the Company and after
the voluntary or involuntary termination of such employment, whether initiated
by the Employee or the Company, the Employee will hold in the strictest
confidence and will not, without the express written authority of the Company
directly or indirectly disclose to others, disseminate, use or publish, other
than use in the ordinary course of the Company's business, any proprietary,
secret or confidential information of the Company (which for the purposes hereof
shall include without limitation the Developments, information designated by the
Company as "proprietary," "secret," or "confidential" (or similarly designated)
and information which is not generally known to those outside of the Company),
including but not limited to any such information concerning: (a) the business
or operations of the Company or any of its clients, suppliers, customers,
consultants, licensees, or others with which it does business ("Business
Partners"), (b) any Company or Business Partner materials, apparatus, processes,
methods, ways of business, formulae, technology, research, development, customer
lists, customer requirements, supplier lists, models, computer programs, program
descriptions, flow charts, equipment designs, equipment descriptions,
documentation, records, books, technical information, blueprints, databases, or
data, or (c) the existence or betterment of, or possible new uses or
applications for, any Company or Business Partner product or service
(Collectively, "Confidential Information").
6. Upon the cessation of the Employee's employment by the Company for any
reason, he shall not take from, and will promptly return to the Company, any and
all Confidential Information and any writings or documents whatever or
reproductions thereof and any and all other information of a proprietary, secret
or confidential nature which relate in any way to the Company's operations,
business, assets, research development, and any of the other items covered by
paragraph 5 above them in Employee's possession or control.
7. The Employee represents and warrants to the Company as follows: (i) he
is not under any obligation to any person which is inconsistent or in conflict
with this letter agreement or which would prevent, limit or impair in any way
the performance of his obligations hereunder;
<PAGE>
and (ii) he has not disclosed and will not disclose to the Company, nor use for
the Company's benefit, any confidential information or trade secrets of any
prior employer or principal, unless and until such confidential information and
trade secrets have become public knowledge without the Employee's participation,
or unless such disclosure is permitted by any agreement with such prior employer
or principal.
8. The Employee agrees that during the term of his employment with the
Company he will not: (a) directly or indirectly, either as principal, agent,
employee, consultant, officer, director, stockholder, or in any other capacity,
engage in or have a financial interest in, any business which is competitive
with the business of the Company or any of its subsidiaries or affiliates, (b)
induce employees of the Company or any of its subsidiaries or affiliates to join
with him in any capacity, direct or indirect, in any business in which he may be
or become interested whether or not competitive with the Company, or (c) solicit
customers of the Company on behalf of himself or anyone else in competition with
the Company. Notwithstanding Section 8(a), the Employee may continue to hold or
purchase at prevailing publicly traded rates not more than one percent (1%) of
the outstanding and issued shares of any publicly traded company which is
competitive with the business of the Company or any of its subsidiaries or
affiliates.
Without limiting the generality of the foregoing, a business will be deemed
competitive or in competition with the Company if it involves the performing of
services and/or the research, development, production, manufacture, marketing,
distribution, licensing, or sale of any product which is or is intended to be
directly or indirectly competitive with or similar to services performed and
products being researched, developed, produced, manufactured, marketed,
distributed, licensed or sold by the Company at any time during the Employee's
employment.
9. This letter agreement does not bind the Employee or the Company to any
specified period of employment, such employment being at the will of both the
Company and the Employee unless otherwise agreed in writing; and the voluntary
or involuntary termination of the Employee's employment shall not affect the
obligations of the Employee and the Company hereunder.
10. The Employee acknowledges that should he breach any of the covenants
set forth in this letter, monetary damages would not provide the Company with an
adequate remedy for such breach, and he hereby consents in addition to any
monetary award to the entry of an order in any court of competent jurisdiction
enjoining any activity constituting such a breach and requiring specific
performance of his obligations hereunder.
11. If any portion or provision of this letter agreement should be
determined by a court of competent jurisdiction to be invalid or unenforceable,
then this letter agreement is intended to and shall be valid and enforced to the
fullest extent permitted by law.
12. Nothing contained in this letter agreement shall refer to or affect
any condition of employment or other item not specifically mentioned herein.
This letter agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Virginia, without giving effect to its conflict of
law provisions, and shall inure to the benefit of and be binding upon the heirs,
executors, administrators, personal representatives and assigns of the
<PAGE>
Employee and upon the legal representatives, successors and assigns of the
Company. The Employee agrees to jurisdiction and venue in the federal and state
courts within the Commonwealth of Virginia for all disputes and enforcement
actions arising under this Agreement. Any such dispute or action shall be heard
by a judge sitting without a jury, and both parties forever waive their right to
a civil jury trial with respect thereto.
Please indicate your acceptance of the terms of this agreement by signing
in the place provided below, whereupon this letter agreement shall take effect
as an instrument under seal.
Sincerely,
ONESOFT CORPORATION
By: /s/ Randall V. Pevin
--------------------
Randall V. Pevin
Vice President, Operations
ACCEPTED AND AGREED:
- -------------------
/s/ Thomas E. Young
- ------------------------
Thomas E Young
<PAGE>
EXHIBIT 10.7
THIRD AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
BY AND AMONG
ONESOFT CORPORATION,
THE HOLDERS OF SERIES A PREFERRED STOCK,
THE HOLDERS OF SERIES B PREFERRED STOCK,
THE HOLDERS OF SERIES C PREFERRED STOCK
AND
CERTAIN HOLDERS OF COMMON STOCK
dated as of August 13, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. BACKGROUND........................................................................................... 1
2. DEFINITIONS.......................................................................................... 1
3. BOARD REPRESENTATION................................................................................. 7
3.1. Representation on the Board of Directors.................................................. 7
3.2. Observers................................................................................. 8
3.3. Expenses.................................................................................. 8
3.4. Confidentiality........................................................................... 8
4. ADDITIONAL UNDERTAKINGS AND COVENANTS................................................................ 8
4.1. Maintenance of Corporate Status........................................................... 8
4.2. Accounts and Records...................................................................... 9
4.3. Litigation................................................................................ 9
4.4. Compliance with Law: No Infringement...................................................... 9
4.5. Disclosure of Information by the Investors................................................ 9
4.6. Maintenance of Properties................................................................. 9
4.7. Insurance................................................................................. 10
4.8. Change in Operations...................................................................... 10
4.9. Defaults and Breaches Under Other Contracts............................................... 10
4.10. Investments.............................................................................. 11
4.11. Liens and Encumbrances................................................................... 11
4.12. Guarantees and Loans..................................................................... 11
4.13. Affiliate Transactions................................................................... 11
4.14. SBA Forms................................................................................ 11
5. REGISTRATION UNDER SECURITIES ACT, ETC............................................................... 12
5.1. Registration on Request................................................................... 12
(a). Request.......................................................................... 12
(b). Long-form Registrations.......................................................... 12
(c). Short-form Registrations......................................................... 12
(d). Registration of Other Securities................................................. 13
(e). Restrictions on Demand Registrations............................................. 13
(i). Restrictions on Long-form Registrations................................. 13
(ii). Restrictions on Short-form Registrations............................... 14
(f). Other Registration Rights........................................................ 14
(g). Effective Registration Statement; Rescission..................................... 14
(h). Priority in Demand Registrations................................................. 15
(i). Additional Demand Registration................................................... 15
5.2. Piggyback Registrations................................................................... 15
(a). Right to Piggyback............................................................... 15
(b). Priority in Piggyback Registrations.............................................. 16
(c). Other Registrations.............................................................. 16
5.3. Registration Procedures................................................................... 17
5.4. Selection of Underwriters................................................................. 20
(a). Demand Registrations............................................................. 20
(b). Piggyback Registrations.......................................................... 21
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(c). Holdback Agreements.............................................................. 21
5.5. Preparation: Reasonable Investigation..................................................... 22
5.6. Indemnification........................................................................... 22
(a). Indemnification by the Company................................................... 22
(b). Indemnification by the Sellers................................................... 23
(c). Notices of Claims, etc........................................................... 23
(d). Other Indemnification............................................................ 24
(e). Indemnification Payments......................................................... 24
(f). Contribution..................................................................... 24
5.7. Registration Expenses..................................................................... 25
5.8. Adjustments Effecting Registrable Securities.............................................. 26
5.9. Participation in Underwritten Registrations............................................... 26
5.10. Rule 144................................................................................. 26
6. BASIC FINANCIAL INFORMATION OF THE COMPANY........................................................... 27
6.1. Annual Report............................................................................. 27
6.2. Quarterly Report.......................................................................... 27
6.3. Monthly Report............................................................................ 28
6.4. Business Plan and Operating Budget........................................................ 28
7. TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH SECURITIES ACT........................................ 28
7.1. Transferability........................................................................... 28
7.2. Restrictive Legend........................................................................ 28
7.3. Notice of Proposed Transfers.............................................................. 30
8. PREEMPTIVE RIGHTS.................................................................................... 31
8.1. Pro Rata Right............................................................................ 31
8.2. Definition of "New Securities"............................................................ 31
8.3. Required Notice........................................................................... 32
8.4. Company's Right to Sell................................................................... 32
8.5. Expiration of Right....................................................................... 32
9. RIGHT OF CO-SALE..................................................................................... 32
10. RIGHTS OF SUBSEQUENT REFUSAL........................................................................ 33
10.1. Investors and Founder.................................................................... 33
10.2. Company and Other Shareholders........................................................... 35
11. INDEMNIFICATION; REMEDIES........................................................................... 36
11.1. Agreement of the Company to Indemnify.................................................... 36
11.2. Conditions of Indemnification............................................................ 37
11.3. Specific Performance..................................................................... 37
11.4. Remedies Cumulative...................................................................... 37
12. LIMITATION OF LIABILITY............................................................................. 37
13. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS............................................................ 38
14. NOMINEES FOR BENEFICIAL OWNERS...................................................................... 38
15. NOTICES............................................................................................. 38
16. ASSIGNMENT.......................................................................................... 39
16.1. Assignment of Registration Rights........................................................ 39
16.2. Assignment of Preemptive Rights, Rights of Subsequent Refusal and Co-Sale................ 39
16.3. Assignment of Rights by Company.......................................................... 40
17. CONVERSION OF STOCK AT SG'S OPTION.................................................................. 40
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
18. BINDING EFFECT....................................................................................... 40
19. DESCRIPTIVE HEADING.................................................................................. 40
20. GOVERNING LAW........................................................................................ 40
21. TERMINATION; RULE 144(K)............................................................................. 40
22. SEVERABILITY......................................................................................... 41
23. COUNTERPARTS......................................................................................... 41
24. UNDERWRITING RIGHT OF FIRST OFFER.................................................................... 41
24.1. Right of First Offer...................................................................... 41
24.2. Right to Co-Manage........................................................................ 41
24.3. Ownership................................................................................. 41
</TABLE>
iii
<PAGE>
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
----------------------------------------------------
THIS THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement")
dated as of August 13, 1999 among ONESOFT CORPORATION, a Delaware corporation
(the "Company"), the entities and individuals listed on the "Schedule of
Investors" attached hereto as Schedule A, the Series A Preferred Stock Holders
----------
and Series B Preferred Stock Holders listed on Schedule B attached hereto, James
----------
W. MacIntyre, IV, and the other Common Stockholders also listed on Schedule B
----------
attached hereto (the "Common Stockholders").
1. BACKGROUND.
The Company, BWSF, SG, RRH (each as defined below) and certain of the
Common Stockholders are parties to a Second Amended and Restated Investor Rights
Agreement dated as of February 26, 1999 (the "Prior Agreement"). The Company
and the Initial Investors and Additional Investors (each as defined below)in the
Company's Series C Preferred Stock (as defined below) are parties to a Stock
Purchase Agreement for the purchase and sale of shares of Series C Preferred
Stock of the Company of even date herewith (the "Series C Preferred Stock
Purchase Agreement"), the Company, SG and RRH are parties to a Stock Purchase
Agreement for the purchase and sale of shares of Series B Preferred Stock of the
Company dated as of February 26, 1999 (the "Series B Preferred Stock Purchase
Agreement"), the Company and SG are parties to a Stock Purchase Agreement for
the purchase and sale of certain shares of Series A Preferred Stock of the
Company dated as of June 11, 1998 (the "Series A Preferred Stock Purchase
Agreement"), and the Company and BWSF are parties to a Stock Purchase Agreement
dated as of November 14, 1997, and amended as of March 13, 1998 and as of June
9, 1998 (the "BWSF Stock Purchase Agreement"). In order to induce the Initial
Investors and the Additional Investors to enter into the Series C Preferred
Stock Purchase Agreement, the parties to this Agreement hereby amend and restate
the Prior Agreement as set forth in this Agreement.
2. DEFINITIONS.
As used herein, unless the context otherwise requires, the following terms
have the following respective meanings:
Additional Investors: As defined in the Series C Preferred Stock Purchase
--------------------
Agreement and as set forth in the amended "Schedule of Investors" attached
hereto.
Affiliate: As defined in Rule 405 under the Securities Act.
---------
Appraiser: As defined in Section 10.2(c).
--------- ----------------
Authorized Transfer: (a) If a stockholder of the Company (a "Stockholder")
-------------------
is an individual, a pledge of Securities, a gift of Securities or a
transfer of Securities without consideration by such Stockholder, to or for
the benefit of any members of the Immediate Family of such Stockholder or
to any personal trust in which such Stockholder or any of such members
retains the entire beneficial interest, (b) if a Stockholder is a
partnership, corporation or limited liability company, a pledge of
Securities or a distribution or transfer of Securities by such Stockholder
to its affiliates, stockholders, partners or members or managing directors
of its members, as applicable, without consideration or at cost, and (c),
notwithstanding the
1
<PAGE>
provisions of the Stockholders Agreement, if a Stockholder is an employee
or former employee of the Company, a transfer or sale of Securities to
current employees of the Company (individually, each transferee described
in (a), (b) and (c) above, an "Authorized Transferee"), in each case
provided that, prior to such pledge, gift, distribution or transfer, such
Authorized Transferee agrees in writing to be bound by this Agreement.
Authorized Transferee: As defined in the definition of Authorized
---------------------
Transfer.
BTIP: BT Investment Partners, Inc., a Delaware corporation.
----
Business: The development and licensing of Internet-enabled customer and
--------
constituent interaction software products, and the provision of services
related to such software including: customization, training, integration,
and outsourced operations.
Board of Directors: The board of directors of the Company.
-------- ---------
BWSF: Blue Water Strategic Fund I, L.L.C., a Delaware limited liability
----
company.
BWSF Observer: As defined in Section 3.2.
------------- ------------
BWSF Preferred Director: As defined in Section 3.1.
----------------------- ------------
BWSF Stock Purchase Agreement: As defined in Section 1.
----------------------------- ----------
Claims: All demands, claims, actions or causes of action, assessments,
------
losses, damages (including, without limitation, diminution in value),
liabilities, costs and expenses, including, without limitation, interest,
penalties and reasonable attorneys' fees and disbursements.
Commission: The Securities and Exchange Commission or any other Federal
----------
agency at the time administering the Securities Act.
Common Directors: As defined in Section 3.1 of this Agreement.
----------------
Common Stock: The authorized common stock, $.001 par value per share, of
------------
the Company.
Company's Notice: As defined in Section 10.2(a).
---------------- ----------------
Company: As defined in the introductory paragraph of this Agreement.
-------
Competitors: Any Person, firm or entity regularly engaged in any material
-----------
Business of the Company or any Affiliate of such Person, firm or entity, as
determined in good faith by the Board of Directors.
Confidential Information: Any confidential, proprietary or secret
------------------------
information which an Investor may obtain from the Company, and which is
prominently marked "confidential," "proprietary" or "secret," including but
not limited to financial statements, reports and other materials submitted
by the Company prior to the date hereof or as required hereunder, or
pursuant to visitation or inspection rights granted hereunder.
2
<PAGE>
Co-sale Notice: As defined in Section 9.
-------------- ----------
Demand Registration: As defined in Section 5.l(a).
------------------- --------------
Environmental Laws: Any Laws (including, without limitation, the
------------------
Comprehensive Environmental Response, Compensation, and Liability Act),
including any plans, other criteria, or guidelines promulgated pursuant to
such Laws, now or hereafter in effect relating to Hazardous Materials
generation, production, use, storage, treatment, transportation or
disposal, or noise control, or the protection of human health or the
environment.
Exchange Act: The Securities Exchange Act of 1934, as amended, or any
------------
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar federal statute.
Fair Market Value: With respect to the Company, the price which a willing
-----------------
buyer would pay to a willing seller for (a) all of the assets and
liabilities of the Company, or (b) all of the outstanding stock of the
Company, with both the buyer and seller being fully informed and neither
being under a compulsion to buy or sell, as the case may be.
Founder: James W. MacIntyre, IV.
-------
Founder Shares: Shares of capital stock of the Company held by the Founder
--------------
or his Authorized Transferees.
Founder Observers: As defined in Section 3.2.
----------------- ------------
GEPT: General Electric Pension Trust, a _______________.
GEPT Observer: As defined in Section 3.2.
------------- ------------
Hazardous Materials: Any wastes, substances or materials (whether solids,
-------------------
liquids or gases) that are deemed hazardous, toxic, pollutants or
contaminants, including, without limitation, substances defined as
"hazardous wastes," "hazardous substances," "toxic substances,"
"radioactive materials," or other similar designations in, or otherwise
subject to regulation under, any Environmental Laws, "Hazardous Materials"
includes polychlorinated biphenyls (PCBs), asbestos, lead-based paints, and
petroleum and petroleum products (including, without limitation, crude oil
or any fraction thereof).
Immediate Family: A parent, spouse, and natural or lawfully adopted
----------------
children.
Information: As defined in Section 5.3(j).
----------- ---------------
Initial Investors: As defined in the Series C Preferred Stock Purchase
-----------------
Agreement and as set forth in the "Schedule of Investors" attached hereto.
Inspectors: As defined in Section 5.3(j).
---------- ---------------
3
<PAGE>
Intellectual Property: All franchises, patents, patent applications,
---------------------
trademarks, service marks, trade names, trade styles, brands, private
labels, copyrights, know-how, computer software, industrial designs and
drawings and general intangibles of a like nature, trade secrets, licenses,
and rights and filings with respect to the foregoing, and all reissues,
extensions and renewals thereof.
Investors' Counsel: As defined in Section 5.3(b).
------------------ ---------------
Investors: BWSF, SG, RRH, the Initial Investors, the Additional Investors
---------
and their respective Authorized Transferees.
Investor Indemnified Persons: Each Investor and its Affiliates, employees,
----------------------------
representatives, agents, members, partners, officers and directors.
Laws: All foreign, federal, state and local statutes, laws, ordinances,
----
regulations, rules, resolutions, orders, determinations, writs,
injunctions, awards (including, without limitation, awards of any
arbitrator), judgments and decrees applicable to the specified persons or
entities and to the businesses and assets thereof (including, without
limitation, laws relating to securities registration and regulation; the
sale, leasing, ownership or management of real property; employment
practices, terms and conditions, and wages and hours; building standards,
land use and zoning; safety, health and fire prevention; and environmental
protection, including Environmental Laws).
Limited Securities: The securities of the Company required to bear the
------------------
legend set forth in Section 7.1.
------------
Long-form Registration: As defined in Section 5.1(a).
---------------------- ---------------
Material Adverse Effect: A material adverse effect on the business,
-----------------------
operations, assets, liabilities, condition (financial or otherwise) or
prospects of the Company and the Subsidiaries, taken as a whole.
NASD: The National Association of Securities Dealers, Inc. or any similar
----
successor organization.
Nasdaq: The Nasdaq Stock Market or the Nasdaq National Market System.
------
New Securities: As defined in Section 8.2.
-------------- ------------
Non-affiliated Director: A member of the Board of Directors of the Company
-----------------------
who is neither an officer nor an employee of the Company, nor an Affiliate
of any officer or employee of the Company.
Offered Shares: As defined in Section 10.2(a).
-------------- ---------------
Other Shares: At any time those shares of Common Stock which do not
------------
constitute Primary Shares or Registrable Securities.
4
<PAGE>
Participation Notice: As defined in Section 9.
-------------------- ---------
Person: A corporation, limited liability company, association,
------
partnership, organization, business, natural person, estate, governmental
or political subdivision or governmental agency.
Piggyback Registration: As defined in Section 5.2(a).
---------------------- ---------------
Preferred Directors: As defined in Section 3.1 of this Agreement.
------------------- -----------
Primary Shares: Authorized but unissued shares of Common Stock.
--------------
Proposed Transferee: Any Person, firm or entity to which a holder of
-------------------
shares of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock intends to transfer some or all of such shares, except as
part of an Underwritten Offering or an Authorized Transfer.
Pro Rata Share: As defined in Section 8.1.
-------------- ------------
Qualified Public Offering: As defined in Section 8.5.
------------------------- ------------
QuestMark: QuestMark Partners, L.P., a Delaware limited partnership.
---------
QuestMark Observer: As defined in Section 3.2.
------------------ ------------
QuestMark Preferred Director: As defined in Section 3.1.
---------------------------- ------------
Records: As defined in Section 5.3(j).
------- ---------------
Register, Registered, and Registration: The terms "register", "registered"
--------------------------------------
and "registration" refer to a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of
such registration statement.
Registrable Securities: At any time, with respect to any Investor or the
----------------------
Founder, the shares of Common Stock held (or to be held upon conversion of
any Preferred Stock) by such Investor or the Founder, its or his heirs,
legatees, successors or assigns, that constitute Restricted Securities.
Registration Expenses: As defined in Section 5.7 of this Agreement.
--------------------- -----------
Restricted Securities: At any time, with respect to any Investor or the
---------------------
Founder, the shares of Series A Preferred Stock, Series B Preferred Stock
or Series C Preferred Stock of the Company held by such Investor or the
Founder from time to time, any shares of Common Stock issued or issuable
upon conversion thereof, any shares or other securities received in respect
thereof, and any other shares of Common Stock held by such Investor or the
Founder, which are held by such Investor or the Founder, its or his
successors or assigns, and which have not previously been sold to the
public pursuant to a registration statement under the Securities Act or
pursuant to Rule 144.
5
<PAGE>
RRH: Rader Reinfrank Holdings No. 2, a California general partnership.
---
RRH Observer: As defined in Section 3.2.
------------ -----------
RRH Preferred Director: As defined in Section 3.1.
---------------------- -----------
Riggs: Riggs Capital Partners, a _____________ partnership.
-----
Rule 144: Rule 144 under the Securities Act, as such rule may be amended
--------
from time to time, or any similar rule or regulation hereafter adopted by
the Commission.
SBA: The United States Small Business Administration and any successor
---
agency thereto.
SBIA: The Small Business Investment Act of 1958 and the regulations
----
thereunder.
SBIC: A Small Business Investment Company licensed by the SBA under the
----
SBIA.
Securities: As defined in Section 9.
---------- ---------
Securities Act: The Securities Act of 1933, as amended, or any similar
--------------
federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar federal statute.
Series A Preferred Stock: The authorized Series A Convertible Preferred
------------------------
Stock, having a par value of $.001 per share, of the Company.
Series B Preferred Stock: The authorized Series B Convertible Preferred
------------------------
Stock, having a par value of $.001 per share, of the Company.
Series C Preferred Stock: The authorized Series C Convertible Preferred
------------------------
Stock, having a par value of $.001 per share, of the Company.
Series A Preferred Stock Purchase Agreement: As defined in Section 1.
------------------------------------------- ---------
Series B Preferred Stock Purchase Agreement: As defined in Section 1.
------------------------------------------- ---------
Series C Preferred Stock Purchase Agreement: As defined in Section 1
------------------------------------------- ---------
SG: SGC Partners II LLC, a Delaware limited liability company.
--
SG Observer: As defined in Section 3.2.
----------- -----------
SG Preferred Director: As defined in Section 3.1.
--------------------- -----------
SGC: SG Cowen & Company, Inc.
---
Short-form Registration: As defined in Section 5.1(a).
----------------------- --------------
6
<PAGE>
Stock Purchase Agreement or Stock Purchase Agreements: collectively, the
-----------------------------------------------------
BWSF Stock Purchase Agreement, the Series A Preferred Stock Purchase
Agreement, the Series B Preferred Stock Purchase Agreement and the Series C
Preferred Stock Purchase Agreement.
Stockholders Agreement: That certain Amended and Restated Stockholders'
----------------------
and Voting Agreement dated as of January 6, 1997, and amended and restated
as of April 3, 1997, among the Company and the other signatories thereto.
Subscription Price: The amount payable to the Company in consideration of
------------------
the initial issuance of the Registrable Securities or the securities from
which the Registrable Securities were issued, whether by way of conversion,
exercise, stock dividend, stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization
or otherwise.
Subsidiaries: The subsidiaries of the Company all of which are listed in
------------
Exhibit B of the Series C Preferred Stock Purchase Agreement.
---------
Substantial Holder: (i) Any holder of any Series A Preferred Stock, Series
------------------
B Preferred Stock or Series C Preferred Stock which, when added to Common
Stock held by each such holder and such holder's Authorized Transferees and
Affiliates, is convertible into at least three percent (3%) of the
outstanding Common Stock on a fully-converted and fully-diluted basis or
any holder of any Common Stock which, when added to Preferred Stock held by
each such holder, constitutes at least three percent (3%) of the
outstanding Common Stock on a fully-converted and fully-diluted basis;
provided, however, that in the cases BWSF, SG, RRH, QuestMark and GEPT,
each of them shall also be deemed to be a Substantial Holder if and so long
as it, together with its Authorized Transferees and Affiliates, continues
to hold capital stock of the Company which, on a fully-converted and fully-
diluted basis, is at least equal to one-half (1/2) of the capital stock
which such holder and its Authorized Transferees and Affiliates held on the
date hereof, inclusive of any Series C Preferred Stock being acquired by it
under the Series C Preferred Stock Purchase Agreement; (ii) BTIP and Riggs,
solely for the purposes of Sections 6, 8, 9 and 10 of this Agreement, so
long as each holder, together with its Authorized Transferees and
Affiliates, continues to hold capital stock of the Company which, on a
fully-converted and fully-diluted basis, is at least equal to one-half
(1/2) of the capital stock which each holder and its Authorized Transferees
and Affiliates held on the date hereof, inclusive of any Series C Preferred
Stock being acquired by each holder under the Series C Preferred Stock
Purchase Agreement; and (iii) the Founder, so long as the Common Stock or
options to purchase Common Stock held by him or his Authorized Transferees
and Affiliates constitutes at least three percent (3%) of the outstanding
Common Stock on a fully-converted and fully-diluted basis.
Underwriters: As defined in Section 5.4.
------------ -----------
Underwritten Registration or Underwritten Offering: A registration in
------------------------- ---------------------
which securities of the Company are sold pursuant to a firm commitment
underwriting.
3. BOARD REPRESENTATION
3.1. Representation on the Board of Directors.
----------------------------------------
7
<PAGE>
The Company shall cause the Board of Directors of the Company to consist of
nine (9) members, as follows: (a) two (2) members, one (1) of each of whom shall
be nominated by BWSF and SG for so long as each such holder is a Substantial
Holder (and who initially shall be Henry Barratt for BWSF and Justin Hall-
Tipping for SG) or, if BWSF or SG is not a Substantial Holder, as the case may
be, then such director shall be nominated by the holders of the Series A
Preferred Stock and elected by a majority vote of the holders of Series A
Preferred Stock, voting separately as a class (the "BWSF Preferred Director" and
the "SG Preferred Director", respectively); (b) one (1) member who shall be
nominated by RRH (and who shall initially be Stephen Rader) or, if RRH is not a
Substantial Holder, then such director shall be nominated by the holders of
Series B Preferred Stock and elected by a majority vote of the holders of Series
B Preferred Stock, voting separately as a class (the "RRH Preferred Director");
(c) one (1) member who shall be nominated by QuestMark (and who shall initially
be Thomas R. Hitchner) or, if QuestMark is not a Substantial Holder, then such
director shall be nominated by the holders of Series C Preferred Stock and
elected by a majority vote of the holders of Series C Preferred Stock, voting
separately as a class (the "QuestMark Preferred Director", together with the
BWSF Preferred Director, the SG Preferred Director and the RRH Preferred
Director, the "Preferred Directors"); (d) four (4) members who shall be
nominated by the Founder and elected by a majority vote of the holders of Common
Stock, voting separately as a class, one (1) of whom shall be a Non-Affiliated
Director (three (3) of whom initially shall be the Founder and Jeffrey
MacIntyre, each an employee of the Company, and Carlos Cisneros, as the Non-
Affiliated Director) (collectively, the "Common Directors"); and (e) one
director who shall be a Non-affiliated Director and who shall be nominated by
the Board of Directors other than such director and shall be elected by a
majority vote of the stockholders entitled to vote for the election of directors
(and who initially shall be A. Douglas Peabody). In the event of the death,
resignation, or removal of any BWSF Preferred Director or SG Preferred Director,
the successor thereto as a director shall be nominated and elected in the manner
set forth above; provided that, in the case the BWSF Director, if there is only
one Substantial Holder or no Substantial Holders of Series A Preferred Stock,
or, in the case of the SG Preferred Director, if there is only one Substantial
Holder or no Substantial Holders of Series A Preferred Stock, or, in the case of
the RRH Director, if there are no Substantial Holders of Series B Preferred
Stock, or, in the case of the QuestMark Director, if there are no Substantial
Holders of Series C Preferred Stock, then such director shall be subject to
removal by the Founder, if the Founder at such time is associated with the
Company as an officer, director or Substantial Holder or, if not, such removal
may be effected by a majority of the directors then serving other than the
director who is subject to such removal, and such director's successor shall be
nominated and elected as an additional Non-affiliated Director pursuant to
clause (e) above. The Stockholders Agreement is hereby amended by deleting
Section 6 thereof in its entirety.
8
<PAGE>
3.2. Observers.
---------
BWSF, for so long as it is a Substantial Holder and holds any Series A
Preferred Stock, SG, for so long as it is a Substantial Holder and holds any
Series A Preferred Stock or Series B Preferred Stock, RRH, for so long as RRH is
a Substantial Holder and holds any Series B Preferred Stock, QuestMark, for so
long as QuestMark is a Substantial Holder and holds any Series C Preferred
Stock, and GEPT, for so long as GEPT is a Substantial Holder and holds any
Series C Preferred Stock, may each from time to time appoint a representative to
attend meetings of the Board of Directors of the Company or any committee
thereof as an observer (the "BWSF Observer", the "SG Observer", the "RRH
Observer", the "QuestMark Observer" and the "GEPT Observer", respectively).
Neither the holders of the Series A Preferred Stock, the holders of Series B
Preferred Stock, the holders of Series C Preferred Stock, the BWSF Observer, the
SG Observer, the RRH Observer, the QuestMark Observer nor the GEPT Observer,
however, shall have any duties, responsibilities or liability by virtue of
attendance at such meetings or the failure to attend the same. The parties
agree that the Founder shall be entitled to appoint observers to attend meetings
of the Board of Directors of the Company or any committee thereof as he deems
appropriate (the "Founder Observers") which Founder Observers shall not have any
duties, responsibilities or liability by virtue of attendance at such meetings
or the failure to attend the same.
3.3. Expenses.
--------
The Company shall reimburse all directors for all reasonable expenses
incurred in connection with their attendance at meetings of the Board of
Directors, including without limitation reasonable and necessary travel and
living expenses. The Preferred Directors and Non-affiliated Director(s)
additionally shall be entitled to receive such compensation as shall be paid to
the directors of the Company who are not also officers of the Company for their
attendance at meetings of the Board of Directors.
3.4. Confidentiality.
---------------
The BWSF Observer, the SG Observer, the RRH Observer, the QuestMark
Observer, the GEPT Observer and the Founder Observers shall be bound, as
representatives of the Company, by all existing nondisclosure agreements, a list
of which is attached hereto as Schedule C and all future nondisclosure
----------
agreements entered into by the Company in good faith, provided that such
agreements are not entered into for the purpose of limiting the Investors in the
exercise of their rights granted pursuant to this Agreement, the SG Series A
Preferred Stock Purchase Agreement, the Series B Preferred Stock Purchase
Agreement, the Series C Preferred Stock Purchase Agreement or the BWSF Stock
Purchase Agreement.
4. ADDITIONAL UNDERTAKINGS AND COVENANTS.
The Investors and the Company hereby covenant and agree with each other as
follows:
4.1. Maintenance of Corporate Status.
-------------------------------
The Company shall maintain, and shall cause its Subsidiaries to maintain,
their corporate existence in good standing in the jurisdictions where they are
respectively incorporated and shall remain, and cause its Subsidiaries to
remain, qualified as foreign corporations in good standing in all
9
<PAGE>
other jurisdictions where they are respectively required to be qualified, except
where any failure so to maintain or remain will not have a Material Adverse
Effect.
4.2. Accounts and Records.
--------------------
The Company shall establish and maintain, and shall cause its Subsidiaries
to establish and maintain, true, correct and complete financial accounts and
records in conformity with generally accepted accounting principles furnished
pursuant to Section 6 of this Agreement.
---------
4.3. Litigation.
----------
The Company shall promptly notify the Investors in writing of all
litigation and all proceedings before any governmental or regulatory body to
which it or any of its Subsidiaries is a party as a result of which (i) damages
are sought against the Company or any of its Subsidiaries at law of $50,000 or
more, or (ii) an equitable remedy is sought against the Company or any of its
Subsidiaries, the impact of which would have a Material Adverse Effect.
4.4. Compliance with Law: No Infringement.
------------------------------------
The Company shall comply, and shall cause its Subsidiaries to comply, with
the provisions of all applicable Laws, except where the failure to comply will
not have a Material Adverse Effect, and shall not engage in any activities which
to the Company's knowledge, after the exercise of reasonable diligence, infringe
upon the Intellectual Property rights of any other person, corporation,
partnership or other entity.
4.5. Disclosure of Information by the Investors.
------------------------------------------
The Company consents to disclosure by the Investors of any information with
respect to the Company and any of its Subsidiaries which is not Confidential
Information or a trade secret of the Company or any of its Subsidiaries,
including financial information, to the members, partners, advisory board
members, stockholders or advisers of the Investors, and to any permitted
transferee of the Restricted Securities; provided that the Investors use
reasonable efforts to avoid disclosure of financial or other information (other
than in a summary format) to anyone other than such persons, including but not
limited to Competitors or customers of the Company.
4.6. Maintenance of Properties.
-------------------------
(a) The Company shall maintain, and shall cause its Subsidiaries to
maintain, all real and tangible personal property owned and used in the business
of the Company in good condition excepting ordinary wear and tear, and shall
make all such repairs, renewals, replacements, additions, and improvements to
such properties as are necessary or appropriate and in the case of leased
property, shall maintain such property in substantial compliance with the terms
of the lease.
(b) The Company shall use its reasonable best efforts to maintain, and
shall cause its Subsidiaries to use their reasonable best efforts to maintain,
all Intellectual Property owned or held by the Company or its Subsidiaries or
thereafter owned or held by the Company or its Subsidiaries in full force and
effect in the United States of America and in such other countries in which the
Company or its Subsidiaries shall engage in business, the maintenance of which
is necessary for the
10
<PAGE>
Company to conduct its Business or the failure to maintain which would have a
Material Adverse Effect, including but not limited to: (i) the execution by
future employees, officers, and independent contractors materially engaged in
providing services related to the Business of the Company or its Subsidiaries of
confidentiality and nondisclosure agreements or acknowledgments, and
Intellectual Property assignment agreements; (ii) the prosecution of
applications to register or perfect rights or claims in and to any such
Intellectual Property; (iii) the registration of license agreements; (iv) the
timely filing of affidavits of use, renewals or other maintenance filings; and
(v) the timely payment of filing and maintenance fees. The Company shall use its
reasonable best efforts not, and shall use its reasonable best efforts to cause
its Subsidiaries not, to: (i) abandon or let lapse or pass to the public domain
any of the Intellectual Property owned or held by the Company or any Subsidiary
or hereafter owned or held by the Company or its Subsidiaries except where such
abandonment or lapsing or passing to public domain would not have a Material
Adverse Effect; (ii) encumber or license others to use the Intellectual Property
rights owned by it except in the ordinary course of business or except where
such encumbrance or license would not have a Material Adverse Effect; and (iii)
fail to maintain the confidentiality and trade secret status of all Intellectual
Property except to the extent that such disclosure is necessary to obtain
copyright or trademark or patents or except under the protection of a
confidentiality and nondisclosure agreement in the exercise of prudent business
judgment.
4.7. Insurance.
---------
The Company shall maintain, and shall cause its Subsidiaries to maintain,
with financially sound and reputable insurers having a Best rating of "B" or
better, insurance with respect to its assets, properties and business against
such casualties and contingencies and in such types and amounts as would be
deemed necessary or advisable by prudent persons engaged in similar businesses.
A schedule of insurance specifying risks covered, the amounts of coverage, the
names of insurers, and the costs of such insurance is set forth in Section 5.22
------------
of the Schedule of Exceptions of the Series C Preferred Stock Purchase
Agreement. Upon the request of the Investors from time to time, the Company
shall promptly supplement such schedule to reflect any change in insurance
coverage.
4.8. Change in Operations.
--------------------
Except as authorized by the Board of Directors, the Company shall not, and
shall not permit the Subsidiaries to, substantially change the type of
operations currently contemplated by the Company and its Subsidiaries or enter
into, by internal expansion or by any form of acquisition, any line of business
not directly related to the type of operations currently contemplated by the
Company and its Subsidiaries.
4.9. Defaults and Breaches Under Other Contracts.
-------------------------------------------
With respect to each contract listed in Section 5.17 of the Schedule of
------------
Exceptions of the Series C Preferred Stock Purchase Agreement, the Company shall
not permit to exist any material default or breach by the Company or any of its
Subsidiaries of any contract provision beyond any reasonable period of grace
provided for in such contract if such breach or default would, insofar as can be
reasonably foreseen, result in an amount in excess of $25,000 becoming due and
payable by
11
<PAGE>
the Company prior to its stated maturity; provided, however, that the existence
of any default or breach may be contested in good faith by the Company by
appropriate proceedings.
4.10. Investments.
-----------
The Company shall not, and shall not permit its Subsidiaries to, invest in
or otherwise divert any of the funds of the Company or any Subsidiary to any
individual, corporation, or business entity, except in the ordinary course of
business and consistent with prudent business practices which includes, but is
not limited to, investment in joint venture opportunities and the creation and
maintenance of new subsidiaries; provided, however, that any investment in joint
venture opportunities or creation of new subsidiaries shall be subject to prior
approval of the Board of Directors.
4.11. Liens and Encumbrances.
----------------------
Except as approved by the Board of Directors, the Company shall not create,
incur, assume, or suffer to exist, and shall cause its Subsidiaries not to
create, incur, assume or suffer to exist, any material encumbrance of any kind
on the Company's or its Subsidiaries' assets or properties now owned or
hereafter acquired, other than those encumbrances incurred in the ordinary
course of business or otherwise identified in this Agreement or the Stock
Purchase Agreements; provided further that under no circumstances shall the
Board of Directors, without the approval of the Preferred Directors approve a
material encumbrance of any kind on the Company's or its Subsidiaries' assets or
properties now owned or hereafter acquired, unless such encumbrance secures a
loan from an unrelated third party institutional lender, which loan shall not
have any attached warrants or other equity features.
4.12. Guarantees and Loans.
--------------------
Except as approved by the Board of Directors, the Company shall not, and
shall cause its Subsidiaries not to, guarantee or endorse an obligation of, or
make an advance or loan to, any individual, corporation, or other business
entity, or assume any contingent liability, except for (a) the endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business, (b) the advancement of travel expenses and relocation costs, (c)
intercompany transactions (e.g., loans to Subsidiaries) or (d) payments or other
obligations in the ordinary course of business and consistent with prudent
business practices, which shall include, but is not limited to obligations of
joint ventures in which the Company has an interest.
4.13. Affiliate Transactions.
----------------------
Except as unanimously approved by the Board of Directors, the Company shall
not, and shall cause its Subsidiaries not to, purchase, rent or lease property
or assets from, or sell, transfer or dispose of any assets, including, but not
limited to, Intellectual Property, or properties (regardless of whether in the
ordinary course of business or not) to any Affiliate of the Company (other than
any Subsidiary) or any current or former officer, director, or employee of the
Company or any Subsidiary, or any Affiliate of any of them.
4.14. SBA Forms.
---------
12
<PAGE>
The Company will, upon the request of SG, complete, execute (where
applicable) and deliver to SG, SBA Forms 480, 652 and 1031.
5. REGISTRATION UNDER SECURITIES ACT, ETC.
5.1. Registration on Request.
-----------------------
(a) Request.
Upon the written request of the holders of at least the applicable
minimum aggregate amount of Registrable Securities as provided in Section
-------
5.1(e), requesting that the Company effect the registration under the Securities
- ------
Act of the public offering and sale thereof, on Form S-l or any similar long-
form registration (a "Long-form Registration") or on Form S-3 or any successor
form thereto (a "Short-form Registration"), if available, the Company shall
promptly give written notice of such requested registration to all holders of
record of Registrable Securities and shall promptly use its reasonable best
efforts to effect, as promptly as practicable, such registration under the
Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such holders, and
(ii) all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request
given to the Company within thirty (30) days after the giving of
such written notice by the Company, all to the extent requisite
to permit the disposition of the Registrable Securities so to be
registered.
All registrations requested pursuant to this Section 5.1(a) are referred to
--------------
herein as "Demand Registrations".
(b) Long-form Registrations.
The holders of Registrable Securities are entitled to request two (2)
Long-form Registrations, which shall be an underwritten registration. A
requested Short-form Registration on Form S-3 or any successor form in
compliance with Section 5.l(c) shall not be deemed to be a registration
-------------
statement requested pursuant to this Section 5.1(b), but shall otherwise be
--------------
treated as a registration initiated pursuant to and shall, except as otherwise
expressly provided in Section 5.1(c), be subject to this Section 5.1.
-------------- -----------
(c) Short-form Registrations.
In addition to the Long-form Registrations provided for in Section
-------
5.1(b), the holders of Registrable Securities are entitled to request four (4)
- ------
(or, if the holders of Registrable Securities, after all such four (4)
registrations have been requested and effected, have not yet requested a Long-
form Registration, five (5) Short-form Registrations) if and at such times as
the Company qualifies for the use of such form. Demand Registrations shall be
Short-form Registrations whenever the Company is eligible to use any applicable
short form for registrations. The Company shall use its
13
<PAGE>
reasonable best efforts to be and remain eligible to use Short-form
Registrations for registered sales of Registrable Securities.
(d) Registration of Other Securities.
Subject to the provisions of Section 5.2, whenever the Company shall
-----------
effect a registration pursuant to this Section 5.1 in connection with an
-----------
offering by one or more holders of Registrable Securities, no securities other
than Registrable Securities shall be included among the securities covered by
such registration, unless (i) in the case of an underwritten offering, the
managing underwriter of such offering shall have advised such holders of such
Registrable Securities in writing that the inclusion of such other securities
would not adversely affect such offering, or (ii) such holders of such
Registrable Securities shall have consented in writing to the inclusion of such
other securities. Any persons other than holders of Registrable Securities who
participate in Demand Registrations which are not at the Company's expense shall
pay their proportionate shares of the Registration Expenses, as provided in
Section 5.7.
- -----------
(e) Restrictions on Demand Registrations.
The Company shall not be obligated to effect any Demand Registration
(i) within one hundred eighty (180) days after the effective date of a previous
registration, if the gross proceeds to the Company from such previous
registration were at least twenty million dollars ($20,000,000), (ii) within
ninety (90) days after the effective date of any prior Demand Registration or
Piggyback Registration (as hereinafter defined), or (iii) prior to the earlier
of (x) December 31, 2001, and (y) one hundred eighty (180) days after the
effective date of the Company's initial public offering of Common Stock pursuant
to an effective registration statement under the Securities Act. The Company
shall not be obligated to effect any Demand Registration unless the holders of a
majority of the shares of Common Stock issuable upon conversion of Registrable
Securities request such Demand Registration. The Company may delay the filing
or effectiveness of any Demand Registration statement for a period of not less
than ninety (90) days and not to exceed one hundred eighty (180) days after the
date of a request for registration pursuant to this Section 5.1 if (i) at the
-----------
time of such request the Company is engaged, or has fixed plans to engage within
sixty (60) days after the time of such request, in a firm commitment
underwritten public offering in which the holders of Registrable Securities may
include Registrable Securities pursuant to Section 5.2 below, or (ii) the
-----------
Company shall furnish to the holders requesting registration pursuant to this
Section 5.1 a certificate signed by the President of the Company stating that,
- -----------
in the good faith judgment of the Board of Directors of the Company, and with
the concurrence of the investment banking firm acting as financial advisor to
the Company, if any, that is currently being retained by the Company, it would
be materially detrimental to the Company and the Stockholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement (provided that the Company may not utilize
the rights set forth in this Section 5.1(e) more than once in any twelve (12)
-------------
month period and in the event the Company does utilize such right, the holders
of Registrable Securities requesting such registration shall be entitled to
withdraw such request and, if such request is withdrawn, such registration shall
not count as a registration pursuant to this Section 5.1 and the holders of
-----------
Registrable Securities requesting such registration shall have no obligation to
reimburse the Company for the Company's expenses in connection with such
rescinded registration). The Company shall not be required to effect any Demand
Registration after the seventh (7th) anniversary of the Initial Closing Date
under the Stock Purchase Agreement and the Demand Registration rights
14
<PAGE>
of any holder of Registrable Securities shall terminate at such time as such
holder is able to sell all of such Registrable Securities under Rule 144 within
a period of ninety (90) days.
(f) Restrictions on Long-form Registrations.
The Company shall not be obligated to effect any Long-form
Registration under the Securities Act except in accordance with the following
provisions:
(A) the Company shall not be obligated to file (1) more than two
(2) Long-form Registrations initiated pursuant to Section 5.1(b) which becomes
--------------
effective, or (2) any registration statement during any period in which any
other registration statement pursuant to which Primary Shares are to be or were
sold has been filed and not withdrawn or has been declared effective within the
prior one hundred eighty (180) days; and
(B) the Company shall not be obligated to effect any Long-form
Registration if the anticipated gross proceeds are expected to be less than
twenty-five million dollars ($25,000,000).
(g). Restrictions on Short-form Registrations.
The Company shall not be obligated to effect any Short-form
Registration under the Securities Act if the anticipated gross proceeds with
respect to the Registrable Securities included in such registration statement
are expected to be less than five million dollars ($5,000,000).
(h) Other Registration Rights.
Except as provided in this Agreement, the Company shall not grant to
any Persons the right to request the Company to register any equity securities
of the Company, or any securities convertible or exchangeable into or
exercisable for such securities, without the written consent of the holders of a
majority of the shares of Common Stock into which the shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock are
convertible and the shares of Common Stock held by the Founder, acting together
as a single class; provided that the Company may grant rights to other Persons
so long as such rights are junior to the rights of the holders of Registrable
Securities.
(i) Effective Registration Statement; Rescission.
A Demand Registration pursuant to this Section 5.1 shall not be deemed
-----------
to have been effected (i) unless a registration statement with respect thereto
has become effective, (ii) if after it has become effective, such registration
is precluded from effectiveness by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason, or (iii) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied, other than by reason of some act or omission by
the holders requesting such registration. A requested Demand Registration under
this Section 5.1 may be rescinded by written notice to the Company by the
-----------
holders requesting such registration and such rescinded registration shall not
count as a registration statement initiated pursuant to this Section 5.1, but if
-----------
no event has occurred following the exercise of such Demand Registration right
(and prior to such written notice of rescission) which may cause a material
15
<PAGE>
reduction in the Fair Market Value of the Company and the demanded registration
was a Long-form Registration, then in order for such rescinded registration not
to count as a registration statement initiated pursuant to this Section 5.1 the
-----------
holders who requested such rescission must reimburse the Company for fifty
percent (50%) of all Registration Expenses incurred by the Company in connection
with such withdrawn Demand Registration. Notwithstanding the foregoing, any
requested Demand Registration under this Section 5.1 which is rescinded after
-----------
the receipt by the Company of comments from the Commission on the applicable
registration statement shall count as a registration statement initiated
pursuant to this Section 5.1.
-----------
(j) Priority in Demand Registrations.
With respect to any registration pursuant to this Section 5.1, the
-----------
Company may include in such registration any Primary Shares and/or Other Shares;
provided that, in the event the registration is for an underwritten public
- --------
offering, if the underwriter (or the managing underwriter on behalf of the
underwriters, if there are more than a single underwriter) advises the Company
that the inclusion of all Registrable Securities, Primary Shares and/or Other
Shares proposed to be included in such registration would interfere with the
successful marketing (including pricing) of all such securities, then the
numbers of Registrable Securities, Primary Shares and/or Other Shares proposed
to be included in such registration shall be included in the following order:
(i) first, Registrable Securities, other than Founder Shares,
-----
and securities having registration rights on a par with Registrable Securities;
(ii) second, securities with registration rights junior to
------
Registrable Securities but senior to Founder Shares, Primary Shares and Other
Shares;
(iii) third, Founder Shares;
-----
(iv) fourth, other Common Stock; and
------
(v) fifth, Primary Shares.
-----
(k) Additional Demand Registration.
Notwithstanding any other provision of this Section 5.1, at any time
-----------
or from time to time, if the Company effects the registration of less than all
of the Registrable Securities requested to be registered pursuant to Section
-------
5.1(a), the parties entitled to request a registration under Section 5.1(a)
- ------ -------------
shall be entitled to request an additional registration pursuant to Section
-------
5.1(a). Any such registration which shall be requested, shall be effected in
- ------
all other respects in accordance with the terms of Section 5.1(a), and the
--------------
Company shall pay all customary Registration Expenses in connection with any
such registration subject to the limitations set forth in Section 5.1(g) and
-------------
Section 5.7. This provision shall apply successively in the event that any
- -----------
holder of Registrable Securities shall continue to hold Registrable Securities
solely as a result of Section 5.1(h).
--------------
5.2. Piggyback Registrations.
-----------------------
(a) Right to Piggyback.
16
<PAGE>
If the Company at any time proposes to register any of its securities
under the Securities Act (other than registrations solely for the registration
of shares in connection with an employee benefit plan or a merger or share
exchange or consolidation and other than pursuant to Section 5.1), whether or
------------
not for sale for its own account, and the registration form to be used may be
used for the registration of Registrable Securities (a "Piggyback
Registration"), the Company will at each such time give prompt written notice to
all holders of Registrable Securities and all other holders of Common Stock not
constituting Registrable Securities of its intention to do so and of such
holders' rights under this Section 5.2. Upon the written request of any such
-----------
holder made within thirty (30) days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such holder), the Company shall use its reasonable best efforts to effect the
registration under the Securities Act of all Registrable Securities and/or other
Common Stock which the Company has been so requested to register by the holders
thereof on the same terms and conditions as the securities otherwise being sold
in such registration, to the extent requisite to permit the disposition of the
Registrable Securities and/or other Common Stock so to be registered. No
registration effected under this Section 5.2 shall relieve the Company of its
-----------
obligation to effect any registration upon request under Section 5.1 above. The
-----------
Piggyback Registration rights under this Section 5.2 shall terminate at such
-----------
time as the Demand Registration rights shall terminate under Section 5.1 above.
-----------
(b) Priority in Piggyback Registrations.
If (i) a registration pursuant to this Section 5.2 involves an
-----------
underwritten offering of the securities so being registered, whether or not for
sale for the account of the Company, to be distributed (on a firm commitment
basis) by or through one or more underwriters of recognized standing under
underwriting terms appropriate for such a transaction, (ii) the Registrable
Securities and/or other Common Stock so requested to be registered for sale for
the account of holders of Registrable Securities and/or other Common Stock are
not also to be included in such underwritten offering (because the Company has
not been requested so to include such Registrable Securities and/or other Common
Stock pursuant to Section 5.4(b)) and (iii) the managing underwriter of such
-------------
underwritten offering shall inform the Company in writing of its belief that the
number of securities requested to be included in such registration exceeds the
number which can be sold in (or during the time of) such offering without
adversely affecting the price to be received thereon, then the Company will
include in such registration, to the extent of the number which the Company is
so advised can be sold in (or during the time of) such offering, first, all
securities proposed by the Company to be sold for its own account or all
securities (other than Registrable Securities) proposed by the Company to be
sold for the account of the holders thereof who requested and were entitled to
have the Company use its reasonable best efforts to effect such registration, as
the case may be; second, such Registrable Securities other than Founder Shares,
and any securities having registration rights on a par with the Registrable
Securities requested to be included in such registration pro rata on the basis
--------
of the number of shares of such Registrable Securities and other securities on a
par with the Registrable Securities so proposed to be sold and so requested to
be included; third, Founder Shares requested to be included in such
registration; fourth, other Common Stock requested to be included in such
registration; and, fifth, Primary Shares, if the Company has not undertaken such
registration to sell securities for its own account in the first instance.
(c) Other Registrations.
17
<PAGE>
If the Company has previously filed a registration statement with
respect to Registrable Securities pursuant to Section 5.1 or with respect to
-----------
Registrable Securities and/or other Common Stock pursuant to this Section 5.2
-----------
and, if such previous registration has not been withdrawn or abandoned, the
Company will not file or cause to be effected any other registration of any of
its equity securities or securities convertible into or exercisable for its
equity securities under the Securities Act (except on Form S-8 or any successor
form), whether on its own behalf or at the request of any holder or holders of
such securities, until a period of at least three (3) months has elapsed from
the effective date of such previous registration.
5.3. Registration Procedures.
-----------------------
If and whenever the Company is required to use its reasonable best
efforts to effect the registration of any Registrable Securities and/or other
Common Stock under the Securities Act as provided in Sections 5.1 or Section
------------
5.2, the Company shall as expeditiously as possible:
- ---
(a) prepare and file with the Commission the requisite registration
statement to effect such registration and thereafter use its best efforts to
cause such registration statement to become and remain effective for a period of
one hundred eighty (180) days or until all of such Registrable Securities and/
or other Common Stock have been disposed of (if earlier), provided that the
Company may discontinue any registration of its securities which are not
Registrable Securities at any time prior to the effective date of the
registration statement relating thereto;
(b) furnish, at least five (5) business days before filing a
registration statement that registers such Registrable Securities and/or other
Common Stock, a prospectus relating thereto or any amendments or supplements
relating to such a registration statement or prospectus, to one counsel selected
by a majority of the Substantial Holders who hold Registrable Securities to be
included in such registration (the "Investors' Counsel"), copies of all such
documents proposed to be filed, and shall not file any thereof to which such
counsel shall have reasonably objected on the grounds that such registration
statement, prospectus, amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or the rules or regulations
thereunder (it being understood that such five (5) business day period need not
apply to successive drafts of the same document proposed to be filed so long as
such successive drafts are supplied to such counsel in advance of the proposed
filing by a period of time that is customary and reasonable under the
circumstances);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than one hundred eighty (180) days and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement;
(d) notify in writing the Investors' Counsel promptly of the receipt
by the Company of any notification with respect to (i) any comments by the
Commission with respect to such registration statement or prospectus or any
amendment or supplement thereto or any request by the Commission for the
amending or supplementing thereof or for additional information with
18
<PAGE>
respect thereto, (ii) the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or prospectus or any
amendment or supplement thereto or the initiation or threatening of any
proceeding for that purpose, and (iii) the suspension of the qualification of
such Registrable Securities and/ or other Common Stock for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purposes;
(e) furnish to each seller of Registrable Securities and/or other
common Stock covered by such registration statement such number of conformed
copies of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under Rule
424 under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents as such seller may reasonably request;
(f) use its reasonable best efforts to register or qualify all
Registrable Securities and/or other Common Stock covered by such registration
statement under such other securities or blue sky laws of such United States
jurisdictions as each seller thereof shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and to take any other action which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such seller, except
that the Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this Section 5.3(f) be obligated to be so qualified,
--------------
to subject itself to taxation in any such jurisdiction or to consent to general
service of process in any such jurisdiction;
(g) use its reasonable best efforts to cause all Registrable
Securities and/or other Common Stock 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 thereof to consummate the disposition of
such Registrable Securities and/or other Common Stock;
(h) furnish to each seller of Registrable Securities and/or other
Common Stock a signed counterpart, addressed to such seller (and the
underwriters, if any) of:
(i) an opinion of counsel for the Company dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and substance to such
seller, and
(ii) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), signed by the independent certified public accountants who have
certified the Company's financial statements included in such registration
statement, covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
the accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in underwritten public
19
<PAGE>
offerings of securities and, in the case of the accountants' letter, such other
financial matters, and, in the case of the legal opinion, such other legal
matters, as such seller or such holder (or the underwriters, if any) may
reasonably request;
(i) notify each seller of Registrable Securities and/or other Common
Stock covered by such registration statement, 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, as then in effect, includes
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 the light of the circumstances under which they were made, and at
the request of any such seller promptly prepare and furnish to such seller a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(j) make available for inspection by any seller of such Registrable
Securities and/or other Common Stock, any underwriter participating in any
disposition pursuant to such registration statement and any attorney, accountant
or other agent retained by any such seller or underwriter (collectively, the
"Inspectors"), all pertinent financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information (together with the Records, the "Information") reasonably
requested by any such Inspector in connection with such registration statement.
Any of the Information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, shall
not be disclosed by the Inspectors unless (i) the disclosure of such Information
is necessary to avoid or correct a misstatement or omission in the registration
statement, (ii) the release of such Information is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction or (iii) such
Information has been made generally available to the public. The seller of
Registrable Securities and/or other Common Stock agrees that he, she or it will,
upon learning that disclosure of such Information 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
Information deemed confidential;
(k) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months, but not more than eighteen
(18) months, beginning with the first full calendar month after the effective
date of such registration statement, which earnings statement shall satisfy the
provisions of the Securities Act;
(l) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities and/or other Common Stock covered by such
registration statement from and after a date not later than the effective date
of such registration statement;
20
<PAGE>
(m) list such Registrable Securities and/or other Common Stock on any
national securities exchange or Nasdaq on which any shares of Common Stock are
listed or quoted or, if shares of Common Stock are not listed on a national
securities exchange or quoted on Nasdaq, use its reasonable best efforts to
qualify such Registrable Securities and/or other Common Stock for inclusion on
such national securities exchange as the holders of a majority of such
Registrable Securities shall request;
(n) issue to any underwriter to which any seller of Registrable
Securities and/or other Common Stock may sell shares in such offering
certificates evidencing such Registrable Securities and/or other Common Stock;
and
(o) use its reasonable best efforts to take all other steps necessary
to effect the registration of such Registrable Securities and/or other Common
Stock contemplated hereby.
The Company may require each seller of Registrable Securities and/or other
Common Stock as to which any registration is being effected to furnish to the
Company such information regarding such seller and the distribution of such
securities as the Company may from time to time reasonably request in writing.
In connection with the preparation and filing of each registration statement
under the Securities Act pursuant to this Agreement, the Company shall give the
holder of Registrable Securities and/or other Common Stock covered by such
registration statement a reasonable opportunity to review and comment upon such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, all prior to
finalization.
Each holder of Registrable Securities and/or other Common Stock covered by
any such registration statement agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 5.3(i),
-------------
such holder will forthwith discontinue such holder's disposition of Registrable
Securities and/or other Common Stock pursuant to such registration statement
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 5.3(i) and, if so directed by the Company,
-------------
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
included in such registration statement which is current at the time of receipt
of such notice.
5.4. Selection of Underwriters.
-------------------------
(a) Demand Registrations.
In connection with any Demand Registration by the holders of
Registrable Securities pursuant to Section 5.1(a), the Company shall select the
--------------
investment banker(s) and manager(s) which will administer the offering (the
"Underwriters"). The Company shall enter into an underwriting agreement with
the Underwriters, such agreement to be reasonably satisfactory in substance and
form to the holders of Registrable Securities being underwritten who are
Substantial Holders, and the Underwriters and to contain such representations
and warranties by the Company and such other terms as are generally prevailing
in agreements of such type, including, without limitation, indemnities to the
effect and to the extent provided in Section 5.6. Any Substantial Holder who
-----------
holds Registrable Securities to be distributed by such underwriters may, at his,
her or its option,
21
<PAGE>
participate in the selection of the Underwriters and the negotiation of the
underwriting agreement, provided that, in the case of an underwritten Short-form
Registration, the holders of Registrable Securities requested to be included in
such registration may, at their option, through a single representative selected
by the holders of a majority of such Registrable Securities on a fully-converted
basis, participate in the selection of the Underwriters and the negotiation of
the underwriting agreement. The holders of Registrable Securities and/ or other
Common Stock being underwritten shall be parties to such underwriting agreement
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such Underwriters shall also be made to and for the benefit of
such holders and that any or all of the conditions precedent to the obligations
of such Underwriters under such underwriting agreement be conditions precedent
to the obligations of such holders. Any such holder shall not be required to
make any representations or warranties to or agreements with the Company or the
Underwriters other than representations, warranties or agreements regarding such
holder, such holder's Registrable Securities and/or other Common Stock and such
holder's intended method of distribution and any other representation required
by law.
(b) Piggyback Registrations.
If the Company at any time proposes to register any of its securities
under the Securities Act as contemplated by Section 5.2 and such securities are
-----------
to be distributed by or through one or more underwriters, the Company shall, if
requested by any holder of Registrable Securities as provided in Section 5.2 and
-----------
subject to the provisions of Section 5.2(b), use its reasonable best efforts to
--------------
arrange for such underwriters to include all the Registrable Securities and/or
other Common Stock requested to be offered and sold by such holder among the
securities to be distributed by such underwriters. The holders of Registrable
Securities and/or other common Stock to be distributed by such underwriters
shall be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders to the extent that such
representations, warranties, other agreements, and conditions precedent bear on
such holders' liability or otherwise impose obligations on such holders. Any
such holder of shall not be required to make any representations or warranties
to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder, such holder's
Registrable Securities and/or other common Stock and such holder's intended
method of distribution and any other representation required by law.
(c) Holdback Agreements.
(i) If, in connection with the initial public offering of shares
of Common Stock of the Company registered pursuant to the Securities Act, the
managing underwriter for such registration shall so request, the holders of
Registrable Securities shall not sell, make any short sale of, grant any option
for the purchase of, or otherwise dispose of any Restricted Securities (other
than those shares of Common Stock included in such registration) without the
prior written consent of the Company for a period designated by the Company in
writing to the holders of Registrable Securities, which period shall begin not
more than fourteen (14) days prior to the effectiveness of the registration
statement pursuant to which such public offering shall be made and shall not
last more
22
<PAGE>
than one hundred eighty (180) days (or such other period as the officers and
directors of the Company and all holders of greater than three percent (3%) of
all Registrable Securities mutually agree) after the effective date of such
registration statement.
(ii) The Company agrees (x) not to effect any public sale or
distribution of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the fourteen (14)
days prior to and the one hundred twenty (120) days after any underwritten
Demand Registration or any underwritten Piggyback Registration pursuant to
Section 5.1 or 5.2 has become effective, except as part of such underwritten
- ------------------
registration and except pursuant to registrations on Form S-4, S-8 or any
successor or similar forms thereto, and (y) to use its best efforts to cause
each holder of at least five percent (5%) (on a fully-diluted basis) of its
equity securities or any securities convertible into or exchangeable or
exercisable for any such securities, in each case purchased from the Company at
any time after the date of this Agreement (other than in a public offering), to
agree not to effect any such public sale or distribution of such securities,
during such period, unless the managing underwriter otherwise agrees to such
sale or distribution.
5.5. Preparation: Reasonable Investigation.
-------------------------------------
In connection with the preparation and filing of each registration
statement under the Securities Act pursuant to this Agreement, the Company shall
give the Substantial Holders who hold Registrable Securities registered under
such registration statement, their underwriters, if any, and the Investor
Counsel and accountants, the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and shall give
each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holder's and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
5.6. Indemnification.
---------------
(a) Indemnification by the Company.
In the event of any registration of any securities of the Company
under the Securities Act, the Company shall indemnify and hold harmless each
holder of Registrable Securities and/or other Common Stock selling such
Registrable Securities and/or other common Stock, its officers and directors,
each underwriter, broker or any other person acting on behalf of such seller and
each other person, if any, who controls any of the foregoing persons within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, to which such seller or any such director or
officer or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Securities and/or other Common
Stock or arise out of or are based upon the omission or alleged
23
<PAGE>
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or, with respect to any
prospectus, necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or any violation by the
Company of the Securities Act or state securities or blue sky laws applicable to
the Company and relating to action or inaction required of the Company in
connection with such registration or qualification under such state securities
or blue sky laws; and the Company will reimburse such seller and each such
director, officer, underwriter and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by such seller,
specifically stating that it is for use in the preparation thereof and, provided
further, that the Company shall not be liable to any Person who participates as
an underwriter in the offering or sale of Registrable Securities and/or other
Common Stock or any other Person, if any, who controls such underwriter within
the meaning of the Securities Act, in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of such Person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to the Person
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of Registrable
Securities and/or the Common Stock to such Person if such statement or omission
was corrected in such final prospectus. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
seller or any such director, officer, underwriter or controlling person and
shall survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers.
The Company may require, as a condition to including any
Registrable Securities and/or other common Stock in any registration statement
filed pursuant to Sections 5.1 or 5.2, that the Company shall have received an
-------------------
undertaking satisfactory to it from the prospective sellers of such securities,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 5.6(a)) the Company, each director of the Company, each officer
-------------
of the Company and each other Person, if any, who controls the Company within
the meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such sellers specifically stating that it is for use
in the preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement, provided that the
obligation to indemnify shall be several, and not joint and several, among such
sellers of and the liability of each such seller shall be in proportion to and
limited to the net amount received by such seller from the sale of Registrable
Securities and/or other Common Stock pursuant to such registration statement.
Such indemnity shall remain in full force and effect, regardless of any
24
<PAGE>
investigation made by or on behalf of the Company or any such director, officer
or controlling person and shall survive the transfer of such securities by such
seller.
(c) Notices of Claims, etc.
Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in the
preceding subdivisions of this Section 5.6, such indemnified party will, if a
-----------
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, provided that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 5.6, except to the extent that the indemnifying
-----------
party is actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and alter
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable for
any settlement made by the indemnified party without its consent (which consent
will not be unreasonably withheld) or for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
(d) Other Indemnification.
Indemnification similar to that specified in the preceding
subdivisions of this Section 5.6 (with appropriate modifications) shall be given
-----------
by the Company and each seller of Registrable Securities and/or other Common
Stock with respect to any required registration or other qualification of
securities under any federal or state law or regulation of any governmental
authority other than the Securities Act.
(e) Indemnification Payments.
The indemnification required by this Section 5.6 shall be made by periodic
-----------
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or liability is
incurred.
(f) Contribution.
If the indemnification provided for in this Agreement shall for
any reason be unavailable or insufficient to an indemnified party under Sections
--------
5.6(a), 5.6(b) or 5.6(d) hereof in respect of any loss, claim, damage or
- -----------------------
liability, or any action in respect thereof, or referred to therein, then each
indemnifying party shall, in lieu of indemnifying such party, contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, in such proportion as
shall be appropriate to reflect (i) the relative benefits received
25
<PAGE>
by the Company, on the one hand, and the holders of the Registrable Securities
and/or other Common Stock included in the offering, on the other hand, from the
offering of the Registrable Securities and/or other Common Stock and (ii) the
relative fault of the Company, on the one hand, and the holders of the
Registrable Securities and/or other Common Stock included in the offering, on
the other hand, with respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits received by
the Company, on the one hand and the holders of the Registrable Securities
and/or other Common Stock, on the other hand, with respect to such offering
shall be deemed to be in the same proportion as the sum of the total
Subscription Price paid to the Company in respect of the Registrable Securities
and/or other Common Stock plus the total net proceeds from the offering of the
securities (before deducting expenses) received by the Company bears to the
amount by which the total net proceeds from the offering of the securities
(before deducting expenses) received by the holders of the Registrable
Securities and/or other common Stock with respect to such offering exceeds the
Subscription Price paid to the Company in respect of the Registrable Securities
and/or other common Stock and in each case the net proceeds received from such
offering shall be determined as set forth on the table of the cover page of the
prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or the holders of the Registrable Securities and/or
other Common Stock, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the holders of the Registrable Securities and/or other
Common Stock agree that it would not be just and equitable if contribution
pursuant to this Section 5.6 were to be determined by pro rata allocation or by
----------- --- ----
any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to in this Section 5.6 shall be deemed to include, for
-----------
purposes of this Section 5.6, any legal or other expenses reasonably incurred by
-----------
such indemnified party in connection with investigating or defending any such
action or claim. 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 who was not guilty of such fraudulent
misrepresentation.
5.7. Registration Expenses.
---------------------
(a) Subject to the limitations in Section 5.1 and this Section 5.7,
----------- -----------
all customary expenses incident to the Company's performance of or compliance
with the registration provisions of this Agreement, including without limitation
all registration, filing and NASD fees, all fees and expenses of compliance with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and its independent certified public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, the reasonable fees and disbursements,
including without limitation, out-of-pocket expenses of any single counsel and
accountants retained by the holder or holders of a majority of the Registrable
Securities being registered and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (including fees paid to a
"qualified independent underwriter" required by the rules of the NASD in
connection with a distribution, but excluding discounts and commissions and
transfer taxes, if any) and other Persons retained by the Company (all such
26
<PAGE>
expenses being herein called "Registration Expenses"), shall be borne by the
Company and, in addition, the Company shall pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit or quarterly review, the expense of any liability insurance, and the
expenses and fees for listing the securities to be registered on each securities
exchange on which similar securities issued by the Company are then listed or
other expenses for the preparation of financial statements or other data
normally prepared by the Company in the ordinary course of its business or which
the Company would have incurred in any event.
(b) In connection with each Demand Registration, the Company shall
reimburse the holders of Registrable Securities covered by such registration for
the reasonable fees and disbursements of one counsel chosen by the holders of a
majority of such Registrable Securities, subject to the dollar limitation set
forth in Section 5.7(d); provided that, in connection with a Short-form
-------------
Registration, the Company shall not be obligated to pay expenses for such Demand
Registration in excess of thirty thousand dollars ($30,000).
(c) To the extent Registration Expenses are not required to be paid
by the Company, each holder of securities other than the Company included in any
registration hereunder shall pay those Registration Expenses allocable to the
registration of such holder's securities so included, and any Registration
Expenses not so allocable shall be borne by all sellers of securities included
in such registration in proportion to the aggregate selling price of the
securities to be so registered.
(d) In addition to any expenses payable or reimbursable by the
Company pursuant to this Section 5.7, the Company shall pay all reasonable fees
-----------
and disbursements, including out-of-pocket expenses, arising in connection with
this Agreement or otherwise in connection with the ownership of Registrable
Securities and/or other Common Stock included in such registration, of any
single counsel retained by the holder or holders of a majority of such
Registrable Securities, up to a maximum of fifteen thousand dollars ($15,000)
per twelve (12) month period.
5.8. Adjustments Effecting Registrable Securities.
--------------------------------------------
The Company shall not effect or permit to occur any combination or
subdivision of shares which would adversely affect the ability of the holders of
Registrable Securities and/or other Common Stock to include such Registrable
Securities and/or other Common Stock in any registration of its securities
contemplated by this Section 5 or the marketability of such Registrable
---------
Securities and/or other Common Stock under any such registration.
5.9. Participation in Underwritten Registrations.
-------------------------------------------
No Person may participate in any registration hereunder which is
underwritten unless such Person (a) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements .
5.10. Rule 144.
--------
27
<PAGE>
If the Company shall have filed a registration statement pursuant to
the requirements of Section 12 of the Exchange Act or a registration statement
pursuant to the requirements of the Securities Act, the Company shall file the
reports required to be filed by it under the Securities Act and the Exchange Act
(or, if the Company is not required to file such reports, shall, upon the
request of any holder of Registrable Securities and/or other Common Stock, make
publicly available other information) and shall take such further action as any
holder of Registrable Securities and/or other Common Stock may reasonably
request, all to the extent required from time to time to enable such holder to
sell such holder's securities without registration under the Securities Act but
within the limitations of the exemptions provided by (a) Rule 144, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Registrable Securities, the Company shall deliver to
such holder a written statement as to whether it has complied with such
requirements.
6. BASIC FINANCIAL INFORMATION OF THE COMPANY
Notwithstanding any provision of the Bylaws of the Company regarding
delivery or non-delivery of financial information to shareholders of the
Company, until the Company becomes a reporting company under the Exchange Act,
the Company shall, (x) allow Substantial Holders to visit the Company and
inspect any of the property of the Company, to examine the books and records of
the Company, and to make copies, notes and abstracts therefrom; provided that
such visits are at reasonable times, are by appointment with management (which
shall not be unreasonably withheld, conditioned or delayed), and the Substantial
Holders agree to maintain the confidentiality of the Company's information which
is identified to them as confidential during such visits; provided, however,
that each Substantial Holder may disclose such confidential information to its
senior officers and managers, provided that such senior officers and managers
agree to be bound by the same confidentiality restrictions as apply hereunder,
(y) from time to time upon request of any authorized officer or representative
of the Substantial Holders, furnish to any such authorized officer or
representative such information regarding the business, operations, assets,
liabilities, condition (financial or otherwise) or prospects (including
materials furnished to the directors of the Company at or in connection with
board meetings) as such officer or representative may reasonably request and (z)
furnish the following reports to each Substantial Holder:
6.1. Annual Report.
-------------
The Company will use its reasonable best efforts to deliver within
ninety (90) days after the end of each fiscal year, a consolidated balance sheet
of the Company and its Subsidiaries, if any, as of the end of such fiscal year,
and a consolidated statement of income and a consolidated statement of cash
flows of the Company and its Subsidiaries, if any, for such year, prepared in
accordance with generally accepted accounting principles and setting forth in
each case in comparative form the figures for the previous fiscal year, all in
reasonable detail and audited by independent certified public accountants of
recognized national standing selected by the Company.
6.2. Quarterly Report.
----------------
Within forty-five (45) days after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company, a
consolidated balance sheet of the Company and its Subsidiaries, if any, as of
the end of each such quarterly period, and a consolidated statement of income
and a consolidated statement of cash flows for such period and for the current
fiscal year
28
<PAGE>
to date, prepared in accordance with generally accepted accounting principles,
with the exception that no notes need be attached to such statements and interim
and year-end adjustments may not have been made. Said financial statements shall
be signed by an officer of the Company who shall state that such financial
statements are in accordance with generally accepted accounting principles, with
the exception that no notes need be attached to such statements and interim and
year-end adjustments may not have been made.
6.3. Monthly Report.
--------------
Within thirty (30) days after the end of each month, a consolidated
balance sheet of the Company and its Subsidiaries, if any, as of the end of each
such month, and a consolidated statement of income and a consolidated statement
of cash flows for such month and for the current fiscal year to date, prepared
in accordance with generally accepted accounting principles, with the exception
that no notes need be attached to such statements and interim and year-end
adjustments may not have been made. Said financial statements shall be signed
by an officer of the Company who shall state that such financial statements are
in accordance with generally accepted accounting principles, with the exception
that no notes need be attached to such statements and interim and year-end
adjustments may not have been made.
6.4. Business Plan and Operating Budget.
----------------------------------
At least thirty (30) days prior to the commencement of each fiscal
year, a business plan and annual operating budget in detail for such fiscal
year, monthly operating expenses and profit and loss projections, quarterly cash
flow projections and a capital expenditure budget for the fiscal year.
29
<PAGE>
7. TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH SECURITIES ACT
7.1. Transferability.
---------------
As set forth below in this Section 7.1 and subject to the restrictions
-----------
set forth in the last sentence of this Section 7.1 and in Section 10, any
----------- ----------
stockholder may transfer his, her or its securities ("Limited Securities");
provided, however, that the Company is given written notice at the time of such
transfer, stating the names and addresses of the transferee and identifying the
Limited Securities to be transferred, and such transferee expressly agrees in
writing with the Company to be bound by and to comply with all applicable
provisions of this Agreement, whereupon such person or entity shall have the
benefit of, and shall be subject to the restrictions contained in, this
Agreement with respect to such Limited Securities. Notwithstanding the
provisions of this Section 7.1, Section 10 and the Stockholders Agreement, a
----------- ----------
stockholder may transfer on any public securities market or in any public
offering pursuant to Section 5, without being required to comply with the
---------
provisions of this Section 7.1, Section 10 or the Stockholders Agreement, any of
----------- ----------
its Common Stock and following such transfer the Common Stock so transferred
shall be free of the requirements of this Section 7, Section 10 and the
--------- ----------
Stockholders Agreement; provided that nothing in this sentence shall be deemed
to increase the number of Demand Registrations to which the holders of
Registrable Securities are entitled pursuant to Section 5.1.
-----------
7.2. Restrictive Legend.
------------------
(a) Each certificate representing (i) the shares of Series C Preferred
Stock, (ii) the shares of Series B Preferred Stock, (iii) the shares of Series A
Preferred Stock, or (iv) any securities (other than Common Stock) issued in
respect of the shares of Series C Preferred Stock, Series B Preferred Stock,
Series A Preferred Stock or the Common Stock issuable upon conversion thereof,
shall (unless otherwise permitted by the provisions of Section 7.1 or Section
----------- -------
7.3) be stamped or otherwise imprinted with a legend substantially in the
- ----
following form (in addition to any legend required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY
NOT BE OFFERED, PLEDGED, SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM AS DETERMINED IN
ACCORDANCE WITH THE THIRD AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT DATED AUGUST 13, 1999 RESTRICTING THEIR TRANSFER.
COPIES OF THE THIRD AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE CORPORATION'S PRINCIPAL PLACE OF BUSINESS.
FURTHER, THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND
LIMITATIONS OF EACH CLASS OF STOCK OF THE CORPORATION AND THE
VARIATIONS IN THE RIGHTS, PREFERENCES AND LIMITATIONS DETERMINED
FOR
30
<PAGE>
EACH SERIES OF STOCK (AND THE AUTHORITY OF THE BOARD OF
DIRECTORS OF THE CORPORATION TO DETERMINE VARIATIONS FOR FUTURE
SERIES), ARE SET FORTH IN THE CORPORATION'S CERTIFICATE OF
INCORPORATION, AS AMENDED, A COPY OF WHICH WILL BE FURNISHED BY
THE CORPORATION TO THE HOLDER OF THIS CERTIFICATE, WITHOUT
CHARGE, UPON THE WRITTEN REQUEST OF SUCH HOLDER.
(b) Each certificate representing shares of Common Stock issued (i)
upon conversion of the shares of Series C Preferred Stock, (ii) upon conversion
of the shares of Series B Preferred Stock, (iii) upon conversion of the shares
of Series A Preferred Stock, or (iv) in respect of the shares of Series C
Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or the
Common Stock issuable upon conversion thereof shall (unless otherwise permitted
by the provisions of Section 7.1 or Section 7.3) be stamped or otherwise
----------- -----------
imprinted with a legend substantially in the following form (in addition to any
legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY
NOT BE OFFERED, PLEDGED, SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM AS DETERMINED IN
ACCORDANCE WITH THE THIRD AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT DATED AUGUST 13, 1999, AND, IF APPLICABLE, THE AMENDED
AND RESTATED STOCKHOLDERS' AND VOTING AGREEMENT DATED AS OF
JANUARY 6, 1997, AND AMENDED AS OF APRIL 3, 1997, RESTRICTING
THEIR TRANSFER. COPIES OF THE THIRD AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT AND THE AMENDED AND RESTATED
STOCKHOLDERS' AND VOTING AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE
TO THE SECRETARY OF THE CORPORATION AT THE CORPORATION'S
PRINCIPAL PLACE OF BUSINESS. FURTHER, THE DESIGNATIONS, RELATIVE
RIGHTS, PREFERENCES AND LIMITATIONS OF EACH CLASS OF STOCK OF THE
CORPORATION AND THE VARIATIONS IN THE RIGHTS, PREFERENCES AND
LIMITATIONS DETERMINED FOR EACH SERIES OF STOCK (AND THE
AUTHORITY OF THE BOARD OF DIRECTORS OF THE CORPORATION TO
DETERMINE VARIATIONS FOR FUTURE SERIES), ARE SET FORTH IN THE
CORPORATION'S CERTIFICATE OF INCORPORATION, AS AMENDED, A COPY OF
WHICH WILL BE FURNISHED BY THE CORPORATION TO THE HOLDER OF THIS
CERTIFICATE, WITHOUT CHARGE, UPON THE WRITTEN REQUEST OF SUCH
HOLDER.
7.3. Notice of Proposed Transfers.
----------------------------
31
<PAGE>
The holder of each certificate representing Limited Securities by
acceptance thereof agrees in writing to comply with the provisions of this
Section 7.3. Prior to any proposed transfer of any Limited Securities, unless
- -----------
there is in effect a registration statement under the Securities Act covering
the proposed transfer, the holder thereof shall give written notice to the
Company of such holder's intention to effect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer (including
the names of the transferees, if known) in sufficient detail, and shall be
accompanied (except in the following cases, with respect to which the
requirements set forth in the balance of this sentence need not be complied
with: if the transferee agrees in writing to be bound by the then applicable
provisions of this Section 7; transactions in compliance with Rule 144 so long
---------
as the Company is furnished with satisfactory evidence of compliance with such
Rule; transactions involving the distribution of Limited Securities in
accordance with the beneficial ownership thereof by any Investor to any
Authorized Transferee, so long as such transaction does not involve the
disposition of such Limited Securities for value; and transactions involving the
transfer of Limited Securities by any holder who is an individual to any
Authorized Transferee) by either (i) an unqualified written opinion of legal
counsel who shall be reasonably satisfactory to the Company addressed to the
Company and reasonably satisfactory in form and substance to the Company's
counsel, to the effect that the proposed transfer of the Limited Securities may
be effected without registration under the Securities Act, or (ii) a "no action"
letter from the Commission to the effect that the distribution of such
securities without registration will not result in a recommendation by the staff
of the Commission that action be taken with respect thereto, whereupon the
holder of such Limited Securities shall be entitled to transfer such Limited
Securities in accordance with the terms of the notice delivered by the holder to
the Company. Each certificate evidencing the Limited Securities transferred as
above provided shall bear the appropriate restrictive legend set forth in
Section 7.2, except that such certificate shall not bear such restrictive legend
- -----------
if in the reasonable opinion of counsel for the Company such legend is not
required in order to establish compliance with any provisions of the Securities
Act.
32
<PAGE>
8. PREEMPTIVE RIGHTS.
8.1. Pro Rata Right.
--------------
The Company hereby grants to each holder of Preferred Stock, for so
long as such holder is a Substantial Holder, and hereby also grants to the
Founder, so long as he is a Substantial Holder, the right of first refusal to
purchase, pro rata, all New Securities (as defined in Section 8.2) which the
-------- -----------
Company may, from time to time, propose to sell and/or issue. An Investor's or
the Founder's pro rata share, for purposes of this right of first refusal, is a
--- ----
ratio (A) the numerator of which is the aggregate of the number of shares of
Common Stock (i) issued or issuable upon conversion of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock held by such Investor, or
the Founder, as the case may be, on the date of the Company's written notice
pursuant to Section 8.3; or (ii) otherwise held by such Investor or the Founder,
-----------
as the case may be, on the date of the Company's written notice pursuant to
Section 8.3, and (B) the denominator of which is the total number of shares of
- -----------
Common Stock outstanding immediately prior to the issuance of the New
Securities, assuming the conversion or exercise of all then outstanding
convertible securities, options, warrants or similar rights to acquire Common
Stock (including without limitation to Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock) and assuming the issuance of all
then unissued permitted employee shares (consistent with Article FOURTH 4.5(b)
of the Restated Certificate of Incorporation of the Company, as in effect on the
date hereof) ("Pro Rata Share"). For purposes of this Section 8.1, the number
-----------
of shares of Series C Preferred Stock, Series B Preferred Stock, Series A
Preferred Stock and Common Stock held by such Investor or the Founder, as the
case may be, shall be determined as of the date of the Company's written notice
pursuant to Section 8.3. Each Investor or the Founder, as the case may be,
-----------
shall have a right of over-allotment such that if any other Investor or the
Founder rights with respect to New Securities fails to exercise its or his right
hereunder to purchase its or his Pro Rata Share of New Securities, the other
such holders may purchase each non-purchasing holder's portion on a pro rata
--- ----
basis within fifteen (15) days from the date such non-purchasing holder fails to
exercise its right. This pre-emptive right shall be subject to all of the
provisions of this Section 8.
---------
8.2. Definition of "New Securities".
------------------------------
"New Securities" shall mean any capital stock (including without
limitation Common Stock, Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock) of the Company whether or not now authorized or not,
and rights, options or warrants to purchase capital stock, and securities of any
type whatsoever that are, or may become, convertible into capital stock;
provided that the term "New Securities" does not include (i) Common Stock or
other securities issuable upon conversion of or with respect to any Series C
Preferred Stock, (ii) Common Stock or other securities issuable upon conversion
of or with respect to any Series B Preferred Stock, (iii) Common Stock or other
securities issuable upon conversion of or with respect to any Series A Preferred
Stock; (iv) Common Stock or other securities issued, or issuable, pursuant to
the 1997 Employee, Director and Consultant Stock Option Plan, if any (consistent
with Article FOURTH 4.2(d)(D)(iii) of the Restated Certificate of
Incorporation), and the specific options listed in Section 5.4 of the Schedule
of Exceptions of the Series C Preferred Stock Purchase Agreement; (v) warrants
issued to Deutsche Bank Securities, Inc. by the Company in connection with the
offering of Series C Preferred Stock, (vi) securities covered by a registration
statement filed under the Securities Act and offered to the public pursuant to a
firm underwriting; (vii) securities issued pursuant to the
33
<PAGE>
acquisition of another corporation by the Company by merger or purchase of all
or substantially all the assets of such corporation; (viii) any borrowings,
direct or indirect, from financial institutions or other persons by the Company,
whether or not presently authorized, including any type of loan or payment
evidenced by any type of debt instrument, provided such borrowings do not have
any equity features, including warrants, options or other rights to purchase
capital stock, and are not convertible into capital stock of the Company; or
(ix) securities issued pursuant to any stock dividend, stock split, combination
or other reclassification by the Company of any of its capital stock.
8.3. Required Notice.
---------------
In the event that the Company proposes to undertake an issuance or
sale of New Securities, it shall give each Investor and the Founder written
notice of its intention, describing the type of New Securities, the price and
the general terms upon which the Company proposes to issue or sell the same.
Each Investor and the Founder shall have thirty (30) days from the date of
receipt of any such notice to agree to purchase such Investor's or the Founder's
Pro Rata Share of such New Securities for the price and upon the general terms
specified in the notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased.
8.4. Company's Right to Sell.
-----------------------
In the event an Investor or the Founder fails within the thirty (30)
day period set forth above to agree to purchase its or his full Pro Rata Share
to which such Investor or the Founder is entitled pursuant to this Section 8
---------
entitled to purchase, and after the expiration of the fifteen (15) day period
for the exercise of the over-allotment rights under Section 8.1, if applicable,
-----------
the Company shall have ninety (90) days thereafter to sell or enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within ninety (90) days after the date of said agreement) to
sell all such New Securities respecting which such Investor's or the Founder's
pre-emptive right to purchase was not exercised, at a price and upon general
terms no more favorable to the purchasers thereof than specified in the
Company's notice delivered to each Investor or the Founder pursuant to Section
-------
8.3. In the event the Company has not sold, or entered into an agreement to
- ---
sell, all such New Securities within such ninety (90) day period (or sold and/or
issued all such New Securities in accordance with the foregoing within ninety
(90) days after the date of such agreement), the Company shall not thereafter
issue or sell any New Securities without first offering such New Securities to
each Investor and the Founder in the manner provided above.
8.5. Expiration of Right.
-------------------
The pre-emptive right granted under Section 8.1 shall expire upon the
-----------
closing of an underwritten public offering of the Company's Common Stock
pursuant to an effective registration statement under the Securities Act, or
under other applicable securities regulations covering the offer and sale of
capital stock of the Company, in which (a) the Company is valued on a pre-money
basis at greater than $100,000,000, (b) the gross proceeds received by the
Company exceed $25,000,000, and (c) the Company uses a nationally recognized
underwriter to underwrite the offering on a firm-commitment basis (a "Qualified
Public Offering").
9. RIGHT OF CO-SALE.
34
<PAGE>
Except for an Underwritten Offering or Authorized Transfers of any
securities of the Company ("Securities"), for so long as an Investor is a
Substantial Holder, if any holder of Common Stock other than an Investor and
other than Bakersville Holdings Ltd. intends to sell any Securities in an amount
which, together with all other Securities previously sold by such holder exceeds
ten percent (10%) of the largest number of shares of Common Stock, on a fully-
converted basis, inclusive of Securities purchasable by such holder upon the
exercise of then-exercisable options, held by such holder and its Authorized
Transferees and Affiliates in the aggregate at any time (adjusted for stock
splits, reverse stock splits, recapitalizations and the like) ("Excess
Securities"), such holder of Common Stock shall deliver a written notice (the
"Co-sale Notice") to such Investor, at least thirty (30) days prior to the
proposed sale, which notice shall specify the terms and conditions upon which
the proposed sale of Excess Securities is intended to be consummated. Such
Investor shall have the right to participate in such sale of Excess Securities
in the manner hereinafter set forth. To exercise such right, an Investor shall
give written notice (the "Participation Notice") of such election to such holder
of Common Stock within twenty (20) days after receipt of the Co-sale Notice.
Thereupon, such Investor shall have the right to sell Securities to the proposed
purchaser upon the same terms and conditions specified in the Co-sale Notice
(which terms and conditions shall include the types and class of Securities then
held by such holder of Common Stock and proposed to be sold), pro rata with its
--- ----
then current holding of Common Stock, on a fully-converted basis, vis-a-vis the
holding of Common Stock, on a fully-converted basis, inclusive of Securities
purchasable upon the exercise of then-exercisable options, of the selling holder
immediately prior to such sale. The amount of Excess Securities to be sold by
such holder of Common Stock shall be reduced by the number of Securities such
Investor elects to sell. If such Investor exercises such right, it shall bear
its pro rata portion of expenses incident to such sale. Failure by such
--- ----
Investor to exercise such right within such twenty (20) day period shall be
deemed a declination of any right to participate in such sale, provided that
such sale is completed within ninety (90) days after expiration of such twenty
(20) day period at a price and on terms and conditions substantially similar to
those set forth in the Co-sale Notice. Failure to meet the conditions in the
proviso in the immediately preceding sentence shall require a new Co-sale Notice
and a new opportunity to exercise the rights of co-sale with respect to such
sale. The co-sale rights granted under this Section 9 shall expire upon
---------
consummation of a Qualified Public Offering.
10. RIGHTS OF SUBSEQUENT REFUSAL.
10.1. Investors and Founder.
---------------------
(a) Except for an Underwritten Offering or an Authorized Transfer of
any Securities of the Company, for so long as an Investor or the Founder, as the
case may be, is a Substantial Holder, if any holder of Common Stock who or which
is a Schedule I or Schedule O Stockholder (as defined in the Stockholders
Agreement) but not an Investor (as defined therein, including but not limited to
Bakersville Holdings Ltd. and Blue Water Capital Fund I, L.L.C.), intends to
sell any Securities, such holder of Common Stock shall deliver a written notice
(the "Subsequent Refusal Notice") to such Investor or the Founder, as the case
may be, at least twenty-one (21) days prior to the proposed sale, which such
notice shall specify the terms and conditions upon which the proposed sale is
intended to be consummated (which terms and conditions shall be the same as
those offered to the Company and Company stockholders pursuant to their rights
of first and second refusal under Sections 2.3 and 2.4 of the Stockholders
------------ ---
Agreement). If the Company and the Company stockholders who have such rights of
first and second refusal have declined to exercise
35
<PAGE>
such rights with respect to such Securities so intended to be sold, such
Investor or the Founder, as the case may be, shall have the right to purchase,
pro rata, the Securities so proposed to be sold on the same terms and conditions
- --- ----
as specified in the Subsequent Refusal Notice in the manner hereinafter set
forth. An Investor's or the Founder's pro rata share, for purposes of this right
--- ----
of subsequent refusal, is a ratio (A) the numerator of which shall be the
aggregate of the number of shares of Common Stock (i) issued or issuable upon
conversion of the Series C Preferred Stock, Series B Preferred Stock and/or
Series A Preferred Stock held by such Investor on the date of the Subsequent
Refusal Notice, or (ii) otherwise held by such Investor or the Founder, as the
case may be, on the date of the Subsequent Refusal Notice, inclusive of
Securities purchasable upon the exercise of then-exercisable options, and (B)
the denominator of which is the total number of shares of Common Stock
outstanding assuming the conversion or exercise of all then outstanding
convertible securities (including the Series C Preferred Stock, Series B
Preferred Stock and Series A Preferred Stock), options, warrants or similar
rights to acquire Common Stock and assuming the issuance of all then unissued
permitted employee shares consistent with Article FOURTH 4.2(d)(D)(iii) of the
Restated Certificate of Incorporation, in effect on the date hereof. An Investor
or the Founder, as the case may be, shall give written notice (the "Purchase
Notice") of the exercise of such right to such holder of Common Stock proposing
to sell Securities within the later of (i) twenty (20) days after delivery of
the Subsequent Refusal Notice and (ii) five (5) days after receipt by the
Investor or the Founder, as the case may be, of written notice of the Company's
and Company stockholders' decisions not to exercise their rights of first and
second refusal under the Stockholders Agreement. The Purchase Notice shall
indicate the number of Securities proposed to be sold which such Investor or the
Founder is willing to purchase. If any Investor or the Founder exercises the
right provided for in this Section 10.1, such Investor or the Founder shall
------------
within thirty (30) days after exercising such option deliver to the holder of
Common Stock selling Securities a check in the amount of the purchase price for
the Securities to be sold, and such selling holder shall simultaneously deliver
the certificate or other instrument evidencing the Securities being sold. Each
Investor and the Founder shall have a right of over-allotment such that, if any
Investor or the Founder fails to exercise its or his right hereunder to purchase
its or his pro rata share of the Securities being sold, the other Investors and
--- ----
the Founder, as the case may be, may purchase each non-purchasing Investor's or
the non-purchasing Founder's pro rata share within fifteen (15) days after the
--- ----
date such non-purchasing Investor or the non-purchasing Founder fails to
exercise its or his right. If the selling holder has not received a Purchase
Notice from an Investor or the Founder within the later of (i) twenty (20) days
after delivery of the Subsequent Refusal Notice and (ii) five (5) days after
receipt by the Investor or the Founder of written notice of the Company's and
the Company stockholders' decisions not to exercise their rights of first and
second refusal, the right of such Investor or the Founder to purchase Securities
provided for in this Section 10.1 shall expire unexercised, and the selling
------------
holder shall thereafter have sixty (60) days to close the proposed sale
specified in the Subsequent Refusal Notice; provided that the right provided for
in this Section 10.1 shall again be applicable following such sixty (60) day
------------
period. Each party to a purchase and sale pursuant to the exercise of a right
pursuant to this Section 10.1 shall bear such party's own expenses. The rights
------------
of subsequent refusal granted under this Section 10.1 shall expire upon
------------
consummation of a Qualified Public Offering. The Company and the other parties
hereto who are parties to the Stockholders Agreement hereby agree that the
Stockholders Agreement shall not be terminated or amended in any manner or to
any extent adverse to the interests of the Investors without the prior written
consent of the Investors. The parties hereto who are holders of Common Stock,
other than the Founder, acknowledge that they are parties to the Stockholders
Agreement as Schedule I Stockholders or Schedule O
36
<PAGE>
Stockholders, that they are bound thereby and that, to their best knowledge,
there are no other Schedule I Stockholders or Schedule O Stockholders. The
Company represents and warrants that there are no Schedule I Stockholders or
Schedule O Stockholders who are not parties hereto.
10.2. Company and Other Stockholders.
------------------------------
(a) Except for an Underwritten Offering or an Authorized Transfer of
any Securities of the Company or as set forth in the penultimate sentence of
Section 7.1, if any Investor intends to transfer any shares of Series C
- -----------
Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Common
Stock (the "Selling Investor") to a Competitor (as determined in accordance with
Section 10.2(d) below), the Selling Investor shall, prior to any such transfer,
- --------------
deliver a written notice (the "Selling Investor's Notice") of such intention to
the Company, which notice shall specify the terms and conditions upon which the
proposed sale is intended to be consummated. The Company shall have the right
to purchase the shares of Series C Preferred Stock, Series B Preferred Stock,
Series A Preferred Stock or Common Stock proposed to be sold (the "Offered
Shares") on the same terms and conditions as specified in the Selling Investor's
Notice, other than the Purchase Price for the Company's right, as defined below,
shall be determined in accordance with Section 10.2(c)). The Company shall give
---------------
written notice (the "Company's Notice") of its election to exercise such rights
to the Selling Investor within twenty (20) days after receipt of the Selling
Investor's Notice by the Company. The Company may only elect to purchase the
amount of the Offered Shares as a whole, but not in part. If the Company
exercises the right provided for in this Section 10.2, the Company shall pay
------------
within forty (40) days after exercising such right deliver to the Selling
Investor, in immediately available funds, the amount of the Purchase Price, and
the Selling Investor shall simultaneously deliver the certificate or other
instrument evidencing the Offered Shares. Failure by the Company to exercise
such right within such twenty (20) day period shall be deemed a declination of
its right to purchase the Offered Shares.
(b) If the Company does not exercise or gives written notice to the
Selling Investor within the time period provided in Section 10.2(a) of its
--------------
intention not to exercise its right to purchase, then the other Investors and
the holders of Common Stock (if and to the extent any of them exercises such
right to purchase, hereinafter referred to as the "Buying Stockholders") shall
have the option to purchase, pro rata among them based on their relative
--- ----
holdings of Common Stock on a fully-converted and fully-diluted basis, the
Offered Shares on the same terms and conditions as designated in the Selling
Investor's Notice, other than the purchase price (with the Purchase Price for
their exercise of such right to be determined in accordance with Section
-------
10.2(c). Within thirty (30) days after the Company's failure to exercise its
right within the time period required therefor or delivery of the Company's
written notice of its intention not to exercise its right within the time period
provided in Section 10.2(a), the Buying Stockholders shall deliver to the
---------------
Selling Investor a written notice (the "Buying Stockholders' Notice") of such
election. The Buying Stockholders may only elect to purchase the amount of the
Offered Shares as a whole but not in part. If the Buying Stockholders exercise
the right provided for in this Section 10.2(b), the Buying Stockholders shall
---------------
pay within thirty (30) days after exercising such right deliver to the Selling
Investor, in immediately available funds, the amount of the Purchase Price, and
the Selling Investor shall simultaneously deliver the certificate or other
instrument evidencing the Offered Shares. Each Buying Stockholder shall have a
right of over-allotment such that, if any such other Investor or holder of
Common Stock fails to exercise, his, her or its right hereunder to purchase his,
her or its pro rata share of the Offered Shares, the others of them may purchase
--- ----
each such non-purchasing Investor's or holder's share, pro
---
37
<PAGE>
rata among them based on their relative holdings of Common Stock on a
- ----
fully-converted and fully-diluted basis, within fifteen (15) days after the date
such non-purchasing Investor or holder fails to exercise his, her or its right.
Failure by any such Investor or other holder to exercise his, her or its right
within the twenty (20) day period shall be deemed a declination of any right to
participate in such purchase; and, if there are no Buying Stockholders, the
Selling Investor shall thereafter have sixty (60) days to close the proposed
sale specified in the Selling Investor's Notice; provided that the rights
provided for in this Section 10.2 shall again be applicable following such sixty
------------
(60) day period. Each party to a purchase and sale pursuant to this Section 10.2
------------
shall bear such party's own expenses. The rights granted under this Section 10.2
------------
shall expire upon consummation of a Qualified Public Offering.
(c) The purchase price for the Offered Shares (the "Purchase Price")
shall be the lesser of (i) the price offered to the Selling Investor by the
proposed buyer or (ii) the Fair Market Value of the Company as determined by a
single appraiser selected from a nationally-recognized independent public
accounting firm (an "Appraiser"), if the Selling Investor and the Company are
able to agree upon a single Appraiser, or, if not, the average of the two
closest Fair Market Values as calculated by three Appraisers, one of whom shall
be appointed by the Selling Investor, one by the Company, and one by the two so-
appointed Appraisers. Each Appraiser shall determine the Fair Market Value of
the Company within thirty (30) days after appointment of the Appraiser or; if
there are three, the appointment of Appraisers, and report its determination to
the Company and the Selling Investor in writing. All reasonable and customary
costs and expenses of the Appraisers shall be paid by the Company.
(d) In the event that a holder of Registrable Securities intends to
transfer its or his shares of Series C Preferred Stock, Series B Preferred
Stock, Series A Preferred Stock or Common Stock to a Proposed Transferee other
than as set forth in the penultimate sentence of Section 7.1, such holder shall
-----------
notify the Company in writing of such holder's intention to so transfer such
shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred
Stock or Common Stock. Within twenty (20) days after receipt of such written
notice (which twenty (20) day period shall run concurrently with the twenty (20)
day period set forth in Section 10.2(a)), the Board of Directors shall determine
---------------
in good faith in its commercially reasonable judgment whether or not the
Proposed Transferee is a Competitor, and the Company shall convey such
determination to the holder in writing. Failure by the Company to make and
convey any determination as to whether or not the Proposed Transferee is a
Competitor within such twenty (20) day period shall be deemed a denial by the
Company to exercise its right provided for in Section 10.2(a). Notwithstanding
---------------
the foregoing, no transfer on a public securities market or in any public
offering pursuant to Section 5 shall be subject to the provisions of this
---------
Section 10.2(d).
- ---------------
11. INDEMNIFICATION; REMEDIES.
11.1. Agreement of the Company to Indemnify.
-------------------------------------
Subject to the conditions and provisions of this Section 11, and
----------
except to the extent of gross negligence or willful misconduct on the part of
any of the Investor Indemnified Persons, the Company hereby agrees to indemnify,
defend and hold harmless the Investor Indemnified Persons from and against and
in any respect of all Claims asserted against, imposed upon or incurred by the
Investor Indemnified Persons (whether such Claims are by, against or relate to
the Company, its
38
<PAGE>
Subsidiaries or any other party, including a governmental entity), directly or
indirectly, by reason of or resulting from any material misrepresentation or
material breach of any covenant, or material noncompliance with any conditions
or other agreements, given or made by the Company in this Agreement or in any
document furnished by or on behalf of the Company pursuant to this Agreement.
11.2. Conditions of Indemnification.
-----------------------------
The obligations and liabilities of the Company hereunder with respect
to its indemnities pursuant to this Section 11.2, resulting from any Claim shall
------------
be subject to the following terms and conditions:
(a) The Investor Indemnified Persons shall give prompt written notice
to the Company of any Claim which is asserted against, imposed upon or incurred
by such indemnified party and which may give rise to liability of the Company
pursuant to this Section 11, stating (to the extent known or reasonably
----------
anticipated) the nature and basis of such Claim and the amount thereof.
(b) The Company shall be entitled to assume the defense with respect
to any such Claim, including the employment of counsel and the payment of
expenses in connection with such defense. Each Investor Indemnified Person
shall have the right to employ its own counsel at Company expense if (i) the
Company authorizes the employment of such counsel, (ii) the Company has failed
in its obligation to employ counsel to take charge of such defense, or (iii) in
the opinion of such Investor Indemnified Person's counsel, the use of joint
counsel presents a conflict of interest or prevents adequate representation of
the interests of both such Investor Indemnified Person and the Company.
11.3. Specific Performance.
--------------------
In addition to any other remedies which any party may have at law or
in equity, each party hereby acknowledges that the Restricted Securities and the
Company and the Subsidiaries are unique, and that the harm to the Investors or
the Company, as the case may be, resulting from breaches by the Company or any
Investor, as the case may be, of its obligations cannot be adequately
compensated by damages. Accordingly, each party (the "Performing Party") agrees
that each other party (the "Benefiting Party") shall have the right to have all
obligations, undertakings, agreements, covenants and other provisions of this
Agreement specifically performed by the Performing Party, and that the
Benefiting Party shall have the right to obtain an order or decree of such
specific performance in any of the courts of the United States of America or of
any state or other political subdivision thereof.
11.4. Remedies Cumulative.
-------------------
The remedies provided herein shall be cumulative and shall not
preclude the assertion by any party of any other rights or the seeking of any
other remedies against any other party, or his, her or its heirs, legatees,-
successors or assigns.
12. LIMITATION OF LIABILITY.
39
<PAGE>
EXCEPT FOR THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AN INVESTOR, SUCH
INVESTOR SHALL NOT BE LIABLE FOR INDIRECT OR CONSEQUENTIAL, EXEMPLARY, PUNITIVE
OR SPECIAL DAMAGES (WHETHER IN CONTRACT OR IN TORT), EVEN IF SUCH INVESTOR HAD
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE. IN NO EVENT SHALL
ANY INVESTOR BE LIABLE FOR THE ACTUAL DAMAGES IN EXCESS OF SUCH INVESTOR'S
INVESTMENT UNDER ITS STOCK PURCHASE AGREEMENT OR AGREEMENTS PLUS ANY INCREASE IN
VALUE ON THE INVESTOR'S INVESTMENT AND ANY DIVIDENDS, STOCK DIVIDENDS, OR
SIMILAR ECONOMIC BENEFIT RECEIVED BY THE INVESTOR ON SUCH INVESTMENT AS A
STOCKHOLDER OF THE COMPANY (IF ANY) TO THE EXTENT THAT SERIES C PREFERRED STOCK,
SERIES B PREFERRED STOCK, SERIES A PREFERRED STOCK, COMMON STOCK INTO WHICH
SERIES C PREFERRED STOCK, SERIES B PREFERRED STOCK AND SERIES A PREFERRED STOCK
IS CONVERTIBLE, OR PROCEEDS FROM THE SALE OF SUCH SERIES C PREFERRED STOCK,
SERIES B PREFERRED STOCK, SERIES A PREFERRED STOCK OR COMMON STOCK, AS THE CASE
MAY BE, ARE IN SUCH INVESTOR'S POSSESSION AS OF THE TIME SUCH INVESTOR RECEIVES
WRITTEN NOTICE OF THE CLAIM.
13. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS.
This Agreement, the Stock Purchase Agreements and the Stockholders
Agreement contain the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior arrangements or understandings
with respect hereto. The terms and provisions of this Agreement may not be
modified or amended, except pursuant to a writing signed by the parties.
14. NOMINEES FOR BENEFICIAL OWNERS.
In the event that any Registrable Securities and/or other Common Stock are
held by a nominee for the beneficial owner thereof, the beneficial owner thereof
may, at its election, be treated as the holder of such Registrable Securities
and/or other Common Stock for purposes of any request or other action by any
holder or holders of Registrable Securities and/or other Common Stock pursuant
to this Agreement. If the beneficial owner of any Registrable Securities and/or
other Common Stock so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities and/or other Common Stock.
15. NOTICES.
All notices, demands, requests, or other communications which may be or are
required to be given, served, or sent by any party to any other party pursuant
to this Agreement shall be in writing and shall be hand delivered, sent by
nationally recognized overnight courier, sent by facsimile transmission, or
mailed by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
(i) If to any holder of Registrable Securities and/or other Common Stock,
at the address that such holder shall have furnished to the Company in writing,
(ii) If to the Company:
40
<PAGE>
OneSoft Corporation
7010 Little River Turnpike
Annandale, Virginia 22003
Attn.: James W. MacIntyre, IV
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be hand delivered,
sent or mailed, in the manner described above, shall be deemed given for all
purposes at such time as it is hand delivered to the addressee (with the return
receipt or the delivery receipt being deemed conclusive, but not exclusive,
evidence of such delivery); if sent by the courier, on next business day; if
made by facsimile transmission, at the time that receipt thereof has been
acknowledged by electronic confirmation or otherwise or; if so mailed, on the
fifth day after deposited in the U.S. mail.
16. ASSIGNMENT.
16.1. Assignment of Registration Rights.
---------------------------------
Except as set forth in Section 16.2, the rights of each Investor
------------
under this Agreement shall be assignable; provided, however, that the Company is
given written notice at the time of such assignment stating the name and address
of the assignee and identifying the securities with respect to which the rights
and benefits hereunder are being assigned and such assignee expressly agrees in
writing with the Company and the other holders of Registrable Securities to be
bound by and to comply with all applicable provisions of this Agreement,
whereupon such person or entity shall have the benefits of, and shall be subject
to the restrictions contained in, this Agreement with respect to such
securities. Any assignment pursuant to this Section 16.1 shall not relieve,
------------
release or otherwise discharge the holder effecting such assignment from its
obligations under this Agreement.
16.2. Assignment of Preemptive Rights, Rights of Subsequent Refusal and Co-
--------------------------------------------------------------------
Sale.
----
Notwithstanding Section 16.1 or any other provision hereof,
------------
(a) The preemptive rights, rights of subsequent refusal and right of
co-sale of the Investors set forth in Sections 8, 9 and 10 are nonassignable,
--------------------
except that (i) such rights are assignable by each Investor and the Founder to
any wholly-owned subsidiary or parent of the Assigning Investor, or to any
Affiliate in the case of the assigning Investor or Founder, (ii) such rights are
assignable between and among any of the Investors and the Founder, (iii) such
rights are assignable by any Investor to its partners, shareholders or members,
or the managing directors thereof, in connection with distributions of shares of
Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock
and/or Common Stock to such partners, shareholders or members, or the managing
directors thereof and (iv) such rights are assignable by any Investor or the
Founder to its or his Authorized Transferees other than those set forth above in
any of clauses (i), (ii) or (iii); provided that the Company is given written
notice at the time of such assignment, stating the name and address of the
assignee and identifying the securities with respect to which the rights and
benefits hereunder are being assigned and such assignee expressly agrees in
writing with the Company and the other holders of Registrable Securities to be
bound by and to comply with all applicable provisions of Sections 8, 9 and 10,
--------------------
whereupon such person or entity shall have the
41
<PAGE>
benefits of, and shall be subject to the restrictions contained in Sections 8, 9
-------------
and 10 with respect to such securities. Any assignment pursuant to this Section
- ------ -------
16.2 shall not relieve, release or otherwise discharge the holder effecting such
- ----
assignment from its obligations under this Agreement.; and
(b) The Board of Directors nomination, separate class voting and
service rights set forth in Section 3 and the informational and the other rights
---------
set forth in Section 6 are nonassignable to a Competitor.
---------
16.3. Assignment of Rights by Company.
-------------------------------
The Company may not assign this Agreement in whole or in part to any
other person without the prior written consent of the other parties hereto.
17. CONVERSION OF STOCK AT SG'S OPTION.
Each share of Preferred Stock or Common Stock held by SG shall be
convertible, at the option of SG (exercised by written notice from SG to the
Company), at any time and from time to time, into or from a share of non-voting
preferred stock or non-voting common stock, respectively, which share shall have
the same rights, preferences and privileges as the applicable series of
Preferred Stock or Common Stock, as the case may be, except that such share
shall have no voting rights. The Company agrees, at the request of SG and to
take such action as is necessary, to create a class of preferred stock or common
stock as required to satisfy the Company's obligations under the preceding
sentence, and each Investor and the Founder hereby agrees to consent to such a
conversion.
18. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective permitted successors and
assigns, heirs and legal representatives and, in the case of Section 24, SGC
----------
and, in the case of Section 10, the Investor Indemnified Persons. In addition,
----------
and whether or not any express assignment shall have been made, the provisions
of this Agreement which are for the benefit of the parties hereto other than the
Company shall also be for the benefit of and enforceable by any subsequent
holder of any Registrable Securities and/or other Common Stock.
19. DESCRIPTIVE HEADING.
The descriptive headings of the several sections and paragraphs of this
Agreement are inserted for reference only and shall not limit or otherwise
affect the meaning hereof
20. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of Delaware
(but not including the choice of law rules thereof).
21. TERMINATION; RULE 144(K).
42
<PAGE>
This Agreement shall terminate and be of no further force or effect when
there shall not be any Registrable Securities outstanding; provided that the
rights of the holders of Registrable Securities and obligations of the Company
under Section 5 hereof shall terminate and be of no further force and effect at
---------
such earlier time as to any holder of Registrable Securities as the provision of
Rule 144(k) are applicable to the Restricted Securities then held by such
holder.
22. SEVERABILITY.
If any part of any provision of this Agreement or any other agreement or
document given pursuant to or in connection with this Agreement shall be invalid
or unenforceable in any respect, such part shall be ineffective to the extent of
such invalidity or unenforceability only, without in any way affecting the
remaining parts of such provision or the remaining provisions of this Agreement.
23. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument.
24. UNDERWRITING RIGHT OF FIRST OFFER.
24.1. Right of First Offer.
--------------------
The Company hereby grants to SGC the right of first offer to lead
underwrite any offering of Securities which the Company may, from time to time,
propose to sell and/or issue in an offering registered under the Securities Act
or offered pursuant to an exemption from registration under Rule 144A under the
Securities Act (collectively, an "Underwriting").
24.2. Right to Co-Manage.
------------------
In the event that the Company proposes to enter into an underwriting
agreement with a lead underwriter other than SGC pursuant to Section 24.1, the
-------------
Company shall deliver notice thereof and a copy of the proposed underwriting
agreement to SGC, and SGC shall have seven (7) business days thereafter to elect
by written notice to the Company to co-manage the Underwriting on terms and
conditions at least as favorable to SGC as the economic terms and conditions
offered to the lead underwriter.
24.3. Ownership.
---------
The Company shall only be obligated to comply with the terms of this
Section 24 if a majority of the outstanding voting securities of SGC is, at the
- ----------
time the Company is obligated to comply with this Section 24, owned, directly or
----------
indirectly, by SGC or its Affiliates.
[REST OF PAGE INTENTIONALLY LEFT BLANK.]
43
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed and delivered this
Agreement, or caused this Agreement to be duly executed and delivered on its
behalf, as of the date first above written.
ONESOFT CORPORATION
By: /s/ James W. MacIntyre, IV
---------------------------------------------
Name: James W. MacIntyre, IV
-------------------------------------------
Title: President
------------------------------------------
QUESTMARK PARTNERS, L.P.
By: /s/ Thomas R. Hitchner
---------------------------------------------
Name: Thomas R. Hitchner
-------------------------------------------
Title: General Partner
------------------------------------------
GENERAL ELECTRIC PENSION TRUST
By: General Electric Investment Corporation,
its Investment Manager
By: /s/ Michael M. Pastore
---------------------------------------------
Name: Michael M. Pastore
-------------------------------------------
Title: Vice President
------------------------------------------
BT INVESTMENT PARTNERS, INC.
By: /s/ Brian Talbot
---------------------------------------------
Name: Brian Talbot
-------------------------------------------
Title: Managing Director
------------------------------------------
US DEVELOPMENT CAPITAL INVESTMENT COMPANY
By: /s/ Raymond L. Moss
---------------------------------------------
Name: Raymond L. Moss
-------------------------------------------
Title: Secretary
------------------------------------------
RIGGS CAPITAL PARTNERS
By: /s/ J. Carter Beese, Jr.
---------------------------------------------
Name: J. Carter Beese, Jr.
-------------------------------------------
Title: President
------------------------------------------
44
<PAGE>
SGC PARTNERS II LLC
By: /s/ Justin Hall-Tipping
---------------------------------------
Name: Justin Hall-Tipping
-------------------------------------
Title: Vice President
------------------------------------
RADER REINFRANK HOLDINGS NO. 2
By: Rader Reinfrank Investors, L.P.
Its General Partner
By: Rader Reinfrank & Co., LLC
Its General Partner
By: /s/ Stephen Radar
--------------------------
Name: Stephen Radar
------------------------
Title:
-----------------------
BONSALL CAPITAL, LLC
By: /s/ Frank A. Bonsal Jr.
---------------------------------------
Name: Frank A. Bonsal Jr.
-------------------------------------
Title:
------------------------------------
USA FUND, LLP
By: /s/ Marc P. Blum
---------------------------------------
Name: Marc P. Blum
-------------------------------------
Title: President, World Total Return, Inc.
------------------------------------
(sole general partner)
/s/ Peter Noce
------------------------------------------
Peter Noce
/s/ Felipe Propper de Callejon
------------------------------------------
Felipe Propper de Callejon
/s/ Daniel Dent
------------------------------------------
Daniel Dent
45
<PAGE>
/s/ Richard Riggs
-----------------------------------------
Richard Riggs
/s/ David Cordish
-----------------------------------------
David Cordish
RT PARTNERS, L.P.
By: /s/ David D. Rothschild
--------------------------------------
Name: David D. Rothschild
------------------------------------
Title: Managing Director of the Gen. Ptr.
-----------------------------------
46
<PAGE>
The undersigned Common Stockholders hereby agree to be bound by all
restrictions, terms and conditions applicable to them pursuant to Sections 5, 8
-------------
and 10 of this Agreement:
- ------
/s/ James W. MacIntyre, IV
- ----------------------------------- ----------------------------
James W. MacIntyre, IV Date
/s/ Jeffrey M. MacIntyre
- ----------------------------------- ----------------------------
Jeffrey MacIntyre Date
/s/ Frederick Hawkins III 8/12/99
- ----------------------------------- ----------------------------
Frederick Hawkins Date
BLUE WATER STRATEGIC FUND I, L.L.C.
By: Blue Water Capital, L.L.C.,
Managing Member
By: /s/ Henry D. Barratt Jr. August 11, 1999
-------------------------------- ----------------------------
Name: Henry D. Barratt Jr. Date
------------------------------
Title: Managing Director
-----------------------------
BAKERSVILLE HOLDINGS LTD.
By: /s/ Glenn A. Dryfoos 8/12/99
-------------------------------- ----------------------------
Date
/s/ Eugene Choi
- ----------------------------------- ----------------------------
Eugene Choi Date
/s/ Peter Shum 8/12/99
- ----------------------------------- ----------------------------
Peter Shum Date
/s/ Cynthia L. Allen 8/12/99
- ----------------------------------- ----------------------------
Cynthia Allen Date
/s/ Monique Hawkins
- ----------------------------------- ----------------------------
Monique Hawkins Date
/s/ A. Douglas Peabody August 13, 1999
- ----------------------------------- ----------------------------
A. Douglas Peabody Date
47
<PAGE>
The undersigned Series A Preferred Stockholders hereby agree to be bound by
all restrictions, terms and conditions applicable to each of them under this
Agreement:
BLUE WATER STRATEGIC FUND I, L.L.C.
By: Blue Water Capital, L.L.C.,
Managing Member
By: /s/ Henry D. Barratt Jr.
------------------------------------
Name: Henry D. Barratt Jr.
----------------------------------
Title: Managing Director
---------------------------------
SGC PARTNERS II LLC
By: /s/ Justin Hall-Tipping
-----------------------------------
Name: Justin Hall-Tipping
----------------------------------
Title:
---------------------------------
48
<PAGE>
The undersigned Series B Preferred Stockholders hereby agree to be bound by
all restrictions, terms and conditions applicable to each of them under this
Agreement:
SGC PARTNERS II LLC
By: /s/ Justin Hall-Tipping
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
RADER REINFRANK HOLDINGS NO. 2
By: Rader Reinfrank Investors, L.P.
Its General Partner
By: Rader Reinfrank & Co., LLC
Its General Partner
By: /s/ Stephen Radar
-----------------------
Name:
---------------------
Title:
--------------------
49
<PAGE>
Exhibit A (as amended)
----------------------
<TABLE>
<CAPTION>
Name and Address of Investor Number of Shares of Series C Aggregate Purchase Price
Preferred Stock Purchased
<S> <C> <C>
QuestMark Partners, L.P.
Suite 800
One South Street
Baltimore, MD 21202 1,517,451 $10,000,002.09
General Electric Pension Trust 758,725 4,999,997.75
BT Investment Partners, Inc. 379,370 2,500,048.30
US Development Capital Investment 227,700 1,500,543.00
Company
SGC Partners II LLC 379,363 2,500,002.17
Riggs Capital Partners 437,026 2,880,001.34
Rader Reinfrank Holdings No. 2 465,858 3,070,004.22
Peter Noce 75,872 500,000.00
Felipe Propper de Callejon 2,276 14,998.84
Daniel Dent 18,000 118,620.00
Richard Riggs 18,000 118,620.00
Bonsall Capital, LLC 15,175 100,003.25
David Cordish 18,209 119,997.31
USA Fund, LLP 75,873 500,003.07
RT Partners, L.P. 75,873 500,003.07
</TABLE>
<PAGE>
Exhibit A (cont.)
-----------------
<TABLE>
<CAPTION>
Name and Address of Additional Number of Shares of Series C Aggregate Purchase Price
Investor Preferred Stock Purchased
<S> <C> <C>
Andrew Wright 75,873 $ 500,000.00
Benjamin Moody 3,794 25,000.00
South Street LLC 37,936 249,998.24
Tennyson Private Placement Fund 182,094 1,199,999.46
ABS Employees Venture Fund 126,785 835,513.15
</TABLE>
<PAGE>
Exhibit B
---------
Series B Preferred Stockholders
SGC Partners II LLC
Rader Reinfrank Holdings No. 2
Series A Preferred Stockholders
Blue Water Strategic Fund I., L.L.C.
SGC Partners II LLC
Common Stockholders
James W. MacIntyre, IV
Jeffrey MacIntyre
Frederick Hawkins
Blue Water Strategic Fund, I, L.L.C.
Bakersville Holdings Ltd.
Eugene Choi
Peter Shum
Cynthia Allen
Monique Hawkins
A. Douglas Peabody
Edgardo Cruz (became common stockholder between Initial Closing and Additional
Closing)
Konstantin Oleinikov (became common stockholder between Initial Closing and
Additional Closing)
<PAGE>
Exhibit C
---------
ADDITIONAL INVESTOR SIGNATURE PAGE TO THE
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
----------------------------------------------------
By executing and delivering this Additional Investor Signature Page, the
undersigned agrees (i) that it is an Additional Investor as defined in the
Series C Convertible Preferred Stock Purchase Agreement among OneSoft
Corporation (the "Company") and the Investors (as defined therein) dated as of
August 13, 1999 and (ii) that it is a party as an Investor to the Third Amended
and Restated Investor Rights Agreement among the Company and the Investors (as
defined therein) dated as of August 13, 1999 and is bound by all the terms and
conditions thereof.
Dated: ________________ ____________________________
Print Name:
By: ________________________
Name:
Title:
Address: ___________________
____________________________
<PAGE>
Exhibit D
---------
COUNTERPART SIGNATURE PAGE TO THE
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
----------------------------------------------------
By executing and delivering this Counterpart Signature Page , the
undersigned agrees that it is a party as a Common Stockholder to the Third
Amended and Restated Investor Rights Agreement among OneSoft Corporation and the
Investors (as defined therein) dated as of August 13, 1999 and is bound by all
the terms and conditions thereof.
Dated: ________________ ____________________________
Print Name:
By: ________________________
Name:
Title:
Address: ___________________
____________________________
<PAGE>
Exhibit 10.8
INCENTIVE STOCK OPTION AGREEMENT
OneSoft Corporation
THIS AGREEMENT is made as of the Xth day of Month, Year, between
OneSoft Corporation (hereinafter the "Company"), a Delaware corporation having a
principal place of business in 7010 Little River Turnpike, Suite 410, Annandale,
VA 22003 and Name and Address of Employee, an employee of the Company
(hereinafter the "Employee").
WHEREAS, the Company desires to grant to the Employee an Option to
purchase shares of its common stock, $.001 par value per share (hereinafter the
"Shares"), under and for the purposes set forth in the Company's 1997 Employee,
Director and Consultant Stock Option Plan (hereinafter the "Plan"); and
WHEREAS, the Company and the Employee understand and agree that any
terms used and not defined herein have the same meanings as in the Plan which is
hereby incorporated by reference; and
WHEREAS, the Company and the Employee each intend that the Option
granted herein qualify as an ISO.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the parties hereto agree
as follows:
1. GRANT OF OPTION
The Company hereby grants to the Employee Number (##) Shares, on the
terms and conditions and subject to all the limitations set forth herein, under
United States Securities and tax laws, and in the Plan, which is hereby
incorporated by reference. The Employee acknowledges receipt of a copy of the
Plan.
2. PURCHASE PRICE
The purchase price of the Shares covered by the Option shall be $XXX
per Share, subject to adjustment, as provided in the Plan, in the event of a
stock split, reverse stock split or other events affecting the holders of
Shares. Payment shall be made in accordance with Paragraph 7 of the Plan.
3. EXERCISE OF OPTION
Subject to the terms and conditions set forth in this Agreement and the
Plan, the Option granted hereby shall become exercisable as follows:
On the first anniversary of the date of this Agreement: ## Shares
On the second anniversary of the date of this Agreement: ## Shares
On the third anniversary of the date of this Agreement: ## Shares
On the fourth anniversary of the date of this Agreement: ## Shares
The foregoing rights are cumulative and are subject to the other terms
and conditions of this Agreement and the Plan.
4. TERM OF OPTION
Confidential Information 1
<PAGE>
(a) The Option shall terminate ten (10) years from the date of this
Agreement or, if the Employee owns as of the date hereof more than 10% of the
total combined voting power of all classes of capital stock of the Company or an
Affiliate, five (5) years from the date of this Agreement, but shall be subject
to earlier termination as provided for herein or in the Plan.
(b) If the Employee ceases to be an employee of the Company or of an
Affiliate (for any reason other than the death or Disability of the Employee or
termination of the Employee's employment for "cause" (as defined in the Plan) ),
the Option may be exercised, if it has not previously terminated, within three
(3) months after the date the Employee ceases to be an employee of the Company
or an Affiliate, or within the originally prescribed term of the Option,
whichever is earlier, but may not be exercised thereafter. In such event, the
Option shall be exercisable only to the extent that the Option has become
exercisable and is in effect at the date of such cessation of employment.
(c) Notwithstanding the foregoing, in the event of the Employee's
Disability or death within three (3) months after the termination of employment,
the Employee or the Employee's Survivors may exercise the Option within one (1)
year after the date of the Employee's termination of employment, but in no event
after the date of expiration of the term of the Option.
(d) In the event the Employee's employment is terminated by the Employee's
employer for "cause" (as defined in the Plan), the Employee's right to exercise
any unexercised portion of this Option shall cease as of such termination, and
this Option shall thereupon terminate. Notwithstanding anything herein to the
contrary, if subsequent to the Employee's termination as an employee, but prior
to the exercise of the Option, the Board of Directors of the Company determines
that, either prior or subsequent to the Employee's termination, the Employee
engaged in conduct which would constitute "cause," then the Employee shall
immediately cease to have any right to exercise the Option and this Option shall
thereupon terminate.
(e) In the event of the Disability of the Employee, as determined in
accordance with the Plan, the Option shall be exercisable within one (1) year
after the date of such Disability or, if earlier, the term originally prescribed
by the Option. In such event, the Option shall be exercisable:
(i) To the extent exercisable but not exercised as of the date of
Disability; and
(ii) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any additional
rights to exercise the Option as would have accrued had the Employee
not become Disabled prior to the end of the accrual period which next
ends following the date of Disability. The pro-ration shall be based
upon the number of days during the accrual period prior to the date of
Disability.
(f) In the event of the death of the Employee while an employee of the
Company or of an Affiliate, the Option shall be exercisable by the Participant's
Survivors within one (1) year after the date of death of the Employee or, if
earlier, within the originally prescribed term of the Option. In such event, the
Option shall be exercisable:
(i) To the extent exercisable but not exercised as of the date of
death; and
(ii) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any additional
rights to exercise the Option as would have accrued had the Employee
not died prior to the end of the accrual period which next ends
following the date of death. The pro ration shall be based upon the
number of days during the accrual period prior to the Employee's death.
Confidential Information 2
<PAGE>
5. METHOD OF EXERCISING OPTION
Subject to the terms and conditions of this Agreement, the Option may
be exercised by written notice to the Company at its principal executive office,
in substantially the form of Exhibit A attached hereto. Such notice shall state
the number of Shares with respect to which the Option is being exercised, and
shall be signed by the person exercising the Option. Payment of the purchase
price for such Shares shall be made in accordance with Paragraph 7 of the Plan.
The Company shall deliver a certificate or certificates representing such Shares
as soon as practicable after the notice shall be received, provided, however,
that the Company may delay issuance of such Shares until completion of any
action or obtaining of any consent, which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws). The certificate or certificates for the Shares as to which the Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising the Option (or, if the Option shall be exercised by the
Employee, and if the Employee shall so request in the notice exercising the
Option, shall be registered in the name of the Employee and another person
jointly, with right of survivorship), and shall be delivered as provided above
to, or upon the written order of, the person or persons exercising the Option.
In the event the Option shall be exercised, pursuant to Paragraph 4 hereof, by
any person or persons other than the Employee, such notice shall be accompanied
by appropriate proof of the right of such person or persons to exercise the
Option. All Shares that shall be purchased upon the exercise of the Option as
provided herein, shall be fully paid and non-assessable.
6. PARTIAL EXERCISE
Exercise of this Option to the extent above stated may be made in part
at any time, and from time to time within the above limits, except that no
fractional share shall be issued pursuant to this Option.
7. NON-ASSIGNABILITY
The Option shall not be transferable by the Employee otherwise than by
will or by the laws of descent and distribution. The Option shall be
exercisable, during the Employee's lifetime, only by the Employee (or, in the
event of legal incapacity or incompetency, by the Employee's guardian or
representative), shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise), and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of the Option or of any rights
granted hereunder contrary to the provisions of this Paragraph 7, or the levy of
any attachment or similar process upon the Option shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE
The Employee shall have no rights as a stockholder with respect to
Shares subject to this Agreement until registration of the Shares in the
Company's share register in the name of the Employee. Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date of such registration.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS
The Plan contains provisions covering the treatment of Options in a
number of contingencies such as stock splits and mergers. Provisions in the Plan
for adjustment with respect to stock subject to Options and the related
provisions with respect to successors to the business of the Company are hereby
made applicable hereunder and are incorporated herein by reference.
10. TAXES
Confidential Information 3
<PAGE>
(a) The Employee acknowledges that any income or other taxes due
from him or her with respect to this Option or the Shares issuable
pursuant to this Option, shall be the Employee's sole responsibility.
(b) In the event of a Disqualifying Disposition (as defined in
Paragraph 15 below), or if the Option is converted into a Non-Qualified
Option, and such Non-Qualified Option is exercised, the Company may
withhold from the Employee's remuneration, if any, the appropriate
amount of federal, state and local withholding taxes attributable to
such amount that is considered compensation includable in such person's
gross income. At the Company's discretion, the amount required to be
withheld, may be withheld in cash from such remuneration, or in kind
from the Shares otherwise deliverable to the Employee on exercise of
the Option. The Employee further agrees that, if the Company does not
withhold an amount from the Employee's remuneration sufficient to
satisfy the Company's income tax withholding obligation, the Employee
will reimburse the Company on demand, in cash, for the amount
under-withheld.
11. PURCHASE FOR INVESTMENT
Unless the offering and sale of the Shares to be issued upon the
particular exercise of the Option shall have been effectively registered under
the Securities Act of 1933, as now in force or hereafter amended (hereinafter
the "1933 Act"), the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following conditions have been
fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection with, the
distribution of any such Shares, in which event the person(s) acquiring
such Shares shall be bound by the provisions of the following legend
which shall be endorsed upon the certificate(s) evidencing the Shares
issued pursuant to such exercise:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES
LAWS. SUCH SHARES MAY NOT BE OFFERED, PLEDGED, SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM AS DETERMINED IN ACCORDANCE WITH THE
INVESTOR RIGHTS AGREEMENT AS AMENDED AND RESTATED FROM TIME TO
TIME RESTRICTING THEIR TRANSFER. COPIES OF THE INVESTOR RIGHTS
AGREEMENT, AS AMENDED, MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE CORPORATION AT THE CORPORATION'S
PRINCIPAL PLACE OF BUSINESS. FURTHER, THE DESIGNATIONS,
RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF EACH CLASS OF
STOCK OF THE CORPORATION AND THE VARIATIONS IN THE RIGHTS,
PREFERENCES AND LIMITATIONS DETERMINED FOR EACH SERIES OF
STOCK (AND THE AUTHORITY OF THE BOARD OF DIRECTORS OF THE
CORPORATION TO DETERMINE VARIATIONS FOR FUTURE SERIES), ARE
SET FORTH IN THE CORPORATION'S CERTIFICATE OF INCORPORATION,
AS AMENDED, A COPY OF WHICH WILL BE FURNISHED BY THE
CORPORATION TO THE HOLDER OF THIS CERTIFICATE, WITHOUT CHARGE,
UPON THE WRITTEN REQUEST OF SUCH HOLDER;" and
(b) If the Company so requires, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such
particular exercise in compliance with the 1933 Act without
registration thereunder. Without limiting the generality of the
foregoing, the Company may delay issuance of the Shares until
completion of any action or obtaining of any consent, which the Company
deems necessary under any applicable law (including, without
limitation. state securities or "blue sky" laws).
Confidential Information 4
<PAGE>
12. RESTRICTIONS ON TRANSFER OF SHARES
(a) The Shares acquired by the Employee pursuant to the exercise
of the Option granted hereby shall not be transferred by the Employee
except as permitted herein and in a Stockholders' and Voting Agreement
dated as of January 6, 1997, as amended August 13, 1999 (hereinafter
the "Stockholders Agreement").
(b) In the event of the Employee's termination of employment,
Disability or death, the Company shall have the option, but not the
obligation, to repurchase all or any part of the shares issued pursuant
to this Agreement (including, without limitation, Shares purchased
after termination of employment, Disability or death in accordance with
Paragraph 4 hereof). In the event the Company does not, upon the
termination of employment, Disability or Death of the Employee (as
described above), exercise its option pursuant to this Subparagraph 12
(b), the restrictions set forth in the balance of this Agreement shall
not thereby lapse, and the Employee for himself or herself, his or her
heirs, legatees, executors, administrators and other successors in
interest, agrees that the Shares shall remain subject to such
restrictions. The following provisions shall apply to a repurchase
under this Subparagraph 12 (b):
(i) The per share repurchase price of the Shares to be
sold to the Company upon exercise of its option under this
Subparagraph 12(b) shall be equal to the Fair Market Value of
each such Share determined in accordance with the Plan as of
the date of termination, Disability or death.
(ii) The Company's option to repurchase the Employee's
Shares in the event of termination of employment, death or
Disability shall be valid for a period of twelve (12) months
commencing with the date of such termination, Disability or
death.
(iii) In the event the Company shall be entitled to and
shall elect to exercise its option to repurchase the
Employee's Shares under this Subparagraph 12(b), the Company
shall notify the Employee, or in case of death, his or her
representative, in writing of its intent to repurchase the
Shares. Such written notice may be mailed by the Company up to
and including the last day of the time period provided for in
Subparagraph 12(b)(ii) for exercise of the Company's option to
repurchase.
(iv) The written notice to the Employee shall specify the
address at, and the time and date on, which payment of the
repurchase price is to be made (hereinafter the "Closing").
The date specified shall not be less than ten (10) days, but
nor more than sixty (60) days, from the date of the mailing of
the notice, and the Employee or his or her successor in
interest with respect to the Shares shall have no further
rights as the owner thereof from, and after the date specified
in the notice. At the Closing, the repurchase price shall be
delivered to the Employee or his or her successor in interest,
and the Shares being purchased, duly endorsed for transfer,
shall, to the extent that they are not then in the possession
of the Company, be delivered to the Company by the Employee or
his or her successor in interest.
(c) Upon acquiring any Shares pursuant to the exercise of the
Option, the Employee agrees to become a party to the Stockholders
Agreement.
(d) In the event that the Employee or his or her successor in
interest fails to deliver the Shares to be repurchased by the Company
under this Agreement, the Company may elect:
(i) To establish a segregated account in the amount of
the repurchase price, such account to be turned over to the
Employee or his or her successor in interest upon delivery of
such Shares, and/or
(ii) Immediately to take such action as is appropriate to
transfer record title of such Shares
Confidential Information 5
<PAGE>
from the Employee to the Company and to treat the Employee and
such Shares in all respects as if delivery of such Shares had
been made as required by this Agreement. The Employee hereby
irrevocably grants the Company a power of attorney which shall
be coupled with an interest for the purpose of effectuating
the preceding Subparagraph 12 (d)(i).
(e) If the Company shall pay a stock dividend or declare a stock
split on or with respect to any of its Common Stock, or otherwise
distribute securities of the Company to the holders of its Common
Stock, the number of shares of stock, or other securities of the
Company issued with respect to the shares then subject to the
restrictions contained in this Agreement shall be added to the Shares
subject to the Company's rights to repurchase pursuant to this
Agreement. If the Company shall distribute to its stockholders shares
of stock of another corporation, the shares of stock of such other
corporation, distributed with respect to the Shares then subject to the
restrictions contained in this Agreement, shall be added to the Shares
subject to the Company's rights to repurchase pursuant to this
Agreement.
(f) If the outstanding shares of Common Stock of the Company shall
be subdivided into a greater number of shares or combined into a
smaller number of shares, or in the event of a reclassification of the
outstanding shares of Common Stock of the Company, or if the Company
shall be a party to a merger, consolidation or capital reorganization,
there shall be substituted for the Shares then subject to the
restrictions contained in this Agreement such amount and kind of
securities as are issued in such subdivision, combination,
reclassification, merger, consolidation or capital reorganization in
respect of the Shares subject immediately prior thereto to the
Company's rights to repurchase pursuant to this Agreement.
(g) The Company shall not be required to transfer any Shares on
its books which shall have been sold, assigned or otherwise transferred
in violation of this Agreement, or to treat as owner of such Shares, or
to accord the right to vote as such owner or to pay dividends to, any
person or organization to which any such Shares shall have been so
sold, assigned or otherwise transferred, in violation of this
Agreement.
(h) The preceding provisions of this Paragraph 12 shall terminate
upon the consummation of a public offering of any of the Company's
securities pursuant to a registration statement filed with the
Securities and Exchange Commission pursuant to the Securities Act, in
which offering the aggregate gross proceeds to the Company exceed
$10,000,000.
(i) If, in connection with a registration statement filed by the
Company pursuant to the Securities Act, the Company or its underwriter
so requests, the Employee will agree not to sell any Shares for a
period not to exceed 180 days following the effectiveness of such
registration.
(j) The Employee acknowledges and agrees that neither the Company,
its shareholders nor its directors and officers, has any duty or
obligation to disclose to the Employee any material information
regarding the business of the Company or affecting the value of the
Shares before, at the time of, or following a termination of the
employment of the Employee by the Company, including, without
limitation, any information concerning plans for the Company to make a
public offering of its securities or to be acquired by or merged with
or into another firm or entity.
(k) All certificates representing the Shares to be issued to the
Employee pursuant to this Agreement shall have endorsed thereon a
legend substantially as follows:
"The shares represented by this certificate are
subject to restrictions set forth in an Incentive
Stock Option Agreement with this Company, a copy of
which Agreement is available for inspection at the
offices of the Company or will be made available upon
request."
Confidential Information 6
<PAGE>
13. NO OBLIGATION TO EMPLOY
The Company is not by the Plan or this Option obligated to continue the
Employee as an employee of the Company.
14. OPTION IS INTENDED TO BE AN ISO
The parties each intend that the Option be an ISO so that the Employee
(or the Employee's Survivors) may qualify for the favorable tax treatment
provided to holders of Options that meet the standards of Section 422 of the
U.S. Internal Revenue Code (hereinafter the "Code"). Any provision of this
Agreement or the Plan which conflicts with the Code so that this Option would
not be deemed an ISO is null and void and any ambiguities shall be resolved so
that the Option qualifies as an ISO. Nonetheless, if the Option is determined
not to be an ISO, the Employee understands that neither the Company nor any
Affiliate is responsible to compensate him or her or otherwise make up for the
treatment of the Option as a Non-qualified Option, and not as an ISO. The
Employee should consult with the Employee's own tax advisors regarding the tax
effects of the Option and the requirements necessary to obtain favorable tax
treatment under Section 422 of the Code, including, but not limited to, holding
period requirements.
15. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION
The Employee agrees to notify the Company in writing immediately after
the Employee makes a Disqualifying Disposition of any of the Shares acquired
pursuant to the exercise of the Option. A Disqualifying Disposition is defined
in Section 424(c) of the Code, and includes any disposition (including any sale)
of such Shares before the later of:
(a) Two (2) years after the date the Employee was granted the
Option; or
(b) One (1) year after the date the Employee acquired Shares by
exercising the Option, except as otherwise provided in Section 424(c)
of the Code.
If the Employee has died before the Shares are sold, these holding
period requirements do not apply, and no Disqualifying Disposition can occur
thereafter.
16. NOTICES
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by recognized courier service, facsimile, registered or
certified mail, return receipt requested, addressed as follows:
If to the Company:
Paul D. Economon, Esq.
1505 Farm Credit Drive
Suite 100
McLean, VA 22102
If to the Employee:
Employee's name
Confidential Information 7
<PAGE>
Employee's Address
In the alternative, notices may be made to such other address or
addresses of which notice in the same manner has previously been given. Any such
notice shall be deemed to have been given upon the earlier of receipt, one
business day following delivery to a recognized courier service or three
business days following mailing by registered or certified mail.
17. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
law of the Commonwealth of Virginia, without giving effect to the conflict of
law principles thereof; provided that, if the Company shall be reincorporated
under the laws of another state, by merger or otherwise, the laws of such other
state shall be applicable, without giving effect to the conflict of laws
principles thereof.
18. BENEFIT OF AGREEMENT
Subject to the provisions of the Plan and the other provisions hereof,
this Agreement shall be for the benefit of, and shall be binding upon, the
heirs, executors, administrators, successors and assigns of the parties hereto.
19. ENTIRE AGREEMENT
This Agreement, together with the Plan, embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement, shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.
20. MODIFICATIONS AND AMENDMENTS
The terms and provisions of this Agreement may be modified or amended
as provided for in the Plan.
21. WAIVERS AND CONSENTS
Except as provided in the Plan, the terms and provisions of this
Agreement may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be, or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Employee has hereunto set his
or her hand, all as of the day and year first above written.
OneSoft Corporation
By:
----------------------------
Name:
Confidential Information 8
<PAGE>
Title:
----------------------
Employee's Name
Confidential Information 9
<PAGE>
Exhibit A
---------
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
[Form For Unregistered Shares]
To: OneSoft Corporation
Ladies and Gentlemen:
I hereby exercise my Incentive Stock Option to purchase ____ shares
(the "Shares") of the common stock, $.001 par value, of OneSoft Corporation (the
"Company"), at the exercise price of $___ per share, pursuant to and subject to
the terms of that certain Incentive Stock Option Agreement between the
undersigned and the Company dated this ___ day of __________, in the year ____.
I am aware that the Shares have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or any state securities
laws. I understand that the reliance by the Company on exemptions under the 1933
Act is predicated in part upon the truth and accuracy of the statements by me in
this Notice of Exercise.
I hereby represent and warrant that:
1) I have been furnished with all information which I deem necessary
to evaluate the merits and risks of the purchase of the Shares; and
2) I have had the opportunity to ask questions concerning the Shares
and the Company and all questions posed have been answered to my
satisfaction; and
3) I have been given the opportunity to obtain any additional
information I deem necessary to verify the accuracy of any information
obtained concerning the Shares and the Company; and
4) I have such knowledge and experience in financial and business
matters that I am able to evaluate the merits and risks of purchasing
the Shares and to make an informed investment decision relating
thereto.
I hereby represent and warrant that I am purchasing the Shares for my
own personal account for investment and not with a view to the sale or
distribution of all or any part of the Shares.
I understand that because the Shares have not been registered under the
1933 Act, I must continue to bear the economic risk of the investment for an
indefinite time and the Shares cannot be sold unless the Shares are subsequently
registered under applicable federal and state securities laws or an exemption
from such registration requirements is available.
I agree that I will in no event sell or distribute or otherwise dispose
of all or any part of the Shares unless:
1) There is an effective registration statement under the 1933 Act
and applicable state securities laws covering any such transaction
involving the Shares; or
2) The Company receives an opinion of my legal counsel (concurred in
by legal counsel for the Company) stating that such transaction is
exempt from registration or the Company otherwise satisfies itself that
such transaction is exempt from registration.
I consent to the placing of a legend on my certificate for the Shares
stating that the Shares have not been registered and setting forth the
restriction on transfer contemplated hereby and to the placing of a stop
transfer order on the books of the Company and with any transfer agents against
the Shares until the Shares may be legally resold or distributed without
restriction.
I understand that at the present time Rule 144 of the Securities and
Exchange Commission (the "SEC")
<PAGE>
may not be relied on for the resale or distribution of the Shares by me. I
understand that the Company has no obligation to me to register the sale of the
Shares with the SEC and has not represented to me that it will register the sale
of the Shares.
I understand the terms and restrictions on the right to dispose of the
Shares set forth in the 1997 Employee, Director and Consultant Stock Option Plan
and the Incentive Stock Option Agreement, both of which I have carefully
reviewed. I consent to the placing of a legend on my certificate for the Shares
referring to such restriction and the placing of stop transfer orders until the
Shares may be transferred in accordance with the terms of such restrictions.
I have considered the Federal, state and local income tax implications
of the exercise of my Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
----------------------------------------------
Please issue the stock certificate for the Shares (check one):
to me; or
to me and , as joint tenants with right of survivorship,
-----------
and mail the certificate to me at the following address:
------------------------
------------------------
------------------------
My mailing address for shareholder communications, if different from
the address listed above is:
------------------------
------------------------
------------------------
Sincerely,
----------------------
Employee (signature)
----------------------
Print Name
----------------------
Date
----------------------
Social Security Number
<PAGE>
Exhibit A
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
[Form For Registered Shares]
TO: OneSoft Corporation
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time
as the Company has filed a Registration Statement with the Securities and
Exchange Commission under which the issuance of the Shares for which this
exercise is being made is registered and such Registration Statement remains
effective.
Ladies and Gentlemen:
I hereby exercise my Incentive Stock Option to purchase _________
shares (the "Shares") of the common stock, $.001 par value of OneSoft
Corporation (the "Company"), at the exercise price of $________ per share,
pursuant to and subject to the terms of that certain Incentive Stock Option
Agreement between the undersigned and the Company dated this ___ day of
__________, in the year ____.
I understand the nature of the investment I am making and the financial
risks thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
----------------------------------------------
Please issue the stock certificate for the Shares (check one):
to me; or
to me and , as joint tenants with right of
----------------------
survivorship,
and mail the certificate to me at the following address:
--------------------------
--------------------------
--------------------------
My mailing address for shareholder communications, if different from
the address listed above, is:
--------------------------
--------------------------
--------------------------
Sincerely,
-----------------------
Employee (signature)
-----------------------
Print Name
-----------------------
Date
-----------------------
Social Security Number
<PAGE>
Exhibit 10.9
NON-QUALIFIED STOCK OPTION AGREEMENT
ONESOFT CORPORATION
THIS AGREEMENT, is made as of _________________ between OneSoft,
Corporation (the "Company"), a Delaware corporation having its principal place
of business at 1505 Farm Credit Drive, McLean, Virginia 22102, and
_______________ (the "Participant"), having an address at ________________.
WHEREAS, the Company desires to grant to the Participant an Option to
purchase shares of its common stock, $.001 par value per share (the "Shares"),
under and for the purposes set forth in the Company's 1997 Employee, Director
and Consultant Stock Option Plan (the "Plan"); and
WHEREAS, the Company and the Participant understand and agree that any
terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Participant each intend that the Option
granted herein shall be a Non-Qualified Option.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. GRANT OF OPTION.
---------------
The Company hereby grants to the Participant the right and option to
purchase all or any part of an aggregate of ___________(XXX) Shares, on the
terms and conditions and subject to all the limitations set forth herein and in
the Plan, which is incorporated herein by reference. The Participant
acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE.
--------------
The purchase price of the Shares covered by the Option shall be
____________($XXX) per Share, subject to adjustment, as provided in the Plan, in
the event of a stock split, reverse stock split or other events affecting the
holders of Shares. Payment shall be made in accordance with Paragraph 7 of the
Plan.
3. EXERCISE OF OPTION.
------------------
Subject to the terms and conditions set forth in this Agreement and the
Plan, the Option granted hereby shall become exercisable as follows:
XXXX: XXX Shares
The foregoing rights are cumulative and are subject to the other terms
and conditions
<PAGE>
of this Agreement and the Plan.
4. TERM OF OPTION.
--------------
The Option shall terminate ten (10) years from the date of this
Agreement, but shall be subject to earlier termination as provided herein or in
the Plan.
If the Participant ceases to be an employee, director or consultant of
the Company or of an Affiliate (for any reason other than the death or
Disability of the Participant or termination of the Participant for "cause" (as
defined in the Plan)), the Option may be exercised, if it has not previously
terminated, within three (3) months after the date the Participant ceases to be
an employee, director or consultant of the Company or an Affiliate, or within
the originally prescribed term of the Option, whichever is earlier, but may not
be exercised thereafter. In such event, the Option shall be exercisable only to
the extent that the Option has become exercisable and is in effect at the date
of such cessation of employment, directorship or consultancy.
Notwithstanding the foregoing, in the event of the Participant's
Disability or death within three (3) months after the termination of employment,
directorship or consultancy, the Participant or the Participant's Survivors may
exercise the Option within one (1) year after the date of the Participant's
termination of employment, directorship or consultancy, but in no event after
the date of expiration of the term of the Option.
In the event the Participant's employment, directorship or consultancy
is terminated by the Company or an Affiliate for "cause" (as defined in the
Plan), the Participant's right to exercise any unexercised portion of this
Option shall cease as of such termination, and this Option shall thereupon
terminate. Notwithstanding anything herein to the contrary, if subsequent to the
Participant's termination, but prior to the exercise of the Option, the Board of
Directors of the Company determines that, either prior or subsequent to the
Participant's termination, the Participant engaged in conduct which would
constitute "cause," then the Participant shall immediately cease to have any
right to exercise the Option and this Option shall thereupon terminate.
In the event of the Disability of the Participant, as determined in
accordance with the Plan, the Option shall be exercisable within one (1) year
after the date of such Disability or, if earlier, the term originally prescribed
by the Option. In such event, the Option shall be exercisable:
(a) To the extent exercisable but not exercised as of the date of
Disability; and
(b) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights to exercise the Option as would have accrued
had the Participant not become Disabled prior to the end of
the accrual period
-2-
<PAGE>
which next ends following the date of Disability. The
pro-ration shall be based upon the number of days during the
accrual period prior to the date of Disability.
In the event of the death of the Participant while an employee,
director or consultant of the Company or of an Affiliate, the Option shall be
exercisable by the Participant's Survivors within one (1) year after the date of
death of the Participant or, if earlier, within the originally prescribed term
of the Option. In such event, the Option shall be exercisable:
(a) To the extent exercisable but not exercised as of the date of
death; and
(b) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights to exercise the Option as would have accrued
had the Participant not died prior to the end of the accrual
period which next ends following the date of death. The
pro-ration shall be based upon the number of days during the
accrual period prior to the Participant's death.
5. METHOD OF EXERCISING OPTION.
---------------------------
Subject to the terms and conditions of this Agreement, the Option may
be exercised by written notice to the Company at its principal executive office,
in substantially the form of Exhibit A attached hereto. Such notice shall state
---------
the number of Shares with respect to which the Option is being exercised and
shall be signed by the person exercising the Option. Payment of the purchase
price for such Shares shall be made in accordance with Paragraph 7 of the Plan.
The Company shall deliver a certificate or certificates representing such Shares
as soon as practicable after the notice shall be received, provided, however,
that the Company may delay issuance of such Shares until completion of any
action or obtaining of any consent, which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws). The certificate or certificates for the Shares as to which the Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising the Option (or, if the Option shall be exercised by the
Participant and if the Participant shall so request in the notice exercising the
Option, shall be registered in the name of the Participant and another person
jointly, with right of survivorship) and shall be delivered as provided above to
or upon the written order of the person or persons exercising the Option. In the
event the Option shall be exercised, pursuant to Section 4 hereof, by any person
or persons other than the Participant, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All Shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and non-assessable.
6. PARTIAL EXERCISE.
----------------
Exercise of this Option to the extent above stated may be made in part
at any time and
-3-
<PAGE>
from time to time within the above limits, except that no fractional share shall
be issued pursuant to this Option.
7. NON-ASSIGNABILITY.
-----------------
The Option shall not be transferable by the Participant otherwise than
by will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act or the rules thereunder. Except as provided in
the previous sentence, the Option shall be exercisable, during the Participant's
lifetime, only by the Participant (or, in the event of legal incapacity or
incompetency, by the Participant's guardian or representative) and shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
Any attempted transfer, assignment, pledge, hypothecation or other disposition
of the Option or of any rights granted hereunder contrary to the provisions of
this Section 7, or the levy of any attachment or similar process upon the Option
shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
---------------------------------------
The Participant shall have no rights as a stockholder with respect to
Shares subject to this Agreement until registration of the Shares in the
Company's share register in the name of the Participant. Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date of such registration.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS.
----------------------------------------
The Plan contains provisions covering the treatment of Options in a
number of contingencies such as stock splits and mergers. Provisions in the Plan
for adjustment with respect to stock subject to Options and the related
provisions with respect to successors to the business of the Company are hereby
made applicable hereunder and are incorporated herein by reference.
10. TAXES.
-----
The Participant acknowledges that upon exercise of the Option the
Participant will be deemed to have taxable income measured by the difference
between the then fair market value of the Shares received upon exercise and the
price paid for such Shares pursuant to this Agreement. The Participant
acknowledges that any income or other taxes due from him or her with respect to
this Option or the Shares issuable pursuant to this Option shall be the
Participant's responsibility.
The Participant agrees that the Company may withhold from the
Participant's
-4-
<PAGE>
remuneration, if any, the appropriate amount of federal, state and local
withholding attributable to such amount that is considered compensation
includable in such person's gross income. At the Company's discretion, the
amount required to be withheld may be withheld in cash from such remuneration,
or in kind from the Shares otherwise deliverable to the Participant on exercise
of the Option. The Participant further agrees that, if the Company does not
withhold an amount from the Participant's remuneration sufficient to satisfy the
Company's income tax withholding obligation, the Participant will reimburse the
Company on demand, in cash, for the amount under-withheld.
11. PURCHASE FOR INVESTMENT.
-----------------------
Unless the offering and sale of the Shares to be issued upon the
particular exercise of the Option shall have been effectively registered under
the Securities Act of 1933, as now in force or hereafter amended (the "1933
Act"), the Company shall be under no obligation to issue the Shares covered by
such exercise unless and until the following conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection
with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the
provisions of the following legend which shall be endorsed
upon the certificate(s) evidencing the Shares issued pursuant
to such exercise:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED, PLEDGED,
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM AS DETERMINED IN ACCORDANCE WITH THE
INVESTOR RIGHTS AGREEMENT AS AMENDED AND RESTATED FROM TIME
TO TIME, RESTRICTING THEIR TRANSFER. COPIES OF THE INVESTOR
RIGHTS AGREEMENT, AS AMENDED, MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
CORPORATION'S PRINCIPAL PLACE OF BUSINESS. FURTHER, THE
DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS
OF EACH CLASS OF STOCK OF THE CORPORATION AND THE VARIATIONS
IN THE RIGHTS, PREFERENCES AND LIMITATIONS DETERMINED FOR
EACH SERIES OF STOCK (AND THE AUTHORITY OF THE BOARD OF
DIRECTORS OF THE CORPORATION TO DETERMINE VARIATIONS FOR
FUTURE SERIES), ARE SET FORTH IN THE CORPORATION'S
CERTIFICATE OF INCORPORATION, AS AMENDED, A COPY OF WHICH
WILL BE FURNISHED BY THE CORPORATION TO THE
-5-
<PAGE>
HOLDER OF THIS CERTIFICATE, WITHOUT CHARGE, UPON THE WRITTEN
REQUEST OF SUCH HOLDER": and
(b) If the Company so requires, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such
particular exercise in compliance with the 1933 Act without
registration thereunder. Without limiting the generality of
the foregoing, the Company may delay issuance of the Shares
until completion of any action or obtaining of any consent,
which the Company deems necessary under any applicable law
(including without limitation state securities or "blue sky"
laws).
12. RESTRICTIONS ON TRANSFER OF SHARES.
----------------------------------
12.1 The Shares acquired by the Participant pursuant to the exercise of
the Option granted hereby shall not be transferred by the Participant except as
permitted herein and in the Amended and Restated Stockholders Agreement dated
January 6, 1997, as restated as of April 3, 1997, and as amended on or about
August 13, 1999 (the "Stockholders Agreement") and that certain Third Amended
and Restated Investor Rights Agreement dated as of August 13, 1999 (the
"Investor Rights Agreement").
12.2 Upon acquiring any Shares pursuant to the exercise of the Option,
the Participant agrees to become a party to the Stockholders Agreement and the
Investor Rights Agreement.
12.3 The Company shall not be required to transfer any Shares on its
books which shall have been sold, assigned or otherwise transferred in violation
of this Agreement, or to treat as owner of such Shares, or to accord the right
to vote as such owner or to pay dividends to, any person or organization to
which any such Shares shall have been so sold, assigned or otherwise
transferred, in violation of this Agreement.
12.4 The Participant acknowledges and agrees that neither the Company,
its shareholders nor its directors and officers, has any duty or obligation to
disclose to the Participant any material information regarding the business of
the Company or affecting the value of the Shares before, at the time of, or
following a termination of the employment of the Participant by the Company,
including, without limitation, any information concerning plans for the Company
to make a public offering of its securities or to be acquired by or merged with
or into another firm or entity.
-6-
<PAGE>
12.5 All certificates representing the Shares to be issued to the
Participant pursuant to this Agreement shall have endorsed thereon a legend
substantially as follows: "The shares represented by this certificate are
subject to restrictions set forth in an Non-Qualified Stock Option Agreement
with this Company, a copy of which Agreement is available for inspection at the
offices of the Company or will be made available upon request."
13. NO OBLIGATION TO MAINTAIN RELATIONSHIP.
--------------------------------------
The Company is not by the Plan or this Option obligated to continue the
Participant as an employee, director or consultant of the Company.
14. NOTICES.
-------
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by recognized courier service, facsimile, registered or
certified mail, return receipt requested, addressed as follows:
If to the Company:
Paul D. Economon, Esq.
OneSoft Corporation
1505 Farm Credit Drive
Suite 100
McLean, VA 22102
If to the Participant:
----------------------
----------------------
----------------------
Or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.
-7-
<PAGE>
15. GOVERNING LAW.
-------------
This Agreement shall be construed and enforced in accordance with the
law of the State of Delaware, without giving effect to the conflict of law
principles thereof.
16. BENEFIT OF AGREEMENT.
--------------------
Subject to the provisions of the Plan and the other provisions hereof,
this Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
17. ENTIRE AGREEMENT.
----------------
This Agreement, together with the Plan, embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.
18. MODIFICATIONS AND AMENDMENTS.
----------------------------
The terms and provisions of this Agreement may be modified or amended
as provided in the Plan.
19. WAIVERS AND CONSENTS.
--------------------
Except as provided in the Plan, the terms and provisions of this
Agreement may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Participant has hereunto set
his or her hand, all as of the day and year first above written.
OneSoft Corporation
-8-
<PAGE>
By:
------------------------
Name:
Title:
------------------------
Participant
-9-
<PAGE>
Exhibit A
---------
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
[Form For Unregistered Shares]
To: OneSoft Corporation
Ladies and Gentlemen:
I hereby exercise my Non-Qualified Stock Option to purchase ____ shares
(the "Shares") of the common stock, $.001 par value, of OneSoft Corporation (the
"Company"), at the exercise price of $ per share, pursuant to and subject to the
terms of that certain Non-Qualified Stock Option Agreement between the
undersigned and the Company dated this ___ day of ____________.
I am aware that the Shares have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or any state securities
laws. I understand that the reliance by the Company on exemptions under the 1933
Act is predicated in part upon the truth and accuracy of the statements by me in
this Notice of Exercise.
I hereby represent and warrant that (1) I have been furnished with all
information which I deem necessary to evaluate the merits and risks of the
purchase of the Shares; (2) I have had the opportunity to ask questions
concerning the Shares and the Company and all questions posed have been answered
to my satisfaction; (3) I have been given the opportunity to obtain any
additional information I deem necessary to verify the accuracy of any
information obtained concerning the Shares and the Company; and (4) I have such
knowledge and experience in financial and business matters that I am able to
evaluate the merits and risks of purchasing the Shares and to make an informed
investment decision relating thereto.
I hereby represent and warrant that I am purchasing the Shares for my
own personal account for investment and not with a view to the sale or
distribution of all or any part of the Shares.
I understand that because the Shares have not been registered under the
1933 Act, I must continue to bear the economic risk of the investment for an
indefinite time and the Shares cannot be sold unless the Shares are subsequently
registered under applicable federal and state securities laws or an exemption
from such registration requirements is available.
I agree that I will in no event sell or distribute or otherwise dispose
of all or any part of the Shares unless (1) there is an effective registration
statement under the 1933 Act and applicable state securities laws covering any
such transaction involving the Shares or (2) the Company receives an opinion of
my legal counsel (concurred in by legal counsel for the Company) stating that
such transaction is exempt from registration or the Company otherwise satisfies
itself that such transaction is exempt from registration.
I consent to the placing of a legend on my certificate for the Shares
stating that the Shares have not been registered and setting forth the
restriction on transfer contemplated
<PAGE>
hereby and to the placing of a stop transfer order on the books of the Company
and with any transfer agents against the Shares until the Shares may be legally
resold or distributed without restriction.
I understand that at the present time Rule 144 of the Securities and
Exchange Commission (the "SEC") may not be relied on for the resale or
distribution of the Shares by me. I understand that the Company has no
obligation to me to register the sale of the Shares with the SEC and has not
represented to me that it will register the sale of the Shares.
I understand the terms and restrictions on the right to dispose of the
Shares set forth in the 1997 Employee, Director and Consultant Stock Option Plan
and the Non-Qualified Stock Option Agreement, both of which I have carefully
reviewed. I consent to the placing of a legend on my certificate for the Shares
referring to such restriction and the placing of stop transfer orders until the
Shares may be transferred in accordance with the terms of such restrictions.
I have considered the Federal, state and local income tax implications
of the exercise of my Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
--------------------------------------------------------------
Please issue the stock certificate for the Shares (check one):
[_] to me; or
[_] to me and ________________________, as joint tenants with
right of survivorship and mail the certificate to me at the following address:
__________________
My mailing address for shareholder communications, if different from
the address listed above is:
Very truly yours,
-----------------------
Participant (signature)
-----------------------
Print Name
-----------------------
Date
-----------------------
<PAGE>
Social Security Number
<PAGE>
Exhibit A
---------
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
[Form For Registered Shares]
TO: OneSoft Corporation
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time
as the Company has filed a Registration Statement with the Securities and
Exchange Commission under which the issuance of the Shares for which this
exercise is being made is registered and such Registration Statement remains
effective.
Ladies and Gentlemen:
I hereby exercise my Non-Qualified Stock Option to purchase _________
shares (the "Shares") of the common stock, $.001 par value of OneSoft
Corporation (the "Company"), at the exercise price of $________ per share,
pursuant to and subject to the terms of that certain Non-Qualified Stock Option
Agreement between the undersigned and the Company dated _______________, 199_.
I understand the nature of the investment I am making and the financial
risks thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
--------------------------------------------------------------
Please issue the stock certificate for the Shares (check one):
[_] to me; or
[_] to me and ____________________________, as joint tenants with
right of survivorship,
and mail the certificate to me at the following address:
My mailing address for shareholder communications, if different from
the address listed above, is:
-----------------------
-----------------------
-----------------------
<PAGE>
Very truly yours,
-------------------------------
Participant (signature)
-------------------------------
Print Name
-------------------------------
Date
-------------------------------
Social Security Number
<PAGE>
EXHIBIT 10.10
OneSoft
THE INTERNET COMMERCE COMPANY
December 30, 1999
Richard Borenstein
240 E. 86th St, #20H
NY, NY 10028
Dear Richard:
The purpose of this letter agreement (the "Agreement") is to confirm the
terms regarding your separation of employment with OneSoft Corporation (the
"Company"). As more fully set forth below, the Company desires to provide you
with severance pay and benefits in exchange for certain agreements by you.
1. Change in Status and Separation of Employment.
----------------------------------------------
(a) You acknowledge that your full-time employment with the Company will
terminate effective December 31, 1999 (the "Change in Status Date"). Such
termination will be treated for all purposes as termination without cause.
You will continue to receive your current bi-weekly base salary (based upon
an annual twenty-six pay cycles) of Six Thousand Nine Hundred Twenty-Three
Dollars and Eight Cents ($6,923.08), less all applicable federal, state,
local and other employment-related deductions, through the Change in Status
Date. Effective January 1, 2000, you shall be a part-time employee of the
Company until the earlier of (i) the completion of the appropriate
documents to transfer your pending application for a H-1B visa to another
entity or (ii) June 31, 2000 (the "Separation Date"). The Company cannot
and does not represent that your application for an H-1B visa will be
approved.
(b) As a part-time employee, Company shall compensate you at the gross
hourly rate of $86.54, less all applicable federal, state, local and other
employment-related deductions. As a part-time employee, Company shall
guarantee you compensation in the amount of at least one (1) hour of per
week, regardless of whether Company requires your services during such
week. Company shall not require more than 1 hour of service from you per
week unless the parties agree otherwise. You acknowledge that Company does
not provide medical, dental, or vision insurance to part-time employees.
(c) After the Change in Status Date, you shall have no authority and shall
not represent yourself as having authority to act on behalf of the Company
without the express written permission of the Company. From and after the
Separation Date, you shall not have any authority and shall not represent
yourself as an agent or employee of the Company, except in connection with
your H-1B visa..
<PAGE>
2. Severance Pay and Benefits. As soon as practicable following the your
---------------------------
execution of this Agreement and the return of any Company property which is in
your possession or control, the Company shall provide you with the following
Severance Pay and Benefits:
(a) Severance Pay. Payment in a lump sum payment of the gross sum of
Forty-Two Thousand Dollars ($42,000) less all applicable federal, state,
and local employment taxes on or before January 31, 2000.
(b) COBRA. As a part-time employee of the Company, you will not be
eligible to participate in any of the Company's benefit plans. You may,
upon completion of the appropriate forms required by Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"), continue your medical and
dental insurance coverage to the extent permitted by the provisions of
COBRA. The COBRA qualifying event shall be deemed to be the Change in
Status Date. If your elect COBRA coverage, the Company will provide you
with payment of the gross sum of Four Hundred Ninety-Four Dollars and
Fifty-Eight Cents ($494.58) (less any applicable federal, state and local
taxes), which gross sum reflects an amount equaling the cost of medical and
dental insurance premiums that would be due pursuant to COBRA for a three
(3) month period, paid in approximately equal monthly installments from
January 2000 to March 2000. Notwithstanding the foregoing, in the event
that you become eligible to receive health insurance coverage from a third
party at any time from the Change in Status Date through March 31, 2000,
the Company will not be obligated to and shall not make any payment
pursuant to this paragraph 2(a) from the date that you become eligible for
such coverage.
(c) Stock Options.
(i) The Company will accelerate the vesting of your option to
purchase 100,000 shares so that the specified options, which otherwise
would terminate on the Change in Status Date, will vest on the Change
in Status Date. The options will be treated by the Company to the
extent possible by law as an Incentive Stock Options. You will have
until three (3) months after the Change in Status Date to exercise the
option. If you fail to exercise the option within such period, the
option will terminate pursuant to the terms of the stock option
agreement entered into by you and the Company on February 1, 1999. The
portion of the option not so accelerated will terminate on the Change
of Status Date.
(ii) As a condition of the acceleration of the option as provided in
Section 2(c)(i), you agree that you will not, without the prior
written consent of OneSoft Corporation, directly or indirectly, offer,
sell, contract to sell, hypothecate, assign,
-2-
<PAGE>
pledge, encumber or otherwise dispose (or enter into any transaction
which is designed to, or could be expected to, result in the
disposition by any person) of the accelerated option for 16,667 of the
total of 100,000 shares or such 16,667 shares themselves from now
until December 31, 2000.
(iii) The Company shall have the immediate right, upon written
notice to you, to repurchase the 16,667 shares described in Section
2(c)(ii) at the price at which you purchased them as follows:
(A) on or after fifteen (15) days following the Separation
Date if, through no fault of the Company's, you fail or refuse
to sign a Release in the form attached hereto as Exhibit A by
---------
that date;
(B) at the time of or after any material violation that is not
cured by you within 5 business days after written notice from
Company to you of a violation by you of your material
obligations under Section 3 of this Agreement;
(C) on December 31, 2000 or thereafter unless
(1) you have complied in all material respects with all
of your obligations under Section 3 of this Agreement; and
(2) you have submitted to OneSoft Corporation's CEO
written certification under oath, in the form attached
hereto as Exhibit B, that you are in full compliance with
---------
your obligations set forth in Section 3.
You acknowledge and agree that the Severance Pay and Benefits provided in
this Agreement are not otherwise due or owing to you under any Company
employment agreement (oral or written) or any Company policy or practice, and
that this Severance Pay to be provided to you is not intended to, and shall not
constitute, a severance plan, and shall confer no benefit on anyone other than
the parties hereto. You further acknowledge that except for the specific
financial consideration set forth in this Agreement, you are not and shall not
in the future be entitled to any other compensation including, without
limitation, other wages, commissions, bonuses, vacation pay, holiday pay or any
other form of compensation or benefit.
3. Covenants by You. You expressly acknowledge and agree to the
-----------------
following:
(a) You have returned to the Company all Company documents (and any copies
-3-
<PAGE>
thereof) and property, except as agreed otherwise by the parties as set
forth in Schedule E hereto, and that you shall abide by any and all common
law and/or statutory obligations relating to protection and non-disclosure
of the Company's trade secrets and/or confidential and proprietary
documents and information.
(b) You will abide by all of the provisions except Section 2 of the
Noncompetition, Nonsolicitation, and Nondisclosure Agreement that you
signed on May 21, 1999 and which is incorporated herein by reference (the
"May 21 Agreement"). Section 2 of the May 21 Agreement will no longer be
enforceable by the Company or you. The remainder of the provisions in the
May 21 Agreement will remain fully enforceable.
(c) Until and through March 31, 2000, you will not perform any services,
whether as an employee or a contractor or otherwise, for any other person,
corporation or other entity that is or is planning to develop and
distribute computer software that enables companies to conduct e-commerce;
provide consulting services to companies concerning the market of e-
commerce and methods to improve one's business by conducting e-commerce;
assist companies in building their e-commerce web sites by implementing the
company's software or software created by third parties; or create, host or
manage web sites or other e-commerce applications created by the company or
third parties, unless you obtain the prior written approval of the CEO of
OneSoft Corporation or Executive Vice President Peter Jones.
(d) From the Change in Status Date and through December 31, 2000, you will
not perform the same or similar services as you performed for the Company
to any of the direct competitors of the Company listed on Exhibit C or to
any entity that prior to your employment by or provisions of services to
such entity is compared to OneSoft as materially competitive or compared to
any direct competitor (except IBM or Microsoft) as materially competitive,
by any of the investment, banking and analyst organizations listed on
Exhibit D. You may submit the name of an entity, in writing (to General
Counsel or Peter M. Jones), for the Company to verify whether or not such
entity has been compared to OneSoft as materially competitive or compared
to any direct competitor (except IBM or Microsoft) as materially
competitive, by any of the investment, banking and analyst organizations
listed on Exhibit D. Upon such submission, the Company shall provide you
with an answer, properly evidenced, within five (5) business days; such
answer shall be valid for thirty (30) days from the date of the Company's
response.
(e) Notwithstanding Sections 3(c) and (d), you may continue to hold or
purchase at prevailing publicly traded prices not more than one per cent
(1%) of the outstanding and
-4-
<PAGE>
issued shares of any publicly traded company.
(f) All information relating in any way to the negotiation of this
Agreement, including the terms and amount of financial consideration
provided for in this Agreement, shall be held confidential by you and shall
not be publicized or disclosed to any person (other than an immediate
family member, legal counsel or financial advisor, provided that any such
individual to whom disclosure is made agrees to be bound by these
confidentiality obligations), business entity or government agency (except
as mandated by state or federal law).
(g) You will not intentionally make any statements that are professionally
or personally disparaging about, or adverse to, the interests of the
Company (including its officers, directors and employees) including, but
not limited to, any statements that disparage any person, product, service,
finances, financial condition, capability or any other aspect of the
business of the Company, (it being understood that you may, subject to the
other provisions of this Agreement, promote products and services offered
by your employer that may be competitive to those offered by the Company)
and you will not engage in any conduct which is intended to harm
professionally or personally the reputation of the Company (including its
officers, directors and employees).
(h) The breach of any of the foregoing covenants by you shall constitute a
material breach of this Agreement and shall relieve the Company of any
further obligations hereunder and, in addition to any other legal or
equitable remedy available to the Company, shall entitle the Company to
exercise its repurchase rights pursuant to Section 2 of this Agreement.
4. Release of Claims. You hereby agree and acknowledge that by signing
------------------
this letter, you are releasing the Company from and waiving your right to assert
any form of legal claim against the Company/1/ (as defined in footnote one
below) whatsoever for any alleged action, inaction or circumstance existing or
arising from the beginning of time through the Change in Status Date. Your
release and waiver herein is intended to bar any form of legal claim, charge,
complaint or any other form of action (jointly referred to as "Claims") against
the Company seeking any form of relief including, without limitation, equitable
relief (whether declaratory, injunctive or otherwise), the recovery of any
damages or any other form of monetary recovery whatsoever (including, without
limitation, back pay, front pay, compensatory damages,
_______________
/1/ For the purposes of this Section 5, the parties agree that the term
"Company" shall include OneSoft Corporation, its divisions, affiliates, parents
and subsidiaries, and its and their respective officers, directors, employees,
agents and assigns.
-5-
<PAGE>
emotional distress damages, punitive damages, attorneys fees and any other
costs) against the Company, for any alleged action, inaction or circumstance
existing or arising through the Change in Status Date.
Without limiting the foregoing general release and waiver, you specifically
release the Company from any and waive your right to bring any Claim arising
from or related to your employment relationship with the Company or the
termination thereof, including, without limitation:
** Claims under any state or federal discrimination, fair employment
practices or other employment related statute, regulation or executive
order (as they may have been amended through the Change in Status
Date) prohibiting discrimination or harassment based upon any
protected status including, without limitation, race, national origin,
age, gender, marital status, disability, veteran status or sexual
orientation. Without limitation, specifically included in this
paragraph are any Claims arising under the federal Age Discrimination
in Employment Act, the Older Workers Benefit Protection Act, the Civil
Rights Acts of 1866 and 1871, Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Equal Pay Act, the Americans
With Disabilities Act and any similar Virginia or other state statute.
** Claims under any other state or federal employment related statute,
regulation or executive order (as they may have been amended through
the Separation Date) relating to wages, hours or any other terms and
conditions of employment. Without limitation, specifically included
in this paragraph are any Claims arising under the Fair Labor
Standards Act, the Family and Medical Leave Act of 1993, the National
Labor Relations Act, the Employee Retirement Income Security Act of
1974, the Consolidated Omnibus Budget Reconciliation Act of 1985
(COBRA) and any similar Virginia or other state statute.
** Claims under any state or federal common law theory including, without
limitation, wrongful discharge, breach of express or implied contract,
promissory estoppel, unjust enrichment, breach of a covenant of good
faith and fair dealing, violation of public policy, defamation,
interference with contractual relations, intentional or negligent
infliction of emotional distress, invasion of privacy,
misrepresentation, deceit, fraud or negligence.
** Any other Claim arising under local, state or federal law.
Notwithstanding the foregoing, this section does not release the Company
from any
-6-
<PAGE>
obligation expressly set forth in this Agreement. You acknowledge and agree
that, but for providing this waiver and release, you would not be receiving the
Severance Pay being provided to you under the terms of this Agreement.
The Company hereby agrees and acknowledges that by signing this letter, the
Company is releasing you from and waiving its right to assert any form of legal
claim against you asserted whatsoever for any alleged action, inaction or
circumstance existing or arising from the beginning of time through the Change
in Status Date. The Company's release and waiver herein is intended to bar any
form of legal claim, charge, complaint or any other form of action (jointly
referred to as "Claims") against you seeking any form of relief including,
without limitation, equitable relief (whether declaratory, injunctive or
otherwise), the recovery of any damages or any other form of monetary recovery
whatsoever.
Notwithstanding the foregoing, this section does not release you from any
obligation expressly set forth in this Agreement.
5. Entire Agreement/Choice of Law/Enforceability. You acknowledge and
----------------------------------------------
agree that this Agreement supersedes any and all prior and contemporaneous oral
and/or written agreements between you and the Company, and sets forth the entire
agreement between you and the Company. No variations or modifications hereof
shall be deemed valid unless reduced to writing and signed by the parties
hereto. This Agreement shall be deemed to have been made in the Commonwealth of
Virginia and shall be governed by and construed in accordance with the laws of
the Commonwealth of Virginia, without giving effect to conflict of law
principles. You agree that any action, demand, claim or counterclaim relating
to the terms and provisions of this Agreement, or to its breach, shall be
commenced in Virginia in a court of competent jurisdiction, and you further
acknowledge that venue for such actions shall lie exclusively in Virginia and
that material witnesses and documents would be located in Virginia. The
provisions of this letter are severable, and if for any reason any part hereof
shall be found to be unenforceable, the remaining provisions shall be enforced
in full.
By executing this Agreement, you are acknowledging that you have been
afforded sufficient time to understand the terms and effects of this letter,
that your agreements and obligations hereunder are made voluntarily, knowingly
and without duress, and that neither the Company nor its agents or
representatives have made any representations inconsistent with the provisions
of this letter.
If the foregoing correctly sets forth our understanding, please sign, date
and return the enclosed copy of this letter to Peter Jones at OneSoft
Corporation within ten (10) days.
Very truly yours,
-7-
<PAGE>
OneSoft Corporation
By: /s/ Peter M. Jones
------------------------
Dated: December 30, 1999
----------------------
Confirmed and Agreed:
/s/ Richard Borenstein
- ------------------------
Richard Borenstein
Dated: December 30, 1999
-----------------
-8-
<PAGE>
EXHIBIT A
---------
RELEASE
In consideration of the acceleration of the vesting of your option to purchase
16,667 shares of common stock of OneSoft Corporation (the "Company"), I, Richard
Borenstein, hereby agree and acknowledge as follows:
I hereby waive my right to assert any form of legal claim against the Company/2/
whatsoever for any alleged action, inaction or circumstance existing or arising
from the beginning of time through ________________ (the "Separation Date"). My
waiver and release herein is intended to bar any form of legal claim, charge,
complaint or any other form of action (jointly referred to as "Claims") against
the Company seeking any form of relief including, without limitation, equitable
relief (whether declaratory, injunctive or otherwise), the recovery of any
damages or any other form of monetary recovery whatsoever (including, without
limitation, back pay, front pay, compensatory damages, emotional distress
damages, punitive damages, attorneys fees and any other costs) against the
Company, for any alleged action, inaction or circumstance existing or arising
through the "Separation Date".
Without limiting the foregoing general waiver and release, I specifically
release the Company from and waive my right to bring any Claim arising from or
related to my employment relationship with the Company or the termination
thereof, including, without limitation:
** Claims under any state or federal discrimination, fair employment
practices or other employment related statute, regulation or executive
order (as they may have been amended through the Change in Status
Date) prohibiting discrimination or harassment based upon any
protected status including, without limitation, race, national origin,
age, gender, marital status, disability, veteran status or sexual
orientation. Without limitation, specifically included in this
paragraph are any Claims arising under the federal Age Discrimination
in Employment Act, the Older Workers Benefit Protection Act, the Civil
Rights Acts of 1866 and 1871, Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Equal Pay Act, the Americans
With Disabilities Act and any similar Virginia or other state statute.
____________________
/2/ For the purposes of this Release, the parties agree that the term "Company"
shall include OneSoft Corporation, its divisions, affiliates, parents and
subsidiaries, and its and their respective officers, directors, employees,
agents and assigns.
-9-
<PAGE>
** Claims under any other state or federal employment related statute,
regulation or executive order (as they may have been amended through
the Separation Date) relating to wages, hours or any other terms and
conditions of employment. Without limitation, specifically included
in this paragraph are any Claims arising under the Fair Labor
Standards Act, the Family and Medical Leave Act of 1993, the National
Labor Relations Act, the Employee Retirement Income Security Act of
1974, the Consolidated Omnibus Budget Reconciliation Act of 1985
(COBRA) and any similar Virginia or other state statute.
** Claims under any state or federal common law theory including, without
limitation, wrongful discharge, breach of express or implied contract,
promissory estoppel, unjust enrichment, breach of a covenant of good
faith and fair dealing, violation of public policy, defamation,
interference with contractual relations, intentional or negligent
infliction of emotional distress, invasion of privacy,
misrepresentation, deceit, fraud or negligence.
** Any other Claim arising under local, state or federal law.
I acknowledge and agree that, but for providing this waiver and release, the
Company would have an immediate right upon written notice to me, to repurchase
16,667 shares of the acceleration option pursuant to the Separation Agreement
which I entered into with the Company on December __, 1999.
Signed this 30th day of December, 2000
/s/ Richard Borenstein
- ----------------------
Richard Borenstein
-10-
<PAGE>
EXHIBIT B
---------
AFFIDAVIT OF RICHARD BORENSTEIN
-------------------------------
I, Richard Borenstein, on oath depose and say:
1. I hereby attest that, as of the date of this Affidavit, I am in full
compliance with each of the obligations specified in Section 3 of the Settlement
Agreement and Release of Claims which I entered into with OneSoft Corporation on
December 30, 1999.
Signed under the pains and penalties of perjury this 31st day of December,
2000.
/s/ Richard Borenstein
----------------------
Richard Borenstein
-11-
<PAGE>
EXHIBIT C
---------
1. Broadvision
2. Interworld
3. Vignette
4. Art Technology Group
5. International Business Machines
6. Microsoft Corporation
7. Open Market
8. Blue Martini
9. Space Works, Inc.
10. Allaire
11. Intershop
-12-
<PAGE>
EXHIBIT D
---------
1. Thomas Weisel and Associates
2. Lehman Brothers
3. Whitt Capital
4. DB Alex Brown
5. Societe Generale
6. Morgan Stanley
7. CS First Boston
8. Hambrecht & Qwist
9. Forrester
10. Meta
11. Gartner
12. Jupiter
13. Aberdeen
-13-
<PAGE>
EXHIBIT E
- -Cellular Phone (OneSoft agrees to pay the base cellular phone bill of $89 a
month for the months of January, February and March of the year 2000).
- -Sony Laptop Computer
Both items to be returned to OneSoft five (5) days after the Separation Date
identified in the Agreement.
-14-
<PAGE>
Exhibit 10.11
July 16, 1997
William Langdon
2600 Robert Trent Jones Drive
#934
Orlando, FL 32835
Re: Settlement Agreement and Release of All Claims
Dear Bill:
This letter confirms the settlement terms that you and I have negotiated
regarding any and all disputes relating to your employment with Onesoft Corp,
(Onesoft), formerly Global Exchange, Incorporated, which shall be deemed for
purposes of this Settlement Agreement and Release of All Claims to include and
any of its current or former divisions, affiliates, subsidiaries and related
entities, and its and their respective current or former officers, directors,
employees, agents, successors and assigns, including specifically and without
limitation, Mr. William L. Robertson, (the "Company"). As more fully set forth
below, the Company shall provide you with settlement pay in exchange for certain
agreements by you.
1. Settlement Pay. Commencing on the fifteenth of the month after ONESOFT
---------------
receives a copy of this Agreement executed by you (the "Effective Date"), the
Company will provide you with the following Settlement Pay:
(i) Settlement Pay in the gross amount of $80,000.00 (less state, federal
and other employment related deductions) shall be in sixteen (16)
equal installments of $5,000 (less deductions) pursuant to a monthly
schedule to be determined by the Company, provided, however, that the
Company shall make such installment payments in at least sixteen (16)
of the twenty (20) months that follow payment of the first installment
and shall have paid the full amount of Settlement Pay ($80,000 less
deductions) within twenty (20) months of the date it pays the first
installment. The first and second installments shall be paid to the
law firm of Mason, Ketterman, & Morgan. All subsequent installments
shall be paid directly to you. The first installment shall be paid on
the seventeenth day of July, 1997. In any subsequent month in which
ONESOFT elects to make a payment, it shall pay the installment by the
fifteenth day of the month.
(ii) ONESOFT agrees to make an additional payment of $30,000 to you within
sixty (60) days of any initial public offering or acquisition of
ONESOFT. For the purposes of this Section 1(ii), an acquisition shall
be defined as the acquisition of fifty-one percent or more of the
Company by a third party entity.
You acknowledge and agree that the Settlement Pay provided herein is not
otherwise due or owing to you under any Company employment agreement (oral or
written) or Company policy or practice, nor is this Settlement Pay intended to,
and shall not, constitute a severance plan, and shall confer no benefit on
anyone other than the parties hereto. You further acknowledge that except for
the specific financial consideration set forth in this Agreement, you have
<PAGE>
been paid and provided all wages, commissions, bonuses, vacation pay, holiday
pay and any other form of compensation or benefit that may be due to you now or
which would have become due in the future in connection with your employment
with or separation of employment from the Company.
2. Confidentiality: You hereby agree and acknowledge the following:
---------------
(i) that you have returned to the Company all of its documents (and any
copies thereof) and property, and that you otherwise shall abide by any and
all common law and/or statutory obligations relating to the protection and
non- disclosure of the Company's trade secrets and/or confidential and
proprietary documents and information;
(ii) that all information relating in any way to the subject matter of this
Agreement, including the terms, amounts and fact of this Agreement, shall
be held confidential by you and shall not be publicized or disclosed to any
person (other than an immediate family member, legal counsel or financial
advisor, provided that any such individual to whom disclosure is made
agrees to be bound by these confidentiality obligations), business entity
or government agency (except as mandated by state or federal law).
3. No Disparagement. You hereby agree that you will not make any
----------------
statements that are professionally or personally disparaging about, or adverse
to, the interests of the Company including, but not limited to, any statements
that disparage any person, product, service, finances, financial condition,
capability or any other aspect of the business of the Company, or engage in any
conduct which is intended to harm professionally or personally the reputation of
the Company.
ONESOFT hereby agrees that the Officers, Directors, and Employees of the
Company will not make any statements that are professionally or personally
disparaging about, or adverse to your interests, including, but not limited to
any statements that disparage you personally or professionally. Nor shall the
Officers, Directors, or Employees of the Company engage in any conduct which is
intended to harm your reputation, professionally or personally.
4. Release of Claims: You hereby agree and acknowledge that by signing
------------------
this letter and accepting the offer of Settlement Pay provided for in Section 1
and other good and valuable consideration provided for in this letter, you are
waiving your right to assert against the Company any form of legal claim of any
kind whatsoever from the beginning of time through the Effective Date of this
Agreement. Your waiver and release herein is intended to bar any form of legal
claim, charge, complaint or any other form of action (jointly referred to as
"Claims") against the Company seeking any form of relief, including, without
limitation, equitable relief (whether declaratory, injunctive or otherwise), the
recovery of any damages or any other form of monetary recovery whatsoever
(including, without limitation, back pay, front pay, compensatory damages,
emotional distress damages, punitive damages, attorneys fees and any other
costs) against the Company, from the beginning of time through the Effective
Date.
Without limiting the foregoing general waiver and release, you specifically
waive and release the Company from any Claim arising from or related to your
employment relationship with the Company, the offer thereof or the termination
thereof, including, without limitation:
** Claims under any state or federal discrimination, fair employment
practices or other employment related statute, regulation or executive
order (as they may have been amended through the Effective Date)
prohibiting discrimination or harassment based
2
<PAGE>
upon any protected status including, without limitation, race,
national origin, age, gender, marital status, disability, veteran
status or sexual orientation. Without limitation, specifically
included in this paragraph are any Claims arising under the federal
Age Discrimination in Employment Act, the Older Workers Benefit
Protection Act, the Civil Rights Acts of 1866 and 1871, Title VII of
the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal
Pay Act, the Americans With Disabilities Act and any similar Virginia
or other state statute.
** Claims under any other state or federal employment related statute,
regulation or executive order (as they may have been amended through
the Effective Date) relating to wages, hours or any other terms and
conditions of employment. Without limitation, specifically included in
this paragraph are any Claims arising under the Fair Labor Standards
Act, the Family and Medical Leave Act of 1993, the National Labor
Relations Act, the Employee Retirement Income Security Act of 1974,
the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and
any similar Virginia or other state statute.
** Claims under any state or federal common law theory including, without
limitation, wrongful discharge, breach of express or implied contract,
promissory estoppel, unjust enrichment, breach of a covenant of good
faith and fair dealing, violation of public policy, defamation,
interference with contractual relations, intentional or negligent
infliction of emotional distress, invasion of privacy,
misrepresentation, deceit, fraud or negligence.
** Any other Claim arising under local, state or federal law.
You also agree to take promptly all steps necessary to withdraw and
voluntarily dismiss with prejudice and in its entirety any Claim previously
filed against the Company in any court, agency or forum. Without limiting the
foregoing, you also agree to execute and file in court promptly the attached
Notice of Dismissal in the matter of William Langdon v. Global Exchange, Inc.
----------------------------------------
and William L. Robertson, CA No. 96-1724-A, United States District Court for the
- ------------------------
Eastern District of Virginia. (See Exhibit A). You also agree to mail promptly a
copy of this executed Notice of Dismissal to Anna B. Boyer, Esq., counsel for
the Company, at the following address:
Anna B. Boyer, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.
1 Financial Center
Boston, MA 02111
(617) 542-6000
Notwithstanding the foregoing, this Section shall not release the Company
from any obligation expressly set forth in this Agreement.
5. Breach. The breach by you of any of the covenants in Sections one
------
through four of this Agreement shall constitute a material breach of this
Agreement and shall relieve the Company of any further obligations hereunder
and, in addition to any other legal or equitable remedy available to it, shall
entitle the Company to recover any monies already paid to you pursuant to
Section 1 of this Agreement.
6. Jurisdiction. You hereby consent to the jurisdiction of the state and
-------------
federal courts of the Commonwealth of Virginia, and any action by you relating
to this Agreement shall be brought only in the Commonwealth of
3
<PAGE>
Virginia before a judge sitting without a jury.
7. Entire Agreement/Choice of Law/Full Agreement. This Agreement
----------------------------------------------
supersedes any and all prior oral and/or written agreements, and sets forth the
entire agreement between you and the Company, provided, however, that your
obligations set forth in any confidentiality, non-disclosure or non-competition
agreements with the Company shall remain in effect. No variations or
modifications hereof shall be deemed valid unless reduced to writing and signed
by the parties hereto. This Agreement shall take effect as an instrument under
seal and shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia, excluding its choice of law provisions. The provisions
of this Agreement are severable, and if for any reason any part hereof shall be
found to be unenforceable, the remaining provisions shall be enforced in full.
It is the Company's desire and intent to make certain that you fully
understand the provisions and effects of this letter. To that end, you have been
encouraged and given the opportunity to consult with legal counsel for the
purpose of reviewing the terms of this letter. Also, by executing this letter,
you are acknowledging that you have been afforded sufficient time to understand
the terms and effects of this letter, that your agreements and obligations
hereunder are made voluntarily, knowingly and without duress, and that neither
the Company nor its agents or representatives have made any representations
inconsistent with the provisions of this letter.
If the foregoing correctly sets forth our understanding, please sign, date
and return the enclosed copy of this letter to me.
Very truly yours,
/s/ James W. MacIntyre, IV
ONESOFT, INCORPORATED
By: James W. MacIntyre IV
CEO & President
Confirmed and Agreed:
/s/ William Langdon
- --------------------------------
William Langdon
Dated: July 18, 1997
Cc: Roy L. Mason
Mason, Ketterman, & Morgan
James A. Kirkland
Mintz, Levin, Cohn, Ferris
<PAGE>
Exhibit 10.12
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE (the "LEASE") made 16th day of July, 1998, by and
between ANNANDALE FINANCIAL CENTER JOINT VENTURE, a Maryland General
Partnership, (hereinafter referred to as "LANDLORD"), and ONESOFT CORPORATION, a
DELAWARE Corporation, (hereinafter referred to as "TENANT").
WITNESSETH, that for and in consideration of the rent hereinafter reserved
and of the mutual covenants and agreements hereinafter set forth, Landlord and
Tenant do hereby mutually agree as follows:
PREMISES 1. Landlord does hereby lease to Tenant, and Tenant does
hereby lease from Landlord, for the term and upon the
covenants and conditions hereinafter set forth, the Premises
described as follows: Approximately FOUR THOUSAND FIVE
HUNDRED NINETY-FIVE (4,595) RENTABLE SQUARE FEET known as
Suite 460 located on the fourth floor of the Building known
as "ANNANDALE FINANCIAL CENTER", located at 7010 Little
River Turnpike, Annandale, Virginia 22203 (hereinafter
referred to as the "Premises").
TERM 2. (a) The term of this Lease shall commence on the earlier
of (i) the "Substantial Completion" of Landlord' s
construction of the Premises or (ii) September 1, 1998 (the
"LEASE COMMENCEMENT DATE"), and expiring FIVE (5) YEARS
after the Lease Commencement Date (the "EXPIRATION DATE").
The period commencing with the Lease Commencement Date (on
the first day of the next calendar month in the event the
Lease Commencement Date does not occur on the first day of a
month) and ending on the last day of the twelfth calendar
month thereafter shall constitute the first "Lease Year" as
such term is used herein. Each successive full twelve (12)
month period during the Lease Term shall constitute a "Lease
Year" and any portion of the Lease Term remaining after the
last twelve month period during said Lease term shall
constitute the last "Lease Year" for the purpose of this
lease.
(b) The term "Substantial Completion" shall mean that date
upon which construction of the improvements to the Premises
(as outlined in Paragraph 28. herein) have been
substantially completed and approved by local officials
having jurisdiction, subject only to normal punch list items
that will not materially or adversely interfere with
Tenant's business operations.
Notwithstanding anything herein to the contrary, Tenant
shall have the opportunity to enter the Premises during the
fifteen (15) day period prior to the Lease Commencement Date
for the purpose of installing computer, data, telephone and
television cable lines, special equipment, furniture,
fixtures, telephones and other personal property, providing
such early entrance does not unreasonably interfere with
Landlord's construction in
/s/ FH, SS
<PAGE>
Premises. Any occupancy prior to the Lease Commencement Date
shall be pursuant to all the terms and conditions of this
Lease, except that rent shall not commence until the Lease
Commencement Date. Within fifteen (15) days after the Lease
Commencement Date, Landlord and Tenant shall execute a
Certificate of Commencement.
RENT 3. (a) During and for the Term hereof, commencing on the
Lease Commencement Date, Tenant covenants and agrees to pay
Landlord for the Premises, without notice or demand and
without deduction, set off or abatement, a fixed minimum
guaranteed base rent (hereinafter sometimes referred to as
the "BASE RENT") payable in monthly installments, in
advance, (hereinafter sometimes referred to as "MONTHLY BASE
RENT" ) as follows:
- ---------------------------------------------------------------
Lease Annual Base Monthly Base Rent Per Square
Year Rent Rent Foot
1 $ 91,900.00 $7,658.33 $20.00
2 96,495.00 8,041.25 21.00
3 101,319.75 8,443.31 22.05
4 106,385.74 8,865.48 23.15
5 111,705.02 9,308.75 24.31
- ---------------------------------------------------------------
Tenant shall pay all rent to Landlord at the office of
Landlord, or to such other party or at such other address as
Landlord may designate from time to time by written notice
to Tenant. Rent shall be paid on or before the first day of
each and every calendar month, without prior notice, during
the Term hereof, provided, however that the Monthly Base
Rent for the First month of the Term shall be payable upon
execution of this Lease.
(b) Tenant covenants and agrees to pay to Landlord a Late
Fee equal to FIVE percent (5%) of the Monthly Base Rent if
any such payment is not received by Landlord within TEN (10)
days of their due date. In addition, all delinquent payments
due Landlord, including but not limited to, rent and
additional rent, shall bear interest at the rate of TWO
percent (2%) per annum above the "Prime Rate" as published
by Wall Street Journal, New York, New York, as of the date
such payment became due, for the period beginning on the
date such payment became due to the date of payment thereof
by Tenant, provided, however, that nothing herein contained
shall be construed or implemented in such a manner as to
allow Landlord to charge or receive interest in excess of
the maximum rate then
2
<PAGE>
allowed by law. All such late fees and interest charges
shall be deemed additional rent due hereunder and shall be
payable with the next installment of Monthly Base Rent.
OPERATING 4. INTENTIONALLY DELETED
EXPENSES AND
REAL ESTATE
TAXES
DELAYED 5. (a) If Landlord shall be unable to give possession of the
POSSESSION Premises on the Lease Commencement Date specified in Section
2 of this Lease for any reason, such failure to do so shall
not affect or impair the validity of this Lease or the
obligations of Tenant hereunder, except as expressly
provided herein, and Landlord shall not be subject to any
liability for damages for such failure to give possession on
said date. In such event, Landlord shall notify Tenant in
writing setting forth a new Lease Commencement Date as
specified in Section 2 of this Lease. Unless such delay is
due to the fault of Tenant, the Base Rent reserved and
covenanted to be paid herein shall not commence until the
date that possession of the Premises is given to Tenant, or
the Premises are available for occupancy by Tenant and
Tenant has been so notified by Landlord, whichever shall
first occur.
(b) If for any reason the Landlord shall be unable to give
possession of the Premises to Tenant more than TWO (2)
months after the Lease Commencement Date specified in
Section 2, then Tenant shall have the option to cancel this
Lease after such date by giving THIRTY (30) days' prior
written notice of such termination to the other party. If
Landlord shall tender possession of the Premises to Tenant
after Tenant has given notice such notice but prior to the
expiration of such THIRTY (30) day period, any notice given
by Tenant shall thereupon be nullified. Upon any such
cancellation becoming effective, Landlord and Tenant shall
be entirely relieved of the obligations hereunder, and any
security deposit given by Tenant to Landlord shall be
returned to Tenant.
USE OF 6. Tenant shall use and occupy the Premises solely as
PREMISES general office space, provided that such use(s) is in
accordance with applicable zoning and other local
governmental regulations. Without the prior written consent
of Landlord, the Premises shall not be used for any other
purposes or uses whatsoever. Tenant shall not use or occupy
the Premises for any unlawful purpose, and shall comply with
all present and future laws, ordinances, regulations, and
orders of the United States of America, Commonwealth of
Virginia, County of Fairfax, and any other public or
quasi-public authority having jurisdiction over the
Premises.
ASSIGNMENT 7. (a) Tenant shall not assign, transfer, mortgage, or
AND otherwise encumber this Lease, or sublet, rent, or permit
occupancy or use of the
3
<PAGE>
SUBLETTING Premises, or any part thereof, without obtaining the prior
written consent of Landlord, which shall not be unreasonably
withheld, nor shall any subletting, assignment or transfer
of this Lease or the right of occupancy hereunder be
effected by operation of law or in any manner other than
with the prior written consent of Landlord. Any assignment
or subletting or transfer with or without Landlord's consent
shall not be construed as a waiver or release of Tenant from
liability hereinbefore the payments of rent or the
performances and observance of any of the terms and
conditions of this Lease. The collection or acceptance of
rent from any assignee, subtenant, or occupant shall not
constitute a waiver or release of Tenant from any covenant
or obligation contained in this Lease, nor shall any
assignment or subletting be construed to relieve Tenant from
the obligation to obtain the consent in writing of Landlord
to any further assignment or subletting.
(b) In the event that Tenant desires to assign or sublet all
or a portion of the Premises, Tenant shall give to Landlord
THIRTY (30) days written notice of Tenant's intention to do
same, the name, address and a current financial statement of
the proposed subtenant or assignee, and a copy of the
proposed assignment or sublease, specifying, among other
items, the proposed use, the term and the rent of the
proposed sublease or assignment. Within TEN (10) days after
receipt of said notice, Landlord shall give written notice
to Tenant, stating whether Landlord approves or disapproves
the proposed assignment or sublease, Tenant may sublet or
assign the Premises only after first obtaining the written
consent of Landlord, which consent shall not be unreasonably
withheld as set forth hereinabove.
(c) In the event that Tenant defaults hereunder, Tenant
hereby assigns to Landlord the rent due from any subtenant
or assignee of Tenant and hereby authorizes each such
subtenant or assignee to pay said rent directly to Landlord.
MAINTENANCE 8. Tenant shall keep the Premises, fixtures and equipment
BY TENANT therein in clean, safe sanitary and good order, will suffer
no waste or injury thereto, condition and will, at the
expiration or other termination of this Lease, surrender the
same, broom clean, in the same order and condition in which
they are on the Lease Commencement Date, ordinary wear and
tear excepted. Maintenance and repair of all equipment
and/or fixtures within or for the exclusive benefit of the
Premises, including, but not limited to, kitchen fixtures,
special air conditioning equipment, bathroom fixtures,
computers, or any other type of equipment or improvements,
together with related plumbing, electrical, or other utility
services, whether installed by Tenant or by Landlord on
behalf of Tenant, shall be the sole responsibility of
Tenant, and Landlord shall have no obligation in connection
therewith.
4
<PAGE>
HOURS OF 9. The regularly scheduled hours of operation for Building
OPERATION shall be between EIGHT O'CLOCK (8:00 a.m.) to SIX O'CLOCK
(6:00 p.m.), Monday through Friday, and eight O'CLOCK (8:00
a.m.) to ONE O'CLOCK (1:00 p.m.) Saturday. Holidays on which
said water for the HVAC system shall not be provided except
at additional cost are: New Year's Day, Washington's
Birthday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day, and Easter Sunday. Such
holidays shall be observed on the dates on which the same
are observed by the federal government. If Tenant desires
air conditioning/heat and or other utilities or services
beyond the hours of operation as hereinabove set forth, and
of mutually satisfactory written agreements are made with
Landlord, or its agent, not less than TWENTY-FOUR (24) hours
in advance of the requirement, Landlord shall use its best
efforts to furnish such air conditioning/heating and/or
other utilities or services to tenant, and Tenant agrees to
pay Landlord the additional costs of such services in an
amount equal to ONE HUNDRED TEN percent (110%) of the total
direct costs of providing such additional services on an
overtime basis. Provided, however, that Landlord and its
agent shall not be liable for failure to furnish or for
suspension or delay in furnishing any or all of such
services caused by breakdown, maintenance or repair work,
strike, riot, civil commotion, or any other cause or reason
whatsoever beyond the control of Landlord.
Building Services. Throughout the Term, Landlord agrees that
-----------------
the Building will be maintained in a manner befitting a
first-class rental office building in the Annandale,
Virginia area and that it will furnish, or cause to be
furnished, the following services to the Premises and
Building, excluding emergency conditions beyond Landlord
control:
(a) Normal and usual cleaning and janitorial services after
5:00 p.m. on business days.
(b) Automatically operated elevator services TWENTY-FOUR
(24) hours a day, SEVEN (7) days a week, 365 days a year;
(c) All electric bulbs and fluorescent tubes in light
fixtures in the public areas of the Building and all
standard light bulbs and fluorescent tubes in the Premises;
(d) An intercom type security access system located at the
front door of the Building. Tenant shall be given access
cards into the Building 24 hours a day, 7 days a week, 365
days a year;
(e) Normal and usual maintenance of the life-safety systems,
the elevators, the Garage and all Building improvements and
facilities;
(f) Heating, ventilating and air-conditioning to the
Premises between
5
<PAGE>
the hours of 8:00 a.m. and 6:00 p.m. on business days and
between the hours of 8:00 a.m. to 1:00 p.m. Saturday,
excluding holidays;
TENANT 10. (a) Tenant shall not make or permit anyone to make any
ALTERATIONS alterations, additions, or improvements, structural or
otherwise, or install any fixtures (hereinafter collectively
referred to as "Alterations"), in or to the Premises or the
Building without the prior written consent of Landlord. All
of such Alterations permitted by Landlord must conform to
all rules and regulations established from time to time by
the Underwriters' Association of the local area and by the
Landlord and conform to all requirements of the Federal,
State and local governments. Prior to the commencement of
work on any Alterations, the Landlord's written approval
must be obtained as to (i) the contractor(s) and
subcontractor(s) selected to perform such work, and (ii)
comprehensive plans and Specifications showing all the
proposed Alterations, including detailed descriptions of the
effect of the proposed Alterations on the mechanical and
electrical systems of the Building. Landlord shall have the
right to stop such work if the Landlord or its designated
agent determines that such work is not being done in a
workmanlike manner or in accordance with the plans and
specifications provided to Landlord. In such event, Tenant
shall promptly correct the problem(s) which give rise to the
work stoppage, and if Tenant fails to do so within a time
period determined by Landlord to be reasonable, then
Landlord may, at its sole option, correct such problem(s),
or complete the Alterations, or remove the Alterations and
restore the Premises to their original condition, and Tenant
shall be liable for the costs of such action as additional
rent. Copies of all plats, plans, sketches, permits,
samples, etc. which are prepared or obtained in the course
of such Alterations shall be provided to the Landlord or its
designated agent no later than TEN (10) days after such are
prepared or obtained. The Tenant agrees to pay to the
Landlord or its designated agent a reasonable inspection fee
and to allow inspection from time to time during the period
of construction of all Alterations. In addition, Tenant
agrees to furnish "as built" plans and specifications for
all Alterations within a reasonable period of time after
completion of Alterations, and to pay to Landlord, or its
designated agent, a reasonable fee for updating the master
reproducible Building blueprint to show the Alterations.
(b) Prior to commencing construction on any Alterations
approved by Landlord, Tenant agrees to obtain and deliver to
Landlord written and unconditional waivers of mechanic's and
materialman's liens upon the Property for all work, labor
and services to be performed and materials to be furnished,
by them in connection with such work, signed by all
contractors, subcontractors, materialmen, and laborers to
become involved in such work. If notwithstanding the
foregoing, any mechanic's or materialmen's lien is filed
against the Property for work claimed to have been done for,
or materials claimed to have been furnished to,
6
<PAGE>
Tenant, such lien shall be discharged by Tenant within ten
(10) days thereafter, at Tenant's sole cost and expense, by
the payment thereof or by filing any bond required by law.
If Tenant shall fail to discharge any such mechanic's or
materialman's lien, Landlord may, at its option, its written
consent to Tenant's making any such Alterations, such
written consent shall not be deemed to be an agreement or
consent by landlord to subject Landlord's interest in the
Property to any mechanic's or materialman's liens which may
be filed in respect of any such Alterations Made by or on
behalf of Tenant .discharge the same and treat the cost
thereof and any legal expenses incurred in connection
therewith, as additional rent payable with the installment
of Monthly Base Rent next becoming due; it being hereby
expressly covenanted and agreed that such discharge by
Landlord shall not be deemed to waive or release the default
of Tenant in not discharging the same. It is understood and
agreed by Landlord and Tenant that any such Alterations
shall be constructed on behalf of Tenant. It is further
understood and agreed that, in the event Landlord shall give
its written consent to Tenant's making any such Alterations,
such written consent shall not be deemed to be an agreement
or consent by landlord to subject Landlord's interest in the
Property to any mechanic's or materialman's liens which may
be filed in respect of any such Alterations made by or on
behalf of Tenant.
(e) All Alterations, including wall-to-wall carpet and wall
covering, to, in or upon the Premises shall, unless the
Landlord elects otherwise, become the property of Landlord
and shall remain upon the Premises and be surrendered with
Premises at the expiration or termination of this Lease, or
any renewal or extension period, without disturbance,
molestation or injury. Should the Landlord elect that
Alterations made by the Tenant upon the Premises be removed
upon the expiration or termination of this Lease, or any
renewal period, the Tenant hereby agrees to cause same to be
removed at the Tenant's sole cost and expense, and to
restore the Premises to the original improved condition, on
or before the expiration or termination of this Lease or any
renewal period. Should Tenant fail to remove the same or
restore the Premises, the Landlord may cause same to be
removed and/or the Premises to be restored at the Tenant's
expense, and the Tenant hereby agrees to pay to the Landlord
the cost of such removal and/or restoration together with
any and all damages which the Landlord may suffer and
sustain by reason of the failure of the Tenant to remove the
same and/or restore the Premises as herein provided.
(f) If Tenant is not in default in the performance of any of
its obligations under this Lease, Tenant shall have the
right to remove, prior to the expiration of the Term of this
Lease, all movable equipment, furniture or furnishings which
are not affixed to the Premises or the Building and which
were installed in the Premises at the expense of Tenant. If
such property of Tenant is not removed by Tenant prior to
the
7
<PAGE>
expiration or termination of this Lease, the same shall
become the property of Landlord and shall be surrendered
with the Premises as a part thereof, or, at Landlord's
option, Landlord may cause the same to be removed and the
Premises to be restored to their original improved
condition, and Tenant hereby agrees to pay to Landlord the
cost of such removal and restoration together with any and
all damages which Landlord may suffer and sustain by reason
of the failure of Tenant to remove the same and restore the
Premises or Building as herein provided.
ADVERTISING 11. Except as otherwise herein provided, Tenant agrees that
no sign, advertisement, display or notice shall be
inscribed, painted or affixed on any part of the outside or
inside of the Premises or Building, except on the
directories and doors of offices, and then only in such
size, color and style as the Landlord shall approve.
Landlord shall have the right to prohibit any advertisement,
or display of items of the Tenant, wherever display or
notice and may charge the Tenant for any costs incurred by
Landlord in connection with such removal.
DELIVERIES 12. No freight, furniture or other bulky matter of any
description shall be received into the Building or carried
in the elevators, except as approved by the Landlord. All
moving of furniture, material and equipment in the Building
outside the Premises must be with the prior written consent
of the Landlord and in accordance with Landlord's reasonable
rules and instructions; however, Landlord shall not be
responsible for any damage to, or charges for, moving the
same. Tenant agrees to remove promptly from the public
area(s) within or adjacent to the Building any of Tenant's
personal property there delivered or deposited. Landlord
shall have the right to prescribe the weight, method of
installation, and position of safes or other heavy fixtures
or equipment. All damage done to the Building by delivery,
maintaining or removal of any fixture or article of Tenant's
furniture or equipment, shall be repaired at the expense of
Tenant.
EQUIPMENT 13. Tenant shall not install or operate in the Premises any
electrically operated equipment or other machinery, except
typewriters, adding machines, copiers, personal computers,
and such other office machinery and equipment as is normally
used in the operation of Tenant's business, without
obtaining the prior written consent of Landlord, which shall
not be unreasonably withheld or delayed, but may be
conditioned upon the payment by Tenant of additional rent in
compensation for any excess consumption of water and/or
electricity as may result from the operation of said
equipment or machinery. Tenant shall not install any
equipment of any kind or nature which shall or may
necessitate changes, replacements, or additions to, or cause
an abnormal increase in its use of the water, plumbing,
heating, air conditioning, or electrical systems, which
serve the Premises, without the prior written consent of
Landlord. Such consent shall not be withheld unreasonably,
but may be conditioned
8
<PAGE>
upon the payment of Tenant of the cost of such changes,
replacements, additions, or increased use. Notwithstanding
the foregoing, in the event that office equipment or
mechanical equipment used by Tenant in the Premises shall
cause noise or vibration that may be transmitted to any part
of the Building to such a degree as to be objectionable to
Landlord or any other tenant, Tenant shall install, at its
own expense, vibration eliminators or silencing devices
sufficient to eliminate such noise and/or vibration. Tenant
shall not install in the Premises any fixtures, equipment,
machinery, furniture or furnishings which place a load upon
the floor exceeding the designed floor load capacity.
INSPECTIONS; 14. Tenant agrees to allow Landlord, its agents or employees
ENTRY to enter the Premises at all reasonable times to examine,
inspect or protect the same; to prevent damage or injury to
the same and/or to any other portion of the Building; to
make such alterations, additions, improvements and repairs
to the Premises or adjacent portions of the Building as
Landlord may deem necessary or desirable; or to exhibit the
same to prospective tenants during the last SIX (6) months
of the Term of this Lease, or any renewal or extension
period, or to prospective purchasers of the Building or any
portion thereof at any time. None of the same shall be
construed as an eviction, actual or constructive. The rent
reserved shall not abate while such alterations, additions,
improvements or repairs are being made, or because of such
inspections or exhibitions, whether by reason of loss or
interruption of Tenant's business or otherwise. Landlord
agrees to make all reasonable efforts to minimize any
disruption of Tenant's business by reason of such
activities. Landlord's right of entry for any purpose shall,
however, be subject to any State or Federal laws and
regulations that may currently enlist or may become
applicable because of any secret, confidential, or other
restricted activities carried on by tenant in the Premises.
INSURANCE 15. (a) Insurance Rating. Tenant will not conduct or permit
----------------
to be conducted any activity other than normal office
business nor will Tenant place any equipment in or about the
Premises or the Property which will, in any way, increase
the rate of property and casualty or other insurance on the
Property. If any increase in the rate of property and
casualty insurance or other insurance is stated by any
insurance company or by the applicable Insurance Rating
Bureau to be due to any activity or equipment of Tenant in
or about the Premises or the Property, such statements shall
be conclusive evidence that the increase in such rate is due
to such activity or equipment, and, as a result thereof,
Tenant shall be liable for such increase and shall reimburse
Landlord therefor upon demand. Any such sum due Landlord
shall be considered additional rent payable hereunder.
(b) Liability Insurance. Tenant shall carry public liability
-------------------
insurance with a company or companies licensed to do
business in the
9
<PAGE>
Commonwealth of Virginia and rated not lower than Level A,
Class XII, as rated in the most recent edition of "Best's
Key Rating Guide" for insurance companies. Said insurance
shall cover all liability of Tenant and its authorized
representatives arising out of and in connection with
Tenant's use or occupancy of the Premises and the Property.
Said insurance shall be in minimum amounts set forth in the
rules and regulations established by Landlord from time to
time such amounts to be reasonable for Tenant's type of
business; a copy of the current rules and regulations is
attached hereto as Exhibit A. Said insurance shall name
Landlord, and the building management agency as additional
insured, as their interests may appear, and shall contain an
endorsement that said insurance shall remain in full force
and effect notwithstanding that the insured has waived his
right of action against any party prior to the occurrence of
a loss. A current Certificate of Insurance from such insurer
shall be delivered to Landlord's agent prior to the Lease
Commencement Date and renewals thereof shall be delivered to
Landlord's agent at least THIRTY (30) days prior to the
expiration of any such policy. Each policy shall contain an
endorsement that will prohibit its cancellation prior to the
expiration of THIRTY (30) days after written notice to
Landlord of such proposed cancellation.
(c) Waiver of Subrogation. Each party hereby waives, and
---------------------
shall have included in its liability insurance policies for
the Building and/or property insurance covering Tenant's
contents, furniture, furnishings, fixtures and other
property, appropriate clauses pursuant to which each party's
insurance carriers waive, all rights of subrogation against
the other party, its principals, agents and employees, with
respect to losses payable under such policies, or
appropriate clauses setting forth that such policies shall
not be invalidated should the insured waive in writing prior
to a loss any or all right of recovery against any party for
losses covered by such policies. If either party at any time
is unable to obtain inclusion of either of the clauses
described in the preceding sentence, then such party shall
have the other party named in such policies as an additional
insured, as their interests may appear. If either party
shall be named as an additional insured in accordance with
the foregoing provisions, and if the main insured shall not
be in default hereunder, and, if progress satisfactory to
Landlord is being made with regard to repairs to any damage
to the Premises or improvements therein, the additional
insured shall promptly endorse to the order of the main
insured, without recourse, any check, draft or order for the
payment of money representing the proceeds of any such
policy, or representing any other payment under such
policies, and the additional insured hereby irrevocably
waives any and all rights in and to such proceeds and
payments. Each party shall advise the other party promptly
as to the coverage or language of the clauses included in
its insurance policies pursuant to this paragraph and shall
notify the other party promptly of any cancellation or
change of the terms of any such policies which would affect
such clauses. All Certificates of Insurance
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provided hereunder shall set forth the waiver of subrogation
provisions contained in the subject policy.
(d) Property and Casualty Insurance. Tenant covenants and
-------------------------------
agrees to maintain standard property and casualty insurance
covering its property located in, on or about the Premises.
Said insurance shall be replacement cost, all risk coverage
for all leasehold improvements other than the building
standard improvements. Tenant shall deliver a Certificate of
Insurance from its insurer to Landlord's agent prior to the
Lease Commencement Date, and renewals thereof shall be
delivered to Landlord's agent at least THIRTY (30) days
prior to the expiration of any such policy.
DAMAGES TO 16. All breakage, injury or damage to the Premises or to
PREMISES OR Property, including damage to carpeting, wall finishes, and
BUILDING other items of improvement thereto, in any way caused by
Tenant or its agents, employees, contractors, visitors,
guests and invitees, shall be repaired at the expense of the
Tenant, except those covered by standard fire and extended
coverage perils insurance. Landlord shall make, or cause to
be made, such necessary repairs, alterations and
replacements, structural, nonstructural or otherwise, and
any charge, costs or damages so incurred by the Landlord
shall be paid by the Tenant. Landlord shall be entitled to
regard such charges, costs or damages as additional rent,
payable with the installment of Monthly Base Rent next
becoming due under this Lease. This provision shall be
construed as an additional remedy granted to Landlord and
not in limitation of any other rights and remedies which
Landlord has or may have.
WAIVER OF 17. (a) Tenant's Property and Personal Injury. All personal
LIABILITY -------------------------------------
INDEMNITY property of Tenant (for the purposes of this Section, the
term "Tenant" shall include Tenant, its agents, employees,
contractors, visitors, guests and invitees) contained in the
Premises shall be and remain there at the sole risk of
Tenant. Landlord and/or its agents and employees shall not
be liable for any accident or damage to property of Tenant
resulting from the use or operation of elevators, heating,
cooling, electrical or plumbing apparatus, water, steam, or
any other cause; nor shall they be liable for any personal
injury to Tenant arising from the use, occupancy and/or
condition of the Premises or Property unless such injury
shall directly result directly from the gross negligence or
willful misconduct of Landlord; nor shall they be liable in
any event for any interruption or loss of Tenant's business.
Notwithstanding any other language contained herein,
Landlord and/or its agents and employees shall not be liable
to Tenant for any loss, damage or injury to person or
property, even if the same is caused by their negligence or
willful misconduct, to the extent that Tenant is compensated
therefore by Tenant's insurance.
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(b) Tenant's Indemnity. Tenant shall indemnify and hold
------------------
Landlord and it's agents and employees harmless from all
loss, damage, liability, cost or expense incurred, suffered,
or claimed by any person or entity by reason of injury,
loss, or damage to any person, property or business
resulting from any default hereunder by Tenant, or from
Tenant's willful act, negligence or negligent or unlawful
use of the Premises or the Property or anything therein,
including but not limited to, water, steam, electricity, or
other facilities or equipment. Landlord and/or its agents
and employees assume no liability or responsibility
whatsoever with respect to the conduct and operation of the
business to be conducted by Tenant in the Premises, and
shall not be liable for any accident or injury to any person
or property which are caused by the conduct and operation of
Tenant's business. Tenant agrees to indemnify and hold
harmless Landlord, its agents and employees, against all
such claims.
BANKRUPTCY 18. All of the terms and provisions of this paragraph 18 are
made expressly subject to and governed by the provisions of
the United States Bankruptcy Code and the orders, rulings
and other determination of any bankruptcy court of
appropriate jurisdiction relating to the Tenant and/or this
Lease. Thus, any provision of this paragraph which is
contrary to or in any way inconsistent with the provisions
of the United States Bankruptcy Code or any order, ruling or
other determination of any bankruptcy court of appropriate
jurisdiction shall, be deemed invalid and of no force and
effect.
(a) In the event that Tenant shall become a Debtor under
Chapter 7 of the Bankruptcy Code, and the Trustee or Tenant
shall elect to assume this Lease for the purpose of
assigning the same or otherwise, such election and
assignment may only be made if all of the terms and
conditions of subsection (b) and subsection (d) of this
Section 18 are satisfied. If such Trustee shall fail to
elect or assume this Lease within sixty (60) days after the
filing of the Petition, this Lease shall be deemed to have
been rejected. Landlord shall be thereupon immediately
entitled to possession of the Premises without further
obligation to Tenant or Trustee, and this Lease shall be
canceled, but Landlord's right to be compensated for damages
in such liquidation proceeding shall survive.
(b) In the event that a Petition for reorganization or
adjustment of debts is filed concerning Tenant under
Chapters 11 and 13 the Bankruptcy Code, or a proceeding is
filed under Chapter 7 of the Bankruptcy Code and is
transferred to Chapter 11 or 13, the Trustee or Tenant, as
Debtor-In-Possession, must elect to assume this Lease within
SEVENTY-FIVE (75) days from the date of the filing of the
Petition under Chapters 11 or 13, or the Trustee or
Debtor-In-Possession shall be deemed to have rejected this
Lease. No election by the Trustee or Debtor-In-Possession to
assume this Lease, whether under Chapters 7, 11 or 13, shall
be effective unless each of the following conditions, which
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Landlord and Tenant acknowledge are commercially reasonable
in the context of a bankruptcy proceeding of Tenant, have
been satisfied, and Landlord has so acknowledged in writing:
(1) The Trustee or the Debtor-in-Possession has cured,
or has provided Landlord adequate assurance (as defined
below) that:
(A) Within TEN (10) days from the date of such
assumption the Trustee will cure all monetary defaults under
this Lease; and
(B) Within THIRTY (30) days from the date of such
assumption the Trustee will cure all non-monetary defaults
under this Lease.
(2) The Trustee or the Debtor-in-Possession has
compensated, or has provided to Landlord adequate assurance
(as defined below) that within TEN (10) days from the date
of assumption, Landlord will be compensated for any
pecuniary loss incurred by Landlord arising from the default
of Tenant, the Trustee, or the Debtor-in-Possession as
recited in Landlord's written statement of pecuniary loss
sent to the Trustee or the Debtor-in-Possession.
(3) The Trustee or the Debtor-In-Possession has
provided Landlord with adequate assurance of the future
performance of each of Tenant's, Trustee's or
Debtor-In-Possession's obligations under this Lease;
provided, however, that:
(A) The Trustee or Debtor-In-Possession shall also
deposit with Landlord as security for the timely payment of
rent, an amount equal to THREE (3) months' base Rent and
other monetary charges accruing under this Lease; and
(B) If not otherwise required by the terms of this
Lease, the Trustee or Debtor-In-Possession shall also pay in
advance on the date Monthly Base Rent is payable,
ONE-TWELFTH (1/12) of Tenant's annual obligations under this
Lease for operating expenses real estate taxes, and similar
charges.
(C) The obligations imposed upon the Trustee or
Debtor-In-Possession shall continue with respect to Tenant
or any assignee of the Lease after the completion of
bankruptcy proceedings.
(4) The assumption of the Lease will not:
(A) Breach any provision in any other lease,
mortgage, financing agreement or other agreement by which
Landlord is bound
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relating to the Building; or
(B) Disrupt, in Landlord's judgment, the tenant mix
of the Building or any other attempt by Landlord to provide
a specific variety of commercial tenants in the Building
which, in Landlord's judgment, would be most beneficial to
all of the tenants of the Building and would enhance the
image, reputation, and profitability of the Building.
(C) For purposes of this subsection (b), Landlord
and Tenant acknowledge that, in the context of a bankruptcy
proceeding of Tenant, at a minimum "adequate assurance"
shall mean:
(i) The Trustee or the Debtor-In-Possession has and
will continue to have sufficient unencumbered assets after
the payment of all secured obligations and administrative
expenses to assure Landlord that the Trustee or
Debtor-In-Possession will have sufficient funds to fulfill
the obligations of Tenant under this Lease, and to keep the
Premises stocked with inventory and properly staffed with
sufficient employees to conduct a fully-operational,
actively promoted business on the Premises; and
(ii) The Bankruptcy Court shall have entered an
Order segregating sufficient cash payable to Landlord and/or
the Trustee or Debtor-In-Possession shall have granted valid
and perfected first lien and security interest and/or
mortgage in property of Tenant, Trustee or Debtor-In-
Possession, acceptable as to value and kind to Landlord, to
secure to Landlord the obligation of the Trustee or Debtor-
In-Possession to cure the monetary and/or non-monetary
defaults under this Lease within the time period set forth
above.
(c) In the extent that this Lease is assumed by a Trustee
appointed for Tenant or by Tenant as Debtor-In-Possession
under the provisions of subsection (b) hereof and Thereafter
Tenant is liquidated of debts under Chapters 11 or 13 of the
Bankruptcy Code, then, and in either of such events,
Landlord may, at its option, terminate this Lease and all
rights of Tenant hereunder, by giving Tenant written notice
of its election to so terminate, by no later than THIRTY
(30) days after the occurrence of either of such events.
(d) If the Trustee or Debtor-In-Possession has assumed the
Lease pursuant to the terms and provisions of subsections
(a) or (b) herein, for the purpose of assigning (or elects
to assign) Tenant's interest under this Lease, or the estate
created thereby, to any other person, such interest or
estate may be so assigned only if Landlord shall acknowledge
in writing that the intended assignee has provided adequate
assurance as defined in this subsection (d) of future
performance of all of the terms, covenants
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and conditions of this Lease to be performed by Tenant.
For purposes of this subsection (d), Landlord and Tenant
acknowledge that, in the context of a bankruptcy proceeding
of Tenant, at a minimum "adequate assurance of future
performance" shall mean that each of the following
conditions have been satisfied, and Landlord has so
acknowledged in writing:
(1) The assignee has submitted a current financial
statement audited by a Certified Public Accountant which
shows a net worth and working capital in amounts determined
to be sufficient by Landlord to assure the future
performance by such assignee of Tenant's obligations under
this Lease;
(2) The assignee, if requested by Landlord, shall have
obtained guarantees in form and substance satisfactory to
Landlord from one or more persons who satisfy Landlord's
standards of creditworthiness;
(3) Landlord has obtained all consents or waivers from
any third party required under any lease, mortgage,
financing arrangement or other agreement by which Landlord
is bound in order to permit Landlord to consent to such
assignment.
(e) When, pursuant to the Bankruptcy Code, the Trustee or
Debtor-In-Possession shall be obligated to pay reasonable
use and occupancy charges for the use of the Premises or any
portion thereof, such charges shall not be less than the
Base Rent as defined in this Lease and other monetary
obligations of Tenant for the payment of operating expenses,
real estate taxes, and similar charges.
(f) Neither Tenant's interest in the Lease, nor any lesser
interest of Tenant herein, nor any estate of Tenant hereby
created, shall pass to any trustee, receiver, assignee for
the benefit of creditors, or any other person or entity, or
otherwise by operation of law Under the laws of any state
having jurisdiction of the person or property of Tenant
(hereinafter referred to as the "state law") unless Landlord
shall consent to such transfer in writing. No acceptance by
Landlord of rent or any other payments from any such
trustee, receiver, assignee, person or other entity shall be
deemed to have waived, nor shall it waive the need to obtain
Landlord's consent of Landlord's right to terminate this
Lease for any transfer of Tenant's interest under this Lease
without such consent.
(g) In the event the estate of Tenant created hereby shall
be taken in execution or by other process of law, or if
Tenant or any guarantor of Tenant's obligations hereunder
(hereinafter referred to as the "guarantor") shall be
adjudicated insolvent pursuant to the provisions of
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any present or future insolvency law under state law, or if
any proceedings are filed by or against the guarantor under
the Bankruptcy Code, or any similar provisions of any future
federal bankruptcy law, or if a Receiver or Trustee of the
property of Tenant or the guarantor shall be appointed under
state law by reason of Tenant's or the guarantor's
insolvency or inability to pay its debts as they become due
or otherwise, or if any assignment shall be made of Tenant's
or the guarantor's property for the benefit of creditors
under state law, then and in such event Landlord may, at its
option, terminate this Lease and all rights of Tenant
hereunder by giving Tenant written notice of the election to
so terminate within THIRTY (30) days after the occurrence of
such event.
As used in this Section 18, the term "Tenant" shall include
any surety or other guarantor of this Lease.
CASUALTY 19. In the event of damage by fire or other casualty to the
Premises or any part thereof, this Lease shall not be
terminated unless otherwise provided hereinafter, but
Landlord shall diligently proceed to repair and restore the
same. During the period that Tenant is deprived of the use
of the damaged portion of the Premises, provided that such
damage was not caused by the negligence or willful
misconduct of Tenant, its agents, employees, contractors,
visitors, guests or invitees, the rent for the remainder of
the Premises shall be that portion of the total rent which
the area remaining that can be occupied bears to the total
area of the Premises, so long as Tenant shall be able to
operate its business normally; if Tenant shall be unable to
operate its business normally, then rent shall be abated
during such period. If during the Term of this Lease the
Premises shall be so damaged by fire or other casualty as to
be untenantable, then unless said damage be repaired within
ONE HUNDRED TWENTY (120) days after said fire or other
casualty, either party, upon written notice to the other
party given at any time following the expiration of ONE
HUNDRED TWENTY (120) days thereafter, may terminate this
Lease, in which case the rent and additional rent shall be
apportioned and paid to the date of said fire or other
casualty. In the event that the Building is so severely
damaged or destroyed by fire or other casualty (although the
Premises may not be affected) that Landlord shall decide
within SIXTY (60) days following such event of casualty not
to rebuild or construct the Building, then Landlord shall
give written notice to Tenant and this Lease and the tenancy
hereunder shall terminate in accordance with such notice.
CONDEMNATION 20. (a) Tenant agrees that if the Premises or a substantial
part thereof shall be taken, or sold under the threat of
condemnation, for public or quasi-public use or purpose by
or to any competent authority, this Lease shall fully
terminate as of the date of any such taking. Tenant shall
have no claim against Landlord and shall have no claim or
right to any portion of the award which may be made to
Landlord as a result of any such
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condemnation; all rights of Tenant to damages therefor, if
any, are hereby assigned by Tenant to Landlord. Upon such
condemnation or taking, the Term of this Lease shall cease
and terminate from the date of such taking or condemnation,
and Tenant shall have no claim against Landlord for the
value of any unexpired term of this Lease, leasehold
improvements, or good will. Notwithstanding the foregoing,
Tenant shall be free to pursue a separate claim against the
condemning authority for the depreciated value of its
leasehold improvements, provided that any award to Tenant
shall not result in a diminution of any award to Landlord.
(b) If less than a substantial part of the Premises is taken
or condemned, the rent for the remainder of the Premises
shall be that portion of the total rent which the area
remaining that can be occupied bears to the total area of
the Premises, effective on the date when title vests in such
governmental authority. The Lease shall otherwise remain in
full force and effect. For purposes hereof, a substantial
part of the Premises shall be considered to have been taken
if Tenant shall be unable to operate its business in its
normal and customary manner.
DEFAULT 21. (a) It is agreed that Tenant shall be in default if
Tenant shall fail to pay the rent (including any additional
rent) at the time the same shall become due and payable as
provided hereunder in Section 3(a) of this Lease, and Tenant
shall not cure such default within TEN (10) days after the
date due and payable for payment of such rent; or if Tenant
shall breach, violate, fail, or neglect to keep and perform
any of the other terms, covenants, or conditions herein
contained, or contained in the Building Instruments, and
Tenant shall not cure such breach within THIRTY (30) days
after written demand by Landlord therefor, or, if such
breach cannot reasonably be cured within such period, Tenant
shall fail to diligently attempt to cure such breach, or if
the Premises shall become vacant or abandoned (provided that
Landlord shall not construe any vacation or abandonment of
the Premises before the expiration of the Term hereof as a
default so long as Tenant continues to comply with all
covenants and conditions of the Lease).
(b) In the event of default by Tenant, then and in each such
case, Landlord may treat the occurrence of such event as a
breach of this Lease, and in addition to any and all other
rights or remedies of Landlord in this Lease or at law or in
equity provided, it shall be, at the option of Landlord,
without further notice or demand of any kind to Tenant or
any other person:
(i) The right of Landlord, even though it may have relet the
Premises as hereinbelow provided, to declare the Lease Term
ended and to re-enter the Premises and take possession
thereof and remove all persons therefrom, and Tenant shall
have no further claim thereon or thereto;
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(ii) The right of Landlord to bring suit for the collection
of rent and other charges, as it accrues pursuant to the
terms of this Lease, and damages (including without
limitation reasonable attorneys' fees and the cost of
renovating the Premises) without entering into possession of
said Premises or canceling this Lease;
(iii) The right of Landlord to re-enter or retake possession
of the Premises from Tenant by summary proceedings or
otherwise and to remove, or cause to be removed, Tenant or
any other occupants from the premises in such manner as
Landlord shall deem advisable with or without legal process
and using self-help if necessary, and it is agreed that the
commencement and prosecution of any action by Landlord in an
unlawful detainer, ejectment or otherwise or any execution
of any judgment or decree obtained in any action to recover
possession of the Premises or any other re-entry and removal
shall not be construed as an election to terminate this
Lease whether or not such entry or re-entry be had or taken
under summary proceedings or otherwise, and shall not be
deemed to have absolved or discharged Tenant from any of its
obligations or liabilities for the remainder of the Term.
Tenant shall, notwithstanding any such entry or re-entry,
continue to be liable for the payment of rent and the
performance of the other covenants, conditions and
agreements by Tenant to be performed as set forth in this
Lease, and Tenant shall pay to Landlord all monthly
deficits, after any such reentry, in monthly installments as
the amounts of such deficits from time to time are
ascertained. In the event of any such ouster, Landlord shall
have the right but not the duty to rent or lease the
Premises to some other person, firm or corporation (whether
for a term greater or less than or equal to the unexpired
portion of the Term or whether the space leased by the new
lease includes more or less floor area than the Premises)
upon such terms and conditions and for such rental as the
Landlord may deem proper and to collect said rental and any
other rental that may thereafter become payable. In such
event, the rentals received by Landlord from such reletting
shall be applied: first, to the payment of any indebtedness
other than the rent due hereunder from Tenant to Landlord;
second, to the payment of any cost of such reletting
(including without limitations the making of any
alterations, repairs or decorations in the Premises which
Landlord deems advisable); third, to the payment of the cost
of any alterations and repairs to the Premises; third, to
the payment of rent due and unpaid hereunder, and the
residue, if any, shall be held by Landlord and applied in
payment of future rent as the same may become due and
payable hereunder. Should that portion of such rentals
received from such reletting during any month, which is
applied to the payment of rent hereunder, be less than the
rent payable during that month by Tenant hereunder, then
Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly; Tenant
shall have no right to any excess. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses,
including, but not limited to,
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brokerage commissions and attorneys' fees, incurred by
Landlord in such reletting or in making such alterations and
repairs not covered by the rental received from such
reletting. Nothing herein contained shall be construed as
obligating the Landlord to relet the whole or any part of
the Premises whatsoever. In the event of any entry or taking
possession of the Premises as aforesaid, Landlord shall have
the right, but not the obligation, to remove therefrom all
or any part of the personal property located therein and may
place the same in storage at a public warehouse at the
expense and risk of the owner or owners thereof. The terms
"re-enter or "re-entry" as used in this Lease are not and
shall not be restricted to their technical meaning but are
used in their broadest sense.
(c) If Landlord elects to terminate this Lease under the
provisions set forth above, Landlord may recover from Tenant
as damages (all of which shall be immediately due and
payable from Tenant to Landlord), in addition to its other
remedies:
(i) Any unpaid rent, including interest thereon,
which is due and owing at the time of such termination; plus
(ii) That rent, including interest thereon, which
would have been earned after termination until the time of
judgment; plus
(iii) A sum representing liquidated damages and not
penalty in an amount equal to the excess of the Base Rent
for the Premises at the time of termination and the
additional rent provided for in Section 4 above for the year
in which this Lease shall be terminated multiplied by the
number of years and fraction of a year then constituting the
remainder of the Term hereof, over the rental value of the
Premises at the time of termination for such unexpired Term,
discounted at a rate of SEVEN percent (7%) per annum to
present value, less commissions, advertising, cost of
repairs and other expenses incidental to reletting of such
Premises.
Nothing herein contained shall limit or prejudice the right
of the Landlord to prove and obtain as liquidated damages in
any bankruptcy, insolvency, receivership, reorganization or
arrangement proceeding an amount equal to the maximum
allowed by any statute or rule of law governing such
proceedings and in effect at the time when such damages are
to be proved, whether or not such amount be greater, equal
to or less than the amount of the excess referred to in the
preceding sentence. In determining the rental value of the
Premises, the commercially reasonable rental realized by any
reletting accomplished or accepted by Landlord within a
reasonable time after termination of this Lease, shall be
deemed, prima facie, to be the rental value.
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(iv) Any other amount necessary to compensate Landlord for
all the detriment directly caused by Tenant's failure to
perform its obligations under this Lease or which in the
ordinary course of things would be likely to result
therefrom including without limitation to cost of renovating
the Premises and reasonable attorneys' fees; plus
(v) At Landlord's election, such other amounts, in addition
to or in lieu of the foregoing, as may be permitted from
time to time by applicable law.
(d) In the event of default, all of the Tenant's fixtures,
furniture, equipment, improvements, additions, alterations,
and other personal property shall remain on the Premises and
in that event and continuing during the length of said
default, Landlord shall have the right to take exclusive
possession of same and to use the same, rent or charge free,
until all defaults are cured or, at its option, at any time
during the Lease Term, to require Tenant to forthwith remove
same. In connection with the foregoing, Landlord shall have
a lien upon the property of Tenant in the Premises during
the Lease Term for the amount of any unpaid rent or other
sum due from Tenant hereunder. Except upon expiration of
this Lease where no default exists in the payment of rent or
other sums due from Tenant hereunder, Tenant shall not
remove any of Tenant's property from the Premises without
the prior written consent of Landlord, other than pursuant
to sale thereof in the regular course of its business, and
Landlord shall have the right and privilege at its sole
option and discretion, to take possession of all property of
Tenant in the Premises, to store the same in said Premises,
or to remove it therefrom and store it in such place as may
be selected by Landlord, at Tenant's risk and expense, in
accordance with such lien and of any rights of distraint it
may possess against Tenant's said property.
(e) In the event of a breach or threatened breach by Tenant
of any of the covenants or provisions hereof, Landlord shall
have the right of injunction and the right to invoke any
remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not therein provided
for; and in such event Landlord shall be entitled to recover
from Tenant, payable as additional rent hereunder, any and
all reasonable expenses as Landlord may incur in connection
with its efforts to secure such injunctive relief or other
remedy at law or in equity, such as court costs and
attorneys' fees. Landlord and Tenant hereby expressly waive
trial by jury in any action, proceeding or counterclaim,
brought by either of them against the other, on any matter
whatsoever arising out of or in any way connected with this
Lease, their relationship as Landlord and Tenant, Tenant's
use and occupancy of the Premises and/or any claim of injury
or damage. If Landlord shall commence any proceeding for
non-payment of rent, or any other payment of any kind to
which Landlord may be entitled or which it may claim
hereunder, Tenant will not
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interpose any counterclaim or set-off of whatever nature or
description in any such proceeding, the parties hereto
specifically agreeing that Tenant's covenants to pay rent or
any other payments required of it hereunder are independent
of all other covenants and agreements herein contained,
provided, however, that this shall not be constructed as a
waiver of Tenant's rights to assert such a claim in any
separate action brought by Tenant. Tenant further waives any
right of defense which may have to claim a merger, and
neither the commencement of any action or proceeding
settlement thereof nor entering of judgment shall bar
Landlord from bringing subsequent actions or proceedings
from time to time. Mention in this Lease of any particular
remedy shall not preclude Landlord from any other remedy at
law or in equity to which it may be entitled. Tenant hereby
expressly waives any and all rights of redemption granted by
or under any present or future laws in event of Tenant being
evicted or dispossessed for any cause, or in the event of
Landlord obtaining possession of the Premises by reason of
the violation by Tenant of any of the covenants and
conditions of this Lease, or otherwise.
(f) It is further provided that, if legal proceedings are
instituted hereunder, and a compromise or settlement thereof
shall be made, it shall not be constituted as a waiver of
any breach of any covenant, condition or agreement herein
contained.
(g) No payment by Tenant or receipt by Landlord of a lesser
amount than the Monthly Base Rent herein stipulated shall be
deemed to be other than on account of the earliest
stipulated rent then due, nor shall any endorsement or
statement on any check or any letter accompanying any check
or payment of rent be deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice
to Landlord's right to recover the balance of such rent or
to pursue any other remedy.
(h) Should Tenant fail to pay rent (including any additional
rent) as and when the same is due, Landlord shall not be
required to wait until the expiration of the Term hereof to
sue for Landlord's loss or damages, but shall have the right
to sue from time to time to recover unpaid rent and other
damages as provided in this Lease. Landlord shall have the
option to declare the entire balance of the Base Rent
(including annual increases as provided herein) immediately
due and payable upon failure by Tenant to cure any default
within the time prescribed herein. Landlord shall have the
further option to defer action until the expiration of the
Term, in which event the cause of action shall not be deemed
to have accrued until the date of expiration. All rights and
remedies of Landlord under this Lease shall be cumulative
and shall not be exclusive of any other rights and remedies
provided to Landlord under applicable law.
21
<PAGE>
(i) If, prior to the commencement of the Term of this Lease,
Tenant notifies Landlord of or otherwise unequivocally
demonstrates an intention to repudiate this Lease, Landlord
may, at its option, consider such anticipatory repudiation a
breach of this Lease. In addition to any other remedies
available to it hereunder or at law or in equity, Landlord
may retain all rent paid upon execution of the Lease and the
security deposit, if any, to be applied to damages of
Landlord incurred as a result of such repudiation,
including, without limitation, attorneys' fees, brokerage
fees, costs of reletting and loss of rent. It is agreed
between the parties that for the purpose of calculating
Landlord's damages, in a building which has other available
space at the time of Tenant's breach, Landlord shall have no
obligation to rent the Premises prior to other space in the
Building.
SUBORDINATION 22. This Lease is subject and subordinate to all ground or
underlying leases, if any, and to any deeds of trust which
may now or hereafter affect this Lease or the Property, and
to all renewals, modifications, consolidations, replacements
and extensions thereof. Notwithstanding the foregoing,
Tenant shall have the right to keep the Lease in full force
and effect so long as Tenant shall fully comply with all the
terms of this Lease. This clause shall be self-operative and
no further instrument of subordination shall be necessary to
effect the subordination of this Lease to the lien of any
such lease, mortgage or deed of trust. In confirmation of
such subordination, however, Tenant shall execute promptly
any such certificate or subordination agreement that
Landlord may request. Tenant hereby constitutes and appoints
Landlord as Tenant's attorney-in-fact to execute any such
certificate(s) for and on behalf of Tenant, said appointment
to be a power coupled with an interest and irrevocable
during the Term of this Lease. In the event of any
proceeding to terminate any ground or underlying lease, or
in the event of any proceeding for the foreclosure of any
mortgage or deed of trust to which this Lease is
subordinate, the ground lessor, purchaser, assignee or other
successor to Landlord's rights, shall have the option to
terminate or cancel this Lease; if this Lease is not so
terminated or canceled, Tenant shall attorn to the Lessor
thereunder or to the purchaser at the foreclosure sale.
Upon request and with reasonable notice from Tenant,
Landlord shall obtain a non-disturbance agreement on
Tenant's behalf from each existing Mortgagee (and any future
mortgagees upon request by Tenant) on such Mortgagees's
commercially reasonable standard form (and in recordable
form) agreeing that such Mortgagee or any purchaser in a
foreclosure sale shall recognize and be bound by the terms
of this Lease upon a foreclosure or deed in lieu thereof (as
long as no Event of Default exists hereunder).
HOLDOVER 23. If Tenant shall remain in the Premises, with the
knowledge and
22
<PAGE>
PROVISIONS written consent of Landlord, after the expiration of the
Term of this Lease, or any renewal or extension thereof,
Tenant shall become a tenant from month to month at ONE
HUNDRED TEN PERCENT (110%) of the monthly rental for the
last month of the Lease Term, commencing on the first day
next after the Lease Expiration Date. Tenant shall give to
Landlord at least THIRTY (30) days written notice of any
intention to quit the Premises, and Tenant shall be entitled
to THIRTY (30) days written notice to quit except in the
event of default hereunder. All other terms and conditions
of this Lease shall remain in full force and effect.
Provided, however, that in the event that Tenant shall hold
over without Landlord's knowledge and consent, then at any
time prior to Landlord's acceptance of rent from Tenant as a
monthly tenant hereunder, Landlord, at its option, may
re-enter and take possession of the Premises without
process, or by any legal proceeds in force in the
jurisdiction in which the Building is situated.
SUCCESSORS' 24. It is agreed that all rights, remedies and liabilities
OBLIGATION hereunder given to or imposed upon either of the parties
hereto shall extend to their respective heirs, successors,
executors, administrators and assigns. This provision shall
not be deemed to grant Tenant any right to assign this Lease
or to sublet the Premises, except as set forth in Section 7
above. Tenant acknowledges Landlord might not be, now or in
the future, the owner of the fee interest in the Premises,
the Building and/or Land. The term "LANDLORD" as used in
this Lease is hereby defined to be only the then current
owner or mortgagee in possession of the Premises. In the
event of any sale or sales by the then current Landlord
hereunder to any party then, from and after the closing of
such sale or lease transaction, the Landlord whose interest
is thus sold or leased shall be and hereby is completely
released and forever discharged from and of all covenants,
obligations and liabilities of Landlord hereunder thereafter
accruing.
RULES AND 25. The Tenant covenants that the rules and regulations set
REGULATIONS forth in Exhibit A, attached hereto and incorporated herein
by reference, and such other and further rules and
regulations as the Landlord may make and furnish to the
Tenant, and which in Landlord's judgment are necessary or
appropriate for the general well-being, safety, care and
cleanliness of the Premises and the Building together with
the appurtenances, shall be faithfully kept, observed and
performed by Tenant, and by Tenant's agents, servants,
employees and guests unless waived in writing by the
Landlord. All such rules and regulations shall be enforced
in a consistent manner by Landlord against all tenants in
the Buildings. Any failure by Landlord to enforce any rule
or regulation against any party shall not be deemed a waiver
of such rule or regulation or of Landlord's further right to
enforce the same.
REPRESEN 26. Landlord's Covenants. Landlord covenants that it has the
--------------------
right to
23
<PAGE>
TATIONS, make this Lease for the Term aforesaid, and that if Tenant
WARRANTIES shall pay the rent and performs all of the covenants, terms,
AND conditions, and agreements of this Lease to be performed by
COVENANTS OF Tenant, Tenant shall, during the Term, be able to freely,
LANDLORD peaceably and quietly occupy and enjoy the full possession
of the Premises without molestation or hindrance by Landlord
or any party claiming through or under Landlord, subject to
other provisions contained in this Lease.
(a) Landlord shall maintain during the term of this Lease,
all risk coverage for the Building in the amount of the full
replacement value thereof together with comprehensive
general liability insurance.
(b) Landlord represents and warrants to Tenant as follows:
To the best of Landlord's knowledge after due inquiry, no
governmental regulated hazardous or toxic substances have
been used, processed, released, discharged, generated,
treated, stored or disposed of on the Premises, the Building
or the land upon which the Building is located (the "Land")
and no hazardous or toxic substances currently exist on or
about the Premises, the Building or the Land and, to the
best of Landlord's knowledge, any adjacent property. In the
event Landlord becomes aware of any governmental regulated
hazardous or toxic substances that have been used,
processed, released, discharged, generated, treated, stored
or disposed of on the Premises, the Building or the land
upon which the Building is located (the "Land"), Landlord
shall remove or otherwise contain any such substances within
thirty (30) days after Landlord becomes aware of such
hazardous or toxic substances.
RESERVATIONS 27. Tenant hereby acknowledges that the Landlord retains the
OF RIGHTS OF following rights: (i) to change the street address and/or
ADDRESS name of the Building and/or name of the Building and/or the
arrangement and/or location entrances, passageways, doors,
doorways, corridors, elevators, stairs, toilets, or other
public parts of the Building and to make improvements,
alterations, additions, installations, eliminations and
changes to the Building, Land, parking facilities, or any
part thereof, provided that such changes do not unreasonably
interfere with Tenant's use and occupancy of the Premises or
conduct of its business (except in the event of an
emergency); (ii) to erect, use, and maintain pipes and
conduits in and through the Premises; (iii) to grant to
anyone the exclusive right to conduct any particular
business or undertaking in the Building; (iv) to install and
maintain signs on the Building and/or Land; and (v) have
passkeys to the Premises. Landlord may exercise any or all
of the foregoing rights without being deemed to be guilty of
an eviction, actual, or constructive, or a disturbance or
interruption of the business of Tenant or Tenant's use or
occupancy of the Premises.
CONSTRUCTION 28. Landlord's Standard Work. It is understood and agreed
OF LEASEHOLD ------------------------
that Tenant will take the Premises in "AS-IS" condition upon
commencement
24
<PAGE>
IMPROVEMENTS of this Lease Agreement. All Leasehold Improvements existing
in the Premises upon occupancy of Tenant or made by or for
Tenant after commencement of any lease term with Landlord
shall remain as the sole property of the Landlord, and in no
event shall Tenant remove any Leasehold Improvements from
the Premises.
Landlord agrees that it will perform a reasonable turnkey
build-out for Tenant, at Landlord's sole cost and expense,
up to a maximum allowance of EIGHT AND 00/100 DOLLARS
($8.00) PER SQUARE FOOT, providing building standard work
using building standard specifications, materials and color
selections, in quantities necessary to build-out the
Premises substantially in accordance with Tenant's Plans,
which plans shall be mutually agreed upon by Landlord and
Tenant, and shall be attached hereto and made a part hereof
as Exhibit "B".
MECHANIC 29. Tenant shall not do, or suffer to be done, any act,
LIENS matter or thing whereby the Premises (or Tenant's interest
therein), or any part thereof, may be encumbered by any
mechanics' or materialmen's lien and/or any other lien or
encumbrance. Tenant shall discharge, within ten (10)
business days after the date of filing, any mechanic's, or
materialmen's or other liens filed against the Premises, or
Tenant interest therein, or any part thereof, purporting to
be for work or material furnished, or to be furnished, to
Tenant.
25
<PAGE>
PARKING 30. Landlord agrees to provide for the use of Tenant in
common with others, a surface parking area adjacent to the
Building in which the Demised Premises are located. The
Landlord reserves the right to promulgate rules and
regulations relating to the use of such surface parking
area, including such limitations as may, in the opinion of
the Landlord, be necessary and desirable. Tenant and
Tenant's employees shall park their vehicles only in those
portions of the parking areas designated for employee
parking by the Landlord. Further, Tenant and its employees
are expressly prohibited from parking in any portion of the
parking area designated or marked for visitor parking only.
Tenant, shall within FIVE (5) days after taking possession
of the Demised Premises, furnish Landlord or its agent with
the vehicle license numbers assigned to Tenant's vehicles
and the vehicles of Tenant's employees, and shall thereafter
notify the Landlord or its agent of any changes within FIVE
(5) days after such changes occur. In the event that the
Tenant or any of its employees shall park their vehicles in
any portion of the parking area other than that portion
designated for that purpose, then the Landlord shall have
the right, at Landlord's option, to assess Tenant a fine or
penalty for any such improperly parked vehicle, and/or to
have any such improperly parked vehicle towed at Tenant's
expense. As an inducement to enter into this Lease
Agreement, Landlord agrees to assign SIX (6) parking spaces
in the parking lot of the Building specifically designated
for Tenant.
GENDER 31. Feminine or neuter pronouns shall be substituted for the
masculine form, and the plural shall be substituted for the
singular number, in any place or places herein in which the
context may require such substitution or substitutions.
Landlord and Tenant, as a matter of convenience, have been
referred to in neuter form.
NOTICES 32. All notices required or desired to be given hereunder by
either party to the other shall be hand delivered or given
by certified or registered mail, first-class postage
prepaid, return receipt requested. Notices to the respective
parties shall be addressed as follows:
To LANDLORD:
ANNANDALE FINANCIAL CENTER JOINT VENTURE
c/o Southern Management Corporation
1950 Old Gallows Road, Suite 600
Vienna, VA 22182
To TENANT:
ONESOFT CORPORATION
ATTN: James McIntyre, IV, President
7010 Little River Turnpike, Suite 430
Annandale VA 22003
26
<PAGE>
Either party may, by like written notice, designate a new
address to which such notices shall be directed.
ESTOPPEL 33. Tenant agrees, at any time and from time to time, upon
CERTIFICATES not less than FIVE (5) days prior written notice by
Landlord, to execute, acknowledge and deliver to Landlord a
statement in writing (i) certifying that this Lease is
unmodified and in full force and effect (or if there have
been modifications, that the Lease is in full force and
effect as modified and stating the modification); (ii)
stating the dates to which the rent and any other charges
hereunder have been paid by Tenant; (iii) stating whether or
not to the best knowledge of Tenant, Landlord is in default
in the performance of any covenant; (iv) stating the address
to which notices to Tenant should be sent; and (v) any other
information as may be reasonably required. Any such
statement delivered pursuant hereto may be relied upon by
any owner of the Building or the Land; any prospective
purchaser of the Building or the Land, any mortgagee or
prospective mortgagee of the Building or the Land or of
Landlord's interest in either, or any prospective assignee
of any such mortgagee.
SECURITY 34. To secure the full faith performance by Tenant of all of
DEPOSIT the obligations, covenants, conditions and agreements to be
fulfilled, kept, observed, and performed by Tenant, Tenant
shall tender Landlord the sum of SEVEN THOUSAND SIX HUNDRED
FIFTY-EIGHT AND 33/100 DOLLARS ($7,658.33) which sum shall
be held as a security deposit ("SECURITY DEPOSIT") and
applied towards its damages and/or remedies in the event of
Tenant's default. Landlord's rights against Tenant in the
event of Default shall in no way be limited or restricted by
this security deposit. Upon the expiration of this Term (or
any renewal or extension thereof in accordance with this
Lease), Landlord shall, provided that tenant is not in
default under the terms hereof, return and pay back such
security deposit to tenant, less such portion thereof as
Landlord shall have appropriated to cure any default by
tenant with respect to any of Tenant's aforesaid
obligations, covenants, conditions and agreements and no
damages or expenses incurred by Landlord. In the event of
any default by Tenant hereunder, Landlord shall have the
right, but not the obligation, to apply all or any portion
of the Security Deposit to cure such default, in which
event, Tenant shall be obligated to promptly deposit with
the Landlord the amount necessary to restore the Security
Deposit to its original amount. In the event of the sale or
transfer of Landlord's interest in the Building, Landlord
shall have the right to transfer the Security Deposit to
such purchaser or transferee in which event Tenant shall
look only to the new Landlord for the return of the Security
Deposit and Landlord shall thereupon be released from all
liability to Tenant for the return of such Security Deposit.
GOVERNING 35. The parties agree that the laws of the Commonwealth of
Virginia
27
<PAGE>
LAW shall govern the validity, performance and enforcement of
this Lease.
BROKERS 36. Landlord and Tenant each represent and warrant that
neither of them has employed any broker to negotiate the
terms of this Lease.
WAIVER OF 37. No delay in exercising or failure to exercise any right
BREACH or power hereunder by Landlord shall impair any such right
or shall be construed as a waiver of any breach or default,
or as acquiescence thereto. One or more waivers of any
covenants, terms or conditions of this Lease by Landlord
shall not be construed by the other party as a waiver of a
continuing or subsequent breach of the same covenant, term
or condition. The consent or approval by Landlord to or of
any act by Tenant of a nature requiring consent or render
unnecessary consent to or approval of any subsequent similar
act. No provision of this Lease shall be deemed to have been
waived by Landlord, unless such waiver be in writing signed
by Landlord.
SEVERABILITY 38. If any term or provision of this Lease or the
application thereof to any person or circumstance shall to
any extent be invalid or unenforceable, the remainder of
this Lease, or the application of such term or provision to
persons or circumstances other than to those as to which it
is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of the Lease shall be
valid and be enforced to the fullest extent permitted by
law.
CAPTIONS FOR 39. The titles of the sections and paragraphs throughout
CONVENIENCE this Lease are for convenience and reference only, and the
words contained therein shall be in no way held to explain,
modify, amplify or aid in the interpretation, construction
or meaning of the provisions of this Lease.
DUPLICATE 40. This Lease may be executed in one or more counterparts,
COUNTERPARTS AS each of which shall be an original, and all of which shall
ORIGINALS constitute one and the same instrument
ENTIRE 41. This Lease constitutes the entire agreement between the
AGREEMENT parties and no earlier statements or prior written matter
shall have any force or effect. Tenant is not relying on any
representations or agreements other than those contained-in
this Lease. This Lease shall not be modified or canceled
except by written instrument executed by both parties.
(SIGNATURES ON FOLLOWING PAGE.)
28
<PAGE>
WITNESSETH the following signatures and seals:
WITNESS LANDLORD:
ANNANDALE FINANCIAL CENTER
JOINT VENTURE
a Maryland general partnership
/S/ Leslie A. King By: /S/ Susan M. Scott
- ------------------ ------------------------------
Its: Agent
-----------------------------
Date July 20, 1998
-----------------------------
ATTEST TENANT:
ONESOFT CORPORATION
A Delaware corporation
/S/ Paul Economon By /S/ Frederick C. Hawkins, III
- ----------------------------- -----------------------------
Corporate Secretary [SEAL]
Its Chief Financial Officer
-----------------------------
Date July 16, 1998
----------------------------
29
<PAGE>
EXHIBIT A
RULES AND REGULATIONS OF THE BUILDING
The Tenant covenants that the following "RULES and REGULATIONS", and such
other and further Rules and Regulations as the Landlord may make and which in
the Landlord's judgement are needful for the general well being, safety, care
and cleanliness of the Premises and the building of which they are a part
together with their appurtenances, shall be faithfully kept, observed and
performed by the Tenant, and by his agents, servants, employees and guests
unless waived in writing by the Landlord.
a. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls or other parts of the Building not occupied by any
tenant shall not be obstructed or encumbered by any tenant or used for any
purpose other than ingress or egress to and from the Premises. Landlord shall
have the right to control and operate the public portions of the Building, and
the facilities furnished for the common use of the tenants, in such manner as
Landlord reasonably deems best for the benefit of the tenants generally. No
tenant shall permit the visit to the Premises of persons in such numbers or
under such conditions as to materially interfere with the use and enjoyment by
other tenants of the entrances, corridors, elevators and other public portions
or facilities of the Building.
b. No awning or other projections shall be attached to the outside walls of
the building, without the prior written consent of Landlord. Notwithstanding the
existing window coverings, no drapes, blinds, shades, or screens 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 Landlord. Such awnings,
projections, curtains, blinds, screens or other fixtures must be of a quality,
type, design, and color, and attached in a manner approved by Landlord.
c. The doors leading to the corridors or main halls shall be kept closed
during business hours except as they may be used to ingress or egress. No
additional locks shall be placed upon any doors of the Premises, nor shall any
changes be made in existing locks or the mechanisms thereof; except that Tenant
shall have the right at its expense to install security locks on all entry doors
and fire doors opening into the Premises, and also on the doors to any offices
within the Premises, provided Tenant at the termination of its occupancy shall
provide Landlord all keys either furnished to, or otherwise procured by Tenant,
and in the event of the loss of any keys so furnished, Tenant shall pay to
Landlord the cost to replace. Tenant further agrees that, should Landlord so
require, Tenant will at its expense remove any additional locks which it
installed or caused to be installed, reinstall the original hardware, and repair
to Landlord's reasonable satisfaction a damage to doors or frames. Tenant agrees
to give access upon reasonable request to any such locked area(s).
d. Tenant -shall not construct, maintain, use or operate within the
Premises or elsewhere in the Building of which the Premises form a part or on
the outside of the Building, any equipment or machinery which produces music,
sound or noise which is audible beyond the Premises.
<PAGE>
e. There shall be no marking, painting, drilling into or in any way
defacing any part of the Premises or the Building with the exception of affixing
wall decorations, shelving and like items within the Premises. No Tenant shall
throw anything out of the doors or windows or down the corridors or stairs.
f. The employees of the Landlord are prohibited as such from receiving any
packages or other articles delivered to the Building for the Tenant, and should
any such employee receive any such packages or articles, he or she in so doing
shall be the agent of the Tenant and not of the Landlord.
g. The water and wash closets and other plumbing fixtures shall not be used
for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags, or other substances shall be thrown therein. All
reasonable costs for damages resulting from any misuse of the fixtures shall be
borne by the Tenant who1 in whose servants, employees, agents, visitors, or
licensees, shall have caused same.
h. No vehicles or animals, except for animals whose function is to assist
disabled persons, of any kind shall be brought into or kept in or about the
Premises or the Building, and no cooking shall be done or permitted by the
Tenant on the demised premises except in kitchens constructed as part of Tenant
Improvements. No Tenant shall cause or permit any objectionable odors to be
produced upon or emanate from the Premises.
i. Neither Tenant, nor any of Tenant's servants, employees, agents,
visitors or licensees, shall at any time bring or keep upon the Premises any
inflammable, combustible or explosive fluid, chemical or substance except normal
and customary office supplies.
j. Canvassing, soliciting and peddling in the Building is prohibited and
Tenant shall cooperate to prevent the same.
k. Any person employed by Tenant to do janitorial work within the Premises
must first obtain Landlord's consent and such person shall, while in the
Building and outside of said demised premises, comply with all instructions
issued by the superintendent of the Building.
l. There shall not be used in any space, or in the public halls of the
Building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber
tires.
m. Access plates to under floor conduits must be left exposed. Where carpet
is installed, carpet must be cut around access plates. Electric and telephone
floor distribution boxes must remain accessible at all times.
n. Tenant shall use reasonable efforts to adjust thermostat, if adjustable
to the setting which uses the least amount of energy upon leaving the Premises
daily.
o. Mats, trash, or other objects are not permitted in the public corridors.
p. Landlord and/or its parking contractor shall have the right to establish
reasonable rules and regulations for the use of all parking facilities at the
Building.
<PAGE>
q. Landlord shall have the right to determine when Tenant may move its
property; i.e., furnishings, files, etc., into or out of the Premises. Tenant
shall request permission from Landlord for any such move, and shall abide by
Landlord's reasonable rules regarding any such move.
r. Tenant shall purchase and maintain comprehensive public liability and
property damage insurance on the Premises, protecting Landlord and Tenant
against loss, cost, or expense by reason of injury or death to persons or damage
to or destruction of property by reason of the use and occupancy of the Premises
by Tenant and its invitees, such insurance to be carried by reputable companies
and having limits of not less than $1,000,000.00 for injury to or death of any
one person, $1,000,000.00 for each accident and $1,000,000.00 for property
damage.
s. No tenant shall purchase spring water, ice, coffee, soft drinks, towels
or other like service, from any company or persons whose repeated violations of
the Building regulations have caused, in Landlord's opinion, a hazard or
nuisance to the Building and/or its occupants.
t. Landlord reserves the right to exclude from the Building at all times
any person who is not known or does not properly identify himself/herself to the
Building management or night watchman on duty. Landlord may at its option,
require all persons admitted to or leaving the Building between the hours of
6:00 P.M. and 8:00 A.M, Monday through Friday, and at all times on Saturdays,
Sundays and legal holidays, to register. Tenant shall be responsible for all
persons for whom he authorizes entry into or exit out of the Building, and shall
be liable to Landlord for all acts of such persons.
u. The Premises shall not be used for lodging or sleeping or for any
illegal purpose. The Premises shall never, at any time, be used for any immoral,
disorderly, unlawful or hazardous purposes nor for any other purposes than
hereinbefore specified; and will not manufacture any commodity therein.
v. Landlord shall not maintain suite finishes which are nonstandard, such
as kitchen appliances, wallpaper, special light, etc. However, should the need
for repairs arise, at Tenant's request, Landlord will arrange for the work to be
done at the Tenant's expense. Tenant shall have the right to select a contractor
for said repairs subject however to Landlord's reasonable approval.
w. No auction sales shall be conducted in the Building without Landlord's
consent.
x. No tenant shall use any other method of heating than that provided by
the Landlord without the Landlord's consent.
y. When reasonably necessary to control the climate, and upon request of
Landlord, Tenant shall keep window coverings closed at the appropriate time of
day to prevent direct solar penetration of the Premises.
Landlord agrees to advise Tenant in writing of any additions to, deletions
from, or changes in the foregoing Rules and Regulations. In the event that
Tenant is in violation of any Building rule or regulation, Landlord shall notify
Tenant in writing of the same, and shall allow Tenant a reasonable period of
time within which to comply with such rule and regulation.
<PAGE>
Failure of Tenant to comply within such period of time shall constitute a
material default under the terms and conditions of this Lease.
<PAGE>
Exhibit 10.13
THIS AGREEMENT OF LEASE (the "LEASE") made this 11th day of July 1997, by
and between ANNANDALE FINANCIAL CENTER JOINT VENTURE, a Maryland General
Partnership, (hereinafter referred to as "LANDLORD"), and ONESOFT CORPORATION, a
DELAWARE Corporation, (hereinafter referred to as "TENANT").
WITNESSETH, that for and in consideration of the rent hereinafter reserved
and of the mutual covenants and agreements hereinafter set forth, Landlord and
Tenant do hereby mutually agree as follows:
PREMISES 1.(a) Landlord does hereby lease to Tenant, and Tenant
does hereby lease from Landlord, for the term and upon the
covenants and conditions hereinafter set forth, the
Premises described as follows: Approximately FOUR THOUSAND
EIGHT HUNDRED NTNETY-SIX (4,896) RENTABLE SQUARE FEET as
shown on Exhibits A-1 and A-2 attached hereto and
incorporated herein by reference, consisting of ONE
THOUSAND EIGHT HUNDRED SIXTY (1,860) RENTABLE SQUARE FEET
located in Suite 430, and THREE THOUSAND THIRTY-SIX
(3,036) RENTABLE SQUARE FEET located in Suite 410 in the
Building known as "ANNANDALE FINANCIAL CENTER", located at
7010 Little River Turnpike, Annandale, Virginia 22203
(hereinafter referred to as the "Premises").
EARLY TERMINATION 1.(b) As an inducement to execute the following Lease, and
providing Tenant does execute this Agreement of Lease,
Landlord does hereby agree to waive any penalties for
early termination of the Tenant's Lease for the Premises
known as Suite 250, Annandale Financial Center, 7010
Little River Turnpike. Annandale, Virginia; and, further,
Landlord hereby incorporates Suite 430 into this new Lease
Agreement, thereby making void the Lease Agreement signed
April 15. 1995 for said Suite 430.
TERM 2.(a) The term of this Lease shall commence on the earlier
of (i) the "Substantial Completion" of Landlord' s
construction of the Premises or (ii) September 1, 1997
(the "LEASE COMMENCEMENT DATE"), expiring THREE (3) YEARS
after the Lease Commencement Date (the "EXPIRATION DATE").
The period commencing with the Lease Commencement Date (on
the first day of the next calendar month in the event the
Lease Commencement Date does not occur on the first day of
a month) and ending on the last day of the twelfth
calendar month thereafter shall constitute the first
"Lease Year" as such term is used herein. Each successive
full twelve (12) month period during the Lease Term shall
constitute a "Lease Year" and any portion of the Lease
Term remaining after the last twelve month period during
said Lease term shall constitute the last "Lease Year" for
the purpose of this lease.
(b) The term "Substantial Completion" shall mean that date
upon which construction of the improvements to the
Premises (as outlined in Paragraph 28. herein) have been
substantially completed and approved by
Initials:: /s/ JM, SS
----------
<PAGE>
local officials having jurisdiction, subject only to
normal punch list items that will not materially or
adversely interfere with Tenant's business operations.
Notwithstanding anything herein to the contrary, Tenant
shall have the opportunity to enter the Premises rent-free
(Suite 410) during the fifteen (15) day period prior to
the Lease Commencement Date for the purpose of installing
computer, data, telephone and television cable lines,
special equipment, furniture, fixtures, telephones and
other personal property, providing such early entrance
does not unreasonably interfere with Landlord's
construction in Premises. Any occupancy prior to the Lease
Commencement Date shall be pursuant to all the terms and
conditions of this Lease, except that rent shall not
commence until the Lease Commencement Date. Within fifteen
(15) days after the Lease Commencement Date, Landlord and
Tenant shall execute a Certificate of Commencement.
RENT 3. (a) During and for the Term hereof, commencing on the
Lease Commencement Date, Tenant covenants and agrees to
pay Landlord for the Premises, without notice or demand
and without deduction, set off or abatement, a fixed
minimum guaranteed base rent (hereinafter sometimes
referred to as the "BASE RENT") payable in monthly
installments, in advance. (hereinafter sometimes referred
to as "MONTHLY BASE RENT" ) as follows:
ANNUAL MONTHLY RENT PER
LEASE YEAR BASE REPORT BASE RENT SQUARE FOOT
- ---------- ----------- --------- -----------
1 $ 80,784.00 $ 6,732.00 $ 16.50
2 $ 83,207.52 $ 6,933.96 $ 17.00
3 $ 85,680.00 $ 7,140.00 $ 17.50
Tenant shall pay all rent to Landlord at the office of
Landlord, or to such other party or at such other address
as Landlord max' designate from time to time by written
notice to Tenant. Rent shall be paid on or before the
first day of each and every calendar month, without prior
notice, during the Term hereof, provided, however that the
Monthly Base Rent for the First month of the Term shall be
payable upon execution of this Lease.
(b) Tenant covenants and agrees to pay to Landlord a Late
Fee equal to FIVE percent (5%) of the Monthly Base Rent if
any such payment is not received by Landlord within TEN
(10) days of their due date. In addition, all delinquent
payments due Landlord, including, but not limited to, rent
and additional rent, shall bear interest at the rate of
TWO percent (2%)
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per annum above the "Prime Rate" as published by Wall
Street Journal, New York, New York, as of the date such
payment became due, for the period beginning on the date
such payment became due to the date of payment thereof by
Tenant, provided, however, that nothing herein contained
shall be construed or implemented in such a manner as to
allow Landlord to charge or receive interest in excess of
the maximum rate then allowed by law. All such late fees
and interest charges shall be deemed additional rent due
hereunder and shall be payable with the next installment
of Monthly Base Rent.
OPERATING EXPENSES 4. (a) Tenant shall pay, as additional rent, for its
AND REAL ESTATE Proportionate Share on operating expenses and real estate
TAXES taxes for the Land and Building (including real estate
taxes and operating expenses for the Land which may be
paid as part of the Ground Rent, if any), in excess of the
total operating expenses and real estate taxes for the
Land and Building for the calendar year 1997 (hereinafter
referred to as the "BASE YEAR") as follows:
(i) Commencing ONE (1) year after the Lease
Commencement Date, Tenant shall pay to Landlord, on the
first day of each calendar month, an amount equal to
ONE-TWELFTH (1/12) of Tenant's Proportionate Share of
Landlord's reasonable estimate (as adjusted annually) of
the amount by which the sum of such operating expenses and
real estate taxes for the then-current calendar year will
exceed the actual amount thereof for the Base Year.
(ii) Within ONE HUNDRED TWENTY (120) days following
the end of each calendar year, Landlord shall furnish
Tenant a statement covering the year (or portion thereof)
just expired, certified as correct by an authorized
representative of Landlord, showing the total operating
expenses and real estate taxes, the amount of Tenant's
proportionate share of the same, and the payments made by
Tenant with respect to such year. If Tenant's
Proportionate Share of operating expenses and real estate
taxes exceeds Tenant's payments so made. Tenant shall pay
Landlord the deficiency within THIRTY (30) days after
receipt of such statement. If Tenant's payments exceed
Tenant's Proportionate Share of operating expenses and
real estate taxes, Tenant shall be entitled to offset the
excess against payments next thereafter to become due
Landlord hereunder or if this Lease has expired or
otherwise terminated and Tenant has returned the Premises
to Landlord and has made all payments called for in this
Lease, the excess shall be refunded to Tenant within
THIRTY (30) DAYS.
(b) The term "OPERATING EXPENSES" as used herein shall
mean all expenses, costs, and disbursements of every kind
and nature which Landlord shall pay or become obligated to
pay in connection with the ownership and/or operation of
the Land, Building and adjacent parking
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facilities (hereinafter referred to collectively as the
"PROPERTY"). By way of example, but without limitation,
operating expenses shall include wages, salaries, bonuses,
fringe benefits (including hospitalization, medical,
surgical, dental and/or group life insurance and pension
payments) and uniforms and dry-cleaning thereof, for
employees engaged in the operation, maintenance or repair
of the Property; social security, unemployment and other
payroll taxes; license fees; worker's compensation
insurance; to the extent that such employees are engaged
in the operations, maintenance, repair or security of
properties of the Landlord other than the Building, the
expenses for those employees set forth in this Paragraph
7, shall be apportioned in accordance with standard
accounting practices; electricity (except as directly
billed to tenants of the Building), gas, water, sewer and
other fuel and utilities; utility taxes; fire, casualty,
liability and other insurance; repairs, maintenance,
painting and cleaning of the Property and supplies
necessary therefor; cleaning of windows and exterior
curtain walls; snow removal, cleaning and other service
contracts; reasonable and customary management fees;
legal, accounting, and other professional fees with
disbursements incurred in connection with the operation
and management of the Property; decorations; exterior and
interior landscaping; depreciation of tools and equipment
used in the operation, cleaning, repair, safety,
management, security or maintenance of the Property; and
any other costs, charges, and expenses which, under
generally accepted accounting and management practices,
would be regarded as maintenance and operating expenses.
(i) The term "OPERATING EXPENSES" as used herein
shall not include any of the following: expenses for
capital improvements made to the Property, except those
expenses which are incurred in order to decrease the
overall operating expenses (to the extent that such
capital expenditures actually decrease operating
expenses), for the Property or are incurred for the
general maintenance of the Property; expenses for
painting. redecorating. or other work which Landlord
performs for any tenant of the Building, the expense of
which is billed to such tenant; interest, amortization, or
other payments on loans to Landlord whether secured, or
any costs connected with refinancing of such loans:
charges for depreciation of the Building or other said
improvements; ground rent payments: real estate brokerage
fees and commissions; space planning fees and commissions:
and advertising and marketing costs; legal fees and other
expenses incurred by Landlord or agents in connection with
negotiations or disputes with tenants or prospective
tenants (other than with Tenant or its sublessees or
assignees) for the Building: costs for structural
replacement or redesign; costs or expenses associated with
the enforcement of any leases (other than with Tenant or
its sublessess or assignees) by Landlord; any costs or
expenses relating to Landlord's obligations under any work
letter to construct tenant improvements (other than that
of Tenant); costs (including permit, license and
inspection fees,
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<PAGE>
incurred in renovating or otherwise improving or
decorating space (other than common areas) for tenants in
the Building; compensation paid to officers of Landlord or
officers of the management or agent or any one else above
the level of asset manager; Landlords cost of any services
sold or provided to tenants for which Landlord is
reimbursed by such tenants under the lease with such
tenants; costs incurred due to violation by Landlord or
any other tenant of the terms and conditions of any lease;
any expense for Landlords' advertising and promotional
program for the Building; and renovation of the Building
made necessary by the exercise of eminent domain; any
transit, sales rental, use, gross receipts or occupancy
taxes levied upon Landlord or income or franchise taxes,
or any recordation, transfer, capital levy, estate, gift
or transfer taxes; any costs, fees or penalties incurred
by Landlord due to violations by Landlord of any
governmental rules or regulations; and any other expense
or cost which under generally accepted accounting
principles and practices consistently applied would not be
considered a normal maintenance or Operating Expense of
the Building.
(ii) Also excluded from "OPERATING EXPENSES" are
those costs and expenses which are paid by, or which are
attributable to, tenants, if any, which pay (either
directly or to the Landlord) all operating expenses
attributable to their respective spaces in the Building.
(c) At Lease Commencement the Proportionate Share shall be
deemed to be 7.6 %. The term "PROPORTIONATE SHARE" as used
herein shall be that fraction having as a numerator the
total number of rentable square feet contained in the
Premises, and as a denominator the total number of
rentable square feet contained in the Building. In the
event that the Building has tenants which pay for all
operating expenses attributable to their respective
spaces. the total number of rentable square feet leased to
such tenants shall be subtracted from the total number of
square feet in the Building for the purpose of determining
the denominator. Tenant's proportionate share figure shall
be subject to adjustment throughout the Term as the
figures used in the calculations may change.
(d) In the event that the building is less than
NINETY-FIVE percent (95%) occupied during any year.
adjustments shall be made in computing each Tenant's
proportionate share of expenses so that the expenses for
such year will be computed as though the Building were
NINETY-FIVE (95%) occupied and fully assessed.
Notwithstanding the foregoing, in no event max' the
Landlord collect more operating expenses than it has
actually incurred.
(e) Notwithstanding the foregoing provisions, it is agreed
that Tenant's share of Operating Expense increases shall
in no event include any amounts or costs or expenses
directly controllable by Landlord in excess of SIX (6%)
percent greater that the respective costs and expenses for
the
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5
<PAGE>
previous year.
DELAYED POSSESSION 5. If Landlord shall be unable to give possession of the
Premises on the Lease Commencement Date specified in
Section 2 of this Lease for any reason, such failure to do
so shall not affect or impair the validity of this Lease
or the obligations of Tenant hereunder, except as
expressly provided herein, and Landlord shall not be
subject to any liability for damages for such failure to
give possession on said date. In such event, Landlord
shall notify Tenant in writing setting forth a new Lease
Commencement Date as specified in Section 2 of this Lease.
Unless such delay is due to the fault of Tenant, the Base
Rent reserved and covenanted to be paid herein shall not
commence until the date that possession of the Premises is
given to Tenant, or the Premises are available for
occupancy by Tenant and Tenant has been so notified by
Landlord, whichever shall first occur.
(b) If for any reason the Landlord shall be unable to give
possession of the Premises to Tenant more than TWO (2)
months after the Lease Commencement Date specified in
Section 2, then Tenant shall have the option to cancel
this Lease after such date by giving THIRTY (30) days'
prior written notice of such termination to the other
party. If Landlord shall tender possession of the Premises
to Tenant after Tenant has given notice such notice but
prior to the expiration of such THIRTY (30) day period,
any notice given by Tenant shall thereupon be nullified.
Upon any such cancellation becoming effective, Landlord
and Tenant shall be entirely relieved of the obligations
hereunder, and any security deposit given by Tenant to
Landlord shall be returned to Tenant.
USE OF PREMISES 6. Tenant shall use and occupy the Premises solely as
general office space, provided that such use(s) is in
accordance with applicable zoning and other local
governmental regulations. Without the prior written
consent of Landlord, the Premises shall not be used for
any other purposes or uses whatsoever. Tenant shall not
use or occupy the Premises for any unlawful purpose. and
shall comply with all present and future laws, ordinances,
regulations, and orders of the United States of America,
Commonwealth of Virginia, County of Fairfax. and any other
public or quasi-public authority having jurisdiction over
the Premises.
ASSIGNMENT AND 7. (a) Tenant shall not assign, transfer, mortgage, or
SUBLETTING otherwise encumber this Lease, or sublet, rent, or permit
occupancy or use of the Premises, or any part thereof,
without obtaining the prior written consent of Landlord,
which shall not be unreasonably withheld, nor shall any
subletting, assignment or transfer of this Lease or the
right of occupancy hereunder be effected by operation of
law or in any manner other than with the prior written
consent of Landlord. Any assignment or subletting or
transfer with or without Landlord's consent shall not be
construed as a waiver or release of Tenant from liability
hereinbefore the payments of rent or the
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<PAGE>
performances and observance of any of the terms and
conditions of this Lease. The collection or acceptance of
rent from any assignee, subtenant, or occupant shall not
constitute a waiver or release of Tenant from any covenant
or obligation contained in this Lease, nor shall any
assignment or subletting be construed to relieve Tenant
from the obligation to obtain the consent in writing of
Landlord to any further assignment or subletting.
. (b) In the event that Tenant desires to assign or sublet
all or a portion of the Premises, Tenant shall give to
Landlord THIRTY (30) days written notice of Tenant's
intention to do same, the name, address and a current
financial statement of the proposed subtenant or assignee,
and a copy of the proposed assignment or sublease,
specifying, among other items, the proposed use, the term
and the rent of the proposed sublease or assignment.
Within TEN (10) days after receipt of said notice,
Landlord shall give written notice to Tenant, stating
whether Landlord approves or disapproves the proposed
assignment or sublease, Tenant may sublet or assign the
Premises only after first obtaining the written consent of
Landlord, which consent shall not be unreasonably withheld
as set forth herein above.
(c) In the event that Tenant defaults hereunder, Tenant
hereby assigns to Landlord the rent due from any subtenant
or assignee of Tenant and hereby authorizes each such
subtenant or assignee to pay said rent directly to
Landlord
MAINTENANCE 8.(a) Tenant shall keep the Premises, fixtures and
BY TENANT equipment therein in clean, safe sanitary and good order,
will suffer no waste or injury thereto, condition and
will, at the expiration or other termination of this
Lease, surrender the same, broom clean, in the same order
and condition in which they are on the Lease Commencement
Date, ordinary wear and tear excepted. Maintenance and
repair of all equipment and/or fixtures within or for the
exclusive benefit of the Premises, including, but not
limited to, kitchen fixtures, special air conditioning
equipment, bathroom fixtures, computers, or any other type
of equipment or improvements, together with related
plumbing, electrical, or other utility services, whether
installed by Tenant or by Landlord on behalf of Tenant,
shall be the sole responsibility of Tenant, and Landlord
shall half no obligation in connection therewith.
HOURS OF OPERATION 9. The regularly scheduled hours of operation for Building
shall be between EIGHT O'CLOCK (8:00 a.m.) to SIX O'CLOCK
(6:00 p.m.), Monday through Friday, and EIGHT O'CLOCK
(8:00 a.m.) to ONE O'CLOCK (1:00 p.m.) Saturday. Holidays
on which said water for the HVAC system shall not be
provided except at additional cost are: New Year's Day,
Washington's Birthday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, Christmas Day, and Easter
Sunday. Such
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<PAGE>
holidays shall be observed on the dates on which the same
are observed by the federal government. If Tenant desires
air conditioning/heat and or other utilities or services
beyond the hours of operation as herein above set forth,
and of mutually satisfactory written agreements are made
with Landlord, or its agent, not less than TWENTY-FOUR
(24) hours in advance of the requirement, Landlord shall
use its best efforts to furnish such air
conditioning/heating and/or other utilities or services to
tenant, and Tenant agree to pay Landlord the additional
costs of such services in an amount equal to ONE HUNDRED
TEN percent (110%) of the total direct costs of providing
such additional services on an overtime basis. Provided,
however, that Landlord and its agent shall not be liable
for failure to furnish or for suspension or delay in
furnishing any or all of such services caused by
breakdown, maintenance or repair work, strike, riot, civil
commotion, or any other cause or reason whatsoever beyond
the control of Landlord.
Building Services. Throughout the Term, Landlord agrees
-----------------
that the Building will be maintained in a manner befitting
a first-class rental office building in the Annandale,
Virginia area and that it will furnish, or cause to be
furnished, the following services to the Premises and
Building. Excluding emergency conditions beyond Landlord
control:
(a) Normal and usual cleaning and janitorial services
after 5:00 p.m. on business days
(b) Automatically operated elevator services TWENTY-FOUR
(24) hours a day, SEVEN (7) days a week. 365 days a year;
(c) All electric bulbs and fluorescent tubes in light
fixtures in the public areas of the Building and all
standard light bulbs and fluorescent tubes in the
Premises;
(d) An intercom type security access system located at the
front door of the Building. Tenant shall be given access
cards into the Building 24 hours a day, 7 days a week, 365
days a year;
(e) Normal and usual maintenance of the life-safety
systems, the elevators, the Garage and all Building
improvements and facilities;
(f) Heating, ventilating and air-conditioning to the
Premises between the hours of 8:00 a.m. and 6:00 p.m. on
business days and between the hours of 8:00 a.m. to 1:00
p.m. Saturday, excluding holidays.
TENANT ALTERATIONS 10. (a) Tenant shall not make or permit anyone to make any
alterations, additions, or improvements, structural or
otherwise, or install any fixtures (hereinafter
collectively referred to as "Alterations"), in or to the
Premises or the Building without the prior written consent
of Landlord. All of such Alterations permitted by Landlord
must conform to all rules
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<PAGE>
and regulations established from time to time by the
Underwriters' Association of the local area and by the
Landlord and conform to all requirements of the Federal,
State and local governments. Prior to the commencement of
work on any Alterations, the Landlord's written approval
must be obtained as to (i) the contractor(s) and
subcontractor(s) selected to perform such work, and (ii)
comprehensive plans and specifications showing all the
proposed Alterations, including detailed descriptions of
the effect of the proposed Alterations on the mechanical
and electrical systems of the Building. Landlord shall
have the right to stop such work if the Landlord or its
designated agent determines that such work is not being
done in a workmanlike manner or in accordance with the
plans and specifications provided to Landlord. In such
event, Tenant shall promptly correct the problem(s) which
give rise to the work stoppage, and if Tenant fails to do
so within a time period determined by Landlord to be
reasonable, then Landlord may. at its sole option, correct
such problem(s), or complete the Alterations, or remove
the Alterations and restore the Premises to their original
condition, and Tenant shall be liable for the costs of
such action as additional rent. Copies of all plats,
plans. Sketches, permits, samples. etc. which are prepared
or obtained in the course of such Alterations shall be
provided to the Landlord or its designated agent no later
than TEN (10) days after such are prepared or obtained.
The Tenant agrees to pay to the Landlord or its designated
agent a reasonable inspection fee and to allow inspection
from time to time during the period of construction of all
Alterations. In addition, Tenant agrees to furnish "as
built" plans and specifications for all Alterations within
a reasonable period of time after completion of
Alterations, and to pay to Landlord, or its designated
agent, a reasonable fee for updating the master
reproducible Building blueprint to show the Alterations.
(b) Prior to commencing construction on any Alterations
approved by Landlord, Tenant agrees to obtain and deliver
to Landlord written and unconditional waivers of mechanic
`s and materialman's liens upon the Property for all work,
labor and services to be performed and materials to be
furnished, by them in connection with such work, signed by
all contractors, subcontractors, materialmen, and laborers
to become involved in such work. If notwithstanding the
foregoing, any mechanic' s or materialmen's lien is filed
against the Property for work claimed to have been done
for, or materials claimed to have been furnished to,
Tenant, such lien shall be discharged by Tenant within ten
(10) days thereafter, at Tenant's sole cost and expense,
by the payment thereof or by filing any bond required by
law. If Tenant shall fail to discharge any such mechanic's
or materialman's lien, Landlord may, at its option,
discharge the same and treat the cost thereof and any
legal expenses incurred in connection therewith, as
additional rent payable with the installment of Monthly
Base Rent next becoming due; it being hereby expressly
covenanted and agreed that such discharge by Landlord
shall
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<PAGE>
not be deemed to waive or release the default of Tenant in
not discharging the same. It is understood and agreed by
Landlord and Tenant that any such Alterations shall be
constructed on behalf of Tenant. It is further understood
and agreed that, in the event Landlord shall give its
written consent to Tenant's making any such Alterations,
such written consent shall not be deemed to be an
agreement or consent by landlord to subject Landlord's
interest in the Property to any mechanic's or
materialman's liens which may be filed in respect of any
such Alterations made by or on behalf of Tenant.
(c) Tenant shall indemnify and hold Landlord harmless from
and against any and all expenses, liens, claims, or
damages to any person or property which may or might arise
directly or indirectly by reason of making of any such
Alterations.
(d) If any Alterations are made without the prior written
consent of Landlord, Landlord retains the right to enter
the Premises at any time during the Term of this Lease to
correct or remove the same and restore the Premises to
their condition prior to the construction of the
unauthorized Alterations, and Tenant shall be liable and
hereby agrees to reimburse the Landlord for the costs of
such removal and restoration together with any and all
damages which the Landlord max' suffer and sustain as a
result thereof.
(e) All Alterations, including wall-to-wall carpet and
wall covering, to, in or upon the Premises shall, unless
the Landlord elects otherwise, become the property of
Landlord and shall remain upon the Premises and be
surrendered with Premises at the expiration or termination
of this Lease, or any renewal or extension period, without
disturbance. molestation or injury. Should the Landlord
elect that Alterations made by the Tenant upon the
Premises be removed upon the expiration or termination of
this Lease, or any renewal period, the Tenant hereby
agrees to cause same to be removed at the Tenant's sole
cost and expense. And to restore the Premises to the
original improved condition, on or before the expiration
or termination of this Lease or any renewal period. Should
Tenant fail to remove the same or restore the Premises,
the Landlord may cause same to be removed and/or the
Premises to be restored at the Tenant's expense, and the
Tenant hereby agrees to pay to the Landlord the cost of
such renewal and/or restoration together with any and all
damages which the Landlord may suffer and sustain by
reason of the failure of the Tenant to remove the same
and/or restore the Premises as herein provided.
(f) If Tenant is not in default in the performance of any
of its obligations under this Lease, Tenant shall have the
right to remove, prior to the expiration of the Term of
this Lease, all movable equipment, furniture or
furnishings which are not affixed to the Premises or the
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<PAGE>
Building and which were installed in the Premises at the
expense of Tenant. If such property of Tenant is not
removed by Tenant prior to the expiration or termination
of this Lease, the same shall become the property of
Landlord and shall be surrendered with the Premises as a
part thereof, or, at Landlord's option, Landlord may cause
the same to be removed and the Premises to be restored to
their original improved condition, and Tenant hereby
agrees to pay to Landlord the cost of such removal and
restoration together with any and all damages which
Landlord may suffer and sustain by reason of the failure
of Tenant to remove the same and restore the Premises or
Building as herein provided.
ADVERTISING 11. Except as otherwise herein provided, Tenant agrees
that no sign, advertisement, display or notice shall be
inscribed, painted or affixed on any part of the outside
or inside of the Premises or Building, except on the
directories and doors of offices, and then only in such
size, color and style as the Landlord shall approve.
Landlord shall have the right to prohibit any
advertisement, or display of items of the Tenant, wherever
appearing, which in the Landlord's reasonable opinion
tends to impair the reputation of the Building or its
desirability as a building for offices or for financial,
insurance or other institutions and businesses of like
nature. Upon written notice from the Landlord, Tenant
shall refrain from and discontinue such advertisement. In
the event that Tenant violates the terms of this section.
Landlord may remove any sign, advertisement, display or
notice and may charge the Tenant for any costs incurred by
Landlord in connection with such removal.
DELIVERIES 12. No freight, furniture or other bulky matter of any
description shall be received into the Building or carried
in the elevators, except as approved by the Landlord. All
moving of furniture, material and equipment in the
Building outside the Premises must be with the prior
written consent of the Landlord and in accordance with
Landlord's reasonable rules and instructions: however.
Landlord shall not be responsible for any damage to, or
charges for, moving the same. Tenant agrees to remove
promptly from the public area(s) within or adjacent to the
Building any of Tenant's personal property there delivered
or deposited. Landlord shall have the right to prescribe
the weight, method of installation, and position of safes
or other heavy fixtures or equipment. All damage done to
the Building by delivery, maintaining or removal of any
fixture or article of Tenant's furniture or equipment,
shall be repaired at the expense of Tenant.
EQUIPMENT 13. Tenant shall not install or operate in the Premises
any electrically operated equipment or other machinery,
except typewriters, adding machines, copiers, personal
computers, and such other office machinery and equipment
as is normally used in the operation of Tenant's business,
without obtaining the prior written consent of Landlord,
which shall not be unreasonably withheld or delayed, but
may be conditioned upon the
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<PAGE>
payment by Tenant of additional rent in compensation for
any excess consumption of water and/or electricity as may
result from the operation of said equipment or machinery.
Tenant shall not install any equipment of any kind or
nature which shall or may necessitate changes,
replacements, or additions to, or cause an abnormal
increase in its use of the water, plumbing, heating, air
conditioning, or electrical systems, which serve the
Premises, without the prior written consent of Landlord.
Such consent shall not be withheld unreasonably, but may
be conditioned upon the payment of Tenant of the cost of
such changes, replacements, additions, or increased use.
Notwithstanding the foregoing, in the event that office
equipment or mechanical equipment used by Tenant in the
Premises shall cause noise or vibration that may be
transmitted to any part of the Building to such a degree
as to be objectionable to Landlord or any other tenant,
Tenant shall install, at its own expense, vibration
eliminators or silencing devices sufficient to eliminate
such noise and/or vibration. Tenant shall not install in
the Premises any fixtures, equipment, machinery, furniture
or furnishings which place a load upon the floor exceeding
the designed floor load capacity.
INSPECTIONS; ENTRY 14. Tenant agrees to allow Landlord, its agents or
employees to enter the Premises at all reasonable times to
examine, inspect or protect the same; to prevent damage or
injury to the same and/or to any other portion of the
Building; to make such alterations, additions,
improvements and repairs to the Premises or adjacent
portions of the Building as Landlord may deem necessary or
desirable; or to exhibit the same to prospective tenants
during the last SIX (6) months of the Term of this Lease,
or any renewal or extension period. or to prospective
purchasers of the Building or any portion thereof at any
time. None of the same shall be construed as an eviction,
actual or constructive. The rent reserved shall not abate
while such alterations, additions, improvements or repairs
are being made, or because of such inspections or
exhibitions, whether by reason of loss or interruption of
Tenant's business or otherwise. Landlord agrees to make
all reasonable efforts to minimize any disruption of
Tenant's business by reason of such activities. Landlord's
right of entry for any purpose shall, however, be subject
to any State or Federal laws and regulations that may
currently enlist or may become applicable because of any
secret, confidential, or other restricted activities
carried on by Tenant in the Premises.
INSURANCE 15. (a) Insurance Rating. Tenant will not conduct or
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permit to be conducted any activity other than normal
office business nor will Tenant place any equipment in or
about the Premises or the Property which will, in any way,
increase the rate of property and casualty or other
insurance on the Property. If any increase in the rate of
property and casualty insurance or other insurance is
stated by any insurance company or by the applicable
Insurance Rating Bureau to be due to any activity or
equipment of Tenant in or about the Premises or the
Property, such
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statements shall be conclusive evidence that the increase
in such rate is due to such activity or equipment, and, as
a result thereof, Tenant shall be liable for such increase
and shall reimburse Landlord therefor upon demand. Any
such sum due Landlord shall be considered additional rent
payable hereunder.
(b) Liability Insurance. Tenant shall carry public
liability insurance with a company or companies licensed
to do business in the Commonwealth of Virginia and rated
not lower than Level A, Class XII, as rated in the most
recent edition of "Best's Key Rating Guide" for insurance
companies. Said insurance shall cover all liability of
Tenant and its authorized representatives arising out of
and in connection with Tenant's use or occupancy of the
Premises and the Property. Said insurance shall be in
minimum amounts set forth in the rules and regulations
established by Landlord from time to time such amounts to
be reasonable for Tenant's type of business; a copy of the
current rules and regulations is attached hereto as
Exhibit B. Said insurance shall name Landlord, and the
building management agency as additional insured, as their
interests may appear, and shall contain an endorsement
that said insurance shall remain in full force and effect
notwithstanding that the insured has waived his right of
action against any party prior to the occurrence of a
loss. A current Certificate of Insurance from such insurer
shall be delivered to Landlord's agent prior to the Lease
Commencement Date and renewals thereof shall be delivered
to Landlord's agent at least THIRTY (30) days prior to the
expiration of any such policy. Each policy shall contain
an endorsement that will prohibit its cancellation prior
to the expiration of THIRTY (30) days after written notice
to Landlord of such proposed cancellation.
(c) Waiver of Subrogation. Each party hereby waives, and
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shall have included in its liability insurance policies
for the Building and/or property insurance covering
Tenant's contents, furniture, furnishings, fixtures and
other property, appropriate clauses pursuant to which each
party's insurance carriers waive, all rights of
subrogation against the other party, its principals,
agents and employees, with respect to losses payable under
such policies, or appropriate clauses setting forth that
such policies shall not be invalidated should the insured
waive in writing prior to a loss any or all right of
recovery against any party for losses covered by such
policies. If either party at any time is unable to obtain
inclusion of either of the clauses described in the
preceding sentence, then such party shall have the other
party named in such policies as an additional insured, as
their interests may appear. If either party shall be named
as an additional insured in accordance with the foregoing
provisions, and if the main insured shall not be in
default hereunder, and, if progress satisfactory to
Landlord is being made with regard to repairs to any
damage to the Premises or improvements therein, the
additional insured shall promptly endorse to the order of
the main insured, without recourse, any check,
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draft or order for the payment of money representing the
proceeds of any such policy, or representing any other
payment under such policies, and the additional insured
hereby irrevocably waives any and all rights in and to
such proceeds and payments. Each party shall advise the
other party promptly as to the coverage or language of the
clauses included in its insurance policies pursuant to
this paragraph and shall notify the other party promptly
of any cancellation or change of the terms of any such
policies which would affect such clauses. All Certificates
of Insurance provided hereunder shall set forth the waiver
of subrogation provisions contained in the subject policy.
(d) Property and Casualty Insurance. Tenant covenants and
-------------------------------
agrees to maintain standard property and casualty
insurance covering its property located in, on or about
the Premises. Said insurance shall be replacement cost,
all risk coverage for all leasehold improvements other
than the building standard improvements. Tenant shall
deliver a Certificate of Insurance from its insurer to
Landlord's agent prior to the Lease Commencement Date, and
renewals thereof shall be delivered to Landlord's agent at
least THIRTY (30) days prior to the expiration of any such
policy.
DAMAGES TO 16. All breakage. injury or damage to the Premises or to
PREMISES OR Property, including damage to carpeting, wall finishes,
BUILDING and other items of improvement thereto, in any way caused
by Tenant or its agents, employees, contractors, visitors,
guests and invitees, shall be repaired at the expense of
the Tenant, except those covered by standard fire and
extended coverage perils insurance. Landlord shall make,
or cause to be made, such necessary repairs. alterations
and replacements, structural, nonstructural or otherwise,
and any charge. costs or damages so incurred by the
Landlord shall be paid by the Tenant. Landlord shall be
entitled to regard such charges, costs or damages as
additional rent, payable with the installment of Monthly
Base Rent next becoming due under this Lease. This
provision shall be construed as an additional remedy
granted to Landlord and not in limitation of any other
rights and remedies which Landlord has or may have.
WAIVER OF 17. (a) Tenant's Property and Personal Injury. All
LIABILITY -------------------------------------
INDEMNITY personal property of Tenant (for the purposes of this
Section, the term "Tenant" shall include Tenant, its
agents, employees, contractors, visitors, guests and
invitees) contained in the Premises shall be and remain
there at the sole risk of Tenant. Landlord and/or its
agents and employees shall not be liable for any accident
or damage to property of Tenant resulting from the use or
operation of elevators, heating, cooling, electrical or
plumbing apparatus, water, steam, or any other cause; nor
shall they be liable for any personal injury to Tenant
arising from the use, occupancy and/or condition of the
Premises or Property unless such injury shall directly
result directly from the gross negligence or willful
misconduct of Landlord; nor shall they be
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liable in any event for any interruption or loss of
Tenant's business. Notwithstanding any other language
contained herein, Landlord and/or its agents and employees
shall not be liable to Tenant for any loss, damage or
injury to person or property, even if the same is caused
by their negligence or willful misconduct, to the extent
that Tenant is compensated therefore by Tenant's
insurance.
(b) Tenant's Indemnity. Tenant shall indemnify and hold
Landlord and it's agents and employees harmless from all
loss, damage, liability, cost or expense incurred,
suffered, or claimed by any person or entity by reason of
injury, loss, or damage to any person, property or
business resulting from any default hereunder by Tenant,
or from Tenant's willful act, negligence or negligent or
unlawful use of the Premises or the Property or anything
therein, including but not limited to, water, steam,
electricity, or other facilities or equipment. Landlord
and/or its agents and employees assume no liability or
responsibility whatsoever with respect to the conduct and
operation of the business to be conducted by Tenant in the
Premises, and shall not be liable for any accident or
injury to any person or property which are caused by the
conduct and operation of Tenant's business. Tenant agrees
to indemnify and hold harmless Landlord, its agents and
employees, against all such claims.
BANKRUPTCY 18. All of the terms and provisions of this paragraph 18
are made expressly subject to and governed by the
provisions of the United States Bankruptcy Code and the
orders, rulings and other determination of any bankruptcy
court of appropriate jurisdiction relating to the Tenant
and/or this Lease. Thus, any provision of this paragraph
which is contrary to or in any way inconsistent with the
provisions of the United States Bankruptcy Code or any
order, ruling or other determination of any bankruptcy
court of appropriate jurisdiction shall, be deemed invalid
and of no force and effect.
(a) In the event that Tenant shall become a Debtor under
Chapter 7 of the Bankruptcy Code, and the Trustee or
Tenant shall elect to assume this Lease for the purpose of
assigning the same or otherwise, such election and
assignment may only be made if all of the terms and
conditions of subsection (b) and subsection (d) of this
Section 18 are satisfied. If such Trustee shall fail to
elect or assume this Lease within sixty (60) days after
the filing of the Petition, this Lease shall be deemed to
have been rejected. Landlord shall be thereupon
immediately entitled to possession of the Premises without
further obligation to Tenant or Trustee, and this Lease
shall be canceled, but Landlord's right to be compensated
for damages in such liquidation proceeding shall survive.
(b) In the event that a Petition for reorganization or
adjustment of debts is filed concerning Tenant under
Chapters 11 and 13 the Bankruptcy Code, or a proceeding is
filed under Chapter 7 of the
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Bankruptcy Code and is transferred to Chapter 11 or 13,
the Trustee or Tenant, as Debtor-In-Possession, must elect
to assume this Lease within SEVENTY-FIVE (75) days from
the date of the filing of the Petition under Chapters 11
or 13, or the Trustee or Debtor-In-Possession shall be
deemed to have rejected this Lease. No election by the
Trustee or Debtor-In-Possession to assume this Lease,
whether under Chapters 7, 11 or 13, shall be effective
unless each of the following conditions, which Landlord
and Tenant acknowledge are commercially reasonable in the
context of a bankruptcy proceeding of Tenant, have been
satisfied, and Landlord has so acknowledged in writing:
(1) The Trustee or the Debtor-in-Possession has cured, or
has provided Landlord adequate assurance (as defined
below) that:
(A) Within TEN (10) days from the date of such
assumption the Trustee will cure all monetary defaults
under this Lease; and
(B) Within THIRTY (30) days from the date of
such assumption the Trustee will cure all non-monetary
defaults under this Lease.
(2) The Trustee or the Debtor-in-Possession has
compensated, or has provided to Landlord adequate
assurance (as defined below) that within TEN (10) days
from the date of assumption. Landlord will be compensated
for any pecuniary loss incurred by Landlord arising from
the default of Tenant, the Trustee, or the
Debtor-in-Possession as recited in Landlord's written
statement of pecuniary loss sent to the Trustee or the
Debtor-in-Possession.
(3) The Trustee or the Debtor-In-Possession has provided
Landlord with adequate assurance of the future performance
of each of Tenant's, Trustee's or Debtor-In Possession's
obligations under this Lease provided, however, that:
(A) The Trustee or Debtor-In-Possession shall also deposit
with Landlord as security for the timely payment of rent,
an amount equal to THREE (3) months' base Rent and other
monetary charges accruing under this Lease; and
(B) If not otherwise required by the terms of this Lease,
the Trustee or Debtor-In-Possession shall also pay in
advance on the date Monthly Base Rent is payable,
ONE-TWELFTH (1/12) of Tenant's annual obligations under
this Lease for operating expenses real estate taxes, and
similar charges.
(C) The obligations imposed upon the Trustee or
Debtor-In-Possession shall continue with respect to Tenant
or any assignee of the
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Lease after the completion of bankruptcy proceedings.
(4) The assumption of the Lease will not:
(A) Breach any provision in any other lease,
mortgage, financing agreement or other agreement by which
Landlord is bound relating to the Building; or
(B) Disrupt, in Landlord's judgment, the tenant
mix of the Building or any other attempt by Landlord to
provide a specific variety of commercial tenants in the
Building which, in Landlord's judgment, would be most
beneficial to all of the tenants of the Building and would
enhance the image, reputation, and profitability of the
Building.
(C) For purposes of this subsection (b),
Landlord and Tenant acknowledge that, in the context of a
bankruptcy proceeding of Tenant, at a minimum "adequate
assurance shall mean:
(i) The Trustee or the Debtor-In-Possession has
and will continue to have sufficient unencumbered assets
after the payment of all secured obligations and
administrative expenses to assure Landlord that the
Trustee or Debtor-In-Possession will have sufficient funds
to fulfill the obligations of Tenant under this Lease, and
to keep the Premises stocked with inventory and properly
staffed with sufficient employees to conduct a
fully-operational. actively promoted business on the
Premises; and
(ii) The Bankruptcy Court shall have entered an
Order segregating sufficient cash payable to Landlord
and/or the Trustee or Debtor-In-Possession shall have
granted valid and perfected first lien and security
interest and/or mortgage in property of Tenant, Trustee or
Debtor-In-Possession, acceptable as to value and kind to
Landlord, to secure to Landlord the obligation of the
Trustee or Debtor-In-Possession to cure the monetary
and/or non-monetary defaults under this Lease within the
time period set forth above.
(c) In the extent that this Lease is assumed by a Trustee
appointed for Tenant or by Tenant as Debtor-In-Possession
under the provisions of subsection (b) hereof and
thereafter Tenant is liquidated of debts under Chapters 11
or 13 of the Bankruptcy Code, then, and in either of such
events, Landlord may, at its option, terminate this Lease
and all rights of Tenant hereunder, by giving Tenant
written notice of its election to so terminate, by no
later than THIRTY (30) days after the occurrence of either
of such events.
(d) If the Trustee or Debtor-In-Possession has assumed the
Lease pursuant to the terms and provisions of subsections
(a) or (b) herein, for the purpose of assigning (or elects
to assign) Tenant's interest under this
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Lease, or the estate created thereby, to any other person,
such interest or estate may be so assigned only if
Landlord shall acknowledge in writing that the intended
assignee has provided adequate assurance as defined in
this subsection (d) of future performance of all of the
terms, covenants and conditions of this Lease to be
perf6rmed by Tenant.
For purposes of this subsection (d), Landlord and Tenant
acknowledge that, in the context of a bankruptcy
proceeding of Tenant, at a minimum "adequate assurance of
future performance" shall mean that each of the following
conditions have been satisfied, and Landlord has so
acknowledged in writing:
(1) The assignee has submitted a current financial
statement audited by a Certified Public Accountant which
shows a net worth and working capital in amounts
determined to be sufficient by Landlord to assure the
future performance by such assignee of Tenant's
obligations under this Lease:
(2) The assignee, if requested by Landlord, shall have
obtained guarantees in form and substance satisfactory to
Landlord from one or more persons who satisfy Landlord's
standards of creditworthiness:
(3) Landlord has obtained all consents or waivers from any
third party required under any lease, mortgage. financing
arrangement or other agreement by which Landlord is bound
in order to permit Landlord to consent to such assignment.
(e) When, pursuant to the Bankruptcy Code, the Trustee or
Debtor-In-Possession shall be obligated to pay reasonable
use and occupancy charges for the use of the Premises or
any portion thereof, such charges shall not be less than
the Base Rent as defined in this Lease and other monetary
obligations of Tenant for the payment of operating
expenses, real estate taxes, and similar charges.
(f) Neither Tenant's interest in the Lease, nor any lesser
interest of Tenant herein, nor any estate of Tenant hereby
created, shall pass to any trustee, receiver, assignee for
the benefit of creditors, or any other person or entity,
or otherwise by operation of law under the laws of any
state having jurisdiction of the person or property of
Tenant (hereinafter referred to as the "state law") unless
Landlord shall consent to such transfer in writing. No
acceptance by Landlord of rent or any other payments from
any such trustee, receiver, assignee, person or other
entity shall be deemed to have waived, nor shall it waive
the need to obtain Landlord's consent of Landlord's right
to terminate this Lease for any transfer of Tenant's
interest under this Lease without such consent.
(g) In the event the estate of Tenant created hereby shall
be taken in
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<PAGE>
execution or by other process of law, or if Tenant or any
guarantor of Tenant's obligations hereunder (hereinafter
referred to as the "guarantor") shall be adjudicated
insolvent pursuant to the provisions of any present or
future insolvency law under state law, or if any
proceedings are filed by or against the guarantor under
the Bankruptcy Code, or any similar provisions of any
future federal bankruptcy law, or if a Receiver or Trustee
of the property of Tenant or the guarantor shall be
appointed under state law by reason of Tenant's or the
guarantor's insolvency or inability to pay its debts as
they become due or otherwise, or if any assignment shall
be made of Tenant's or the guarantor's property for the
benefit of creditors under state law, then and in such
event Landlord may, at its option, terminate this Lease
and all rights of Tenant hereunder by giving Tenant
written notice of the election to so terminate within
THIRTY (30) days after the occurrence of such event.
As used in this Section 18. the term "Tenant" shall
include any surety or other guarantor of this Lease.
CASUALTY 19. In the event of damage by fire or other casualty to
the Premises or any part thereof, this Lease shall not be
terminated unless otherwise provided hereinafter, but
Landlord shall diligently proceed to repair and restore
the same. During the period that Tenant is deprived of the
use of the damaged portion of the Premises, provided that
such damage was not caused by the negligence or willful
misconduct of Tenant, its agents, employees, contractors,
visitors, guests or invitees, the rent for the remainder
of the Premises shall be that portion of the total rent
which the area remaining that can be occupied bears to the
total area of the Premises, so long as Tenant shall be
able to operate its business normally; if Tenant shall be
unable to operate its business normally, then rent shall
be abated during such period. If during the Term of this
Lease the Premises shall be so damaged by fire or other
casualty as to be untenantable, then unless said damage be
repaired within ONE HUNDRED TWENTY (120) days after said
fire or other casualty, either party, upon written notice
to the other party given at any time following the
expiration of ONE HUNDRED TWENTY (120) days thereafter,
may terminate this Lease, in which case the rent and
additional rent shall be apportioned and paid to the date
of said fire or other casualty. In the event that the
Building is so severely damaged or destroyed by fire or
other casualty (although the Premises may not be affected)
that Landlord shall decide within SIXTY (60) days
following such event of casualty not to rebuild or
construct the Building, then Landlord shall give written
notice to Tenant and this Lease and the tenancy hereunder
shall terminate in accordance with such notice.
CONDEMNATION 20. (a) Tenant agrees that if the Premises or a
substantial part thereof shall be taken, or sold under the
threat of condemnation, for public or quasi-public use or
purpose by or to any competent authority, this Lease
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shall fully terminate as of the date of any such taking.
Tenant shall have no claim against Landlord and shall have
no claim or right to any portion of the award which may be
made to Landlord as a result of any such condemnation; all
rights of Tenant to damages therefor, if any, are hereby
assigned by Tenant to Landlord. Upon such condemnation or
taking, the Term of this Lease shall cease and terminate
from the date of such taking or condemnation, and Tenant
shall have no claim against Landlord for the value of any
unexpired term of this Lease, leasehold improvements, or
good will. Notwithstanding the foregoing, Tenant shall be
free to pursue a separate claim against the condemning
authority for the depreciated value of its leasehold
improvements, provided that any award to Tenant shall not
result in a diminution of any award to Landlord.
(b) If less than a substantial part of the Premises is
taken or condemned, the rent for the remainder of the
Premises shall be that portion of the total rent which the
area remaining that can be occupied bears to the total
area of the Premises, effective on the date when title
vests in such governmental authority. The Lease shall
otherwise remain in full force and effect. For purposes
hereof, a substantial part of the Premises shall be
considered to have been taken if Tenant shall be unable to
operate its business in its normal and customary manner.
DEFAULT 21.(a) It is agreed that Tenant shall be in default if
Tenant shall fail to pay the rent (including any
additional rent) at the time the same shall become due and
payable as provided hereunder in Section 3(a) of this
Lease, and Tenant shall not cure such default within TEN
(10) days after the date due and payable for payment of
such rent; or if Tenant shall breach. violate, fail, or
neglect to keep and perform any of the other terms,
covenants, or conditions herein contained, or contained in
the Building Instruments, and Tenant shall not cure such
breach within THIRTY (30) days after written demand by
Landlord therefor, or, if such breach cannot reasonably be
cured within such period, Tenant shall fail to diligently
attempt to cure such breach, or if the Premises shall
become vacant or abandoned (provided that Landlord shall
not construe any vacation or abandonment of the Premises
before the expiration of the Term hereof as a default so
long as Tenant continues to comply with all covenants and
conditions of the Lease).
(b) In the event of default by Tenant, then and in each
such case, Landlord may treat the occurrence of such event
as a breach of this Lease, and in addition to any and all
other rights or remedies of Landlord in this Lease or at
law or in equity provided, it shall be, at the option of
Landlord, without further notice or demand of any kind to
Tenant or any other person:
(i) The right of Landlord, even though it may have relet
the Premises as hereinbelow provided, to declare the Lease
Term ended and
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to re-enter the Premises and take possession thereof and
remove all persons therefrom, and Tenant shall have no
further claim thereon or thereto;
(ii) The right of Landlord to bring suit for the
collection of rent and other charges, as it accrues
pursuant to the terms of this Lease, and damages
(including without limitation reasonable attorneys' fees
and the cost of renovating the Premises) without entering
into possession of said Premises or canceling this Lease;
(iii) The right of Landlord to re-enter or retake
possession of the Premises from Tenant by summary
proceedings or otherwise and to remove, or cause to be
removed, Tenant or any other occupants from the premises
in such manner as Landlord shall deem advisable with or
without legal process and using self-help if necessary,
and it is agreed that the commencement and prosecution of
any action by Landlord in an unlawful detainer, ejectment
or otherwise or any execution of any judgment or decree
obtained in any action to recover possession of the
Premises or any other re-entry and removal shall not be
construed as an election to terminate this Lease whether
or not such entry or reentry be had or taken under summary
proceedings or otherwise, and shall not be deemed to have
absolved or discharged Tenant from any of its obligations
or liabilities for the remainder of the Term. Tenant
shall, notwithstanding any such entry or re-entry,
continue to be liable for the payment of rent and the
performance of the other covenants, conditions and
agreements by Tenant to be performed as set forth in this
Lease, and Tenant shall pay to Landlord all monthly
deficits, after any such re-entry, in monthly installments
as the amounts of such deficits from time to time are
ascertained. In the event of any such ouster. Landlord
shall have the right but not the duty to rent or lease the
Premises to some other person. firm or corporation
(whether for a term greater or less than or equal to the
unexpired portion of the Term or whether the space leased
by the new lease includes more or less floor area than the
Premises) on such terms and conditions and for such rental
as the Landlord may deem proper and to collect said rental
and any other rental that may thereafter become payable.
In such event, the rentals received by Landlord from such
reletting shall be applied: first, to the payment of any
indebtedness other than the rent due hereunder from Tenant
to Landlord; second, to the payment of any cost of such
reletting (including without limitations the making of any
alterations, repairs or decorations in the Premises which
Landlord deems advisable); third, to the payment of the
cost of any alterations and repairs to the Premises;
third, to the payment of rent due and unpaid hereunder,
and the residue, if any, shall be held by Landlord and
applied in payment of future rent as the same may become
due and payable hereunder. Should that portion of such
rentals received from such reletting during any month,
which is applied to the payment of rent hereunder, be less
than the rent payable during that month by Tenant
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hereunder, then Tenant shall pay such deficiency to
Landlord. Such deficiency shall be calculated and paid
monthly; Tenant shall have no right to any excess. Tenant
shall also pay to Landlord, as soon as ascertained, any
costs and expenses, including, but not limited to,
brokerage commissions and attorneys' fees, incurred by
Landlord in such reletting or in making such alterations
and repairs not covered by the rental received from such
reletting. Nothing herein contained shall be construed as
obligating the Landlord to relet the whole or any part of
the Premises whatsoever. In the event of any entry or
taking possession of the Premises as aforesaid, Landlord
shall have the right, but not the obligation, to remove
therefrom all or any part of the personal property located
therein and may place the same in storage at a public
warehouse at the expense and risk of the owner or owners
thereof. The terms "re-enter" or "re-entry" as used in
this Lease are not and shall not be restricted to their
technical meaning but are used in their broadest sense.
(c) If Landlord elects to terminate this Lease under
the provisions set forth above, Landlord may recover from
Tenant as damages (all of which shall be immediately due
and payable from Tenant to Landlord), in addition to its
other remedies:
(i) Any unpaid rent, including interest
thereon, which is due and owing at the time of such
termination: plus
(ii) That rent, including interest thereon,
which would have been earned after termination until the
time of judgment; plus
(iii) A sum representing liquidated damages and
not penalty in an amount equal to the excess of the Base
Rent for the Premises at the time of termination and the
additional rent provided for in Section 4 above for the
year in which this Lease shall be terminated multiplied by
the number of years and fraction of a year then
constituting the remainder of the Term hereof. Over the
rental value of the Premises at the time of termination
for such unexpired Term, discounted at a rate of SEVEN
percent (7%) per annum to present value, less commissions,
advertising, cost of repairs and other expenses incidental
to reletting of such Premises.
Nothing herein contained shall limit or
prejudice the right of the Landlord to prove and obtain as
liquidated damages in any bankruptcy, insolvency,
receivership, reorganization or arrangement proceeding an
amount equal to the maximum allowed by any statute or rule
of law governing such proceedings and in effect at the
time when such damages are to be proved, whether or not
such amount be greater, equal to or less than the amount
of the excess referred to in the preceding sentence. In
determining the rental value of the Premises, the
commercially reasonable rental realized by any reletting
accomplished or accepted by
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Landlord within a reasonable time after termination of
this Lease, shall be deemed, prima facie, to be the rental
value.
(iv) Any other amount necessary to compensate
Landlord for all the detriment directly caused by Tenant's
failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to
result therefrom including without limitation to cost of
renovating the Premises and reasonable attorneys' fees;
plus
(v) At Landlord's election, such other amounts,
in addition to or in lieu of the foregoing, as may be
permitted from time to time by applicable law.
(d) In the event of default, all of the Tenant's fixtures,
furniture, equipment, improvements, additions,
alterations, and other personal property shall remain on
the Premises and in that event and continuing during the
length of said default, Landlord shall have the right to
take exclusive possession of same and to use the same,
rent or charge free, until all defaults are cured or. At
its option, at any time during the Lease Term, to require
Tenant to forthwith remove same. In connection with the
foregoing, Landlord shall have a lien upon the property of
Tenant in the Premises during the Lease Term for the
amount of any unpaid rent or other sum due from Tenant
hereunder. Except upon expiration of this Lease where no
default exists in the payment of rent or other sums due
from Tenant hereunder, Tenant shall not remove any of
Tenant's property from the Premises without the prior
written consent of Landlord, other than pursuant to sale
thereof in the regular course of its business, and
Landlord shall have the right and privilege at its sole
option and discretion, to take possession of all property
of Tenant in the Premises, to store the same in said
Premises, or to remove it therefrom and store it in such
place as ma; be selected by Landlord, at Tenant's risk and
expense, in accordance with such lien and of any rights of
distraint it may possess against Tenant's said property.
(e) In the event of a breach or threatened breach by
Tenant of any of the covenants or provisions hereof,
Landlord shall have the right of injunction and the right
to invoke any remedy allowed at law or in equity as if
re-entry, summary proceedings and other remedies were not
therein provided for; and in such event Landlord shall be
entitled to recover from Tenant, payable as additional
rent hereunder, any and all reasonable expenses as
Landlord may incur in connection with its efforts to
secure such injunctive relief or other remedy at law or in
equity, such as court costs and attorneys' fees. Landlord
and Tenant hereby expressly waive trial by jury in any
action, proceeding or counterclaim, brought by either of
them against the other, on any matter whatsoever arising
out of or in any way connected with this Lease, their
relationship as Landlord and Tenant, Tenant's use and
occupancy of the Premises and/or any claim of
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injury or damage. If Landlord shall commence any
proceeding for non-payment of rent, or any other payment
of any kind to which Landlord may be entitled or which it
may claim hereunder, Tenant will not interpose any
counterclaim or set-off of whatever nature or description
in any such proceeding, the parties hereto specifically
agreeing that Tenant's covenants to pay rent or any other
payments required of it hereunder are independent of all
other covenants and agreements herein contained, provided,
however, that this shall not be constructed as a waiver of
Tenant's rights to assert such a claim in any separate
action brought by Tenant. Tenant further waives any right
of defense which may have to claim a merger, and neither
the commencement of any action or proceeding settlement
thereof nor entering of judgment shall bar Landlord from
bringing subsequent actions or proceedings from time to
time. Mention in this Lease of any particular remedy shall
not preclude Landlord from any other remedy at law or in
equity to which it may be entitled. Tenant hereby
expressly waives any and all rights of redemption granted
by or under any present or future laws in event of Tenant
being evicted or dispossessed for any cause, or in the
event of Landlord obtaining possession of the Premises by
reason of the violation by Tenant of any of the covenants
and conditions of this Lease, or otherwise.
(f) It is further provided that, if legal proceedings are
instituted hereunder, and a compromise or settlement
thereof shall be made, it shall not be constituted as a
waiver of any breach of any covenant, condition or
agreement herein contained.
(g) No payment by Tenant or receipt by Landlord of a
lesser amount than the Monthly Base Rent herein stipulated
shall be deemed to be other than on account of the
earliest stipulated rent then due. nor shall any
endorsement or statement on any check or any letter
accompanying any check or payment of rent be deemed an
accord and satisfaction, and Landlord may accept such
check or payment without prejudice to Landlord's right to
recover the balance of such rent or to pursue any other
remedy.
(h) Should Tenant fail to pay rent (including any
additional rent) as and when the same is due, Landlord
shall not be required to wait until the expiration of the
Term hereof to sue for Landlord's loss or damages, but
shall have the right to sue from time to time to recover
unpaid rent and other damages as provided in this Lease.
Landlord shall have the option to declare the entire
balance of the Base Rent (including annual increases as
provided herein) immediately due and payable upon failure
by Tenant to cure any default within the time prescribed
herein. Landlord shall have the further option to defer
action until the expiration of the Term, in which event
the cause of action shall not be deemed to have accrued
until the date of expiration. All rights and remedies of
Landlord under this Lease shall be cumulative and shall
not be exclusive of any other rights
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and remedies provided to Landlord under applicable law.
(i) If prior to the commencement of the Term of this
Lease, Tenant notifies Landlord of or otherwise
unequivocally demonstrates an intention to repudiate this
Lease, Landlord may, at its option, consider such
anticipatory repudiation a breach of this Lease. In
addition to any other remedies available to it hereunder
or at law or in equity, Landlord may retain all rent paid
upon execution of the Lease and the security deposit, if
any, to be applied to damages of Landlord incurred as a
result of such repudiation, including, without limitation,
attorneys' fees, brokerage fees, costs of reletting and
loss of rent. It is agreed between the parties that for
the purpose of calculating Landlord's damages, in a
building which has other available space at the time of
Tenant's breach, Landlord shall have no obligation to rent
the Premises prior to other space in the Building.
SUBORDINATION 22. This Lease is subject and subordinate to all ground or
underlying leases, if any, and to any deeds of trust which
may now or hereafter affect this Lease or the Property,
and to all renewals, modifications, consolidations,
replacements and extensions thereof. Notwithstanding the
foregoing. Tenant shall have the right to keep the Lease
in full force and effect so long as Tenant shall fully
comply with all the terms of this Lease. This clause shall
be self-operative and no further instrument of
subordination shall be necessary to effect the
subordination of this Lease to the lien of any such lease,
mortgage or deed of trust. In confirmation of such
subordination, however, Tenant shall execute promptly any
such certificate or subordination agreement that Landlord
may request. Tenant hereby constitutes and appoints
Landlord as Tenant's attorney-in-fact to execute any such
certificate(s) for and on behalf of Tenant, said
appointment to be a power coupled with an interest and
irrevocable during the Term of this Lease. In the event of
any proceeding to terminate any ground or underlying
lease, or in the event of any proceeding for the
foreclosure of any mortgage or deed of trust to which this
Lease is subordinate, the ground lessor, purchaser,
assignee or other successor to Landlord's rights, shall
have the option to terminate or cancel this Lease; if this
Lease is not so terminated or canceled, Tenant shall
attorn to the Lessor thereunder or to the purchaser at the
foreclosure sale.
Upon request and with reasonable notice from Tenant,
Landlord shall obtain a non-disturbance agreement on
Tenant's behalf from each existing Mortgagee (and any
future mortgagees upon request by Tenant) on such
Mortgagees's commercially reasonable standard form (and in
recordable form) agreeing that such Mortgagee or any
purchaser in a foreclosure sale shall recognize and be
bound by the terms of this Lease upon a foreclosure or
deed in lieu thereof (as long as no Event of Default
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exists hereunder).
HOLDOVER 23. If Tenant shall remain in the Premises, with the
PROVISIONS knowledge and written consent of Landlord, after the
expiration of the Term of this Lease, or any renewal or
extension thereof, Tenant shall become a tenant from month
to month at ONE HUNDRED TEN PERCENT (110%) of the monthly
rental for the last month of the Lease Term, commencing on
the first day next after the Lease Expiration Date. Tenant
shall give to Landlord at least THIRTY (30) days written
notice of any intention to quit the Premises, and Tenant
shall be entitled to THIRTY (30) days written notice to
quit except in the event of default hereunder. All other
terms and conditions of this Lease shall remain in full
force and effect. Provided, however, that in the event
that Tenant shall hold over without Landlord's knowledge
and consent, then at any time prior to Landlord's
acceptance of rent from Tenant as a monthly tenant
hereunder, Landlord, at its option, may re-enter and take
possession of the Premises without process, or by any
legal proceeds in force in the jurisdiction in which the
Building is situated.
SUCCESSORS' 24. It is agreed that all rights, remedies and liabilities
OBLIGATIONS hereunder given to or imposed upon either of the parties
hereto shall extend to their respective heirs, successors,
executors, administrators and assigns. This provision
shall not be deemed to grant Tenant any right to assign
this Lease or to sublet the Premises, except as set forth
in Section 7 above. Tenant acknowledges Landlord might not
be, now or in the future, the owner of the fee interest in
the Premises, the Building and/or Land. The term
"LANDLORD" as used in this Lease is hereby defined to be
only the then current owner or mortgagee in possession of
the Premises. In the event of any sale or sales by the
then current Landlord hereunder to any party then, from
and after the closing of such sale or lease transaction,
the Landlord whose interest is thus sold or leased shall
be and hereby is completely released and forever
discharged from and of all covenants, obligations and
liabilities of Landlord hereunder thereafter accruing.
RULES AND 25. The Tenant covenants that the rules and regulations
REGULATIONS set forth in Exhibit B, attached hereto and incorporated
herein by reference, and such other and further rules and
regulations as the Landlord may make and furnish to the
Tenant, and which in Landlord's judgment are necessary or
appropriate for the general well-being, safety, care and
cleanliness of the Premises and the Building together with
the appurtenances, shall be faithfully kept, observed and
performed by Tenant, and by Tenant's agents, servants,
employees and guests unless waived in writing by the
Landlord. All such rules and regulations shall be enforced
in a consistent manner by Landlord against all tenants in
the Buildings. Any failure by Landlord to enforce any rule
or regulation against any party shall not be deemed a
waiver of such rule or regulation or of Landlord's further
right
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<PAGE>
to enforce the same.
REPRESENT- 26. Landlord Covenants. Landlord covenants that it has the
ATIONS, right to make this Lease for the Term aforesaid, and that
WARRANTIES AND if Tenant shall pay the rent and performs all of the
COVENANTS covenants, terms, conditions, and agreements of this Lease
OF LANDLORDS to be performed by Tenant, Tenant shall, during the Term,
be able to freely, peaceably and quietly occupy and enjoy
the full possession of the Premises without molestation or
hindrance by Landlord or any party claiming through or
under Landlord, subject to other provisions contained in
this Lease.
(a) Landlord shall maintain during the term of this Lease,
all risk coverage for the Building in the amount of the
full replacement value thereof together with comprehensive
general liability insurance.
(b) Landlord represents and warrants to Tenant as follows:
To the best of Landlord's knowledge after due inquiry, no
governmental regulated hazardous or toxic substances have
been used, processed, released, discharged, generated,
treated, stored or disposed of on the Premises, the
Building or the land upon which the Building is located
(the "Land") and no hazardous or toxic substances
currently exist on or about the Premises, the Building or
the Land and, to the best of Landlord's knowledge, any
adjacent property. In the event Landlord becomes aware of
any governmental regulated hazardous or toxic substances
that have been used, processed, released, discharged,
generated, treated, stored or disposed of on the Premises,
the Building or the land upon which the Building is
located (the "Land"). Landlord shall remove or otherwise
contain any such substances within thirty (30) days after
Landlord becomes aware of such hazardous or toxic
substances.
RESERVATIONS OF 27. Tenant hereby acknowledges that the Landlord retains
RIGHTS OF ADDRESS the following rights: (i) to change the street address
and/or name of the Building and/or name of the Building
and/or the arrangement and/or location entrances,
passageways, doors, doorways, corridors, elevators,
stairs, toilets, or other public parts of the Building and
to make improvements, alterations, additions,
installations, eliminations and changes to the Building,
Land, parking facilities, or any part thereof, provided
that such changes do not unreasonably interfere with
Tenant's use and occupancy of the Premises or conduct of
its business (except in the event of an emergency); (ii)
to erect, use, and maintain pipes and conduits in and
through the Premises; (iii) to grant to anyone the
exclusive right to conduct any particular business or
undertaking in the Building; (iv) to install and maintain
signs on the Building and/or Land; and (v) have passkeys
to the Premises. Landlord may exercise any or all of the
foregoing rights without being deemed to be guilty of an
eviction, actual, or constructive, or a disturbance or
interruption of the business of
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Tenant or Tenant's use or occupancy of the Premises.
CONSTRUCTION 28. Landlord's Standard Work. It is understood and agreed
LEASEHOLD that Tenant will take the Premises in "AS-IS" condition
IMPROVEMENTS upon commencement of this Lease Agreement. All Leasehold
Improvements existing in the Premises upon occupancy of
Tenant or made by or for Tenant after commencement of any
lease term with Landlord shall remain as the sole property
of the Landlord, and in no event shall Tenant remove any
Leasehold Improvements from the Premises.
(a) Landlord or Tenant's contractors (as approved by
Landlord) shall perform the following Tenant Improvements
in Premises at Landlord's sole cost and expense:
(1) Recarpet Suite 410 to match as closely as
possible the carpet in Suite 430.
(2) Repaint both Suite 410 and Suite 430, using
building standard materials, in a color to be chosen by
Tenant.
(3) Construct a pass-through from one office
area to the other.
(4) Professionally clean existing carpet in
Suite 430.
(b) Tenant may request that Landlord or Tenant's
contractors (as approved by Landlord) perform additional
improvements upon the Premises ("Tenant Improvements") up
to a maximum amount of THREE AND NO/100 DOLLARS ($3.00)
per rentable square foot ("Allowance"). Said Tenant
Improvements shall include all architectural and
engineering fees, tenant plans and construction drawings,
any and all necessary permits, and all Tenant Improvement
work in Premises, in accordance with Tenant's Approved
Plans (which shall be set forth as Exhibit "C". a copy of
which shall be attached hereto and made a part hereof). In
the event that Tenant requests Landlord to perform said
Tenant Improvements on behalf of Tenant, Tenant shall
reimburse Landlord for all costs by adding the cost of the
Tenant Improvements to the Base Rent and by repaying this
amount to Landlord, on a monthly basis over the initial
term of the Lease. If Tenant elects to perform any
Additional Tenant Improvements to Premises in excess of
the Allowance, said Additional Improvements shall be at
the sole cost and expense of Tenant.
TERMINATION 29. Provided the Tenant is in possession of the Premises
OPTION and is not in default of the Lease, then Tenant shall have
the option to terminate this Lease anytime after the end
of the EIGHTEENTH (18th) MONTH of the Lease Term by
providing Landlord with at least SIX (6) MONTHS' prior
written notice of its intention to exercise this right of
termination. Should Tenant elect to exercise this right,
Tenant shall be subject to penalties,
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whereby Tenant shall reimburse and pay to Landlord all
unamortized costs of construction of Premises paid out by
Landlord for this Lease. Additional penalties shall be due
and payable as follows: If Tenant elects to terminate
between the end of the NINETEENTH (19TH) MONTH and the
TWENTY-SEVENTH (27TH) MONTH of the Lease, a penalty of TWO
(2) MONTHS' Base Rent shall be paid by Tenant; if the
Tenant elects to terminate between the TWENTY-EIGHTH
(28TH) MONTH and the THIRTY-SIXTH (36TH) MONTH, a penalty
of ONE (1) MONTH'S Base Rent shall be paid by Tenant. All
penalties shall be due and payable to Landlord by Tenant
within THIRTY (30) days of receipt of Tenant's notice
exercising this right. Time is of the essence.
MECHANIC 30. Tenant shall not do. or suffer to be done, any act,
LIENS matter or thing whereby the Premises (or Tenant's interest
therein), or any part thereof, may be encumbered by any
mechanics' or materialmen's lien and/or any other lien or
encumbrance. Tenant shall discharge, within ten (10)
business days after the date of filing, any mechanic's, or
materialmen's or other liens filed against the Premises,
or Tenant interest therein, or any part thereof,
purporting to be for work or material furnished, or to be
furnished, to Tenant.
PARKING 31. Landlord agrees to provide for the use of Tenant in
common with others, a surface parking area adjacent to the
Building in which the Demised Premises are located. The
Landlord reserves the right to promulgate rules and
regulations relating to the use of such surface parking
area. including such limitations as may, in the opinion of
the Landlord, be necessary and desirable. Tenant and
Tenant's employees shall park their vehicles only in those
portions of the parking areas designated for employee
parking by the Landlord. Further, Tenant and its employees
are expressly prohibited from parking in any portion of
the parking area designated or marked for visitor parking
only. Tenant, shall within FIVE (5) days after taking
possession of the Demised Premises, furnish Landlord or
its agent with the vehicle license numbers assigned to
Tenant's vehicles and the vehicles of Tenant's employees,
and shall thereafter notify the Landlord or its agent of
any changes within FIVE (5) days after such changes occur.
In the event that the Tenant or any of its employees shall
park their vehicles in any portion of the parking area
other than that portion designated for that purpose, then
the Landlord shall have the right, at Landlord's option,
to assess Tenant a fine or penalty for any such improperly
parked vehicle, and/or to have any such improperly parked
vehicle towed at Tenant's expense.
As an inducement to enter into this Lease Agreement,
Landlord agrees to assign SEVEN (7) parking spaces in the
parking lot of the Building specifically designated for
Tenant.
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<PAGE>
GENDER 32. Feminine or neuter pronouns shall be substituted for
the masculine form, and the plural shall be substituted
for the singular number, in any place or places herein in
which the context may require such substitution or
substitutions. Landlord and Tenant, as a matter of
convenience, have been referred to in neuter form.
NOTICES 33. All notices required or desired to be given hereunder
by either party to the other shall be hand delivered or
given by certified or registered mail, first-class postage
prepaid, return receipt requested. Notices to the
respective parties shall be addressed as follows:
To LANDLORD: ANNANDALE FINANCIAL CENTER
JOINT VENTURE
c/o Southern Management Corporation
1950 Old Gallows Road, Suite 600
Vienna, VA 22182
To TENANT: ONESOFT CORPORATION
ATTN: James W. McIntyre IV
7010 Little River Turnpike, Suite 430
Annandale VA 22003
Either party may. by like written notice, designate a new
address to which such notices shall be directed.
ESTOPPEL 34. Tenant agrees. at any time and from time to time, upon
CERTIFICATES not less than FIVE (5) days prior written notice by
Landlord, to execute , acknowledge and deliver to Landlord
a statement in writing (i) certifying that this Lease is
unmodified and in full force and effect (or if there have
been modifications, that the Lease is in full force and
effect as modified and stating the modification); (ii)
stating the dates to which the rent and any other charges
hereunder have been paid by Tenant; (iii) stating whether
or not to the best knowledge of Tenant. Landlord is in
default in the performance of any covenant; (iv) stating
the address to which notices to Tenant should be sent; and
(v) any other information as may be reasonably required.
Any such statement delivered pursuant hereto may be relied
upon by any owner of the Building or the Land, any
prospective purchaser of the Building or the Land, any
mortgagee or prospective mortgagee of the Building or the
Land or of Landlord's interest in either, or any
prospective assignee of any such mortgagee.
SECURITY 35. To secure the full faith performance by Tenant of all
DEPOSIT of the obligations, covenants, conditions and agreements
to be fulfilled, kept, observed, and performed by Tenant,
Tenant shall tender Landlord the
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sum of FIVE THOUSAND ONE HUNDRED SIXTY-EIGHT AND 00/100
DOLLARS ($5,168.75) which sum shall be held as a security
deposit ("SECURITY DEPOSIT") and applied towards its
damages and/or remedies in the event of Tenant's default.
Landlord's rights against Tenant in the event of Default
shall in no way be limited or restricted by this security
deposit. Upon the expiration of this Term (or any renewal
or extension thereof in accordance with this Lease),
Landlord shall, provided that tenant is not in default
under the terms hereof, return and pay back such security
deposit to tenant, less such portion thereof as Landlord
shall have appropriated to cure any default by tenant with
respect to any of Tenant's aforesaid obligations,
covenants, conditions and agreements and no damages or
expenses incurred by Landlord. In the event of any default
by Tenant hereunder, Landlord shall have the right, but
not the obligation, to apply all or any portion of the
Security Deposit to cure such default, in which event,
Tenant shall be obligated to promptly deposit with the
Landlord the amount necessary to restore the Security
Deposit to its original amount. In the event of the sale
or transfer of Landlord's interest in the Building,
Landlord shall have the right to transfer the Security
Deposit to such purchaser or transferee in which event
Tenant shall look only to the new Landlord for the return
of the Security Deposit and Landlord shall thereupon be
released from all liability to Tenant for the return of
such Security Deposit.
GOVERNING LAW 36. The parties agree that the laws of the Commonwealth of
Virginia shall govern the validity, performance and
enforcement of this Lease.
BROKERS 37. Landlord and Tenant each represent and warrant that
neither of them has employed any broker to negotiate the
terms of this Lease.
WAIVER OF BREACH 38. No delay in exercising or failure to exercise any
right or power hereunder by Landlord shall impair any such
right or shall be construed as a waiver of any breach or
default, or as acquiescence thereto. One or more waivers
of any covenants, terms or conditions of this Lease by
Landlord shall not be construed by the other party as a
waiver of a continuing or subsequent breach of the same
covenant, term or condition. The consent or approval by
Landlord to or of any act by Tenant of a nature requiring
consent or render unnecessary consent to or approval of
any subsequent similar act. No provision of this Lease
shall be deemed to have been waived by Landlord, unless
such waiver be in writing signed by Landlord.
SEVERABILITY 39. If any term or provision of this Lease or the
OF CLAUSES application thereof to any person or circumstance shall to
any extent be invalid or unenforceable, the remainder of
this Lease, or the application of such term or provision
to persons or circumstances other than to those as to
which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of the Lease
shall be valid and be enforced
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<PAGE>
to the fullest extent permitted by law.
CAPTIONS 40. The titles of the sections and paragraphs throughout
this Lease are for convenience FOR CON- and reference
only, and the words contained therein shall be in no way
held to explain, VENIENCE modify, amplify or aid in the
interpretation, construction or meaning of the provisions
of this Lease.
DUPLICATE COUNTER- 41. This Lease may be executed in one or more
PARTS ORIGINALS counterparts, each of which shall be an original, and all
of which shall constitute one and the same instrument.
ENTIRE AGREEMENT 42. This Lease constitutes the entire agreement between
the parties and no earlier statements or prior written
matter shall have any force or effect. Tenant is not
relying on any representations or agreements other than
those contained-in this Lease. This Lease shall not be
modified or canceled except by written instrument executed
by both parties.
(SIGNATURES ON FOLLOWING PAGE.)
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<PAGE>
WITNESSETH the following signatures and seals:
WITNESS: LANDLORD:
/s/ Walter C. Jarbe, Jr.
- ------------------------ ANNANDALE FINANCIAL
CENTER JOINT VENTURE
a Maryland general partnership
By: /s/ Susan Scott
---------------
Its: Agent
Date: 7/14/97
ATTEST: TENANT:
- -------------------------- ONESOFT CORPORATION
Corporate Secretary [SEAL] a Delaware corporation
By: /s/ James W. MacIntyre, IV
--------------------------
Its: President
Date: July 11, 1997
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<PAGE>
EXHIBIT "A"
SPACE PLAN
TO BE ATTACHED
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<PAGE>
EXHIBIT "B"
a. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls or other parts of the Building not occupied by any
tenant shall not be obstructed or encumbered by any tenant or used for any
purpose other than ingress or egress to and from the Premises. Landlord shall
have the right to control and operate the public portions of the Building, and
the facilities furnished for the common use of the tenants, in such manner as
Landlord reasonably deems best for the benefit of the tenants generally. No
tenant shall permit the visit to the Premises of persons in such numbers or
under such conditions as to materially interfere with the use and enjoyment by
other tenants of the entrances, corridors, elevators and other public portions
or facilities of the Building.
b. No awning or other projections shall be attached to the outside
walls of the building, without the prior written consent of Landlord.
Notwithstanding the existing window coverings, no drapes, blinds, shades, or
screens 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 Landlord. Such
awnings, projections, curtains, blinds, screens or other fixtures must be of a
quality, type, design, and color, and attached in a manner approved by Landlord.
c. The doors leading to the corridors or main halls shall be kept
closed during business hours except as they may be used to ingress or egress. No
additional locks shall be placed upon any doors of the Premises except for the
door of the file room, nor shall any changes be made in existing locks or the
mechanisms thereof; except that Tenant shall have the right at its expense to
install security locks on all entry doors and fire doors opening into the
Premises, and also on the doors to any offices within the Premises, provided
Tenant at the termination of its occupancy shall restore to Landlord all keys of
stores, offices, storage and toilet rooms, either furnished to, or otherwise
procured by Tenant, and in the event of the loss of any keys so furnished,
Tenant shall pay to Landlord the cost to replace. Tenant further agrees that,
should Landlord so require, Tenant will at its expense remove any additional
locks which it installed or caused to be installed, reinstall the original
hardware, and repair to Landlord's reasonable satisfaction any damage to doors
or frames. Tenant agrees to give access upon reasonable request to any such
locked area(s).
d. Tenant shall not construct, maintain, use or operate within the
Premises or elsewhere in the Building of which the Premises form a part or on
the outside of the Building, any electrical device, wiring or apparatus in
connection with a loud speaker system or other sound system unless the Tenant
shall have first obtained the prior written consent of the Landlord, except that
this restriction shall not apply to radios, television sets or dictating
machines, or paging systems, if such items are audible solely within the
Premises. There shall be no marking, painting, drilling into or in any way
defacing any part of the Demised Premises or the Building with the exception of
affixing wall decorations, shelving and like items within the Premises. No
Tenant shall throw anything out of the doors or windows or down the corridors or
stairs.
e. The employees of the landlord are prohibited as such from
receiving any packages or other articles delivered to the Building for the
Tenant, and should any such employee receive
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<PAGE>
any such packages or articles, he or she in so doing shall be the agent of the
Tenant and not of the Landlord.
f. The water and wash closets and other plumbing fixtures shall not
be used for any purposes other than those for which they were constructed, and
no sweepings, rubbish, rags, or other substances shall be thrown therein. All
reasonable costs for damages resulting from any misuse of the fixtures shall be
borne by the Tenant who, in whose servants, employees, agents, visitors, or
licensees, shall have caused same.
g. No vehicles or animals, except for animals whose function is to
assist disabled persons, of any kind shall be brought into or kept in or about
the Premises or the Building, and no cooking shall be done or permitted by the
Tenant on the demised premises except in kitchens constructed as part of Tenant
Improvements. No Tenant shall cause or permit any reasonably objectionable odors
to be produced upon or emanate from the Premises.
h. Neither Tenant, nor any of Tenant's servants, employees, agents,
visitors or licensees, shall at any time bring or keep upon the Premises any
inflammable, combustible or explosive fluid, chemical or substance except normal
and customary office supplies.
i. Canvassing, soliciting and peddling in the Building is prohibited
and Tenant shall cooperate to prevent the same.
j. Any person employed by Tenant to do janitorial work within the
Premises must first obtain Landlord's consent and such person shall, while in
the Building and outside of said demised premises, comply with all instructions
issued by the superintendent of the Building.
k. There shall not be used in any space, or in the public halls of
the Building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber
tires.
l. Access plates to under floor conduits must be left exposed. Where
carpet is installed, carpet must be cut around access plates.
m. Tenant shall use reasonable efforts to adjust thermostat, if
adjustable, to the setting which uses the least amount of energy upon leaving
the Premises daily.
n. Mats, trash, or other objects are not permitted in the public
corridors.
o. Landlord and/or its parking contractor shall have the right to
establish reasonable rules and regulations for the use of all parking facilities
at the Building.
p. Landlord shall have the right to determine when Tenant may move
its property; i.e., furnishings, files, etc., into or out of the Premises.
Tenant shall request permission from Landlord for any such move, and shall abide
by Landlord's reasonable rules regarding any such move.
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q. Tenant shall purchase and maintain comprehensive public liability
and property damage insurance on the Premises, protecting Landlord and Tenant
against loss, cost, or expense by reason of injury or death to persons or damage
to or destruction of property by reason of the use and occupancy of the Premises
by Tenant and its invitees, such insurance to be carried by reputable companies
and having limits of not less than $1,000,000.00 for injury to or death of any
one person, $1,000,000.00 for each accident and $1,000,000.00 for property
damage.
r. No tenant shall purchase spring water, ice, coffee, soft drinks,
towels or other like service, from any company or persons whose repeated
violations of the Building regulations have caused, in Landlord's opinion, a
hazard or nuisance to the Building and/or its occupants.
s. Landlord reserves the right to exclude from the Building at all
times any person who is not known or does not properly identify himself/herself
to the Building management or night watchman on duty. Landlord may at its
option, require all persons admitted to or leaving the Building between the
hours of 6:00 P.M. and 8:00 A.M., Monday through Friday, and at all times on
Saturdays, Sundays and legal holidays, to register. Tenant shall be responsible
for all persons for whom he authorizes entry into or exit out of the Building,
and shall be liable to Landlord for all acts of such persons.
t. The Demised Premises shall not be used for lodging or sleeping or
for any illegal purpose. The Demised Premises shall never, at any time, be used
for any immoral or illegal purposes.
u. Landlord shall not maintain suite finishes which are nonstandard,
such as kitchen appliances, wallpaper, special light, etc. However, should the
need for repairs arise, at Tenant's request, Landlord will arrange for the work
to be done at the Tenant's expense. Tenant shall have the right to select a
contractor for said repairs subject however to Landlord's reasonable approval.
v. No auction sales shall be conducted in the Building without
Landlord's consent.
w. No tenant shall use any other method of heating than that provided
by the Landlord without the Landlord's consent, except for the reasonable use of
space heaters, which approval is subject to Landlord's reasonable consent, which
consent shall not be unreasonably withheld, conditioned, or delayed.
x. When reasonably necessary to control the climate, and upon request
of Landlord, Tenant shall keep window coverings closed at the appropriate time
of day to prevent direct solar penetration of the Premises.
y. Tenant shall be allowed reasonable use of space coolers and
dehumidifier in Premises, subject to Landlord's consent, which shall not be
unreasonably withheld, conditioned, or delayed.
Landlord agrees to advise Tenant in writing of any additions to, deletions from,
or changes in the foregoing Rules and Regulations. In the event that Tenant is
in violation of any Building rule or
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regulation, Landlord shall notify Tenant in writing of the same, and shall allow
Tenant a reasonable period of time within which to comply with such rule and
regulation. Failure of Tenant to comply within such period of time shall
constitute a material default under the terms and conditions of this Lease.
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EXHIBIT "C"
APPROVED BLUEPRINTS
TO BE ATTACHED
UPON COMPLETION BY ARCHITECT
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EXHIBIT 10.14
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE (the "LEASE") made this 27/th/ day of October
1998, by and between ANNANDALE FINANCIAL CENTER JOINT VENTURE, a Maryland
General Partnership, (hereinafter referred to as "LANDLORD"), and ONESOFT
CORPORATION, a DELAWARE Corporation, (hereinafter referred to as "TENANT").
WITNESSETH, that for and in consideration of the rent hereinafter
reserved and of the mutual covenants and agreements hereinafter set forth,
Landlord and Tenant do hereby mutually agree as follows:
PREMISES 1. Landlord does hereby lease to Tenant, and Tenant does hereby
lease from Landlord, for the term and upon the covenants and
conditions hereinafter set forth, the Premises which shall be
deemed to be approximately THREE THOUSAND SEVEN HUNDRED TWENTY
(3,720) RENTABLE SQUARE FEET known as Suite 140 located on the
first floor of the Building known as "ANNANDALE FINANCIAL
CENTER", located at 7010 Little River Turnpike, Annandale,
Virginia 22003 (hereinafter referred to as the "Premises").
TERM 2. (a) The term of this Lease shall commence on the later of (i)
the "Substantial Completion" of Landlord's construction of the
Premises or (ii) December 1, 1998 (the "LEASE COMMENCEMENT
DATE"), and expiring FIVE (5) YEARS after the Lease Commencement
Date (the "EXPIRATION DATE"). The period commencing with the
Lease Commencement Date (on the first day of the next calendar
month in the event the Lease Commencement Date does not occur on
the first day of a month) and ending on the last day of the
twelfth calendar month thereafter shall constitute the first
"Lease Year" as such term is used herein. Each successive full
twelve (12) month period during the Lease Term shall constitute a
"Lease Year" and any portion of the Lease Term remaining after
the last twelve month period during said Lease term shall
constitute the last "Lease Year" for the purpose of this lease.
(b) The term "Substantial Completion" shall mean that date upon
which construction of the improvements to the Premises (as
outlined in Paragraph 28. herein) have been substantially
completed and approved by local officials having jurisdiction,
subject only to normal punch list items that will not materially
or adversely interfere with Tenant's business operations.
Notwithstanding anything herein to the contrary, Tenant shall
have the opportunity to enter the Premises during the fifteen
(15) day period prior to the Lease Commencement Date for the
purpose of installing computer, data, telephone and television
cable lines, special equipment, furniture,
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fixtures, telephones and other personal property, providing such
early entrance does not unreasonably interfere with Landlord's
construction in Premises. Any occupancy prior to the Lease
Commencement Date shall be pursuant to all the terms and
conditions of this Lease, except that rent shall not commence
until the Lease Commencement Date. Within fifteen (15) days after
the Lease Commencement Date, Landlord and Tenant shall execute a
Certificate of Commencement.
RENT 3. (a) During and for the Term hereof, commencing on the Lease
Commencement Date, Tenant covenants and agrees to pay Landlord
for the Premises, without notice or demand and without deduction,
set off or abatement, a fixed minimum guaranteed base rent
(hereinafter sometimes referred to as the "BASE RENT") payable in
monthly installments, in advance, (hereinafter sometimes referred
to as "MONTHLY BASE RENT") as follows:
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Lease Year Annual Base Monthly Base Rent Per Square
Rent Rent Foot
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1 $74,400.00 $6,200.00 $20.00
2 78,120.00 6,510.00 21.00
3 82,026.00 6,835.50 22.05
4 86,127.30 7,177.28 23.15
5 90,433.67 7,536.14 24.31
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Tenant shall pay all rent to Landlord at the office of Landlord,
or to such other party or at such other address as Landlord may
designate from time to time by written notice to Tenant. Rent
shall be paid on or before the first day of each and every
calendar month, without prior notice, during the Term hereof,
provided, however that the Monthly Base Rent for the First month
of the Term shall be payable upon execution of this Lease
(b) Tenant covenants and agrees to pay to Landlord a Late Fee
equal to Five percent (5%) of the Monthly Base Rent if any such
payment is not received by Landlord within TEN (10) days of their
due date. In addition, all delinquent payments due Landlord,
including, but not limited to, rent and additional rent, shall
bear interest at the rate of TWO percent (2%) per annum above the
"Prime Rate" as published by Wall Street Journal, New York, New
York, as of the date such payment became due, for the period
beginning on the date such payment became due to the date of
payment thereof by Tenant, provided, however, that nothing herein
contained shall
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2
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be construed or implemented in such a manner as to allow Landlord
to charge or receive interest in excess of the maximum rate then
allowed by law. All such late fees and interest charges shall be
deemed additional rent due hereunder and shall be payable with
the next installment of Monthly Base Rent.
OPERATING 4. INTENTIONALLY DELETED
EXPENSES AND
REAL ESTATE
TAXES
DELAYED
POSSESSION 5. (a) If Landlord shall be unable to give possession of the
Premises on the Lease Commencement Date specified in Section 2 of
this Lease for any reason, such failure to do so shall not affect
or impair the validity of this Lease or the obligations of Tenant
hereunder, except as expressly provided herein, and Landlord
shall not be subject to any liability for damages for such
failure to give possession on said date. In such event, Landlord
shall notify Tenant in writing setting forth a new Lease
Commencement Date as specified in Section 2 of this Lease. Unless
such delay is due to the fault of Tenant, the Base Rent reserved
and covenanted to be paid herein shall not commence until the
date that possession of the Premises is given to Tenant, or the
Premises are available for occupancy by Tenant and Tenant has
been so notified by Landlord, whichever shall first occur.
(b) If for any reason the Landlord shall be unable to give
possession of the Premises to Tenant more than TWO (2) months
after the Lease Commencement Date specified in Section 2. then
Tenant shall have the option to cancel this Lease after such date
by giving THIRTY (30) days' prior written notice of such
termination to the other party. If Landlord shall tender
possession of the Premises to Tenant after Tenant has given
notice such notice but prior to the expiration of such THIRTY
(30) day period, any notice given by Tenant shall thereupon be
nullified. Upon any such cancellation becoming effective,
Landlord and Tenant shall be entirely relieved of the obligations
hereunder, and any security deposit given by Tenant to Landlord
shall be returned to Tenant.
USE OF
PREMISES 6. Tenant shall use and occupy the Premises solely as general
office space, provided that such use(s) is in accordance with
applicable zoning and other local governmental regulations.
Without the prior written consent of Landlord, the Premises shall
not be used for any other
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purposes or uses whatsoever. Tenant shall not use or occupy the
Premises for any unlawful purpose, and shall comply with all
present and future laws, ordinances, regulations, and orders of
the United States of America, Commonwealth of Virginia, County of
Fairfax, and any other public or quasi-public authority having
jurisdiction over the Premises.
ASSIGNMENT
AND SUBLETTING 7. (a) Tenant shall not assign, transfer, mortgage, or otherwise
encumber this Lease, or sublet, rent, or permit occupancy or use
of the Premises, or any part thereof, without obtaining the prior
written consent of Landlord, which shall not be unreasonably
withheld, nor shall any subletting, assignment or transfer of
this Lease or the right of occupancy hereunder be effected by
operation of law or in any manner other than with the prior
written consent of Landlord. Any assignment or transfer with or
without Landlord's consent shall not be construed as a waiver or
release of Tenant from liability hereinbefore the payments of
rent or the performances and observances of any of the terms and
conditions of this Lease. The collection or acceptance of rent
from any assignee, subtenant, or occupant shall not constitute a
waiver or release of Tenant from any covenant or obligation
contained in this Lease, nor shall any assignment or subletting
be construed to relieve Tenant from the obligation to obtain the
consent in writing of Landlord to any further assignment or
subletting.
(b) In the event that Tenant desires to assign or sublet all or a
portion of the Premises, Tenant shall give to Landlord THIRTY
(30) days written notice of Tenant's intention to do same, the
name, address and a current financial statement of the proposed
subtenant or assignee, and a copy of the proposed assignment or
sublease, specifying, among other items, the proposed use, the
term and the rent of the proposed sublease or assignment. Within
TEN (10) days after receipt of said notice, Landlord shall give
written notice to Tenant, stating whether Landlord approves or
disapproves the proposed assignment or sublease. Tenant may
sublet or assign the Premises only after first obtaining the
written consent of Landlord, which consent shall not be
unreasonably withheld as set forth hereinabove
(c) In the event that Tenant defaults hereunder, Tenant hereby
assigns to Landlord the rent due from any subtenant or assignee
of Tenant and hereby authorizes each such subtenant or assignee
to pay said rent directly to Landlord.
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4
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MAINTENANCE
BY TENANT 8. Tenant shall keep the Premises, fixtures and equipment therein
in clean, safe sanitary and good order. will suffer no waste or
injury thereto, condition and will, at the expiration or other
termination of this Lease, surrender the same, broom clean, in
the same order, and condition in which they are on the Lease
Commencement Date, ordinary wear and tear excepted. Maintenance
and repair of all equipment and/or fixtures within or for the
exclusive benefit of the Premises, including, but not limited to,
kitchen fixtures, special air conditioning equipment, bathroom
fixtures, computers, or any other type of equipment or
improvements, together with related plumbing, electrical, or
other utility services, whether installed by Tenant or by
Landlord on behalf of Tenant, shall be the sole responsibility of
Tenant, and Landlord shall have no obligation in connection
therewith.
HOURS OF
OPERATION The regularly scheduled hours of operation for Building shall be
between EIGHT O'CLOCK (8:00 a.m.) to SIX O'CLOCK (6:00 p.m.),
Monday through Friday, and eight O'CLOCK (8:00 a.m.) to ONE
O'CLOCK (1:00 p.m.) Saturday. Holidays, on which said water for
the HVAC system shall not be provided except at additional cost
are: New Year's Day, Washington's Birthday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day, and
East Sunday. Such holidays shall be observed on the dates on
which the same are observed by the federal government. If Tenant
desires air conditioning/heat and or other utilities or services
beyond the hours of operation as hereinabove set forth, and of
mutually satisfactory written agreements are made with Landlord,
or its agent, not less than TWENTY-FOUR (24) hours in advance of
the requirement, Landlord shall use its best efforts to furnish
such air conditioning/heating and/or other utilities or services
to Tenant, and Tenant agrees to pay Landlord the additional costs
of such services in an amount equal to ONE HUNDRED TEN percent
(110%) of the total direct costs of providing such additional
services on an overtime basis. Provided, however, that Landlord
and its agent shall not be liable for failure to furnish or for
suspension or repair work, strike, riot, civil commotion, or any
other cause or reason whatsoever beyond the control of Landlord.
Building Services. Throughout the Term, Landlord agrees that the
-----------------
Building will be maintained in a manner befitting a first-class
rental office building in the Annandale, Virginia area and that
it will furnish, or cause to be furnished, the following services
to the Premises and Building, excluding emergency conditions
beyond Landlord control:
(a) Normal and usual cleaning and janitorial services after 5:00
p.m. on business days.
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(b) Automatically operated elevator services TWENTY-FOUR (24)
hours a day, SEVEN (7) days a week. 365 days a year;
(c) All electric bulbs and fluorescent tubes in light fixtures in
the public areas of the Building and all standard light bulbs and
fluorescent tubes in the Premises;
(d) An intercom type security access system located at the front
door of the Building. Tenant shall be given access cards into the
Building 24 hours a day, 7 days a week, 365 days a year;
(e) Normal and usual maintenance of the life-safety systems, the
elevators, the Garage and all Building improvements and
facilities;
(f) Heating, ventilating and air-conditioning to the Premises
between the hours of 8:00 a.m. and 6:00 p.m. on business days and
between the hours of 8:00 a.m. to 1:00 p.m. Saturday, excluding
holidays;
TENANT
ALTERATIONS 10. (a) Tenant shall not make or permit anyone to make any
alterations, additions, or improvements, structural or otherwise,
or install any fixtures (hereinafter collectively referred to as
"Alterations"), in or to the Premises or the Building without the
prior written consent of Landlord. All of such Alterations
permitted by Landlord must conform to all rules and regulations
established from time to time by the Underwriters' Association of
the local area and by the Landlord and conform to all
requirements of the Federal, State and local governments. Prior
to the commencement of work on any Alterations, the Landlord's
written approval must be obtained as to (i) the contractor(s) and
subcontractor(s) selected to perform such work, and (ii)
comprehensive plans and specifications showing all the proposed
Alterations, including detailed descriptions of the effect of the
proposed Alterations on the mechanical and electrical systems of
the Building. Landlord shall have the right to stop such work if
the Landlord or its designated agent determines that such work is
not being done in a workmanlike manner or in accordance with the
plans and specifications provided to Landlord. In such event,
Tenant shall promptly correct the problem(s) which give rise to
the work stoppage, and if Tenant fails to do so within a time
period determined by Landlord to be reasonable, then Landlord
may, at its sole option, correct such problem(s), or complete the
Alterations, or remove the Alterations and restore the Premises
to their original condition, and Tenant shall be liable for the
costs of such action as additional rent. Copies of all plats,
plans, sketches, permits, samples, etc. which are prepared or
obtained in the course of such Alterations shall be provided to
the Landlord or its designated agent no later than TEN (10) days
after such are prepared or obtained. The Tenant agrees to pay to
the Landlord or its designated agent a reasonable inspection fee
and to allow
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6
<PAGE>
inspection from time to time during the period of construction of
all Alterations. In addition, Tenant agrees to furnish "as built"
plans and specifications for all Alterations within a reasonable
period of time after completion of Alterations, and to pay to
Landlord, or its designated agent, a reasonable fee for updating
the master reproducible Building blueprint to show the
Alterations.
(b) Prior to commencing construction on any Alterations approved
by Landlord, Tenant agrees to obtain and deliver to Landlord
written and unconditional waivers of mechanic's and materialman's
liens upon the Property for all work, labor and services to be
performed and materials to be furnished, by them in connection
with such work, signed by all contractors, subcontractors,
materialmen, and laborers to become involved in such work. If
notwithstanding the foregoing, any mechanic's or materialmen's
lien is filed against the Property for work claimed to have been
done for, or materials claimed to have been furnished to, Tenant,
such lien shall be discharged by Tenant within ten (10) days
thereafter, at Tenant's sole cost and expense, by the payment
thereof or by filing any bond required by law. If Tenant shall
fail to discharge any such mechanic's or materialman's lien,
Landlord may, at its option, discharge the same and treat the
cost thereof and any legal expenses incurred in connection
therewith, as additional rent payable with the installment of
Monthly Base Rent next becoming due; it being hereby expressly
covenanted and agreed that such discharge by Landlord shall not
be deemed to waive or release the default of Tenant in not
discharging the same. It is understood and agreed by Landlord and
Tenant that any such Alterations shall be constructed on behalf
of Tenant. It is further understood and agreed that, in the event
Landlord shall give its written consent to Tenant's making any
such Alterations, such Alternations shall not be deemed to be an
agreement or consent by landlord to subject Landlord's interest
in the Property to any mechanic's or materialman's liens which
may be filed in respect of any such Alterations made by or on
behalf of Tenant.
(c) Tenant shall indemnify and hold Landlord harmless from and
against any and all expenses, liens, claims, or damages to any
person or property which may or might arise directly or
indirectly by reason of making of any such Alterations.
(d) If any Alterations are made without the prior written consent
of Landlord, Landlord retains the right to enter the Premises at
any time during the Term of this Lease to correct or remove the
same and restore the Premises to their condition prior to the
construction of the unauthorized Alterations, and Tenant shall be
liable and hereby agrees to reimburse the Landlord for the costs
of such removal and restoration
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together with any and all damages which the Landlord may suffer
and sustain as a result thereof.
(e) All Alterations, including wall-to-wall carpet and wall
covering, to, in or upon the Premises shall, unless the Landlord
elects otherwise, become the property of Landlord and shall
remain upon the Premises and be surrendered with Premises at the
expiration or termination of this Lease, or any renewal or
extension period, without disturbance, molestation or injury.
Should the Landlord elect that Alterations made by the Tenant
upon the Premises be removed upon the expiration or termination
of this Lease, or any renewal period, the Tenant hereby agrees to
cause same to be removed at the Tenant's sole cost and expense,
and to restore the Premises to the original improved condition,
on or before the expiration or termination of this Lease or any
renewal period. Should Tenant fail to remove the same or restore
the Premises, the Landlord may cause same to be removed and/or
the Premises to be restored at the Tenant's expense, and the
Tenant hereby agrees to pay to the Landlord the cost of such
removal and/or restoration together with any and all damages
which the Landlord may suffer and sustain by reason of the
failure of the Tenant to remove the same and/or restore the
Premises as herein provided.
(f) If Tenant is not in default in the performance of any of its
obligations under this Lease, Tenant shall have the right to
remove, prior to the expiration of the Term of this Lease, all
movable equipment, furniture or furnishings which are not affixed
to the Premises or the Building and which were installed in the
Premises at the expense of Tenant. If such property of Tenant is
not Removed by Tenant prior to the expiration or termination of
this Lease, the same shall become the property of Landlord and
shall be surrendered with the Premises as a part thereof, or, at
Landlord's option, Landlord may cause the same to be removed and
the Premises to be restored to their original improved condition,
and Tenant hereby agrees to pay to Landlord the cost of such
removal and restoration together with any and all damages which
Landlord may suffer and sustain by reason of the failure of
Tenant to remove the same and restore the Premises or Building as
herein provided.
ADVERTISING 11. Except as otherwise herein provided, Tenant agrees that no
sign, advertisement, display or notice shall be inscribed,
painted or affixed on any part of the outside or inside of the
Premises or Building. except on the directories and doors of
offices, and then only in such size, color and style as the
Landlord shall approve. Landlord shall have the right to prohibit
any advertisement, or display of items of the Tenant, wherever
appearing, which in the Landlord's reasonable opinion tends to
impair the reputation of the Building or its desirability as a
building for offices or for financial, insurance or other
institutions and businesses of like nature. Upon written notice
from the Landlord, Tenant shall refrain from and discontinue such
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advertisement. In the event that Tenant violates the terms of
this section, Landlord may remove any sign, advertisement,
display or notice and may charge the Tenant for any costs
incurred by Landlord in connection with such removal.
DELIVERIES 12. No freight, furniture or other bulky matter of any
description shall be received into the Building or carried in the
elevators, except as approved by the Landlord. All moving of
furniture. material and equipment in the Building outside the
Premises must be with the prior written consent of the Landlord
and in accordance with Landlord's reasonable rules and
instructions; however, Landlord shall not be responsible for any
damage to, or charges for, moving the same. Tenant agrees to
remove promptly from the public area(s) within or adjacent to the
Building any of Tenant's personal property there delivered or
deposited. Landlord shall have the right to prescribe the weight,
method of installation, and position of safes or other heavy
fixtures or equipment. All damage done to the Building by
delivery, maintaining or removal of any fixture or article of
Tenant's furniture or equipment, shall be repaired at the expense
of Tenant.
EQUIPMENT 13. Tenant shall not install or operate in the Premises any
electrically operated equipment or other machinery, except
typewriters, adding machines, copiers, personal computers, and
such other office machinery and equipment as is normally used in
the operation of Tenant's business, without obtaining the prior
written consent of Landlord, which shall not be unreasonably
withheld or delayed, but may be conditioned upon the payment by
Tenant of additional rent in compensation for any excess
consumption of water and/or electricity as may result from the
operation of said equipment or machinery. Tenant shall not
install any equipment of any kind or nature which shall or may
necessitate changes, replacements, or additions to, or cause an
abnormal increase in its use of the water, plumbing, heating, air
conditioning, or electrical systems, which serve the Premises,
without the prior written consent of Landlord. Such consent shall
not be withheld unreasonably, but may be conditioned upon the
payment of Tenant of the cost of such changes, replacements,
additions, or increased use. Notwithstanding the foregoing, in
the event that office equipment or mechanical equipment used by
Tenant in the Premises shall cause noise or vibration that may be
transmitted to any part of the Building to such a degree as to be
objectionable to Landlord or any other tenant, Tenant shall
install, at its own expense, vibration eliminators or silencing
devices sufficient to eliminate such noise and/or vibration.
Tenant shall not install in the Premises any fixtures, equipment,
machinery, furniture or furnishings which place a load upon the
floor exceeding the designed floor load capacity.
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INSPECTIONS;
ENTRY 14. Tenant agrees to allow Landlord, its agents or employees to
enter the Premises at all reasonable times to examine, inspect or
protect the same; to prevent damage or injury to the same and/or
to any other portion of the Building; to make such alterations,
additions, improvements and repairs to the Premises or adjacent
portions of the Building as Landlord may deem necessary or
desirable; or to exhibit the same to prospective tenants during
the last SIX (6) months of the Term of this Lease, or any renewal
or extension period, or to prospective purchasers of the Building
or any portion thereof at any time. None of the same shall be
construed as an eviction, actual or constructive. The rent
reserved shall not abate while such alterations, additions,
improvements or repairs are being made, or because of such
inspections or exhibitions, whether by reason of loss or
interruption of Tenant's business or otherwise. Landlord agrees
to make all reasonable efforts to minimize any disruption of
Tenant's business by reason of such activities. Landlord's right
of entry for any purpose shall, however, be subject to any State
or Federal laws and regulations that may currently enlist or may
become applicable because of any secret, confidential, or other
restricted activities carried on by Tenant in the Premises.
INSURANCE 15. (a) Insurance Rating. Tenant will not conduct or permit to
----------------
be conducted any activity other than normal office business nor
will Tenant place any equipment in or about the Premises or the
Property which will, in any way, increase the rate of property
and casualty or other insurance on the Property. If any increase
in the rate of property and casualty insurance or other insurance
is stated by any insurance company or by the applicable Insurance
Rating Bureau to be due to any activity or equipment of Tenant in
or about the Premises or the Property, such statements shall be
conclusive evidence that the increase in such rate is due to such
activity or equipment, and, as a result thereof, Tenant shall be
liable for such increase and shall reimburse Landlord therefor
upon demand. Any such sum due Landlord shall be considered
additional rent payable hereunder.
(b) Liability Insurance. Tenant shall carry public liability
-------------------
insurance with a company or companies licensed to do business in
the Commonwealth of Virginia and rated not lower than Level A,
Class XII, as rated in the most recent edition of "Best's Key
Rating Guide" for insurance companies. Said insurance shall cover
all liability of Tenant and its authorized representatives
arising out of and in connection with Tenant's use or occupancy
of the Premises and the Property. Said insurance shall be in
minimum amounts set forth in the rules and regulations
established by Landlord from time to time such amounts to be
reasonable for Tenant's type of business; a copy of the current
rules and regulations is attached hereto as Exhibit A. Said
insurance shall name Landlord, and the building management agency
as additional insured, as their interests may appear.
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and shall contain an endorsement that said insurance shall remain
in full force and effect notwithstanding that the insured has
waived his right of action against any party prior to the
occurrence of a loss. A current Certificate of Insurance from
such insurer shall be delivered to Landlord's agent prior to the
Lease Commencement Date and renewals thereof shall be delivered
to Landlord's agent at least THIRTY (30) days prior to the
expiration of any such policy. Each policy shall contain an
endorsement that will prohibit its cancellation prior to the
expiration of THIRTY (30) days after written notice to Landlord
of such proposed cancellation.
(c) Waiver of Subrogation. Each party hereby waives, and shall
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have included in its liability insurance policies for the
Building and/or property insurance covering Tenant's contents,
furniture, furnishings, fixtures and other property, appropriate
clauses pursuant to which each party's insurance carriers waive,
all rights of subrogation against the other party, its
principals, agents and employees, with respect to losses payable
under such policies, or appropriate clauses setting forth that
such policies shall not be invalidated should the insured waive
in writing prior to a loss any or all right of recovery against
any party for losses covered by such policies. If either party at
any time is unable to obtain inclusion of either of the clauses
described in the preceding sentence, then such party shall have
the other party named in such policies as an additional insured,
as their interests may appear. If either party shall be named as
an additional insured in accordance with the foregoing
provisions, and if the main insured shall not be in default
hereunder, and, if progress satisfactory to Landlord is being
made with regard to repairs to any damage to the Premises or
improvements therein, the additional insured shall promptly
endorse to the order of the main insured, without recourse, any
check, draft or order for the payment of money representing the
proceeds of any such policy, or representing any other payment
under such policies, and the additional insured hereby
irrevocably waives any and all rights in and to such proceeds and
payments. Each party shall advise the other party promptly as to
the coverage or language of the clauses included in its insurance
policies pursuant to this paragraph and shall notify the other
party promptly of any cancellation or change of the terms of any
such policies which would affect such clauses. All Certificates
of Insurance provided hereunder shall set forth the waiver of
subrogation provisions contained in the subject policy.
(d) Property and Casualty Insurance. Tenant covenants and agrees
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to maintain standard property and casualty insurance covering its
property located in, on or about the Premises. Said insurance
shall be replacement cost, all risk coverage for all leasehold
improvements other than the building standard improvements.
Tenant shall deliver a Certificate of Insurance from its insurer
to Landlord's agent prior to the Lease Commencement Date, and
renewals thereof shall be delivered to
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Landlord's agent at least THIRTY (30) days prior to the
expiration of any such policy.
DAMAGES TO
PREMISES OR
BUILDING 16. All breakage, injury or damage to the Premises or to
Property, including damage to carpeting, wall finishes, and other
items of improvement thereto, in any way caused by Tenant or its
agents, employees, contractors, visitors, guests and invitees,
shall be repaired at the expense of the Tenant, except those
covered by standard fire and extended coverage perils insurance.
Landlord shall make, or cause to be made, such necessary repairs,
alterations and replacements, structural, nonstructural or
otherwise, and any charge, costs or damages so incurred by the
Landlord shall be paid by the Tenant. Landlord shall be entitled
to regard such charges, costs or damages as additional rent,
payable with the installment of Monthly Base Rent next becoming
due under this Lease. This provision shall be construed as an
additional remedy granted to Landlord and not in limitation of
any other rights and remedies which Landlord has or may have.
WAIVER OF
LIABILITY
INDEMNITY 17. (a) Tenant's Property and Personal Injury. All personal
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property of Tenant (for the purposes of this Section, the term
"Tenant" shall include Tenant, its agents, employees,
contractors, visitors, guests and invitees) contained in the
Premises shall be and remain there at the sole risk of Tenant.
Landlord and/or its agents and employees shall not be liable for
any accident or damage to property of Tenant resulting from the
use or operation of elevators, heating, cooling, electrical or
plumbing apparatus, water, steam, or any other cause; nor shall
they be liable for any personal injury to Tenant arising from the
use, occupancy and/or condition of the Premises or Property
unless such injury shall directly result directly from the gross
negligence or willful misconduct of Landlord; nor shall they be
liable in any event for any interruption or loss of Tenant's
business. Notwithstanding any other language contained herein,
Landlord and/or its agents and employees shall not be liable to
Tenant for any loss, damage or injury to person or property, even
if the same is caused by their negligence or willful misconduct,
to the extent that Tenant is compensated therefore by Tenant's
insurance.
(b) Tenant's Indemnity. Tenant shall indemnify and hold Landlord
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and it's agents and employees harmless from all loss, damage,
liability, cost or expense incurred, suffered, or claimed by any
person or entity by reason of injury, loss, or damage to any
person, property or business resulting from any default hereunder
by Tenant, or from Tenant's willful act, negligence or negligent
or unlawful use of the Premises or the Property or anything
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therein, including but not limited to, water, steam, electricity,
or other facilities or equipment. Landlord and/or its agents and
employees assume no liability or responsibility whatsoever with
respect to the conduct and operation of the business to be
conducted by Tenant in the Premises, and shall not be liable for
any accident or injury to any person or property which are caused
by the conduct and operation of Tenant's business. Tenant agrees
to indemnify and hold harmless Landlord, its agents and
employees, against all such claims.
BANKRUPTCY 18. All of the terms and provisions of this paragraph 18 are made
expressly subject to and governed by the provisions of the United
States Bankruptcy Code and the orders, rulings and other
determination of any bankruptcy court of appropriate jurisdiction
relating to the Tenant and/or this Lease. Thus, any provision of
this paragraph which is contrary to or in any way inconsistent
with the provisions of the United States Bankruptcy Code or any
order, ruling or other determination of any bankruptcy court of
appropriate jurisdiction shall, be deemed invalid and of no force
and effect.
(a) In the event that Tenant shall become a Debtor under Chapter
7 of the Bankruptcy Code, and the Trustee or Tenant shall elect
to assume this Lease for the purpose of assigning the same or
otherwise, such election and assignment may only be made if all
of the terms and conditions of subsection (b) and subsection (d)
of this Section 18 are satisfied. If such Trustee shall fail to
elect or assume this Lease within sixty (60) days after the
filing of the Petition, this Lease shall be deemed to have been
rejected. Landlord shall be thereupon immediately entitled to
possession of the Premises without further obligation to Tenant
or Trustee, and this Lease shall be canceled, but Landlord's
right to be compensated for damages in such liquidation
proceeding shall survive.
(b) In the event that a Petition for reorganization or adjustment
of debts is filed concerning Tenant under Chapters 11 and 13 the
Bankruptcy Code, or a proceeding is filed under Chapter 7 of the
Bankruptcy Code and is transferred to Chapter 11 or 13, the
Trustee or Tenant, as Debtor-In-Possession, must elect to assume
this Lease within SEVENTY-FIVE (75) days from the date of the
filing of the Petition under Chapters 11 or 13, or the Trustee or
Debtor-In-Possession shall be deemed to have rejected this Lease.
No election by the Trustee or Debtor-In-Possession to assume this
Lease, whether under Chapters 7, 11 or 13, shall be effective
unless each of the following conditions, which Landlord and
Tenant acknowledge are commercially reasonable in the context of
a bankruptcy proceeding of Tenant, have been satisfied, and
Landlord has so acknowledged in writing:
(1) The Trustee or the Debtor-in-Possession has cured, or has
provided Landlord adequate assurance (as defined below) that:
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(A) Within TEN (10) days from the date of such assumption
the Trustee will cure all monetary defaults under this
Lease; and
(B) Within THIRTY (30) days from the date of such assumption
the Trustee will cure all non-monetary defaults under this
Lease.
(2) The Trustee or the Debtor-in-Possession has compensated, or
has provided to Landlord adequate assurance (as defined below)
that within TEN (10) days from the date of assumption, Landlord
will be compensated for any pecuniary loss incurred by Landlord
arising from the default of Tenant, the Trustee, or the Debtor-
in-Possession as recited in Landlord's written statement of
pecuniary loss sent to the Trustee or the Debtor-in-Possession.
(3) The Trustee or the Debtor-In-Possession has provided
Landlord with adequate assurance of the future performance of
each of Tenant's, Trustee's or Debtor-In-Possession's obligations
under this Lease; provided, however, that:
(A) The Trustee or Debtor-In-Possession shall also deposit
with Landlord as security for the timely payment of rent, an
amount equal to THREE (3) months' base Rent and other
monetary charges accruing under this Lease; and
(B) If not otherwise required by the terms of this Lease,
the Trustee or Debtor-in-Possession shall al in advance on
the date Monthly Base Rent is payable, ONE-TWELFTH (1/12) of
Tenant's annual obligations under this Lease for operating
expenses real estate taxes, and similar charges.
(C) The obligations imposed upon the Trustee or Debtor-In-
Possession shall continue with respect to Tenant or any
assignee of the Lease after the completion of bankruptcy
proceedings.
(4) The assumption of the Lease will not:
(A) Breach any provision in any other lease, mortgage,
financing agreement or other agreement by which Landlord is
bound relating to the Building; or
(B) Disrupt, in Landlord's judgment the tenant mix of tic
Building or any other attempt by Landlord to provide a
specific variety of commercial tenants in the Building
which, in Landlord's judgment. would be most beneficial to
all of the tenants of the Building and would enhance the
image, reputation, and profitability of the Building.
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(C) For purposes of this subsection (b), Landlord and Tenant
acknowledge that, in the context of a bankruptcy proceeding
of Tenant, at a minimum "adequate assurance" shall mean:
(i) The Trustee or the Debtor-In-Possession has and
will continue to have sufficient unencumbered assets
after the payment of all secured obligations and
administrative expenses to assure Landlord that the
Trustee or Debtor-In-Possession will have sufficient
funds to fulfill the obligations of Tenant under this
Lease, and to keep the Premises stocked with inventory
and properly staffed with sufficient employees to
conduct a fully-operational, actively promoted business
on the Premises; and
(ii) The Bankruptcy Court shall have entered an Order
segregating sufficient cash payable to Landlord and/or
the Trustee or Debtor-In-Possession shall have granted
valid and perfected first lien and security interest
and/or Mortgage in property of Tenant Trustee or
Debtor-In-Possession acceptable as to value and kind to
Landlord, to secure to Landlord the obligation of the
Trustee or Debtor-In-Possession to cure the monetary
and/or non-monetary defaults under this Lease within
the time period set forth above.
(c) in the extent that this Lease is assumed by a Trustee
appointed for Tenant or by Tenant as Debtor-In-Possession
under the provisions of subsection (b) hereof and thereafter
Tenant is liquidated of debts under Chapters 11 or 13 of the
Bankruptcy Code, then, and in either of such events,
Landlord may, at its option, tenant this Lease and all
rights of Tenant hereunder, by giving Tenant written notice
of its election to so terminate, by no later than THIRTY
(30) days after the occurrence of either of such events.
(d) If the Trustee or Debtor-In-Possession has assumed the
Lease pursuant to the terms and provisions of subsections
(a) or (b) herein, for the purpose of assigning (or elects
to assign) Tenant's interest under this Lease, or the estate
created thereby, to any other person, such interest or
estate may be so assigned only if Landlord shall acknowledge
in writing that the intended assignee has provided adequate
assurance as defined in this subsection (d) of future
performance of all of the terms, covenants and conditions of
this Lease to be performed by Tenant.
For purposes of this subsection (d), Landlord and Tenant
acknowledge that, in the context of a bankruptcy proceeding
of Tenant at a minimum "adequate assurance of future
performance" shall mean that each of the following
conditions have been satisfied, and Landlord has so
acknowledged in writing:
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(1) The assignee has submitted a current financial statement
audited by a Certified Public Accountant which shows a net
worth and working capital in amounts determined to be
sufficient by Landlord to assure the future performance by
such assignee of Tenant's obligations under this Lease;
(2) The assignee, if requested by Landlord shall have
obtained guarantees in form and substance satisfactory to
Landlord from one or more persons who satisfy Landlord's
standards of creditworthiness;
(3) Landlord has obtained all consents or waivers from any
third party required under any lease, mortgage, financing
arrangement or other agreement by which Landlord is bound in
order to permit Landlord to consent to such assignment.
(e) When, pursuant to the Bankruptcy Code, the Trustee or
Debtor-In-Possession shall be obligated to pay reasonable
use and occupancy charges for the use of the Premises or any
portion thereof, such charges shall not be less than the
Base Rent as defined in this Lease and other monetary
obligations of Tenant for the payment of operating expenses,
real estate taxes, and similar charges.
(f) Neither Tenant's interest in the Lease, nor any lesser
interest of Tenant herein, nor any estate of Tenant hereby
created, shall pass to any trustee, receiver, assignee for
the benefit of creditors, or any other person or entity, or
otherwise by operation of law under the Laws of any state
having jurisdiction of the person or property of Tenant
(hereinafter referred to as the "state law") unless Landlord
shall consent to such transfer in writing. No acceptance by
Landlord of rent or any other payments from any such
trustee, receiver, assignee, person or other entity shall be
deemed to have waive nor shall it waive the need to obtain
Landlord's consent of Landlord's right to terminate this
Lease for any transfer of Tenant's interest under this Lease
without such consent.
(g) In the event the estate of Tenant created hereby shall
be taken in execution or by other process of law, or if
Tenant or any guarantor of Tenant's obligations hereunder
(hereinafter referred to as the "guarantor") shall be
adjudicated insolvent pursuant to the provisions of any
present or future insolvency law under state law, or if any
proceedings are filed by or against the guarantor under the
Bankruptcy Code, or any similar provisions of any future
federal bankruptcy law, or if a Receiver or Trustee of the
property of Tenant or the guarantor shall be appointed under
state law by reason of Tenant's or the guarantor's
insolvency or inability to pay its debts as they become due
or otherwise, or if any assignment shall be made of Tenant's
or the guarantor's property for the benefit of creditors
under state law, then and in such event Landlord may, at its
option, terminate this Lease and all rights of Tenant
hereunder by giving
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<PAGE>
Tenant written notice of the election to so terminate within
THIRTY (30) days after the occurrence of such event.
As used in this Section 18, the term "Tenant" shall include
any surety or other guarantor of this Lease.
CASUALTY 19. In the event of damage by fire or other casualty to the
Premises or any part thereof, this Lease shall not be
terminated unless otherwise provided hereinafter, but
Landlord shall diligently proceed to repair and restore the
same. During the period that Tenant is deprived of the use
of the damaged portion of the Premises, provided that such
damage was not caused by the negligence or willful
misconduct of Tenant, its agents, employees, contractors,
visitors, guests or invitees, the rent for the remainder of
the Premises shall be that portion of the total rent which
the area remaining that can be occupied bears to the total
area of the Premises, so long as Tenant shall be able to
operate its business normally: if Tenant shall be unable to
operate its business normally, then rent shall be abated
during such period. If during the Term of this Lease the
Premises shall be so damaged by fire or other casualty as to
be untenantable, then unless said damage be repaired within
ONE HUNDRED TWENTY (120) days after said fire or other
casualty, either party, upon written notice to the other
party given at any time following the expiration of ONE
HUNDRED TWENTY (120) days thereafter, may terminate this
Lease, in which case the rent and additional rent shall be
apportioned and paid to the date of said fire or other
casualty. In the event that the Building is so severely
damaged or destroyed by fire or other casualty (although the
Premises may not be affected) that Landlord shall decide
within SIXTY (60) days following such event of casualty not
to rebuild or construct the Building, then Landlord shall
give written notice to Tenant and this Lease and the tenancy
hereunder shall terminate in accordance with such notice.
CONDEM-
NATION 20. (a) Tenant agrees that if the Premises or a substantial
part thereof shall be taken, or sold under the threat of
condemnation, for public or quasi-public use or purpose by
or to any competent authority, this Lease shall fully
terminate as of the date of any such taking. Tenant shall
have no claim against Landlord and shall have no claim or
right to any portion of the award which may be made to
Landlord as a result of any such condemnation; all rights of
Tenant to damages therefor, if any, are hereby assigned by
Tenant to Landlord. Upon such condemnation or taking, the
Term of this Lease shall cease and terminate from the date
of such taking or condemnation, and Tenant shall have no
claim against Landlord for the value of any unexpired term
of this Lease, leasehold improvements, or good will.
Notwithstanding the foregoing, Tenant shall be free to
pursue a separate claim against the condemning authority for
the depreciated value
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of its leasehold improvements, provided that any award to
Tenant shall not result in a diminution of any award to
Landlord.
(b) If less than a substantial part of the Premises is taken
or condemned, the rent for the remainder of the Premises
shall be that portion of the total rent which the area
remaining that can be occupied bears to the total area of
the Premises, effective on the date when title vests in such
governmental authority. The Lease shall otherwise remain in
full force and effect. For purposes hereof, a substantial
part of the Premises shall be considered to have been taken
if Tenant shall be unable to operate its business in its
normal and customary manner.
DEFAULT 21. (a) It is agreed that Tenant shall be in default if
Tenant shall fail to pay the rent (including any additional
rent) at the time the same shall become due and payable as
provided hereunder in Section 3(a) of this Lease, and Tenant
shall not cure such default within TEN (10) days after the
date due and payable for payment of such rent; or if Tenant
shall breach, violate, fail, or neglect to keep and perform
any of the other terms, covenants, or conditions herein
contained, or contained in the Building Instruments, and
Tenant shall not cure such breach within THIRTY (30) days
after written demand by Landlord therefor, or, if such
breach cannot reasonably be cured within such period, Tenant
shall fail to diligently attempt to cure such breach, or if
the Premises shall become vacant or abandoned (provided that
Landlord shall not construe any vacation or abandonment of
the Premises before the expiration of the Term hereof as a
default so long as Tenant continues to comply with all
covenants and conditions of the Lease).
(b) In the event of default by Tenant, then and in each such
case, Landlord may treat the occurrence of such event as a
breach of this Lease, and in addition to any and all other
rights or remedies of Landlord in this Lease or at law or in
equity provided it shall be, at the option of Landlord,
without further notice or demand of any kind to Tenant or
any other person:
(i) The right of Landlord, even though it may have
relet the Premises as hereinbelow provided, to declare
the Lease Term ended and to re-enter the Premises and
take possession thereof and remove all persons
therefrom, and Tenant shall have no further claim
thereon or thereto;
(ii) The right of Landlord to bring suit for the
collection of rent and other charges, as it accrues
pursuant to the terms of this Lease, and damages
(including without limitation reasonable attorneys'
fees and the cost of renovating the Premises) without
entering into possession of said Premises or canceling
this Lease;
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(iii) The right of Landlord to re-enter or retake
possession of the Premises from Tenant by summary
proceedings or otherwise and to remove, or cause to be
removed, Tenant or any other occupants from the
premises in such manner as Landlord shall deem
advisable with or without legal process and using self-
help if necessary, and it is agreed that the
commencement and prosecution of any action by Landlord
in an unlawful detainer, ejectment or otherwise or any
judgment or decree obtained in any action to recover
possession of the Premises or any other re-entry and
removal shall not be construed as an election to
terminate this Lease whether or not such entry or re-
entry be had or taken under summary proceedings or
otherwise, and shall not be deemed to have absolved or
discharged Tenant from any of its obligations or
liabilities for the remainder of the Term. Tenant
shall, notwithstanding any such entry or re-entry,
continue to be liable for the payment of rent and the
performance of the other covenants, conditions and
agreements by Tenant to be performed as set forth in
this Lease, and Tenant shall pay to Landlord all
monthly deficits, after any such re-entry, in monthly
installments as the amounts of such deficits from time
to time are ascertained. In the event of any such
ouster, Landlord shall have the right but not the duty
to rent or lease the Premises to some other person,
firm or corporation (whether for a term greater or less
than or equal to the unexpired portion of the Term or
whether the spare leased by the new lease includes more
or less floor area than the Premises) upon such terms
and conditions and for such rental as the Landlord may
deem proper and to collect said rental and any other
rental that may thereafter become payable. In such
event, the rentals received by Landlord from such
reletting shall be applied: first, to the payment of
any indebtedness other than the rent due hereunder from
Tenant to Landlord: second, to the payment of any cost
of such reletting (including without limitations the
making of any alterations, repairs or decorations in
the Premises which Landlord deems advisable); third, to
the payment of the cost of any alterations and repairs
to the Premises; third, to the payment of rent due and
unpaid hereunder, and the residue, if any, shall be
held by Landlord and applied in payment of future rent
as the same may become due and payable hereunder.
Should that portion of such rentals received from such
reletting during any month, which is applied to the
payment of rent hereunder, be less than the rent
payable during that month by Tenant hereunder, then
Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly; Tenant
shall have no right to any excess. Tenant shall also
pay to Landlord, as soon as ascertained, any costs and
expenses, including, but not limited to, brokerage
commissions and attorneys' fees, incurred by Landlord
in such reletting or in making such alterations and
repairs not covered by the rental received from such
reletting. Nothing herein contained shall
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be construed as obligating the Landlord to relet the whole or
any part of the Premises whatsoever. In the event of any entry
or taking possession of the Premises as aforesaid, Landlord
shall have the right, but not the obligation, to remove
therefrom all or any part of the personal property located
therein and may place the same in storage at a public
warehouse at the expense and risk of the owner or owners
thereof. The terms "re-enter, or "re-entry" as used in this
Lease are not and shall not be restricted to their technical
meaning but are used in their broadest sense.
(c) If Landlord elects to terminate this Lease under the
provisions set forth above, Landlord may recover from Tenant as
damages (all of which shall be immediately due and payable from
Tenant to Landlord). in addition to its other remedies:
(i) Any unpaid rent, including interest thereon, which is
due and owing at the time of such termination; plus
(ii) That rent, including interest thereon, which would have
been earned after termination until the time of judgment; plus
(iii) A sum representing liquidated damages and not penalty
in an amount equal to the excess of the Base Rent for the
Premises at the time of termination and the additional rent
provided for in Section 4 above for the year in which this
Lease shall be terminated multiplied by the number of years
and fraction of a year then constituting the remainder of the
Term hereof, over the rental value of the Premises at the time
of termination for such unexpired Term, discounted at a rate
of SEVEN percent (7%) per annum to present value, less
commissions, advertising, cost of repairs and other expenses
incidental to reletting of such Premises.
Nothing herein contained shall limit or prejudice the right of
the Landlord to prove and obtain as liquidated damages in any
bankruptcy, insolvency, receivership, reorganization or
arrangement proceeding an amount equal to the maximum allowed
by any statute or rule of law governing such proceedings and
effect at the time when such damages are to be proved, whether
or not such amount be greater, equal to or less than the
amount of the excess referred to in the preceding sentence. In
determining the rental value of the Premises, the commercially
reasonable rental realized by any reletting accomplished or
accepted by Landlord within a reasonable time after
termination of this Lease, shall be deemed, prima facie, to be
the rental value.
(iv) Any other amount necessary to compensate Landlord for
all the detriment directly caused by Tenant's failure to
perform its obligation
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under this Lease or which in the ordinary course of things
would be likely to result therefrom including without
limitation to cost of renovating the Premises and reasonable
attorneys' fees; plus
(v) At Landlord's election, such other amounts, in addition
to or in lieu of the foregoing, as may be permitted from time
to time by applicable law.
(d) In the event of default all of the Tenant's fixtures,
furniture, equipment, improvements additions, alterations, and
other personal property shall remain on the Premises and in that
event and continuing during the length of said default, Landlord
shall have the right to take exclusive possession of same and to
use the same, rent or charge free, until all defaults are cured
or, at its option, at any time during the Lease Term, to require
Tenant to forthwith remove same. In connection with the foregoing,
Landlord shall have a lien upon the property of Tenant in the
Premises during the Lease Term for the amount of any unpaid rent
or other sum due from Tenant hereunder. Except upon expiration of
this Lease where no default exists in the payment of rent or other
sums due from Tenant hereunder, Tenant shall not remove any of
Tenant's property from the Premises without the prior written
consent of Landlord, other than pursuant to sale thereof in the
regular course of its business, and Landlord shall have the right
and privilege at its sole option and discretion, to take
possession of all property of Tenant in the Premises. to store the
same in said Premises, or to remove it therefrom and store it in
such place as may be selected by Landlord, at Tenant's risk and
expense. in accordance with such lien and of any rights of
distraint it may possess against Tenant's said property.
(e) In the event of a breach or threatened breach by Tenant of any
of the covenants or provisions hereof, Landlord shall have the
right of injunction and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and other
remedies were not therein provided for; and in such event Landlord
shall be entitled to recover from Tenant. payable as additional
rent hereunder, any and all reasonable expenses as Landlord may
incur in connection with its efforts to secure such injunctive
relief or other remedy at law or in equity, such as court costs
and attorneys' fees. Landlord and Tenant hereby expressly waive
trial by jury in any action, proceeding or counterclaim, brought
by either of them against the other, on any matter whatsoever
arising out of or in any way connected with this Lease, their
relationship as Landlord and Tenant Tenant's use and occupancy of
the Premises and/or any claim of injury or damage. If Landlord
shall commence any proceeding for non-payment of rent, or any
other payment of any kind to which Landlord may be entitled or
which it may claim hereunder, Tenant will not interpose any
counterclaim or set-off of whatever nature or description in any
such
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proceeding, the parties hereto specifically agreeing that
Tenant's covenants to pay rent or any other payments required of
it hereunder are independent of all other covenants and
agreements herein contained, provided, however, that this shall
not be constructed as a waiver of Tenant's rights to assert such
a claim in any separate action brought by Tenant. Tenant further
waives any right of defense which may have to claim a merger, and
neither the commencement of any action or proceeding settlement
thereof nor entering of judgment shall bar Landlord from bringing
subsequent actions or proceedings from time to time Mention in
this Lease of any particular remedy shall not preclude Landlord
from any other remedy at law or in equity to which it may be
entitled. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws in
event of Tenant being evicted or dispossessed for any cause, or
in the event of Landlord obtaining possession of the Premises by
reason of the violation by Tenant of any of the covenants and
conditions of this Lease, or otherwise.
(f) It is further provided that, if legal proceedings are
instituted hereunder, and a compromise or settlement thereof
shall be made, it shall not he constituted as a waiver of any
breach of any covenant, condition or agreement herein contained.
(g) No payment by Tenant or receipt by Landlord of a lesser
amount than the Monthly Base Rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated
rent then due, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment of rent be
deemed an accord and satisfaction, and Landlord may accept such
check or payment without prejudice to Landlord's right to recover
the balance of such rent or to pursue any other remedy.
(h) Should Tenant fail to pay rent (including any additional
rent) as and when the same is due, Landlord shall not be required
to wait until the expiration of the Term hereof to sue for
Landlord's loss or damages, but shall have the right to sue from
time to time to recover unpaid rent and other damages as provided
in this Lease. Landlord shall have the option to declare the
entire balance of the Base Rent (including annual increases as
provided herein) immediately due and payable upon failure by
Tenant to cure any default within the rime prescribed herein.
Landlord shall have the further option to defer action until the
expiration of the Term, in which event the cause of action shall
not be deemed to have accrued until the date of expiration all
rights and remedies of Landlord under this Lease shall be
cumulative and shall not be exclusive of any other rights and
remedies provided to Landlord under applicable law.
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(i) If, prior to the commencement of the Term of this Lease,
Tenant notifies Landlord of or otherwise unequivocally
demonstrates an intention to repudiate this Lease, Landlord may,
at its option, consider such anticipatory repudiation a breach of
this Lease. In addition to any other remedies available to it
hereunder or at law or in equity, Landlord may retain all rent
paid upon execution of the Lease arid the security deposit, if
any, to be applied to damages of Landlord incurred as a result of
such repudiation, including, without limitation, attorneys' fees,
brokerage fees, costs of reletting and loss of rent. It is agreed
between the parties that for the purpose of calculating
Landlord's damages, in a building which has other available space
at the time of Tenant's breach, Landlord shall have no obligation
to rent the Premises prior to other space in the Building.
SUBORDI-
NATION 22. This Lease is subject and subordinate to all ground or
underlying leases, if any, and to any deeds of trust which may
now or hereafter affect this Lease or the Property, and to all
renewals, modifications, consolidations, replacements and
extensions thereof. Notwithstanding the foregoing. Tenant shall
have the right to keep the Lease in full force and effect so long
as Tenant shall fully comply with all the terms of this Lease.
This clause shall be self-operative and no further instrument of
subordination shall be necessary to effect the subordination of
this Lease to the lien of any such lease, mortgage or deed of
trust. In confirmation of such subordination, however, Tenant
shall execute promptly any such certificate or subordination
agreement that Landlord may request. Tenant hereby constitutes
and appoints Landlord as Tenant's attorney-in-fact to execute any
such certificate(s) for and on behalf of Tenant, said appointment
to be a power coupled with an interest and irrevocable during the
Term of this Lease. In the event of any proceeding to terminate
any ground or underlying lease, or in the event of any proceeding
for the foreclosure of any mortgage or deed of trust to which
this Lease is subordinate, the ground lessor, purchaser, assignee
or other Successor to Landlord's rights, shall have the option to
terminate or cancel this Lease; if this Lease is not so
terminated or canceled. Tenant shall attorn to the Lessor
thereunder or to the purchaser at the foreclosure sale.
Upon request and with reasonable notice from Tenant, Landlord
shall obtain a non-disturbance agreement on Tenant's behalf from
each existing Mortgagee (and any future mortgagees upon request
by Tenant) on such Mortgagees's commercially reasonable standard
form (and in recordable form) agreeing that such Mortgagee or any
purchaser in a foreclosure sale shall recognize and be bound by
the terms of this Lease upon a foreclosure or deed in lieu
thereof (as long as no Event of Default exists hereunder).
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<PAGE>
HOLDOVER
PROVISIONS 23. If Tenant shall remain in the Premises, with the knowledge
and written consent of Landlord, after the expiration of the Term
of this Lease, or any renewal or extension thereof, Tenant shall
become a tenant from month to month at ONE HUNDRED TEN PERCENT
(110%) of the monthly rental for the last month of the Lease
Term, commencing on the first day next after the Lease Expiration
Date. Tenant shall give to Landlord at least THIRTY (30) days
written notice of any intention to quit the Premises, and Tenant
shall be entitled to THIRTY (30) days written notice to quit
except in the event of default hereunder. All other terms and
conditions of this Lease shall remain in full force and effect
Provided, however, that in the event that Tenant shall hold over
without Landlord's knowledge and consent, then at any time prior
to Landlord's acceptance of rent from Tenant as a monthly tenant
hereunder, Landlord, at its option, may re-enter and take
possession of the Premises without process, or by any legal
proceeds in force in the jurisdiction in which the Building is
situated.
SUCCESSORS'
OBLIGATION 24. It is agreed that all rights, remedies and liabilities
hereunder given to or imposed upon either of the parties hereto
shall extend to their respective heirs, successors, executors,
administrators and assigns. This provision shall not be deemed to
grant Tenant any right to assign this Lease or to sublet the
Premises, except as set forth in Section 7 above. Tenant
acknowledges Landlord might not be, now or in the future, the
owner of the fee interest in the Premises, the Building and/or
Land. The term "LANDLORD" as used in this Lease is hereby defined
to be only the then current owner or mortgagee in possession of
the Premises. In the event of any sale or sales by the then
current Landlord hereunder to any party then, from and after the
closing of such sale or lease transaction, the Landlord whose
interest is thus sold or leased shall be and hereby is completely
released and forever discharged from and of all covenants,
obligations and liabilities of Landlord hereunder thereafter
accruing.
RULES AND
REGULATIONS 25. The Tenant covenants that the rules and regulations set forth
in Exhibit A, attached hereto and incorporated herein by
reference, and such other and further rules and regulations as
the Landlord may make and furnish to the Tenant, and which in
Landlord's judgment are necessary or appropriate for the general
well-being, safety, care and cleanliness of the Premises and the
Building together with the appurtenances, shall be faithfully
kept. observed and performed by Tenant, and by Tenant's agents,
servants, employees and guests unless waived in writing by the
Landlord. All such rules and regulations shall be enforced in a
consistent manner by Landlord against all tenants in the
Buildings. Any failure by Landlord to enforce any rule or
regulation against any party shall not be
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<PAGE>
deemed a waiver of such rule or regulation or of Landlord's
further right to enforce the same.
REPRESEN-
TATIONS,
WARRANTIES
AND
COVENANTS
OF LANDLORD 26. Landlord's Covenants. Landlord covenants that it has the
--------------------
right to make this Lease for the term aforesaid, and that if
Tenant shall pay the rent and performs all of the covenants,
terms, conditions, and agreements of this Lease to be performed
by Tenant, Tenant shall, during the Term, be able to freely,
peaceably and quietly occupy and enjoy the full possession of the
Premises without molestation or hindrance by Landlord or any
party claiming through or under Landlord, subject to other
provisions contained in This Lease.
(a) Landlord shall maintain during the term of this Lease, all
risk coverage for the Building in the amount of the full
replacement value thereof together with comprehensive general
liability insurance.
(b) Landlord represents and warrants to Tenant as follows: To the
best of Landlords knowledge after due inquiry, no governmental
regulated hazardous or toxic substances have been used,
processed, released, discharged, generated, treated, stored or
disposed of on the Premises, the Building or the land upon which
the Building is located (the "Land") and no hazardous or toxic
substances currently exist on or about the Premises, the Building
or the Land and, to the best of Landlord's knowledge, any
adjacent property. In the event Landlord becomes aware of any
governmental regulated hazardous or toxic substances that have
been used, processed, released, discharged, generated, treated,
stored or disposed of on the Premises, the Building or the land
upon which the Building is located (the "Land"). Landlord shall
remove or otherwise contain any such substances within thirty
(30) days after Landlord becomes aware of such hazardous or toxic
substances.
RESERVA-
TIONS OF
RIGHTS OF
ADDRESS 27. Tenant hereby acknowledges that the Landlord retains the
following rights: (i) to change the street address and/or name of
the Building and/or name of the Building and/or the arrangement
and/or location entrances, passageways, doors, doorways,
corridors., elevators, stairs, toilets, or other public parts of
the Building and to make improvements, alterations, additions,
installations, eliminations and changes to the Building, Land.
parking facilities, or any part thereof, provided that such
changes do not
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<PAGE>
unreasonably interfere with Tenant's use and occupancy of the
Premises or conduct of its business (except in the event of an
emergency); (ii) to erect, use, and maintain pipes and conduits
in and through the Premises; (iii) to grant to anyone the
exclusive right to conduct any particular business or undertaking
in the Building; (iv) to install and maintain signs on the
Building and/or Land; and (v) have passkeys to the Premises-
Landlord may exercise any or all of the foregoing rights without
being deemed to be guilty of an eviction, actual, or
constructive, or a disturbance or interruption of the business of
Tenant or Tenants use or occupancy of the Premises.
CONSTRUC-
TION OF
LEASEHOLD
IMPROVEMENTS 28. Landlord's Standard Work. It is understood and agreed that
------------------------
Tenant will take the Premises in "AS-IS" condition upon
commencement of this Lease Agreement. All Leasehold Improvements
existing in the Premises upon occupancy of Tenant or made by or
for Tenant after commencement of any lease term with Landlord
shall remain as the sole property of the Landlord, and in no
event shall Tenant remove any Leasehold improvements from the
Premises.
Landlord agrees that it will perform a reasonable turnkey build-
out for Tenant, at Landlord's sole cost and expense, up to a
maximum allowance of EIGHT AND 00/100 DOLLARS ($8.00) PER SQUARE
FOOT, providing building standard work using building standard
specifications, materials and color selections, in quantities
necessary to build-out the Premises substantially in accordance
with Tenant's Plans, which plans shall be mutually agreed upon by
Landlord and Tenant, and shall be attached hereto and made a part
hereof as Exhibit "B".
MECHANIC
LIENS 29. Tenant shall not do, or suffer to be done, any act, matter or
thing whereby the Premises (or Tenants interest therein), or any
part thereof, may be encumbered by any mechanics' or
materialmen's lien and/or any other lien or encumbrance. Tenant
shall discharge, within ten (10) business days after the dare of
filing, any mechanic's, or materialmen's or other liens filed
against the Premises, or Tenant interest therein, or any part6
thereof, purporting to be for work or material furnished, or to
be furnished, to Tenant.
PARKING 30. Landlord agrees to provide for the use of Tenant in common
with others, a surface parking area adjacent to the Building in
which the Demised Premises are located. The Landlord reserves the
right to promulgate rules and regulations relating to the use of
such surface parking area, including such limitations as may, in
the opinion of the
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<PAGE>
Landlord, be necessary and desirable. Tenant and Tenant's
employees shall park their vehicles only in those portions of the
parking areas designated for employee parking by the Landlord.
Further, Tenant and its employees are expressly prohibited from
parking in any portion of the parking area designated or marked
for visitor parking only. Tenant, shall within FIVE (5) days
after taking possession of the Demised Premises, furnish Landlord
or its agent with the vehicle license numbers assigned to
Tenant's vehicles and the vehicles of Tenant's employees, and
shall thereafter notify the Landlord or its agent of any changes
within FIVE (5) days after such changes occur. In the event that
the Tenant or any of its employees shall park their vehicles in
any portion of the parking area other than that portion
designated for that purpose, then the Landlord shall have the
right, at Landlord's option, to assess Tenant a fine or penalty
for any such improperly parked vehicle, and/or to have any such
improperly parked vehicle towed at Tenant's expense. As an
inducement to enter into this Lease Agreement, Landlord agrees to
assign FOUR (4) parking spaces in the parking lot of the Building
specifically designated for Tenant.
GENDER 31. Feminine or neuter pronouns shall be substituted for the
masculine form, and the plural shall be substituted for the
singular number, in any place or places herein in which the
context may require such substitution or substitutions. Landlord
and Tenant, as a matter of convenience, have been referred to in
neuter form.
NOTICES 32. All notices required or desired to be given hereunder by
either party to the other shall be hand delivered or given by
certified or registered mail, first-class postage prepaid, return
receipt requested. Notices to the respective parties shall be
addressed as follows:
To LANDLORD:
ANNANDALE FINANCIAL CENTER JOINT VENTURE
c/o Southern Management Corporation
1950 Old Gallows Road, Suite 600
Vienna, VA 22182
To TENANT:
ONESOFT CORPORATION
ATTN: James McIntyre, IV, President
7010 Little River Turnpike, Suite 410
Annandale, VA 22003
Either party may, by like written notice, designate a new
address to which such notices shall be directed.
ESTOPPEL
CERTIFICATES 33. Tenant agrees, at any rime and from time to time, upon not
less than FIVE (5) days prior written notice by Landlord, to
execute, acknowledge
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<PAGE>
and deliver to Landlord a statement in writing (i) certifying
that this Lease is unmodified and in full force and effect (or if
there have been modifications, that the Lease is in full force
and effect as modified and stating the modification); (ii)
stating the dates to which the rent and any other charges
hereunder have been paid by Tenant; (iii) stating whether or not
to the best knowledge of Tenant, Landlord is in default in the
performance of any covenant; (iv) stating the address to which
notices to Tenant should be sent; and (v) any other information
as may be reasonably required. Any such statement delivered
pursuant hereto may be relied upon by any owner of the Building
or the Land, any prospective purchaser of the Building or the
Land, any mortgagee or prospective mortgagee of the Building or
the Land or of Landlord's interest in either, or any prospective
assignee of any such mortgagee.
SECURITY
DEPOSIT 34. To secure the full faith performance by Tenant of all of the
obligations, covenants, conditions and agreements to be
fulfilled, kept, observed, and performed by Tenant, Tenant shall
tender Landlord the sum of SIX THOUSAND TWO HUNDRED AND 00/100
DOLLARS ($6,200.00) which sum shall be held as a security deposit
("SECURITY DEPOSIT') and applied towards its damages and/or
remedies in the event of Tenants default. Landlord's rights
against Tenant in the event of Default shall in no way be limited
or restricted by this security deposit. Upon the expiration of
this Term (or any renewal or extension thereof in accordance with
this Lease), Landlord shall, provided that tenant is not in
default under the terms hereof, return and pay back such security
deposit to tenant, less such portion thereof as Landlord shall
have appropriated to cure any default by tenant with respect to
any of Tenant's aforesaid obligations, covenants, conditions and
agreements and no damages or expenses incurred by Landlord. In
the event of any default by Tenant hereunder, Landlord shall have
the right, but not the obligation to apply all or any portion of
the Security Deposit to cure such default, in which event, Tenant
shall be obligated to promptly deposit with the Landlord the
amount necessary to restore the Security Deposit to its original
amount. In the event of the sale or transfer of Landlord's
interest in the Building, Landlord shall have the right to
Transfer the Security Deposit to such purchaser or transferee in
which event Tenant shall look only to the new Landlord for the
return of the Security Deposit and Landlord shall thereupon be
released from all liability to Tenant for the return of such
Security Deposit.
GOVERNING
LAW 35. The parties agree that the laws of the Commonwealth of
Virginia shall govern the validity, performance and enforcement
of this Lease.
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28
<PAGE>
BROKERS 36. Landlord and Tenant each represent and warrant that neither
of them has employed any broker to negotiate the terms of this
Lease.
WAIVER OF
BREACH 37. No delay in exercising or failure to exercise any right or
power hereunder by Landlord shall impair any such right or shall
be construed as a waiver of any breach or default, or as
acquiescence thereto. One or more waivers of any covenants, terms
or conditions of this Lease by Landlord shall not be construed by
the other party as a waiver of a continuing or subsequent breach
of the same covenant, term or condition. The consent or approval
by Landlord to or of any act by Tenant of a nature requiring
consent or render unnecessary consent to or approval of any
subsequent similar act. No provision of this Lease shall be
deemed to have been waived by Landlord, unless such waiver be in
writing signed by Landlord.
SEVERABILITY
OF CLAUSES 38. If any term or provision of this Lease or the application
thereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances
other than to those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and
provision of the Lease shall be valid and be enforced to the
fullest extent permitted by law.
CAPTIONS FOR
CONVENIENCE 39 The titles of the sections and paragraphs throughout this
Lease are for convenience and reference only, and the words
contained therein shall be in no way held to explain, modify,
amplify or aid in the interpretation, construction or meaning of
the provisions of this Lease.
DUPLICATE
COUNTERPARTS
AS ORIGINALS 40. This Lease may be executed in one or more counterparts, each
of which shall be an original, and all of which shall constitute
one and the same instrument.
ENTIRE
AGREEMENT 41. This Lease Constitutes the entire agreement between the
parties and no earlier statements or prior written matter shall
have any force or effect. Tenant is not relying on any
representations or agreements other than those contained in this
Lease. This Lease shall not be modified or canceled except by
written instrument executed by both parties.
(SIGNATURES ON FOLLOWING PAGE.)
WITNESSETH the following signatures and seals:
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29
<PAGE>
WITNESS: LANDLORD:
ANNANDALE FINANCIAL CENTER
JOINT VENTURE
a Maryland general partnership
/s/ Sabrina Morell By: /s/ Susan M. Scott
- ------------------------------ --------------------------------
Its: Agent
-------------------------------
Date: 11/4/98
------------------------------
ATTEST: TENANT:
ONESOFT CORPORATION
a Delaware corporation
By: /s/ Randall Pevin
______________________________ --------------------------------
Corporate Secretary [Seal]
Its: Vice President
-------------------------------
Date: 10/27/98
------------------------------
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30
<PAGE>
EXHIBIT "A"
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RULES AND REGULATIONS OF THE BUILDING
The Tenant covenants that the following "RULES and REGULATIONS", and such other
and further Rules and Regulations as the Landlord may make and which in the
Landlord's judgement are needful for the general well being, safety, care and
cleanliness of the Premises and the building of which they are a part together
with their appurtenances, shall be faithfully kept, observed and performed by
the Tenant, and by his agents, servants, employees and guests unless waived in
writing by the Landlord.
a. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls or other parts of the Building not occupied by any
tenant shall not be obstructed or encumbered by any tenant or used for any
purpose other than ingress or egress to and from the Premises. Landlord shall
have the right to control and operate the public portions of the Building, and
the facilities furnished for the common use of the tenants, in such manner as
Landlord reasonably deems best for the, benefit of the tenants generally. No
tenant shall permit the visit to the Premises of persons in such numbers or
under such conditions as to materially interfere with the use and enjoyment by
other tenants of the entrances, corridors, elevators and other public portions
or facilities of the Building.
b. No awning or other projections shall be attached to the outside walls
of the building, without the prior written consent of Landlord. Notwithstanding
the existing window coverings, no drapes, blinds, shades, or screens 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 Landlord. Such awnings,
projections, curtains, blinds, screens or other fixtures must be of a quality,
type, design, and color, and attached in a manner approved by Landlord.
c. The doors leading to the corridors or main halls shall be kept closed
during business hours except as they may be used to ingress or egress. No
additional locks shall be placed upon any doors of the Premises, nor shall any
changes be made in existing locks of the mechanisms thereof; except that Tenant
shall have the right at its expense to install security locks on all entry doors
and fire doors opening into the Premises, and also on the doors to any offices
within the Premises, provided Tenant at the termination of its occupancy shall
provide Landlord all keys either furnished to, or otherwise procured by Tenant,
and in the event of the loss of any keys so furnished, Tenant shall pay to
Landlord the cost to replace. Tenant further agrees that, should Landlord so
require, Tenant will at its expense remove any additional locks which it
installed or caused to be installed, reinstall the original hardware, and repair
to Landlord's reasonable satisfaction any damage to doors or frames. Tenant
agrees to give access upon reasonable request to any such locked area(s).
d. Tenant shall not construct, maintain, use or operate within the
Premises or elsewhere in the Building of which the Premises form a part or on
the outside of the Building, any equipment or machinery which produces music,
sound or noise which is audible beyond the Premises.
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<PAGE>
e. There shall be no marking, painting, drilling into or in any way
defacing any part of the Premises or the Building with the exception of affixing
wall decorations, shelving and like items within the Premises. No Tenant shall
throw anything out of the doors or windows or down the corridors or stairs.
f. The employees of the Landlord are prohibited as such from receiving
any packages or other articles delivered to the Building for the Tenant, and
should any such employee receive any such packages or articles, he or she in so
doing shall be the agent of the Tenant and not of the Landlord.
g. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed, and no
sweepings. rubbish, rags, or other substances shall be thrown therein. All
reasonable costs for damages resulting from any misuse of the fixtures shall be
borne by the Tenant who, in whose servants, employees, agents, visitors, or
licensees, shall have caused same.
h. No vehicles or animals, except for animals whose function is to assist
disabled persons of any kind shall be brought into or kept in or about the
Premises or the Building, and no cooking shall be done or permitted by the
Tenant on the demised premises except in kitchens constructed as part of Tenant
Improvements. No Tenant shall cause or permit any objectionable odors to be
produced upon or emanate from the Premises
i. Neither Tenant nor any of Tenant's servants, employees, agents.
visitors or licensees, shall at any time bring or keep upon the Premises any
inflammable, combustible or explosive fluid, chemical or substance except normal
and customary office supplies.
j. Canvassing, soliciting and peddling in the Building is prohibited and
tenant shall cooperate to prevent the same.
k. Any person employed by Tenant to do janitorial work within the
Premises must first obtain Landlord's consent and such person shall, while in
the Building and outside of said demised premises, comply with all instructions
issued by the superintendent of the Building,
l. There shall not be used in any space, or in the public halls of the
Building, either by any tenant or by jobbers or others, in the delivery or
receipt at merchandise, any hand trucks, except those equipped with rubber
tires.
m. Access plates to under floor conduits must be left exposed. Where
carpet is installed, carpet must be cut around access plates. Electric and
telephone floor distribution boxes must remain accessible at all times.
n. Tenant shall use reasonable efforts to adjust thermostat, if
adjustable, to the setting which uses the least amount of energy upon leaving
the Premises daily.
o. Mats, trash, or other objects are not permitted in the public
corridors.
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<PAGE>
p. Landlord and/or its parking contractor shall have the right to
establish reasonable rules and regulations for the use of all parking facilities
at the Building.
q. Landlord shall have the right to determine when Tenant may move its
property; i.e., furnishings, files, etc., into or out of the Premises. Tenant
shall request permission from Landlord for any such move, and shall abide by
Landlord's reasonable rules regarding any such move.
r. Tenant shall purchase and maintain comprehensive public liability and
property damage insurance on the Premises, protecting Landlord and Tenant
against loss, cost, or expense by reason of injury or death to persons or damage
to or destruction of property by reason of the use and occupancy of the Premises
by Tenant and its invitees, such insurance to be carried by reputable companies
and having limits of not less than $1,000,000.00 for injury to or death of any
one person, $1,000,000.00 for each accident and $1,000,000.00 for property
carnage.
s. No tenant shall purchase spring water, ice, coffee, soft drinks,
towels or other like service, from any company or persons whose repeated
violations of the Building regulations have caused, in Landlord's opinion, a
hazard or nuisance to the Building and/or its occupants.
t. Landlord reserves the right to exclude from the Building at all times
any person who is not known or does not properly identify himself/herself to the
Building management or night watchman on duty. Landlord may at its option,
require all persons admitted to or leaving the Building between the hours of
6:00 P.M. and 8:00 A.M., Monday through Friday, and at all times on Saturdays,
Sundays and legal holidays, to register. Tenant shall be responsible for all
persons for whom he authorizes entry into or exit out of the Building, and shall
be liable to Landlord for all acts of such persons.
u. The Premises shall not be used for lodging or sleeping or for any
illegal purpose. The Premises shall never, at any time, be used f or any
immoral, disorderly, unlawful or hazardous purposes nor for any other purposes
than hereinbefore specified; and will not manufacture any commodity therein.
v. Landlord shall not maintain suite finishes which are nonstandard, such
as kitchen appliances, wallpaper. special light, etc. However, should the need
for repairs arise, at Tenant's request, Landlord will arrange for the work to be
done at the Tenant's expense. Tenant shall have the right to select a contractor
for said repairs subject however to Landlord's reasonable approval.
w. No auction sales shall be conducted in the Building without Landlord's
consent.
x. No tenant shall use any other method of heating than that provided by
the Landlord without the Landlord's consent.
y. When reasonably necessary to control the climate, and upon request of
Landlord, Tenant shall keep window coverings closed at the appropriate time of
day to prevent direct solar penetration of the Premises.
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<PAGE>
Landlord agrees to advise Tenant in writing of any additions to, deletions from,
or changes in the foregoing Rules and Regulations. In the event that Tenant is
in violation of any Building rule or regulation, Landlord shall notify Tenant in
writing of the same, and shall allow Tenant a reasonable period of time within
which to comply with such rule and regulation. Failure of Tenant to comply
within such period of time shall constitute a material default under the terms
and conditions of this Lease.
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<PAGE>
Exhibit 10.15
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE (the "LEASE") made this 27th day of October, 1998,
by and between ANNANDALE FINANCIAL CENTER JOINT VENTURE, a Maryland General
Partnership, (hereinafter referred to as "LANDLORD"), and ONESOFT CORPORATION, a
DELAWARE Corporation, (hereinafter referred to as "TENANT").
WITNESSETH, that for and in consideration of the rent hereinafter reserved
and of the mutual covenants and agreements hereinafter set forth, Landlord and
Tenant do hereby mutually agree as follows:
PREMISES 1. Landlord does hereby lease to Tenant, and Tenant does
hereby lease from Landlord, for the term and upon the
covenants and conditions hereinafter set forth, the Premises
which shall be deemed to be approximately ONE THOUSAND FOUR
HUNDRED SEVENTY-SIX (1,476) RENTABLE SQUARE FEET known as
Suite 120 located on the first floor of the Building known
as "ANNANDALE FINANCIAL CENTER", located at 7010 Little
River Turnpike, Annandale, Virginia 22003 (hereinafter
referred to as the "Premises").
TERM 2.(a) The term of this Lease shall commence on the later of
(i) the "Substantial Completion" of Landlord s construction
of the Premises or (ii) December 1, 1998 (the "LEASE
COMMENCEMENT DATE"), and expiring FIVE (5) YEARS after the
Lease Commencement Date (the "EXPIRATION DATE"). The period
commencing with the Lease Commencement Date (on the first
day of the next calendar month in the event the Lease
Commencement Date does not occur on the first day of a
month) and ending on the last day of the twelfth calendar
month thereafter shall constitute the first "Lease Year" as
such term is used herein. Each successive full twelve (12)
month period during the Lease Term shall constitute a "Lease
Year" and any portion of the Lease Term remaining after the
last twelve month period during said Lease term shall
constitute the last "Lease Year" for the purpose of this
lease.
(b) The term "Substantial Completion" shall mean that date
upon which construction of the improvements to the Premises
(as outlined in Paragraph 28. herein) have been
substantially completed and approved by local officials
having jurisdiction, subject only to normal punch list items
that will not materially or adversely interfere with
Tenant's business operations.
Notwithstanding anything herein to the contrary, Tenant
shall have the opportunity to enter the Premises during the
fifteen (15) day period prior to the Lease Commencement Date
for the purpose of installing computer, data, telephone and
television cable lines, special equipment, furniture,
fixtures, telephones and other personal property, providing
such early
<PAGE>
entrance does not unreasonably interfere with Landlord's
construction in Premises. Any occupancy prior to the Lease
Commencement Date shall be pursuant to all the terms and
conditions of this Lease, except that rent shall not
commence until the Lease Commencement Date. Within fifteen
(15) days after the Lease Commencement Date, Landlord and
Tenant shall execute a Certificate of Commencement.
RENT 3.(a) During and for the Term hereof, commencing on the
Lease Commencement Date, Tenant covenants and agrees to pay
Landlord for the Premises, without notice or demand and
without deduction, set off or abatement, a fixed minimum
guaranteed base rent (hereinafter sometimes referred to as
the "BASE RENT") payable in monthly installments, in
advance, (hereinafter sometimes referred to as "MONTHLY BASE
RENT" ) as follows:
Lease Year Annual Base Monthly Rent Per
Rent Base Rent Square Foot
-----------------------------------------------------
1 $29,520.00 $2,460.00 $20.00
2 30,996.00 2,583.00 21.00
3 32.545.80 2,712.15 22.05
4 34.173.09 2.847.76 23.15
5 35.881.74 2,990.15 24.31
-----------------------------------------------------
Tenant shall pay all rent to Landlord at the office of
Landlord, or to such other party or at such other address as
Landlord may designate from time to time by written notice
to Tenant. Rent shall be paid on or before the first day of
each and every calendar month, without prior notice, during
the Term hereof, provided, however that the Monthly Base
Rent for the First month of the Term shall be payable upon
execution of this Lease.
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2
<PAGE>
(b) Tenant covenants and agrees to pay to Landlord a Late
Fee equal to FIVE percent (5%) of the Monthly Base Rent if
any such payment is not received by Landlord within TEN (10)
days of their due date. In addition, all delinquent payments
due Landlord, including, but not limited to, rent and
additional rent, shall bear interest at the rate of TWO
percent (2%) per annum above the "Prime Rate" as published
by Wall Street Journal, New York, New York, as of the date
such payment became due, for the period beginning on the
date such payment became due to the date of payment thereof
by Tenant, provided, however, that nothing herein contained
shall be construed or implemented in such a manner as to
allow Landlord to charge or receive interest in excess of
the maximum rate then allowed by law. All such late fees and
interest charges shall be deemed additional rent due
hereunder and shall be payable with the next installment of
Monthly Base Rent.
OPERATING EXPENSES 4. Intentionally DELETED
AND REAL ESTATE
TAXES
DELAYED 5.(a) If Landlord shall be unable to give possession of the
POSSESSION Premises on the Lease Commencement Date specified in Section
2 of this Lease for any reason, such failure to do so shall
not affect or impair the validity of this Lease or the
obligations of Tenant hereunder, except as expressly
provided herein, and Landlord shall not be subject to any
liability for damages for such failure to give possession on
said date. In such event, Landlord shall notify Tenant in
writing setting forth a new Lease Commencement Date as
specified in Section 2 of this Lease. Unless such delay is
due to the fault of Tenant, the Base Rent reserved and
covenanted to be paid herein shall not commence until the
date that possession of the Premises is given to Tenant, or
the Premises are available for occupancy by Tenant and
Tenant has been so notified by Landlord, whichever shall
first occur.
(b) If for any reason the Landlord shall be unable to give
possession of the Premises to Tenant more than TWO (2)
months after the Lease Commencement Date specified in
Section 2, then Tenant shall have the option to cancel this
Lease after such date by giving THIRTY (30) days prior
written notice of such termination to the other party. If
Landlord shall tender possession of the Premises to Tenant
after Tenant has given notice such notice but prior to the
expiration of such THIRTY (30) day period, any notice given
by Tenant shall thereupon be nullified. Upon any such
cancellation becoming effective, Landlord and Tenant shall
be entirely relieved of the obligations hereunder, and any
security deposit given by Tenant to Landlord shall be
returned to Tenant.
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3
<PAGE>
USE OF PREMISES 6. Tenant shall use and occupy the Premises solely as a
general office space, provided that such use(s) is in
accordance with applicable zoning and other local
governmental regulations. Without the prior written consent
of Landlord, the Premises shall not be used for any other
purposes or uses whatsoever. Tenant shall not use or occupy
the Premises for any unlawful purpose, and shall comply with
all present and future laws, ordinances, regulations, and
orders of the United States of America, Commonwealth of
Virginia, County of Fairfax, and any other public or
quasi-public authority having jurisdiction over the
Premises.
ASSIGNMENT 7.(a) Tenant shall not assign, transfer, mortgage, or
AND otherwise encumber this Lease, or sublet, rent, or permit
SUBLETTING occupancy or use of the Premises, or any part thereof,
without obtaining the prior written consent of Landlord,
which shall not be unreasonably withheld, nor shall any
subletting, assignment or transfer of this Lease or the
right of occupancy hereunder be effected by operation of law
or in any manner other than with the prior written consent
of Landlord. Any assignment or subletting or transfer with
or without Landlord's consent shall not be construed as a
waiver or release of Tenant from liability hereinbefore the
payments of rent or the performances and observance of any
of the terms and conditions of this Lease. The collection or
acceptance of rent from any assignee, subtenant, or occupant
shall not constitute a waiver or release of Tenant from any
covenant or obligation contained in this Lease, nor shall
any assignment or subletting be construed to relieve Tenant
from the obligation to obtain the consent in writing of
Landlord to any further assignment or subletting.
(b) In the event that Tenant desires to assign or sublet all
or a portion of the Premises, Tenant shall give to Landlord
THIRTY (30) days written notice of Tenant's intention to do
same, the name, address and a current financial statement of
the proposed subtenant or assignee, and a copy of the
proposed assignment or sublease, specifying, among other
items, the proposed use, the term and the rent of the
proposed sublease or assignment. Within TEN (10) days after
receipt of said notice, Landlord shall give written notice
to Tenant, stating whether Landlord approves or disapproves
the proposed assignment or sublease, Tenant may sublet or
assign the Premises only after first obtaining the written
consent of Landlord, which consent shall not be unreasonably
withheld as set forth hereinabove.
(c) In the event that Tenant defaults hereunder, Tenant
hereby assigns to Landlord the rent due from any subtenant
or assignee of Tenant and hereby authorizes each such
subtenant or assignee to pay said rent directly to Landlord.
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4
<PAGE>
MAINTENANCE 8. Tenant shall keep the Premises, fixtures and equipment
BY TENANT therein in clean, safe sanitary and good order, will suffer
no waste or injury thereto, condition and will, at the
expiration or other termination of this Lease, surrender the
same, broom clean, in the same order and condition in which
they are on the Lease Commencement Date, ordinary wear and
tear excepted. Maintenance and repair of all equipment
and/or fixtures within or for the exclusive benefit of the
Premises, including, but not limited to, kitchen fixtures,
special air conditioning equipment, bathroom fixtures,
computers, or any other type of equipment or improvements,
together with related plumbing, electrical, or other utility
services, whether installed by Tenant or by Landlord on
behalf of Tenant, shall be the sole responsibility of
Tenant, and Landlord shall have no obligation in connection
therewith.
HOURS OF OPERATION 9. The regularly scheduled hours of operation for Building
shall be between EIGHT O'CLOCK (8:00 a.m.) to SIX O'CLOCK
(6:00 p.m.), Monday through Friday, and eight O'CLOCK (8:00
a.m.) to ONE O'CLOCK (1:00 p.m.) Saturday. Holidays on which
said water for the HVAC system shall not be provided except
at additional cost are: New Year's Day, Washington's
Birthday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day, and Easter Sunday. Such
holidays shall be observed on the dates on which the same
are observed by the federal government. If Tenant desires
air conditioning/heat and or other utilities or services
beyond the hours of operation as hereinabove set forth, and
of mutually satisfactory written agreements are made with
Landlord, or its agent, not less than TWENTY-FOUR (24) hours
in advance of the requirement. Landlord shall use its best
efforts to furnish such air conditioning/heating and/or
other utilities or services to tenant, and Tenant agrees to
pay Landlord the additional costs of such services in an
amount equal to ONE HUNDRED TEN percent (110%) of the total
direct costs of providing such additional services on an
overtime basis. Provided, however, that Landlord and its
agent shall not be liable for failure to furnish or for
suspension or delay in furnishing any or all of such
services caused by breakdown, maintenance or repair work,
strike, riot, civil commotion, or any other cause or reason
whatsoever beyond the control of Landlord.
Building Services. Throughout the Term, Landlord agrees that
-----------------
the Building will be maintained in a manner befitting a
first-class rental office building in the Annandale,
Virginia area and that it will furnish, or cause to be
furnished, the following services to the Premises and
Building, excluding emergency conditions beyond Landlord
control:
(a) Normal and usual cleaning and janitorial services after
5:00 p.m. on business days.
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5
<PAGE>
(b) Automatically operated elevator services TWENTY-FOUR
(24) hours a day, SEVEN (7) days a week, 365 days a year;
(c) All electric bulbs and fluorescent tubes in light
fixtures in the public areas of the Building and all
standard light bulbs and fluorescent tubes in the Premises;
(d) An intercom type security access system located at the
front door of the Building. Tenant shall be given access
cards into the Building 24 hours a day, 7 days a week, 365
days a year;
(e) Normal and usual maintenance of the life-safety systems,
the elevators, the Garage and all Building improvements and
facilities;
(f) Heating, ventilating and air-conditioning to the
Premises between the hours of 8:00 a.m. and 6:00 p.m. on
business days and between the hours of 8:00 a.m. to 1:00
p.m. Saturday, excluding holidays;
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6
<PAGE>
TENANT 10. (a) Tenant shall not make or permit anyone to make any
ALTERATIONS alterations, additions, or improvements, structural or
otherwise, or install any fixtures (hereinafter collectively
referred to as "Alterations"), in or to the Premises or the
Building without the prior written consent of Landlord. All
of such Alterations permitted by Landlord must conform to
all rules and regulations established from time to time by
the Underwriters' Association of the local area and by the
Landlord and conform to all requirements of the Federal,
State and local governments. Prior to the commencement of
work on any Alterations, the Landlord's written approval
must be obtained as to (i) the contractor(s) and
subcontractor(s) selected to perform such work, and (ii)
comprehensive plans and specifications showing all the
proposed Alterations, including detailed descriptions of the
effect of the proposed Alterations on the mechanical and
electrical systems of the Building. Landlord shall have the
right to stop such work if the Landlord or its designated
agent determines that such work is not being done in a
workmanlike manner or in accordance with the plans and
specifications provided to Landlord. In such event, Tenant
shall promptly correct the problem(s) which give rise to the
work stoppage, and if Tenant fails to do so within a time
period determined by Landlord to be reasonable, then
Landlord may. at its sole option, correct such problem(s),
or complete the Alterations, or remove the Alterations and
restore the Premises to their original condition, and Tenant
shall be liable for the costs of such action as additional
rent. Copies of all plats, plans, sketches, permits,
samples, etc. which are prepared or obtained in the course
of such Alterations shall be provided to the Landlord or its
designated agent no later than TEN (10) days after such are
prepared or obtained. The Tenant agrees to pay to the
Landlord or its designated agent a reasonable inspection fee
and to allow inspection from time to time during the period
of construction of all Alterations. In addition, Tenant
agrees to furnish "as built" plans and specifications for
all Alterations within a reasonable period of time after
completion of Alterations, and to pay to Landlord, or its
designated agent, a reasonable fee for updating the master
reproducible Building blueprint to show the Alterations.
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7
<PAGE>
(b) Prior to commencing construction on any Alterations
approved by Landlord, Tenant agrees to obtain and deliver to
Landlord written and unconditional waivers of mechanic's and
materialman's liens upon the Property for all work, labor
and services to be performed and materials to be furnished,
by them in connection with such work, signed by all
contractors, subcontractors, materialmen, and laborers to
become involved in such work. If notwithstanding the
foregoing, any mechanic's or materialmen's lien is filed
against the Property for work claimed to have been done for,
or materials claimed to have been furnished to, Tenant, such
lien shall be discharged by Tenant within ten (10) days
thereafter, at Tenant's sole cost and expense, by the
payment thereof or by filing any bond required by law. If
Tenant shall fail to discharge any such mechanic's or
materialman's lien, Landlord may, at its option, discharge
the same and treat the cost thereof and any legal expenses
incurred in connection therewith, as additional rent payable
with the installment of Monthly Base Rent next becoming due;
it being hereby expressly covenanted and agreed that such
discharge by Landlord shall not be deemed to waive or
release the default of Tenant in not discharging the same.
It is understood and agreed by Landlord and Tenant that any
such Alterations shall be constructed on behalf of Tenant.
It is further understood and agreed that, in the event
Landlord shall give its written consent to Tenant's making
any such Alterations, such written consent shall not be
deemed to be an agreement or consent by landlord to subject
Landlord's interest in the Property to any mechanic's or
materialman's liens which may be filed in respect of any
such Alterations made by or on behalf of Tenant.
(c) Tenant shall indemnify and hold Landlord harmless from
and against any and all expenses, liens, claims, or damages
to any person or property which may or might arise directly
or indirectly by reason of making of any such Alterations.
(d) If any Alterations are made without the prior written
consent of Landlord, Landlord retains the right to enter the
Premises at any time during the Term of this Lease to
correct or remove the same and restore the Premises to their
condition prior to the construction of the unauthorized
Alterations, and Tenant shall be liable and hereby agrees to
reimburse the Landlord for the costs of such removal and
restoration together with any and all damages which the
Landlord may suffer and sustain as a result thereof.
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8
<PAGE>
(e) All Alterations, including wall-to-wall carpet and wall
covering, to, in or upon the Premises shall, unless the
Landlord elects otherwise, become the property of Landlord
and shall remain upon the Premises and be surrendered with
Premises at the expiration or termination of this Lease, or
any renewal or extension period, without disturbance,
molestation or injury. Should the Landlord elect that
Alterations made by the Tenant upon the Premises be removed
upon the expiration or termination of this Lease, or any
renewal period, the Tenant hereby agrees to cause same to be
removed at the Tenant's sole cost and expense, and to
restore the Premises to the original improved condition, on
or before the expiration or termination of this Lease or any
renewal period. Should Tenant fail to remove the same or
restore the Premises, the Landlord may cause same to be
removed and/or the Premises to be restored at the Tenant's
expense, and the Tenant hereby agrees to pay to the Landlord
the cost of such removal and/or restoration together with
any and all damages which the Landlord may suffer and
sustain by reason of the failure of the Tenant to remove the
same and/or restore the Premises as herein provided.
(f) If Tenant is not in default in the performance of any of
its obligations under this Lease, Tenant shall have the
right to remove, prior to the expiration of the Term of this
Lease, all movable equipment, furniture or furnishings which
are not affixed to the Premises or the Building and which
were installed in the Premises at the expense of Tenant. If
such property of Tenant is not removed by Tenant prior to
the expiration or termination of this Lease, the same shall
become the property of Landlord and shall be surrendered
with the Premises as a part thereof, or, at Landlord's
option, Landlord may cause the same to be removed and the
Premises to be restored to their original improved
condition, and Tenant hereby agrees to pay to Landlord the
cost of such removal and restoration together with any and
all damages which Landlord may suffer and sustain by reason
of the failure of Tenant to remove the same and restore the
Premises or Building as herein provided.
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9
<PAGE>
ADVERTISING 11. Except as otherwise herein provided, Tenant agrees that
no sign, advertisement, display or notice shall be
inscribed, painted or affixed on any part of the outside or
inside of the Premises or Building, except on the
directories and doors of offices, and then only in such
size, color and style as the Landlord shall approve.
Landlord shall have the right to prohibit any advertisement,
or display of items of the Tenant, wherever appearing, which
in the Landlords reasonable opinion tends to impair the
reputation of the Building or its desirability as a building
for offices or for financial, insurance or other
institutions and businesses of like nature. Upon written
notice from the Landlord, Tenant shall refrain from and
discontinue such advertisement. In the event that Tenant
violates the terms of this section, Landlord may remove any
sign, advertisement, display or notice and may charge the
Tenant for any costs incurred by Landlord in connection with
such removal.
Notwithstanding the foregoing, Tenant shall have the right
to affix exterior signage to the Building at Tenant's sole
cost and expense. Tenant shall provide Landlord with a scale
drawing of the sign and proposed location on the Building,
and such sign and location shall be subject to Landlord's
approval and any governmental and historic restrictions.
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10
<PAGE>
DELIVERIES 12. No freight, furniture or other bulky matter of any
description shall be received into the Building or carried
in the elevators, except as approved by the Landlord. All
moving of furniture, material and equipment in the Building
outside the Premises must be with the prior written consent
of the Landlord and in accordance with Landlord's reasonable
rules and instructions; however, Landlord shall not be
responsible for any damage to, or charges for, moving the
same. Tenant agrees to remove promptly from the public
area(s) within or adjacent to the Building any of Tenant's
personal property there delivered or deposited. Landlord
shall have the right to prescribe the weight, method of
installation, and position of safes or other heavy fixtures
or equipment. All damage done to the Building by delivery,
maintaining or removal of any fixture or article of Tenant's
furniture or equipment, shall be repaired at the expense of
Tenant.
EQUIPMENT 13. Tenant shall not install or operate in the Premises any
electrically operated equipment or other machinery, except
typewriters, adding machines, copiers, personal computers,
and such other office machinery and equipment as is normally
used in the operation of Tenant's business, without
obtaining the prior written consent of Landlord, which shall
not be unreasonably withheld or delayed, but may be
conditioned upon the payment by Tenant of additional rent in
compensation for any excess consumption of water and/or
electricity as may result from the operation of said
equipment or machinery. Tenant shall not install any
equipment of any kind or nature which shall or may
necessitate changes, replacements, or additions to, or cause
an abnormal increase in its use of the water, plumbing,
heating, air conditioning, or electrical systems, which
serve the Premises, without the prior written consent of
Landlord. Such consent shall not be withheld unreasonably,
but may be conditioned upon the payment of Tenant of the
cost of such changes replacements, additions, or increased
use. Notwithstanding the foregoing, in the event that office
equipment or mechanical equipment used by Tenant in the
Premises shall cause noise or vibration that may be
transmitted to any part of the Building to such a degree as
to be objectionable to Landlord or any other tenant, Tenant
shall install, at its own expense, vibration eliminators or
silencing devices sufficient to eliminate such noise and/or
vibration. Tenant shall not install in the Premises any
fixtures, equipment, machinery, furniture or furnishings
which place a load upon the floor exceeding the designed
floor load capacity.
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11
<PAGE>
INSPECTIONS; 14. Tenant agrees to allow Landlord, its agents or employees
ENTRY to enter the Premises at all reasonable times to examine,
inspect or protect the same; to prevent damage or injury to
the same and/or to and other portion of the Building; to
make such alterations, additions, improvements and repairs
to the Premises or adjacent portions of the Building as
Landlord may deem necessary or desirable; or to exhibit the
same to prospective tenants during the last SIX (6) months
of the Term of this Lease, or any renewal or extension
period, or to prospective purchasers of the Building or any
portion thereof at any time. None of the same shall be
construed as an eviction, actual or constructive. The rent
reserved shall not abate while such alterations, additions,
improvements or repairs are being made, or because of such
inspections or exhibitions, whether by reason of loss or
interruption of Tenant's business or otherwise. Landlord
agrees to make all reasonable efforts to minimize any
disruption of Tenant's business by reason of such
activities. Landlord's right of entry for any purpose shall,
however, be subject to any State or Federal laws and
regulations that may currently enlist or may become
applicable because of any secret, confidential, or other
restricted activities carried on by Tenant in the Premises.
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12
<PAGE>
INSURANCE 15.(a) Insurance Rating. Tenant will not conduct or permit
----------------
to be conducted any activity other than normal office
business nor will Tenant place any equipment in or about the
Premises or the Property which will, in any way, increase
the rate of property and casualty or other insurance on the
Property. If any increase in the rate of property and
casualty insurance or other insurance is stated by any
insurance company or by the applicable Insurance Rating
Bureau to be due to any activity or equipment of Tenant in
or about the Premises or the Property, such statements shall
be conclusive evidence that the increase in such rate is due
to such activity or equipment, and, as a result thereof,
Tenant shall be liable for such increase and shall reimburse
Landlord therefor upon demand. Any such sum due Landlord
shall be considered additional rent payable hereunder.
(b) Liability Insurance. Tenant shall carry public liability
-------------------
insurance with a company or companies licensed to do
business in the Commonwealth of Virginia and rated not lower
than Level A, Class XII, as rated in the most recent edition
of "Best's Key Rating Guide" for insurance companies. Said
insurance shall cover all liability of Tenant and its
authorized representatives arising out of and in connection
with Tenant's use or occupancy of the Premises and the
Property. Said insurance shall be in minimum amounts set
forth in the rules and regulations established by Landlord
from time to time such amounts to be reasonable for Tenant's
type of business; a copy of the current rules and
regulations is attached hereto as Exhibit A. Said insurance
shall name Landlord, and the building management agency as
additional insured, as their interests may appear, and shall
contain an endorsement that said insurance shall remain in
full force and effect notwithstanding that the insured has
waived his right of action against any party prior to the
occurrence of a loss. A current Certificate of Insurance
from such insurer shall be delivered to Landlord's agent
prior to the Lease Commencement Date and renewals thereof
shall be delivered to Landlord's agent at least THIRTY (30)
days prior to the expiration of any such policy. Each policy
shall contain an endorsement that will prohibit its
cancellation prior to the expiration of THIRTY (30) days
after written notice to Landlord of such proposed
cancellation.
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13
<PAGE>
(c) Waiver of Subrogation. Each party hereby waives, and
---------------------
shall have included in its liability insurance policies for
the Building and/or property insurance covering Tenant's
contents, furniture, furnishings, fixtures and other
property, appropriate clauses pursuant to which each party's
insurance carriers waive, all rights of subrogation against
the other party, its principals, agents and employees, with
respect to losses payable under such policies, or
appropriate clauses setting forth that such policies shall
not be invalidated should the insured waive in writing prior
to a loss any or all right of recovery against any party for
losses covered by such policies. If either party at any time
is unable to obtain inclusion of either of the clauses
described in the preceding sentence, then such party shall
have the other party named in such policies as an additional
insured, as their interests may appear. If either party
shall be named as an additional insured in accordance with
the foregoing provisions, and if the main insured shall not
be in default hereunder, and, if progress satisfactory to
Landlord is being made with regard to repairs to any damage
to the Premises or improvements therein, the additional
insured shall promptly endorse to the order of the main
insured, without recourse, any check, draft or order for the
payment of money representing the proceeds of any such
policy, or representing any other payment under such
policies, and the additional insured hereby irrevocably
waives any and all rights in and to such proceeds and
payments. Each party shall advise the other party promptly
as to the coverage or language of the clauses included in
its insurance policies pursuant to this paragraph and shall
notify the other party promptly of any cancellation or
change of the terms of any such policies which would affect
such clauses. All Certificates of Insurance provided
hereunder shall set forth the waiver of subrogation
provisions contained in the subject policy.
(d) Property and Casualty Insurance. Tenant covenants and
-------------------------------
agrees to maintain standard property and casualty insurance
covering its property located in, on or about the Premises.
Said insurance shall be replacement cost, all risk coverage
for all leasehold improvements other than the building
standard improvements. Tenant shall deliver a Certificate of
Insurance from its insurer to Landlord's agent prior to the
Lease Commencement Date, and renewals thereof shall be
delivered to Landlord's agent at least THIRTY (30) days
prior to the expiration of any such policy.
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14
<PAGE>
DAMAGES 16. All breakage, injury or damage to the Premises or to
TO PREMISES Property, including damage to carpeting, wall finishes, and
other items of improvement thereto, in any way caused by
Tenant or its agents, employees, contractors, visitors,
guests and invitees, shall be repaired at the expense of the
Tenant, except those covered by standard fire and extended
coverage perils insurance. Landlord shall make, or cause to
be made, such necessary repairs, alterations and
replacements, structural, nonstructural or otherwise, and
any charge, costs or damages so incurred by the Landlord
shall be paid by the Tenant. Landlord shall be entitled to
regard such charges, costs or damages as additional rent,
payable with the installment of Monthly Base Rent next
becoming due under this Lease. This provision shall be
construed as an additional remedy granted to Landlord and
not in limitation of any other rights and remedies which
Landlord has or may have.
WAIVER OF 17. (a) Tenant's Property and Personal Injury. All personal
LIABILITY -------------------------------------
INDEMNITY property of Tenant (for the purposes of this Section, the
term "Tenant" shall include Tenant, its agents, employees,
contractors, visitors, guests and invitees) contained in the
Premises shall be and remain there at the sole risk of
Tenant. Landlord and/or its agents and employees shall not
be liable for any accident or damage to property of Tenant
resulting from the use or operation of elevators, heating,
cooling, electrical or plumbing apparatus, water, steam, or
any other cause; nor shall they be liable for any personal
injury to Tenant arising from the use, occupancy and/or
condition of the Premises or Property unless such injury
shall directly result directly from the gross negligence or
willful misconduct of Landlord; nor shall they be liable in
any event for any interruption or loss of Tenant's business.
Notwithstanding any other language contained herein,
Landlord and/or its agents and employees shall not be liable
to Tenant for any loss, damage or injury to person or
property, even if the same is caused by their negligence or
willful misconduct, to the extent that Tenant is compensated
therefore by Tenant's insurance.
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(b) Tenant's Indemnity. Tenant shall indemnify and hold
------------------
Landlord and it's agents and employees harmless from all
loss, damage, liability, cost or expense incurred, suffered,
or claimed by any person or entity by reason of injury,
loss, or damage to any person, property or business
resulting from any default hereunder by Tenant, or from
Tenant's willful act, negligence or negligent or unlawful
use of the Premises or the Property or anything therein,
including but not limited to, water, steam, electricity, or
other facilities or equipment. Landlord and/or its agents
and employees assume no liability or responsibility
whatsoever with respect to the conduct and operation of the
business to be conducted by Tenant in the Premises, and
shall not be liable for any accident or injury to any person
or property which are caused by the conduct and operation of
Tenant's business. Tenant agrees to indemnify and hold
harmless Landlord, its agents and employees, against all
such claims.
BANKRUPTCY 18. All of the terms and provisions of this paragraph 18 are
made expressly subject to and governed by the provisions of
the United States Bankruptcy Code and the orders, rulings
and other determination of any bankruptcy court of
appropriate jurisdiction relating to the Tenant and/or this
Lease. Thus, any provision of this paragraph which is
contrary to or in any' way inconsistent with the provisions
of the United States Bankruptcy Code or any order, ruling or
other determination of any bankruptcy court of appropriate
jurisdiction shall, be deemed invalid and of no force and
effect.
(a) In the event that Tenant shall become a Debtor under
Chapter 7 of the Bankruptcy Code, and the Trustee or Tenant
shall elect to assume this Lease for the purpose of
assigning the same or otherwise, such election and
assignment may only be made if all of the terms and
conditions of subsection (b) and subsection (d) of this
Section 18 are satisfied. If such Trustee shall fail to
elect or assume this Lease within sixty (60) days after the
filing of the Petition, this Lease shall be deemed to have
been rejected. Landlord shall be thereupon immediately
entitled to possession of the Premises without further
obligation to Tenant or Trustee, and this Lease shall be
canceled, but Landlord's right to be compensated for damages
in such liquidation proceeding shall survive.
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(b) In the event that a Petition for reorganization or
adjustment of debts is filed concerning Tenant under
Chapters 11 and 13 the Bankruptcy Code, or a proceeding is
filed under Chapter 7 of the Bankruptcy Code and is
transferred to Chapter 11 or 13, the Trustee or Tenant, as
Debtor-In-Possession, must elect to assume this Lease within
SEVENTY-FIVE (75) days from the date of the filing of the
Petition under Chapters 11 or 13, or the Trustee or
Debtor-In-Possession shall be deemed to have rejected this
Lease. No election by the Trustee or Debtor-In-Possession to
assume this Lease, whether under Chapters 7, 11 or 13, shall
be effective unless each of the following conditions, which
Landlord and Tenant acknowledge are commercially reasonable
in the context of a bankruptcy proceeding of Tenant, have
been satisfied, and Landlord has so acknowledged in writing:
(1) The Trustee or the Debtor-in-Possession has cured, or
has provided Landlord adequate assurance (as defined below)
that:
(A) Within TEN (10) days from the date of such
assumption the Trustee will cure all monetary
defaults under this Lease; and
(B) Within THIRTY (30) days from the date of such
assumption the Trustee will cure all non-monetary
defaults under this Lease.
(2) The Trustee or the Debtor-in-Possession has compensated,
or has provided to Landlord adequate assurance (as defined
below) that within TEN (10) days from the date of
assumption. Landlord will be compensated for any pecuniary
loss incurred by Landlord arising from the default of
Tenant, the Trustee, or the Debtor-in-Possession as recited
in Landlord's written statement of pecuniary loss sent to
the Trustee or the Debtor-in-Possession.
(3) The Trustee or the Debtor-In-Possession has provided
Landlord with adequate assurance of the future performance
of each of Tenant's, Trustee's or Debtor-In-Possession's
obligations under this Lease; provided, however, that:
(A) The Trustee or Debtor-In-Possession shall also
deposit with Landlord as security for the timely
payment of rent, an amount equal to THREE (3)
months' base Rent and other monetary charges
accruing under this Lease; and
(B) If not otherwise required by the terms of this
Lease, the Trustee or Debtor-In-Possession shall
also pay in advance on the date Monthly Base Rent
is payable, ONE-TWELFTH (1/12) of Tenant's annual
obligations under this Lease for operating expenses
real estate taxes, and similar charges.
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(C) The obligations imposed upon the Trustee or
Debtor-In-Possession shall continue with respect to
Tenant or any assignee of the Lease after the
completion of bankruptcy proceedings.
(4) The assumption of the Lease will not:
(A) Breach any provision in any other lease, mortgage,
financing agreement or other agreement by which Landlord
is bound relating to the Building; or
(B) Disrupt, in Landlord's judgment, the tenant mix of the
Building or any other attempt by Landlord to provide a
specific variety of commercial tenants in the Building
which, in Landlord's judgment, would be most beneficial to
all of the tenants of the Building and would enhance the
image, reputation, and profitability of the Building.
(C) For purposes of this subsection (b), Landlord and Tenant
acknowledge that, in the context of a bankruptcy proceeding
of Tenant, at a minimum "adequate assurance" shall mean:
(i) The Trustee or the Debtor-In-Possession has and will
continue to have sufficient unencumbered assets after the
payment of all secured obligations and administrative
expenses to assure Landlord that the Trustee or
Debtor-In-Possession will have sufficient funds to fulfill
the obligations of Tenant under this Lease, and to keep the
Premises stocked with inventory and properly staffed with
sufficient employees to conduct a fully-operational,
actively promoted business on the Premises; and
(ii) The Bankruptcy Court shall have entered an Order
segregating sufficient cash payable to Landlord and/or the
Trustee or Debtor-In-Possession shall have granted valid and
perfected first lien and security interest and/or mortgage
in property of Tenant, Trustee or Debtor-In-Possession,
acceptable as to value and kind to Landlord, to secure to
Landlord the obligation of the Trustee or
Debtor-In-Possession to cute the monetary and/or
non-monetary defaults under this Lease within the time
period set forth above.
(c) In the extent that this Lease is assumed by a Trustee
appointed for Tenant or by Tenant as Debtor-In-Possession
under the provisions of subsection (b) hereof and thereafter
Tenant is liquidated of debts under Chapters 11 or 13 of the
Bankruptcy Code, then, and in either of such events,
Landlord may, at its option, terminate this Lease and all
rights of Tenant hereunder, by giving Tenant written notice
of its election to so terminate, by no later than THIRTY
(30) days after the occurrence of either of such events.
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(d) If the Trustee or Debtor-In-Possession has assumed the
Lease pursuant to the terms and provisions of subsections
(a) or (b) herein, for the purpose of assigning (or elects
to assign) Tenant's interest under this Lease, or the estate
created thereby, to any other person, such interest or
estate may be so assigned only if Landlord shall acknowledge
in writing that the intended assignee has provided adequate
assurance as defined in this subsection (d) of future
performance of all of the terms, covenants and conditions of
this Lease to be performed by Tenant.
For purposes of this subsection (d), Landlord and Tenant
acknowledge that, in the context of a bankruptcy proceeding
of Tenant, at a minimum "adequate assurance of future
performance" shall mean that each of the following
conditions have been satisfied, and Landlord has so
acknowledged in writing:
(1) The assignee has submitted a current financial statement
audited by a Certified Public Accountant which shows a net
worth and working capital in amounts determined to be
sufficient by Landlord to assure the future performance by
such assignee of Tenant's obligations under this Lease:
(2) The assignee, if requested by Landlord, shall have
obtained guarantees in form and substance satisfactory to
Landlord from one or more persons who satisfy Landlord's
standards of creditworthiness:
(3) Landlord has obtained all consents or waivers from any
third party required under any lease, mortgage. financing
arrangement or other agreement by which Landlord is bound in
order to permit Landlord to consent to such assignment.
(e) When, pursuant to the Bankruptcy Code, the Trustee or
Debtor-In-Possession shall be obligated to pay reasonable
use and occupancy charges for the use of the Premises or any
portion thereof, such charges shall not be less than the
Base Rent as defined in this Lease and other monetary
obligations of Tenant for the payment of operating expenses,
real estate taxes, and similar charges.
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(f) Neither Tenant's interest in the Lease, nor any lesser
interest of Tenant herein, nor any estate of Tenant hereby
created, shall pass to any trustee, receiver, assignee for
the benefit of creditors, or any other person or entity, or
otherwise by operation of law under the laws of any state
having jurisdiction of the person or property of Tenant
(hereinafter referred to as the "state law") unless Landlord
shall consent to such transfer in writing. No acceptance by
Landlord of rent or any other payments from any such
trustee, receiver, assignee, person or other entity shall be
deemed to have waived, nor shall it waive the need to obtain
Landlord's consent of Landlord's right to terminate this
Lease for any transfer of Tenant's interest under this Lease
without such consent.
(g) In the event the estate of Tenant created hereby shall
be taken in execution or by other process of law, or if
Tenant or any guarantor of Tenant's obligations hereunder
(hereinafter referred to as the "guarantor") shall be
adjudicated insolvent pursuant to the provisions of any
present or future insolvency law under state law, or if any
proceedings are filed by or against the guarantor under the
Bankruptcy Code, or any similar provisions of any future
federal bankruptcy law, or if a Receiver or Trustee of the
property of Tenant or the guarantor shall be appointed under
state law by reason of Tenant's or the guarantor's
insolvency or inability to pay its debts as they become due
or otherwise, or if any assignment shall be made of Tenant's
or the guarantor's property for the benefit of creditors
under state law, then and in such event Landlord may, at its
option, terminate this Lease and all rights of Tenant
hereunder by giving Tenant written notice of the election to
so terminate within THIRTY (30) days after the occurrence of
such event.
As used in this Section 18, the term "Tenant" shall include
any surety or other guarantor of this Lease.
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CASUALTY 19. In the event of damage by fire or other casualty to the
Premises or any part thereof, this Lease shall not be
terminated unless otherwise provided hereinafter, but
Landlord shall diligently proceed to repair and restore the
same. During the period that Tenant is deprived of the use
of the damaged portion of the Premises, provided that such
damage was not caused by the negligence or willful
misconduct of Tenant, its agents, employees, contractors,
visitors, guests or invitees, the rent for the remainder of
the Premises shall be that portion of the total rent which
the area remaining that can be occupied bears to the total
area of the Premises, so long as Tenant shall be able to
operate its business normally; if Tenant shall be unable to
operate its business normally, then rent shall be abated
during such period. If during the Term of this Lease the
Premises shall be so damaged by fire or other casualty as to
be untenantable, then unless said damage be repaired within
ONE HUNDRED TWENTY (120) days after said fire or other
casualty, either party, upon written notice to the other
party given at any time following the expiration of ONE
HUNDRED TWENTY (120) days thereafter, may terminate this
Lease, in which case the rent and additional rent shall be
apportioned and paid to the date of said fire or other
casualty. In the event that the Building is so severely
damaged or destroyed by fire or other casualty (although the
Premises may not be affected) that Landlord shall decide
within SIXTY (60) days following such event of casualty not
to rebuild or construct the Building, then Landlord shall
give written notice to Tenant and this Lease and the tenancy
hereunder shall terminate in accordance with such notice.
CONDEMNATION 20. (a) Tenant agrees that if the Premises or a substantial
part thereof shall be taken, or sold under the threat of
condemnation, for public or quasi-public use or purpose by
or to any competent authority, this Lease shall fully
terminate as of the date of any such taking. Tenant shall
have no claim against Landlord and shall have no claim or
right to any portion of the award which may be made to
Landlord as a result of any such condemnation: all rights of
Tenant to damages therefor, if any, are hereby assigned by
Tenant to Landlord. Upon such condemnation or taking, the
Term of this Lease shall cease and terminate from the date
of such taking or condemnation, and Tenant shall have no
claim against Landlord for the value of any unexpired term
of this Lease, leasehold improvements, or good will.
Notwithstanding the foregoing, Tenant shall be free to
pursue a separate claim against the condemning authority for
the depreciated value of its leasehold improvements,
provided that any award to Tenant shall not result in a
diminution of any award to Landlord.
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(b) If less than a substantial part of the Premises is taken
or condemned, the rent for the remainder of the Premises
shall be that portion of the total rent which the area
remaining that can be occupied bears to the total area of
the Premises, effective on the date when title vests in such
governmental authority. The Lease shall otherwise remain in
full force and effect. For purposes hereof, a substantial
part of the Premises shall be considered to have been taken
if Tenant shall be unable to operate its business in its
normal and customary manner.
DEFAULT 21. (a) It is agreed that Tenant shall be in default if
Tenant shall fail to pay the rent (including any additional
rent) at the time the same shall become due and payable as
provided hereunder in Section 3(a) of this Lease, and Tenant
shall not cure such default within TEN (10) days after the
date due and payable for payment of such rent; or if Tenant
shall breach, violate, fail, or neglect to keep and perform
any of the other terms, covenants, or conditions herein
contained, or contained in the Building Instruments, and
Tenant shall not cure such breach within THIRTY (30) days
after written demand by Landlord therefor, or, if such
breach cannot reasonably be cured within such period, Tenant
shall fail to diligently attempt to cure such breach, or if
the Premises shall become vacant or abandoned (provided that
Landlord shall not construe any vacation or abandonment of
the Premises before the expiration of the Term hereof as a
default so long as Tenant continues to comply with all
covenants and conditions of the Lease).
(b) In the event of default by Tenant, then and in each such
case, Landlord may treat the occurrence of such event as a
breach of this Lease, and in addition to any and all other
rights or remedies of Landlord in this Lease or at law or in
equity provided, it shall be, at the option of Landlord,
without further notice or demand of any kind to Tenant or
any other person:
(i) The right of Landlord, even though it may have relet the
Premises as herein below provided, to declare the Lease Term
ended and to re-enter the Premises and take possession
thereof and remove all persons therefrom, and Tenant shall
have no further claim thereon or thereto;
(ii) The right of Landlord to bring suit for the collection
of rent and other charges, as it accrues pursuant to the
terms of this Lease, and damages (including without
limitation reasonable attorneys' fees and the cost of
renovating the Premises) without entering into possession of
said Premises or canceling this Lease;
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(iii) The right of Landlord to re-enter or retake possession
of the Premises from Tenant by summary proceedings or
otherwise and to remove, or cause to be removed, Tenant or
any other occupants from the premises in such manner as
Landlord shall deem advisable with or without legal process
and using self-help if necessary, and it is agreed that the
commencement and prosecution of any action by Landlord in an
unlawful detainer, ejectment or otherwise or any execution
of any judgment or decree obtained in any action to recover
possession of the Premises or any other re-entry and removal
shall not be construed as an election to terminate this
Lease whether or not such entry or re-entry be had or taken
under summary proceedings or otherwise, and shall not be
deemed to have absolved or discharged Tenant from any of its
obligations or liabilities for the remainder of the Term.
Tenant shall, notwithstanding any such entry or re-entry,
continue to be liable for the payment of rent and the
performance of the other covenants, conditions and
agreements by Tenant to be performed as set forth in this
Lease, and Tenant shall pay to Landlord all monthly
deficits, after any such reentry, in monthly installments as
the amounts of such deficits from time to time are
ascertained. In the event of any such ouster, Landlord shall
have the right but not the duty to rent or lease the
Premises to some other person, firm or corporation (whether
for a term greater or less than or equal to the unexpired
portion of the Term or whether the space leased by the new
lease includes more or less floor area than the Premises)
upon such terms and conditions and for such rental as the
Landlord may deem proper and to collect said rental and any
other rental that may thereafter become payable. In such
event, the rentals received by Landlord from such reletting
shall be applied: first, to the payment of any indebtedness
other than the rent due hereunder from Tenant to Landlord;
second, to the payment of any cost of such reletting
(including without limitations the making of any
alterations, repairs or decorations in the Premises which
Landlord deems advisable); third, to the payment of the cost
of any alterations and repairs to the Premises; third, to
the payment of rent due and unpaid hereunder, and the
residue, if any, shall be held by Landlord and applied in
payment of future rent as the same may become due and
payable hereunder. Should that portion of such rentals
received from such reletting during any month, which is
applied to the payment of rent hereunder, be less than the
rent payable during that month by Tenant hereunder, then
Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly; Tenant
shall have no right to any excess. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses,
including, but not limited to, brokerage commissions and
attorneys' fees, incurred by Landlord in such reletting or
in making such alterations and repairs not covered by the
rental received from such reletting. Nothing herein
contained shall be
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construed as obligating the Landlord to relet the whole or
any part of the Premises whatsoever. In the event of any
entry or taking possession of the Premises as aforesaid,
Landlord shall have the right, but not the obligation, to
remove therefrom all or any part of the personal property
located therein and may place the same in storage at a
public warehouse at the expense and risk of the owner or
owners thereof. The terms "re-enter" or "re-entry" as used
in this Lease are not and shall not be restricted to their
technical meaning but are used in their broadest sense.
(c) If Landlord elects to terminate this Lease under the
provisions set forth above, Landlord may recover from Tenant
as damages (all of which shall be immediately due and
payable from Tenant to Landlord), in addition to its other
remedies:
(i) Any' unpaid rent, including interest thereon, which is
due and owing at the time of such termination: plus
(ii) That rent, including interest thereon, which would have
been earned after termination until the time of judgment:
plus
(iii) A sum representing liquidated damages and not penalty
in an amount equal to the excess of the Base Rent for the
Premises at the time of termination and the additional rent
provided for in Section 4 above for the year in which this
Lease shall be terminated multiplied by the number of years
and tradition of a year then constituting the remainder of
the Term hereof, over the rental value of the Premises at
the time of termination for such unexpired Term, discounted
at a rate of SEVEN percent (7%) per annum to present value,
less commissions, advertising, cost of repairs and other
expenses incidental to reletting of such Premises.
Nothing herein contained shall limit or prejudice the right
of the Landlord to prove and obtain as liquidated damages in
any bankruptcy, insolvency, receivership, reorganization or
arrangement proceeding an amount equal to the maximum
allowed by any statute or rule of law governing such
proceedings and in effect at the time when such damages are
to be proved, whether or not such amount be greater, equal
to or less than the amount of the excess referred to in the
preceding sentence. In determining the rental value of the
Premises, the commercially reasonable rental realized by any
reletting accomplished or accepted by Landlord within a
reasonable time after termination of this Lease, shall be
deemed, prima facie, to be the rental value.
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(iv) Any other amount necessary to compensate Landlord for
all the detriment directly caused by Tenant's failure to
perform its obligations under this Lease or which in the
ordinary course of things would be likely to result
therefrom including without limitation to cost of renovating
the Premises and reasonable attorneys' fees; plus
(v) At Landlord's election, such other amounts, in addition
to or in lieu of the foregoing, as may be permitted from
time to time by applicable law.
(d) In the event of default, all of the Tenant's fixtures,
furniture, equipment, improvements, additions, alterations,
and other personal property shall remain on the Premises and
in that event and continuing during the length of said
default, Landlord shall have the right to take exclusive
possession of same and to use the same, rent or charge free,
until all defaults are cured or, at its option, at any time
during the Lease Term, to require Tenant to forthwith remove
same. In connection with the foregoing, Landlord shall have
a lien upon the property of Tenant in the Premises during
the Lease Term for the amount of any unpaid rent or other
sum due from Tenant hereunder. Except upon expiration of
this Lease where no default exists in the payment of rent or
other sums due from Tenant hereunder. Tenant shall not
remove any of Tenant's property from the Premises without
the prior written consent of Landlord, other than pursuant
to sale thereof in the regular course of its business, and
Landlord shall have the right and privilege at its sole
option and discretion, to take possession of all property of
Tenant in the Premises, to store the same in said Premises,
or to remove it therefrom and store it in such place as may
be selected by Landlord, at Tenant's risk and expense. in
accordance with such lien and of any rights of distraint it
may possess against Tenants said property.
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(e) In the event of a breach or threatened breach by Tenant
of any of the covenants or provisions hereof, Landlord shall
have the right of injunction and the right to invoke any
remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not therein provided
for; and in such event Landlord shall be entitled to recover
from Tenant, payable as additional rent hereunder, any and
all reasonable expenses as Landlord may incur in connection
with its efforts to secure such injunctive relief or other
remedy at law or in equity, such as court costs and
attorneys' fees. Landlord and Tenant hereby expressly waive
trial by jury in any action, proceeding or counterclaim,
brought by either of them against the other, on any matter
whatsoever arising out of or in any way connected with this
Lease, their relationship as Landlord and Tenant, Tenant's
use and occupancy of the Premises and/or any claim of injury
or damage. If Landlord shall commence any proceeding for
non-payment of rent, or any other payment of any kind to
which Landlord may be entitled or which it may claim
hereunder, Tenant will not interpose any counterclaim or
set-off of whatever nature or description in any such
proceeding, the parties hereto specifically agreeing that
Tenant's covenants to pay rent or any other payments
required of it hereunder are independent of all other
covenants and agreements herein contained, provided,
however, that this shall not be constructed as a waiver of
Tenant's rights to assert such a claim in any separate
action brought by Tenant. Tenant further waives any right of
defense which may have to claim a merger, and neither the
commencement of any action or proceeding settlement thereof
nor entering of judgment shall bar Landlord from bringing
subsequent actions or proceedings from time to time. Mention
in this Lease of any particular remedy shall not preclude
Landlord from any other remedy at law or in equity to which
it may be entitled. Tenant hereby expressly waives any and
all rights of redemption granted by or under any present or
future laws in event of Tenant being evicted or dispossessed
for any cause, or in the event of Landlord obtaining
possession of the Premises by reason of the violation by
Tenant of any of the covenants and conditions of this Lease,
or otherwise.
(f) It is further provided that, if legal proceedings are
instituted hereunder, and a compromise or settlement thereof
shall be made, it shall not be constituted as a waiver of
any breach of any covenant, condition or agreement herein
contained.
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(g) No payment by Tenant or receipt by Landlord of a lesser
amount than the Monthly Base Rent herein stipulated shall be
deemed to be other than on account of the earliest
stipulated rent then due, nor shall any endorsement or
statement on any check or any letter accompanying any check
or payment of rent be deemed an accord and satisfaction, and
Landlord may' accept such check or payment without prejudice
to Landlord's right to recover the balance of such rent or
to pursue any other remedy.
(h) Should Tenant fail to pay rent (including any additional
rent) as and when the same is due, Landlord shall not be
required to wait until the expiration of the Term hereof to
sue for Landlord's loss or damages, but shall have the right
to sue from time to time to recover unpaid rent and other
damages as provided in this Lease. Landlord shall have the
option to declare the entire balance of the Base Rent
(including annual increases as provided herein) immediately
due and payable upon failure by Tenant to cure any default
within the time prescribed herein. Landlord shall have the
further option to defer action until the expiration of the
Term, in which event the cause of action shall not be deemed
to have accrued until the date of expiration. All rights and
remedies of Landlord under this Lease shall be cumulative
and shall not be exclusive of any other rights and remedies
provided to Landlord under applicable law.
(i) If, prior to the commencement of the Term of this Lease,
Tenant notifies Landlord of or otherwise unequivocally
demonstrates an intention to repudiate this Lease, Landlord
may, at its option, consider such anticipatory repudiation a
breach of this Lease. In addition to any other remedies
available to it hereunder or at law or in equity, Landlord
may retain all rent paid upon execution of the Lease and the
security deposit, if any, to be applied to damages of
Landlord incurred as a result of such repudiation,
including, without limitation, attorneys' fees, brokerage
fees, costs of reletting and loss of rent. It is agreed
between the parties that for the purpose of calculating
Landlord's damages, in a building which has other available
space at the time of Tenant's breach, Landlord shall have no
obligation to rent the Premises prior to other space in the
Building.
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SUBORDINATION 22. This Lease is subject and subordinate to all ground or
underlying leases, if any, and to any deeds of trust which
may now or hereafter affect this Lease or the Property, and
to all renewals, modifications, consolidations, replacements
and extensions thereof. Notwithstanding the foregoing,
Tenant shall have the right to keep the Lease in full force
and effect so long as Tenant shall fully comply with all the
terms of this Lease. This clause shall be self-operative and
no further instrument of subordination shall be necessary to
effect the subordination of this Lease to the lien of any
such lease, mortgage or deed of trust. In confirmation of
such subordination, however, Tenant shall execute promptly
any such certificate or subordination agreement that
Landlord may request. Tenant hereby constitutes and appoints
Landlord as Tenant's attorney-in-fact to execute any such
certificate(s) for and on behalf of Tenant, said appointment
to be a power coupled with an interest and irrevocable
during the Term of this Lease. In the event of any
proceeding to terminate any ground or underlying lease, or
in the event of any proceeding for the foreclosure of any
mortgage or deed of trust to which this Lease is
subordinate, the ground lessor, purchaser, assignee or other
successor to Landlord's rights, shall have the option to
terminate or cancel this Lease; if this Lease is not so
terminated or canceled, Tenant shall attorn to the Lessor
thereunder or to the purchaser at the foreclosure sale.
Upon request and with reasonable notice from Tenant,
Landlord shall obtain a nondisturbance agreement on Tenant's
behalf from each existing Mortgagee (and any future
mortgagees upon request by Tenant) on such Mortgagees's
commercially reasonable standard form (and in recordable
form) agreeing that such Mortgagee or any purchaser in a
foreclosure sale shall recognize and be bound by the terms
of this Lease upon a foreclosure or deed in lieu thereof (as
long as no Event of Default exists hereunder).
HOLDOVER 23. If Tenant shall remain in the Premises, with the
PROVISIONS knowledge and written consent of Landlord, after the
expiration of the Term of this Lease, or any renewal or
extension thereof, Tenant shall become a tenant from month
to month at ONE HUNDRED TEN PERCENT (110%) of the monthly
rental for the last month of the Lease Term, commencing on
the first day next after the Lease Expiration Date. Tenant
shall give to Landlord at least THIRTY (30) days written
notice of any intention to quit the Premises, and Tenant
shall be entitled to THIRTY (30) days written notice to quit
except in the event of default hereunder. All other terms
and conditions of this Lease shall remain in full force and
effect. Provided, however, that in the event that Tenant
shall hold over without Landlord's knowledge and consent,
then at any time prior to Landlord's acceptance of rent from
Tenant as a monthly tenant hereunder, Landlord, at its
option, may re-enter and take possession of the Premises
without process, or by any legal proceeds in force in the
jurisdiction in which the Building is situated.
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28
<PAGE>
SUCCESSORS' 24. It is agreed that all rights, remedies and liabilities
OBLIGATION hereunder given to or imposed upon either of the parties
hereto shall extend to their respective heirs, successors,
executors, administrators and assigns. This provision shall
not be deemed to grant Tenant any right to assign this Lease
or to sublet the Premises, except as set forth in Section 7
above. Tenant acknowledges Landlord might not be, now or in
the future, the owner of the fee interest in the Premises,
the Building and/or Land. The term "LANDLORD" as used in
this Lease is hereby defined to be only the then current
owner or mortgagee in possession of the Premises. In the
event of any sale or sales by the then current Landlord
hereunder to any party then, from and after the closing of
such sale or lease transaction, the Landlord whose interest
is thus sold or leased shall be and hereby is completely
released and forever discharged from and of all covenants,
obligations and liabilities of Landlord hereunder thereafter
accruing.
RULES AND 25. The Tenant covenants that the rules and regulations set
REGULATIONS forth in Exhibit A, attached hereto and incorporated herein
by reference, and such other and further rules and
regulations as the Landlord may make and furnish to the
Tenant, and which in Landlord's judgment are necessary or
appropriate for the general well-being, safety, care and
cleanliness of the Premises and the Building together with
the appurtenances, shall be faithfully kept, observed and
performed by Tenant, and by Tenant's agents, servants,
employees and guests unless waived in writing by the
Landlord. All such rules and regulations shall be enforced
in a consistent manner by Landlord against all tenants in
the Buildings. Any failure by Landlord to enforce any rule
or regulation against any party shall not be deemed a waiver
of such rule or regulation or of Landlord's further right to
enforce the same.
REPRESENTATIONS, 26. Landlord's Covenants. Landlord covenants that it has the
WARRANTIES right to make this Lease for the Term aforesaid, and that if
AND Tenant shall pay the rent and performs all of the covenants,
COVENANTS terms, conditions, and agreements of this Lease to be
OF LANDLORD performed by Tenant, Tenant shall, during the Term, be able
to freely, peaceably and quietly occupy and enjoy the fill
possession of the Premises without molestation or hindrance
by Landlord or any party claiming through or under Landlord,
subject to other provisions contained in this Lease.
(a) Landlord shall maintain during the term of this Lease,
all risk coverage for the Building in the amount of the full
replacement value thereof together with comprehensive
general liability insurance.
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29
<PAGE>
(b) Landlord represents and warrants to Tenant as follows:
To the best of Landlord's knowledge after due inquiry, no
governmental regulated hazardous or toxic substances have
been used, processed, released, discharged, generated,
treated, stored or disposed of on the Premises, the Building
or the land upon which the Building is located (the "Land")
and no hazardous or toxic substances currently exist on or
about the Premises, the Building or the Land and, to the
best of Landlord's knowledge, any adjacent property. In the
event Landlord becomes aware of any governmental regulated
hazardous or toxic substances that have been used,
processed, released, discharged, generated, treated, stored
or disposed of on the Premises, the Building or the land
upon which the Building is located (the "Land"). Landlord
shall remove or otherwise contain any such substances within
thirty (30) days after Landlord becomes aware of such
hazardous or toxic substances.
RESERVATIONS OF 27. Tenant hereby acknowledges that the Landlord retains the
RIGHTS OF ADDRESS following rights: (i) to change the street address and/or
name of the Building and/or name of the Building and/or the
arrangement and/or location entrances, passageways, doors,
doorways, corridors, elevators, stairs, toilets, or other
public parts of the Building and to make improvements,
alterations, additions, installations, eliminations and
changes to the Building, Land, parking facilities, or any
part thereof, provided that such changes do not unreasonably
interfere with Tenant's use and occupancy of the Premises or
conduct of its business (except in the event of an
emergency); (ii) to erect, use, and maintain pipes and
conduits in and through the Premises; (iii) to grant to
anyone the exclusive right to conduct any particular
business or undertaking in the Building; (iv) to install and
maintain signs on the Building and/or Land; and (v) have
passkeys to the Premises. Landlord may exercise any or all
of the foregoing rights without being deemed to be guilty of
an eviction, actual, or constructive, or a disturbance or
interruption of the business of Tenant or Tenant's use or
occupancy of the Premises.
CONSTRUCTION OF 28. Landlord's Standard Work. It is understood and agreed
LEASEHOLD ------------------------
IMPROVEMENTS that Tenant will take the Premises in "AS-IS" condition upon
commencement of this Lease Agreement. All Leasehold
Improvements existing in the Premises upon occupancy of
Tenant or made by or for Tenant after commencement of any
lease term with Landlord shall remain as the sole property
of the Landlord, and in no event shall Tenant remove any
Leasehold Improvements from the Premises.
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30
<PAGE>
Landlord agrees that it will perform a reasonable turnkey
build-out for Tenant, at Landlord's sole cost and expense,
up to a maximum allowance of EIGHT AND 00/100 DOLLARS
($8.00) PER SQUARE FOOT, providing building standard work
using building standard specifications, materials and color
selections, in quantities necessary to build-out the
Premises substantially in accordance with Tenant's Plans,
which plans shall be mutually agreed upon by Landlord and
Tenant, and shall be attached hereto and made a part hereof
as Exhibit "B".
MECHANIC LIENS 29. Tenant shall not do, or suffer to be done, any act,
matter or thing whereby the Premises (or Tenant's interest
therein), or any part thereof, may be encumbered by any
mechanics' or materialmen's lien and/or any other lien or
encumbrance. Tenant shall discharge, within ten (10)
business days after the date of filing, any mechanic's, or
materialmen's or other liens filed against the Premises, or
Tenant interest therein, or any part thereof, purporting to
be for work or material furnished, or to be furnished, to
Tenant.
PARKING 30. Landlord agrees to provide for the use of Tenant in
common with others, a surface parking area adjacent to the
Building in which the Demised Premises are located. The
Landlord reserves the right to promulgate rules and
regulations relating to the use of such surface parking
area, including such limitations as may, in the opinion of
the Landlord, be necessary and desirable. Tenant and
Tenant's employees shall park their vehicles only in those
portions of the parking areas designated for employee
parking by the Landlord. Further, Tenant and its employees
are expressly prohibited from parking in any portion of the
parking area designated or marked for visitor parking only.
Tenant, shall within FIVE (5) days after taking possession
of the Demised Premises, furnish Landlord or its agent with
the vehicle license numbers assigned to Tenant's vehicles
and the vehicles of Tenant's employees, and shall thereafter
notify the Landlord or its agent of any changes within FIVE
(5) days after such changes occur. In the event that the
Tenant or any of its employees shall park their vehicles in
any portion of the parking area other than that portion
designated for that purpose, then the Landlord shall have
the right, at Landlord's options to assess Tenant a fine or
penalty for any such improperly parked vehicle, and/or to
have any such improperly parked vehicle towed at Tenant's
expense.
As an inducement to enter into this Lease Agreement,
Landlord agrees to assign TWO (2) parking spaces in the
parking lot, of the Building specifically designated for
Tenant.
Initials: /s/ RP.SS
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31
<PAGE>
GENDER 31. Feminine or neuter pronouns shall be substituted for the
masculine form, and the plural shall be substituted for the
singular number, in any place or places herein in which the
context may require such substitution or substitutions.
Landlord and Tenant, as a matter of convenience, have been
referred to in neuter form.
NOTICES 32. All notices required or desired to be given hereunder by
either party to the other shall be hand delivered or given
by certified or registered mail, first-class postage
prepaid, return receipt requested. Notices to the respective
parties shall be addressed as follows:
To LANDLORD:
ANNANDALE FINANCIAL CENTER JOINT VENTURE
c/o Southern Management Corporation
1950 Old Gallows Road, Suite 600
Vienna, VA 22182
To TENANT:
ONESOFT CORPORATION
ATTN: James McIntyre, TV, President
7010 Little River Turnpike, Suite 410
Annandale, VA 22003
Either party may, by like written notice, designate a new
address to which such notices shall be directed.
ESTOPPEL 33. Tenant agrees, at any time and from time to time, upon
CERTIFICATES not less than FIVE (5) days prior written notice by
Landlord, to execute, acknowledge and deliver to Landlord a
statement in writing (i) certifying that this Lease is
unmodified and in full force and effect (or if there have
been modifications, that the Lease is in full force and
effect as modified and stating the modification); (ii)
stating the dates to which the rent and any other charges
hereunder have been paid by Tenant; (iii) stating whether or
not to the best knowledge of Tenant, Landlord is in default
in the performance of any covenant; (iv) stating the address
to which notices to Tenant should be sent; and (v) any other
information as may be reasonably required. Any such
statement delivered pursuant hereto may be relied upon by
any owner of the Building or the Land, any prospective
purchaser of the Building or the Land, any mortgagee or
prospective mortgagee of the Building or the Land or of
Landlord's interest in either, or any prospective assignee
of any such mortgagee.
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32
<PAGE>
SECURITY 34. To secure the full faith performance by Tenant of all of
DEPOSIT the obligations, covenants, conditions and agreements to be
fulfilled, kept, observed, and performed by Tenant, Tenant
shall tender Landlord the sum of TWO THOUSAND FOUR HUNDRED
SIXTY AND 00/100 DOLLARS ($2,460.00) which sum shall be held
as a security deposit ("SECURITY DEPOSIT") and applied
towards its damages and/or remedies in the event of Tenant's
default Landlord's rights against Tenant in the event of
Default shall in no way be limited or restricted by this
security deposit. Upon the expiration of this Term (or any
renewal or extension thereof in accordance with this Lease),
Landlord shall, provided that tenant is not in default under
the terms hereof, return and pay back such security deposit
to tenant, less such portion thereof as Landlord shall have
appropriated to cure any default by tenant with respect to
any of Tenant's aforesaid obligations, covenants, conditions
and agreements and no damages or expenses incurred by
Landlord. In the event of any default by Tenant hereunder,
Landlord shall have the right, but not the obligation, to
apply all or any portion of the Security Deposit to cure
such default, in which event, Tenant shall be obligated to
promptly deposit with the Landlord the amount necessary to
restore the Security Deposit to its original amount. In the
event of the sale or transfer of Landlord's interest in the
Building, Landlord shall have the right to transfer the
Security Deposit to such purchaser or transferee in which
event Tenant shall look only to the new Landlord for the
return of the Security Deposit and Landlord shall thereupon
be released from all liability to Tenant for the return of
such Security Deposit.
GOVERNING 35. The parties agree that the laws of the Commonwealth of
LAW Virginia shall govern the validity, performance and
enforcement of this Lease.
BROKERS 36. Landlord and Tenant each represent and warrant that
neither of them has employed any broker to negotiate the
terms of this Lease.
WAIVER OF 37. No delay in exercising or failure to exercise any right
BREACH or power hereunder by Landlord shall impair any such right
or shall be construed as a waiver of any breach or default,
or as acquiescence thereto. One or more waivers of any
covenants, terms or conditions of this Lease by Landlord
shall not be construed by the other party as a waiver of a
continuing or subsequent breach of the same covenant, term
or condition.
The consent or approval by Landlord to or of any act by
Tenant of a nature requiring consent or render unnecessary
consent to or approval of any subsequent similar act No
provision of this Lease shall be deemed to have been waived
by Landlord, unless such waiver be in writing signed by
Landlord.
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33
<PAGE>
SEVERABILITY 38. If any term or provision of this Lease or the
OF CLAUSES application thereof to any person or circumstance shall to
any extent be invalid or unenforceable, the remainder of
this Lease, or the application of such term or provision to
persons or circumstances other than to those as to which it
is held invalid or unenforceable, shall not be affected
thereby, and each term arid provision of the Lease shall be
valid and be enforced to the fullest extent permitted by
law.
CAPTIONS FOR 39. The titles of the sections and paragraphs throughout
CONVENIENCE this Lease are for convenience and reference only, and the
words contained therein shall be in no way held to explain,
modify, amplify or aid in the interpretation, construction
or meaning of the provisions of this Lease.
DUPLICATE 40. This Lease may be executed in one or more counterparts,
COUNTER-PARTS each of which shall be an original, and all of which shall
AS ORIGINALS constitute one and the same instrument.
ENTIRE 41. This Lease constitutes the entire agreement. between the
AGREEMENT parties and no earlier statements or prior written matter
shall have any force or effect. Tenant is not relying on any
representations or agreements other than those contained-in
this Lease. This Lease shall not be modified or canceled
except by written instrument executed by both parties.
(SIGNATURES ON FOLLOWING PAGE)
Initials: /s/ RP.SS
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34
<PAGE>
WITNESSETH the following signatures and seals:
WITNESS LANDLORD:
ANNANDALE FINANCIAL CENTER
JOINT VENTURE
a Maryland general partnership
/s/ Sabrina Morell By: /s/ Susan M. Scott
- --------------------------------- --------------------------------------
Its: Agent
-------------------------------------
Date: November 14, 1998
-----------------------------------
ATTEST: TENANT:
ONESOFT CORPORATION
a Delaware corporation
/s/ Paul Economon By: /s/ Randall Pevin
- --------------------------------- --------------------------------------
Corporate Secretary [Seal] Its: Vice President
-------------------------------------
Date: October 27, 1998
------------------------------------
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35
<PAGE>
EXHIBIT "A"
-----------
RULES AND REGULATIONS OF THE BUILDING
The Tenant covenants that the following "RULES and REGULATIONS", and such other
and further Rules and Regulations as the Landlord may make and which in the
Landlord's judgement are needful for the general well being, safety, care and
cleanliness of the Premises and the building of which they are a part together
with their appurtenances, shall be faithfully kept, observed and performed by
the Tenant, and by his agents, servants, employees and guests unless waived in
writing by the Landlord.
a. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls or other parts of the Building not occupied by any
tenant shall not be obstructed or encumbered by any tenant or used for any
purpose other than ingress or egress to and from the Premises. Landlord shall
have the right to control and operate the public portions of the Building, and
the facilities furnished for the common use of the tenants, in such manner as
Landlord reasonably deems best for the benefit of the tenants generally. No
tenant shall permit the visit to the Premises of persons in such numbers or
under such conditions as to materially interfere with the use and enjoyment by
other tenants of the entrances, corridors, elevators and other public portions
or facilities of the Building.
b. No awning or other projections shall be attached to the outside walls of
the building, without the prior written consent of Landlord. Notwithstanding the
existing window coverings, no drapes, blinds, shades, or screens 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 Landlord. Such awnings,
projections, curtains, blinds, screens or other fixtures must be of a quality,
type, design, and color, and attached in a manner approved by Landlord.
c. The doors leading to the corridors or main halls shall be kept closed
during business hours except as they may be used to ingress or egress. No
additional locks shall be placed upon any doors of the Premises, nor shall any
changes be made in existing locks or the mechanisms thereof, except that Tenant
shall have the right at its expense to install security locks on all entry doors
and fire doors opening into the Premises, and also on the doors to any offices
within the Premises, provided Tenant at the termination of its occupancy shall
provide Landlord all keys either furnished to, or otherwise procured by Tenant,
and in the event of the loss of any keys so otherwise procured by Tenant, and in
the event of the loss of any keys so furnished, Tenant shall pay to Landlord the
cost to replace. Tenant further agrees that, should Landlord so require, Tenant
will at its expense remove any additional locks which it installed or caused to
be installed, reinstall the original hardware, and repair to Landlord's
reasonable satisfaction any damage to doors or frames. Tenant agrees to give
access upon reasonable request to any such locked area(s).
d. Tenant shall not construct, maintain, use or operate within the Premises
or elsewhere in the Building of which the Premises form a part or on the outside
of the Building, any equipment or machinery which produces music, sound or noise
which is audible beyond the Premises.
<PAGE>
e. There shall be no marking, painting, drilling into or in any way
defacing any part of the Premises or the Building with the exception of affixing
wall decorations, shelving and like items within the Premises. No Tenant shall
throw anything out of the doors or windows or down the corridors or stairs.
f. The employees of the Landlord are prohibited as such from receiving any
packages or other articles delivered to the Building for the Tenant, and should
any such employee receive any such packages or articles, he or she in so doing
shall be the agent of the Tenant and not of the Landlord.
g. The water and wash closets and other plumbing fixtures shall not be used
for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags, or other substances shall be thrown therein. All
reasonable costs for damages resulting from any misuse of the fixtures shall be
borne by the Tenant who, in whose servants, employees, agents, visitors, or
licensees, shall have caused same.
h. No vehicles or animals, except for animals whose function is to assist
disabled persons, of any kind shall be brought into or kept in or about the
Premises or the Building, and no cooking shall be done or permitted by the
Tenant on the demised premises except in kitchens constructed as part of Tenant
Improvements. No Tenant shall cause or permit any objectionable odors to be
produced upon or emanate from the Premises.
i. Neither Tenant, nor any of Tenant's servants, employees, agents,
visitors or licensees shall at any time bring or keep upon the Premises any
inflammable, combustible or explosive fluid, chemical or substance except normal
and customary office supplies.
j. Canvassing, soliciting and peddling in the Building is prohibited and
Tenant shall cooperate to prevent the same.
k. Any person employed by Tenant to do janitorial work within the Premises
must first obtain Landlord's consent and such person shall, while in the
Building and outside of said demised premises, comply with all instructions
issued by the superintendent of the Building.
l. There shall not be used in any space, or in the public halls of the
Building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber
tires.
m. Access plates to under floor conduits must be left exposed. Where carpet
is installed, carpet must be cut around access plates. Electric and telephone
floor distribution boxes must remain accessible at all times.
n. Tenant shall use reasonable efforts to adjust thermostat, if adjustable,
to the setting which uses the least amount of energy upon leaving the Premises
daily.
o. Mats, trash, or other objects are not permitted in the public corridors.
p. Landlord and/or its parking contractor shall have the right to establish
reasonable rules and regulations for the use of all parking facilities at the
Building.
2
<PAGE>
q. Landlord shall have the right to determine when Tenant may move its
property; i.e., furnishings, files, etc., into or out of the Premises. Tenant
shall request permission from Landlord for any such move, and shall abide by
Landlord's reasonable rules regarding any such move.
r. Tenant shall purchase and maintain comprehensive public liability and
property damage insurance on the Premises, protecting Landlord and Tenant
against loss, cost, or expense by reason of injury or death to persons or damage
to or destruction of property by reason of the use and occupancy of the Premises
by Tenant and its invitees, such insurance to be carried by reputable companies
and having limits of not less than $1,000,000.00 for injury to or death of any
one person, $1,000,000.00 for each accident and $1,000,000.00 for property
damage.
s. No tenant shall purchase spring water, ice, coffee, soft drinks, towels
or other like service, from any company or persons whose repeated violations of
the Building regulations have caused, in Landlord's opinion, a hazard or
nuisance to the Building and/or its occupants.
t. Landlord reserves the right to exclude from the Building at all times
any person who is not known or does not properly identify himself/herself to the
Building management or night watchman on duty. Landlord may at its option,
require all persons admitted to or leaving the Building between the hours of
6:00 P.M. and 8:00 A.M., Monday through Friday, and at all times on Saturdays,
Sundays and legal holidays, to register. Tenant shall be responsible for all
persons for whom he authorizes entry into or exit out of the Building, and shall
be liable to Landlord for all acts of such persons.
u. The Premises shall not be used for lodging or sleeping or for any
illegal purpose. The Premises shall never, at any time, be used for any
immortal, disorderly, unlawful or hazardous purposes nor for any other purposes
than hereinbefore specified; and will not manufacture any commodity therein.
v. Landlord shall not maintain suite finishes which are nonstandard, such
as kitchen appliances, wallpaper, special light, etc. However, should the need
for repairs arise, at Tenant's request, Landlord will arrange for the work to be
done at the Tenant's expense. Tenant shall have the right to select a contractor
for said repairs subject however to Landlord's reasonable approval.
w. No auction sales shall be conducted in the Building without Landlord's
consent.
x. No tenant shall use any other method of heating than that provided by
the Landlord without the Landlord's consent.
y. When reasonably necessary to control the climate, and upon request of
Landlord, Tenant shall keep window coverings closed at the appropriate time of
day to-prevent direct solar penetration of the Premises.
Landlord agrees to advise Tenant in writing of any additions to, deletions
from, or changes in the foregoing Rules and Regulations. In the event that
Tenant is in violation of any Building rule or regulation, Landlord shall notify
Tenant in writing of the same, and shall allow Tenant a reasonable period of
time within which to comply with such rule and regulation. Failure of
3
<PAGE>
Tenant to comply within such period of time shall constitute a material default
under the terms and conditions of this Lease.
4
<PAGE>
Exhibit 10.16
SUBLEASE
between
DOVER CORPORATION,
as Sublessor,
and
ONESOFT CORPORATION,
as Sublessee
Dated as of February 23, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1 Definitions.................................................. 1
ARTICLE 2 Sublease of the Subleased Premises: Use: Term................ 2
ARTICLE 3 Rent/Electricity Charge...................................... 3
ARTICLE 4 Incorporation of Master Lease................................ 4
ARTICLE 5 Notices...................................................... 6
ARTICLE 6 Right of Sublessor to Cure Sublessee's Defaults.............. 7
ARTICLE 7 Consents and Approvals of Sublessor.......................... 8
ARTICLE 8 Brokerage.................................................... 9
ARTICLE 9 Consent of Prime Landlord.................................... 9
ARTICLE 10 Insurance; Alterations; Restoration.......................... 10
ARTICLE 11 Notices...................................................... 10
ARTICLE 12 Miscellaneous................................................ 11
<PAGE>
THIS AGREEMENT OF SUBLEASE (this "Sublease") made as of this 23rd day of
February, 1999, by and between DOVER CORPORATION, a Delaware corporation, having
an address at 280 Park Avenue, New York, New York 10017 (the "Sublessor"), and
ONESOFT CORPORATION, a Delaware corporation, having an address at 7010 Little
River Turnpike, Suite 460, Annandale, Virginia 22003 (the "Sublessee").
WITNESSETH:
----------
WHEREAS, the Sublessor is presently the tenant under that certain lease
dated December 20, 1996 (the "Master Lease") by and between Sablons Investors,
Inc., a New York corporation, predecessor in interest to Boston Properties
Limited Partnership, a Delaware limited partnership, as landlord (the "Prime
Landlord"), and the Sublessor, as tenant, covering the entire 34th floor in the
building known as 280 Park Avenue, New York, New York (the "Building"); and
WHEREAS, the Sublessee desires to sublease from the Sublessor and the
Sublessor is willing to sublease to the Sublessee a portion of the 34th floor
leased under the Master Lease as identified on Exhibit A attached hereto and
---------
made a part hereof, together with all fixtures, equipment, improvements and
installations attached thereto on the date hereof (collectively, the "Subleased
Premises"), and all the appurtenances, rights and privileges belonging or
relating to the Subleased Premises, or any portion thereof.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Sublessor and the Sublessee, for themselves, their successors
and permitted assigns, hereby covenant and agree as follows:
ARTICLE 1 Definitions
---------------------
Section 1.01. Except as otherwise specified or as the context may otherwise
require, the following terms shall have the respective meanings set forth below
for all purposes of this Sublease, and the definitions of such terms are equally
applicable both to the singular and the plural forms thereof:
Building shall have the meaning set forth in the first WHEREAS clause.
--------
Commencement Date shall have the meaning set forth in Section 2.03.
-----------------
Electricity Charge shall have the meaning set forth in Section 3.02.
------------------
Fixed Rent means $212,500.00 per annum.
----------
Master Lease shall have the meaning set forth in the first WHEREAS clause.
------------
PMR means Prime Manhattan Realty.
---
Prime Landlord shall have the meaning set forth in the first WHEREAS
--------------
clause.
<PAGE>
Security Deposit shall have the meaning set forth in Section 3.04.
----------------
Studley means Julien J. Studley, Inc.
-------
Sublease Expiration Date means the day prior to the fifth anniversary of
------------------------
the Commencement Date.
Sublease Interest Rate means fifteen percent (15 %) per annum.
----------------------
Subleased Premises shall have the meaning set forth in the second WHEREAS
------------------
clause.
Term shall have the meaning set forth in Section 2.03.
----
ARTICLE 2 Sublease of the Subleased Premises: Use: Term
-------------------------------------------------------
Section 2.01. The Sublessor hereby subleases, and the Sublessee hereby
hires and takes from the Sublessor, the Subleased Premises, subject to the
terms, provisions, covenants and conditions of this Sublease.
Section 2.02. The Subleased Premises shall be used only for the purposes
permitted by the Master Lease, and for no other use or purpose.
Section 2.03. The term of this Sublease (the "Term") shall commence on the
day after the Prime Landlord's consent is obtained pursuant to Article 9 hereof
(the "Commencement Date"). The Term shall expire on the Sublease Expiration
Date, unless it shall sooner cease and expire as hereinafter provided. The Term
of this Sublease shall not be extended due to delays in obtaining the Prime
Landlord's consent, or for any other reason.
Section 2.04. The Sublessee acknowledges that it has inspected the
Subleased Premises and accepts the same in its "as is" condition on the date
hereof, subject to ordinary wear, tear and use between the date hereof and the
Commencement Date, and that the Sublessor shall have no obligation whatsoever to
(a) make any alterations, improvements or repairs, (b) install any fixtures or
equipment or (c) render any services to make the Building or the Subleased
Premises ready or suitable for the Sublessee's use or occupancy. The Sublessee
shall be solely responsible for any cost and expense incurred in connection with
any work or services performed in preparation for the Sublessee's use and
occupancy of the Subleased Premises.
Section 2.05. If the Master Lease terminates for any reason whatsoever
prior to the date on which this Sublease is scheduled to expire, this Sublease
shall thereupon terminate immediately. The Sublessor shall not be liable to the
Sublessee by reason of any such termination and thereafter shall have no further
obligations of any kind whatsoever to the Sublessee.
Section 2.06. Upon the scheduled expiration or termination of this
Sublease, or upon any earlier termination of this Sublease, the Sublessee shall
peaceably and quietly leave and surrender to the Sublessor the Subleased
Premises broom clean, in good condition and repair,
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<PAGE>
ordinary wear and tear excepted. The Sublessee's obligations under this Section
2.06 shall survive the expiration of the Term or any earlier termination of this
Sublease.
Section 2.07. If the Sublessor is unable to give possession of the
Subleased Premises on the Commencement Date for any reason whatsoever including,
but not limited to, the continuing possession of any other subtenant or person
or the failure or delay of the Prime Landlord in granting its consent to this
Sublease, the Sublessor shall not be liable for the failure to give such
possession, nor shall such failure be deemed to extend the Term. In such event,
this Sublease shall continue in full force and effect; provided, however, that
Fixed Rent shall abate until the Sublessor gives the Sublessee written notice
that the Subleased Premises are available for occupancy.
ARTICLE 3 Rent/Electricity Charge
---------------------------------
Section 3.01. The Sublessee hereby covenants and agrees to pay to the
Sublessor the Fixed Rent from the Commencement Date until the expiration or
sooner termination of the Term, payable in equal monthly installments of
$17,708.34 in advance on the first day of each month during the Term hereof,
without notice or demand and without abatement, deduction or set-off of any
amount whatsoever. In addition, the Sublessee hereby covenants and agrees to pay
additional rent (as such term is defined in the Master Lease) at the times and
in the manner set forth in the Master Lease as amended by this Sublease. If the
Commencement Date shall not occur on the first day of a month, the first month's
Fixed Rent and additional rent shall be prorated in the manner set forth in the
last sentence of Section 2.1 of the Master Lease.
Section 3.02. In addition to the Fixed Rent specified in Section 3.01 of
this Sublease, from the Commencement Date the Sublessee shall also pay to the
Sublessor without notice or demand and without abatement, deduction or set-off
of any amount whatsoever, the sum of $2.75 per square foot (or $11,687.50 per
annum) (the "Electricity Charge") for electrical energy consumed on the
Subleased Premises during the Term hereof in equal monthly installments of
$973.96 in advance on the first day of each month during the Term hereof. The
Electricity Charge for the initial month of occupancy shall be pro rated if the
Commencement Date is not the first day of a month. At any time during the Term
at the Sublessor's request, the Sublessee's consumption of electrical energy in
the Subleased Premises shall be determined by a separate survey of the Subleased
Premises (excluding any other space demised under the Master Lease) by a
reputable independent electrical engineer to be selected by the Sublessor whose
fees or charges shall be paid equally by the Sublessor and the Sublessee.
Notwithstanding anything in this Sublease to the contrary, the amount that the
Sublessee shall be obligated to pay for electricity shall be based upon such
survey and similar periodic surveys made from time to time (but not more often
than once a calendar year). The Sublessor shall not in anyway be liable or
responsible to the Sublessee for any loss or damage or expense which the
Sublessee may sustain or incur if either the quantity or character of electric
service is changed or is no longer available or suitable for the Sublessee's
requirements.
Section 3.03 The Sublessee hereby covenants and agrees to pay any and all
sums required to be paid by the Sublessee pursuant to the terms of this Sublease
to the Sublessor at the address set forth in Article 11, or at such other place
as the Sublessor may designate without notice or demand, abatement, deduction or
set-off of any amount whatsoever in lawful money of the
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<PAGE>
United States which shall be legal tender for the payment of all debts, public
and private at the time of payment.
Section 3.04. On the date hereof the Sublessee shall deliver to the
Sublessor either (i) an irrevocable letter of credit in the amount of
$212,500.00, or (ii) a check, subject to collection, in the amount of
$212,500.00 (the "Security Deposit") as security for the Sublessee's performance
of the terms, covenants, conditions and provisions of this Sublease. The letter
of credit shall be issued by a bank and be in form and substance acceptable to
the Sublessor in its sole discretion. The. Sublessor shall have the right,
without notice to the Sublessee, to apply all or any portion of the Security
Deposit to cure any default by the Sublessee under this Sublease. In such event,
the Sublessee shall immediately deposit with the Sublessor an amount equal to
the portion of the Security Deposit so applied so that the Sublessor shall hold
the full amount of the Security Deposit at all times during the Term. The
Sublessee's failure to replenish the Security Deposit shall be an event of
default and any failure of a check delivered as a security deposit to clear
shall be an event of default. Any unapplied portion of the Security Deposit
shall be returned to the Sublessee within thirty (30) days after the expiration
of this Sublease provided that the Sublessee has complied with all of the terms,
covenants, conditions and provisions of this Sublease.
ARTICLE 4 Incorporation of Master Lease
---------------------------------------
Section 4.01. This Sublease is made upon the terms and conditions set forth
in, and is subject and subordinate to (i) the Master Lease and (ii) any
mortgages and ground leases which now or hereafter may be superior to the Master
Lease. A copy of the Master Lease has been delivered to the Sublessee and the
Sublessee hereby acknowledges that it has received, read and examined the Master
Lease and is fully familiar with all of its terms, covenants and provisions.
Section 4.02. The Sublessor hereby warrants and represents that the Master
Lease is in full force and effect and that the Sublessor, subject to such
consents as are required under the Master Lease, is authorized and empowered to
enter into this Sublease.
Section 4.03. Except as hereinafter provided in Section 4.05 of this
Sublease, the Sublessor and the Sublessee hereby agree that this Sublease shall
incorporate, and there is hereby incorporated into this Sublease, all of the
terms, covenants, conditions and provisions of the Master Lease with the same
force and effect as if such terms, covenants, conditions and provisions were set
forth herein in full as part of a direct lease from the Sublessor to the
Sublessee, and for the purposes of this incorporation, (a) the term "Tenant" in
the Master Lease means the Sublessee, (b)the term "Landlord" in the Master Lease
means the Sublessor, subject, however, to the limitations set forth in Section
4.05(e) and elsewhere in this Sublease, (c) the term "Demised Premises" in the
Master Lease means the Subleased Premises and (d) the term "Expiration Date" in
the Master Lease means the Sublease Expiration Date. In the event of any
inconsistency between the Master Lease and the specific provisions of this
Sublease, the specific provisions of this Sublease shall govern.
Section 4.04. This Sublease is subject to, and the Sublessee hereby accepts
this Sublease subject and subordinate to, any amendments and supplements to the
Master Lease hereafter made between Prime Landlord and the Sublessor, provided
that any such amendment or supplement to
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<PAGE>
the Master Lease which would prevent or adversely affect the use by the
Sublessee of the Subleased Premises in accordance with the terms of this
Sublease, increase the obligations of the Sublessee, or decrease its rights
under this Sublease, shall not be deemed incorporated herein without the express
prior written consent of the Sublessee.
Section 4.05 (a) For the purposes of this Sublease, the following
provisions of the Master Lease shall be deemed deleted and shall form no part of
this Sublease:
Section 1.1(f), Section 1.1(g), Section 1.1(h), Section 1.1(j),
Section 1.1(k), Section 1.1(1), Section 1. 1(u), Section 2. 1(a)
(except for the last sentence thereof), Section 2.1(b), the last
sentence of Section 3.2, the third sentence of Section 4.2(d), the
first sentence of Section 4.9, the last sentence of Section 7.6(a),
Section 7.7, Section 11.9, Section 11.10, Section 15.1(e), Article 21,
Section 22.2, Article 25, Article 28, Article 43, Article 44, Exhibit
B, and Exhibit F.
(b) For the purposes of this Sublease, the following provisions of the
Master Lease are hereby amended as follows:
(i) Section 2.3(d) shall be deleted in its entirety and in lieu
thereof the following language shall be inserted: "Base Tax Year shall mean the
July 1, 1999 to June 30, 2000 Tax Year."
(ii) In Section 2.3(f), the words "2.3 percent (2.3%)" shall be
deleted and in lieu thereof the words "52/100 percent (.52%)" shall be inserted.
(iii) Section 2.3(h) shall be deleted in its entirety and in lieu
thereof the following language shall be inserted: "Base Wage Rate shall mean the
Wage Rate in effect for the calendar year 1999."
(iv) In the first sentence of Section 4.1(b), (a) the words
"Except with respect to Landlord's reimbursement for Tenant's Initial
Construction (as defined and set forth in Article 21 hereof)," shall be deleted
and (b) the next word "all" shall be capitalized.
(v) In the second sentence 01 Section 13.1, the words "Except
as expressly provided in Sections 3.2 and 4.2," shall be deleted.
(vi) In Section 26.4(a), the third sentence, the fifth sentence,
the sixth sentence and the seventh sentence shall be deleted.
(vii) In the first and second sentences of Section 40.1, the
phrase "twenty-five (25)" shall be deleted and in lieu thereof the phrase "six
(6)" shall be inserted.
(viii) In the second sentence of Section 40.2, the phrase "twelve
(12)" shall be deleted and in lieu thereof the phrase "three (3)" shall be
inserted.
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(c) Wherever it is provided in the Master Lease that the Prime
Landlord has the right to elect to perform any covenant, term or provision
required to be complied with by the tenant thereunder upon default of such
tenant in observing or complying with such covenant, term or provision, such
right shall inure to the benefit of the Sublessor hereunder as well as to the
benefit of the Prime Landlord thereunder.
(d) Nothing contained herein or in the Master Lease shall be construed
to require the Sublessor to cure any default of the Prime Landlord under the
Master Lease or to bring any action or proceeding or take any steps to enforce
the Sublessor's rights, if any, against the Prime Landlord in respect thereof.
(e) Without limiting the generality of the foregoing provisions of
this Article 4 and notwithstanding anything in this Sublease or in the Master
Lease to the contrary, the parties hereto hereby agree that the Sublessor shall
not be responsible for furnishing any service or for doing any maintenance or
repairs to the Subleased Premises or for complying with any obligations required
of the Prime Landlord under the Master Lease, and the Sublessee in no event
whatsoever shall be entitled to any allowance, reduction or adjustment of the
Fixed Rent or additional rent payable under this Sublease by reason of the
failure of the Prime Landlord to comply with its obligations, if any, under the
Master Lease. The Sublessee shall look solely to the Prime Landlord for all
services, maintenance, repairs and the performance of all obligations required
to be performed by the Prime Landlord under the Master Lease and shall not under
any circumstances seek nor require the Sublessor to perform any such services,
maintenance, repairs or perform any of said obligations nor shall the Sublessee
make any claim upon the Sublessor for any damages which may arise by reason of
the Prime Landlord's default under the Master Lease or its negligence whether by
omission or commission. In furtherance of the foregoing, the Sublessee does, to
the extent permitted by law, waive any and all causes of action and any right to
bring an action against the Sublessor by reason of any act or omission of the
Prime Landlord under the Master Lease.
(f) The Sublessee hereby agrees to perform and comply with all of the
terms, provisions, covenants and conditions of the Master Lease required to be
complied with by the tenant thereunder and not to do or suffer or permit
anything to be done which would result in default under or cause the Master
Lease to be terminated or forfeited. The Sublessee shall have no rights in the
Subleased Premises greater than the Sublessor's rights under the Master Lease.
ARTICLE 5 Notices
-----------------
Section 5.01. Whenever in the Master Lease a time is specified for the
giving of any notice or the making of any demand by the tenant thereunder, such
time is hereby changed (for the purpose of this Sublease only) by adding two (2)
Business Days thereto, and whenever in the Master Lease a time is specified for
the giving of any notice or the making of any demand by the Prime Landlord
thereunder, such time is hereby changed (for the purpose
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<PAGE>
of this Sublease only) by subtracting two (2) Business Days therefrom. Whenever
in the Master Lease a time is specified within which the tenant thereunder must
give notice or make a demand following an event, or within which such tenant
must respond to any notice, request or demand previously given or made by the
Prime Landlord thereunder, such time is hereby changed (for the purpose of this
Sublease only) by subtracting two (2) Business Days therefrom. Whenever in the
Master Lease a time is specified within which the Prime Landlord thereunder must
give notice or make a demand following an event, or within which the Prime
Landlord must respond to any notice, request or demand previously given or made
by the tenant thereunder, such time is hereby changed (for the purpose of this
Sublease only) by adding two (2) Business Days thereto. It is the purpose and
intent of the foregoing provisions to provide the Sublessor with time within
which to transmit to the Prime Landlord any notices or demands received from the
Sublessee, and to transmit to the Sublessee any notices or demands received from
the Prime Landlord.
Section 5.02. Notwithstanding anything contained in any provision of this
Sublease to the contrary, the Sublessee hereby agrees with respect to the
Subleased Premises to comply with and remedy any default under this Sublease
within the period allowed to the Sublessor as tenant under the Master Lease,
even if such time period is shorter than the period otherwise allowed therein
due to the fact that notice of default from the Sublessor to the Sublessee is
given after the corresponding notice of default from the Prime Landlord to the
Sublessor. The Sublessor hereby agrees to forward to the Sublessee, upon receipt
thereof by the Sublessor, a copy of all notices (including, without limitation,
notices of default), requests or demands which relate to the Subleased Premises,
or any portion thereof, received by the Sublessor in its capacity as tenant
under the Master Lease. The Sublessee hereby agrees to forward to the Sublessor,
upon receipt thereof, copies of any notices, requests or demands which relate to
the Subleased Premises, or any portion thereof, received by the Sublessee from
the Prime Landlord or from any governmental authorities.
ARTICLE 6 Right of Sublessor to Cure Sublessee's Defaults
---------------------------------------------------------
Section 6.01. If the Sublessee shall fail to perform any of the terms,
provisions, covenants or conditions of this Sublease on its part to be
performed, which failure constitutes a default under the Master Lease, then the
Sublessor may, at its option, perform any such term, provision, covenant or
condition, and the full cost and expense incurred shall immediately be due and
owing by the Sublessee to the Sublessor, together with interest thereon at the
Sublease Interest Rate from the date of payment thereof by the Sublessor.
Section 6.02. If the Sublessee shall default in the performance or
observance of any term, covenant or agreement contained in this Sublease, or in
the Master Lease, as herein incorporated, or breach any representation or
warranty herein, then, in any one or more of such events, if such default shall
not have been remedied after notice given by the Sublessor to the Sublessee and
within the grace period, if any (as such period is modified by the provisions of
Article 5 of this Sublease), provided for under the Master Lease, the Sublessor
shall be entitled to exercise any and all rights and remedies to which the
Sublessor is entitled by law and equity or as are specifically granted to the
Prime Landlord under the Master Lease, which rights and remedies are hereby
incorporated herein and made a part hereof with the same force and effect as
though herein specifically set forth, and the Sublessee shall remain liable as
provided for in the Master Lease.
Section 6.03. The Sublessee hereby agrees to indemnify the Sublessor and
hold the Sublessor harmless from and against any and all loss, liability,
damage, penalty, cost, claim,
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demand, judgment, charge and expense of every kind whatsoever, including
reasonable attorneys' fees, arising out of or incurred in connection with any:
(a) failure of or by any Sublessee of the Sublessee's interests
hereunder to perform or comply with any and all of the terms, covenants,
conditions and provisions of this Sublease and the Master Lease or breach of any
representation and warranty contained herein;
(b) use or occupancy by the Sublessee of the Subleased Premises or
from any work of any kind done or omitted to be done, in, on, or about the
Subleased Premises or the Building by the Sublessee or the Sublessee's
employees, contractors, agents, or licensees (including, but not limited to,
construction, alterations, repairs, or similar acts of any kind whatsoever, and
whether or not authorized by this Sublease);
(c) negligence or willful act or omission of the Sublessee or its
employees, contractors, agents or licensees;
(d) injuries to persons or property occurring in, on or about the
Subleased Premises or the Building caused by the Sublessee or Sublessee's
employees, contractors, agents, or licensees; and
(e) any action or proceeding brought against Sublessor by reason of
this Sublease and arising out of any of the circumstances enumerated in
subsections (a) through (d) of this Section 6.03.
If any action, suit or proceeding shall be brought against the Sublessor in
connection with any matter covered by the indemnity set forth in this Section
6.03, the Sublessee, at the election of the Sublessor and on notice from the
Sublessor, shall defend such action, suit or proceeding at the Sublessee's
expense with counsel approved by the Sublessor.
ARTICLE 7 Consents and Approvals of Sublessor
---------------------------------------------
Section 7.01. The Sublessee hereby agrees that in any case where the
provisions of this Sublease require the consent or approval of the Sublessor
prior to the taking of any action, it shall be a condition precedent to the
taking of such action that the prior written consent or approval of the Prime
Landlord shall have been obtained if the consent of the Prime Landlord must be
obtained under the Master Lease in such cases. The Sublessee hereby agrees that
the Sublessor shall not have any duty or responsibility with respect to
obtaining the consent or approval of the Prime Landlord when the same is
required under the terms of the Master Lease, other than the mere transmission
by the Sublessor to the Prime Landlord of the Sublessee's request for such
consent or approval. If the Prime Landlord shall delay any such consent or
approval, the Sublessor may similarly delay any consent or approval to the
Sublessee. If the Prime Landlord shall refuse such consent or approval, the
Sublessor shall be released from any obligation to grant its consent or
approval, whether or not the Prime Landlord's refusal, in the Sublessee's
opinion, is arbitrary or unreasonable.
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ARTICLE 8 Brokerage
-------------------
Section 8.01. The Sublessor hereby represents and warrants to the Sublessee
that it has dealt with no brokers, agents or finders other than Studley in
connection with the execution of this Sublease or the transactions contemplated
by this Sublease. The Sublessor agrees to pay the commission due and payable to
Studley pursuant to a separate written agreement between the Sublessor and
Studley.
Section 8.02. The Sublessee hereby represents and warrants to the Sublessor
that it has dealt with no brokers, agents or finders other than PMR in
connection with the execution of this Sublease or the transactions contemplated
by this Sublease.
Section 8.03. The Sublessor hereby agrees to indemnify and hold the
Sublessee harmless from and against any commission or fee claim by any person
with whom the Sublessor has dealt with other than Studley and PMR in connection
with the negotiation and execution of this Sublease or any matter whatsoever
pertaining or related thereto. This indemnification shall also cover any and all
expenses which the Sublessee incurs to defend against any such commission or fee
claim including, but not limited to, reasonable attorneys' fees.
Section 8.04. The Sublessee hereby agrees to indemnify and hold the
Sublessor harmless from and against any commission or fee claim by any person
with whom the Sublessee has dealt with other than Studley in connection with the
negotiation and execution of this Sublease or any matter whatsoever pertaining
or related thereto. This indemnification shall also cover any and all expenses
which the Sublessor incurs to defend against any such commission or fee claim
including, but not limited to, reasonable attorneys' fees.
Section 8.05. The representations, warranties and indemnifications set
forth in this Article 8 shall survive the expiration or sooner termination of
this Sublease.
ARTICLE 9 Consent of Prime Landlord
-----------------------------------
Section 9.01. Notwithstanding anything in this Sublease to the contrary,
the parties hereto hereby expressly acknowledge and agree that this Sublease is
conditioned upon the Sublessor' s obtaining such consents hereto as are required
by the provisions of the Master Lease. Promptly following the execution by the
Sublessee and the Sublessor of this Sublease, the Sublessor hereby agrees to use
commercially reasonable efforts to obtain such consents. The Sublessee hereby
agrees to cooperate in obtaining such consents. The Sublessor shall promptly
notify the Sublessee when such consents have been obtained. If the consent of
the Prime Landlord, or any other consent required by the Master Lease as a
condition to the Sublessor's entering into this Sublease, is not obtained within
sixty (60) days after the execution hereof, either party hereto may cancel this
Sublease at any time prior to the obtaining of said consent(s) by giving written
notice to the other. Upon such cancellation neither party hereto shall have any
further rights or obligations hereunder except such rights and obligations which
expressly survive the termination of this Sublease.
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ARTICLE 10 Insurance; Alterations; Restoration
----------------------------------------------
Section 10.01. At its sole cost and expense the Sublessee will obtain and
maintain any and all liability and casualty insurance of any kind whatsoever
with respect to the Subleased Premises which the Sublessor is required to
maintain as tenant under the Master Lease. If the Sublessee fails to maintain
any such insurance, the Sublessor may, at its election, obtain the same and
collect the cost thereof from the Sublessee as additional rent, upon demand,
with interest thereon at the Sublease Interest Rate from the date of such
demand.
Section 10.02. The Sublessee shall make no alterations, improvements,
decorations, or installations of any kind whatsoever, in or to the Subleased
Premises without the prior written consent of the Sublessor and without the
prior written consent of the Prime Landlord. The Sublessee hereby agrees that
the Sublessee's employment of any contractor, subcontractor, or other person in
connection with the alteration, restoration, improvement or decoration of the
Subleased Premises (or any portion thereof) shall be expressly subject to the
approval of the Prime Landlord and the Sublessor.
Section 10.03. The Sublessee shall restore the Subleased Premises at the
end of the Term and surrender the same to the Sublessor in the same condition
which existed on the date hereof, reasonable wear and tear excepted.
ARTICLE 11 Notices
------------------
Section 11.01. All notices, requests, demands, elections, consents,
approvals and other communications required or permitted to be given hereunder
shall be in writing (each such, a "notice") and addressed as follows (or to such
other address as either party may by previous written notice have designated):
If to the Sublessor:
-------------------
Dover Corporation
280 Park Avenue
New York, New York 10017
Attention: Robert G. Kuhbach, Esq.
with a copy to:
Coudert Brothers
1114 Avenue of the Americas
New York, New York 10036
Attention: Gerard V. Hannon, Esq.
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If to the Sublessee:
-------------------
OneSoft Corporation
7010 Little River Turnpike, Suite 460
Annandale, VA 22003
Attention: Paul Economon, Esq.
Any notice under this Sublease shall be deemed to have been given only if
delivered by hand (with receipt), sent by Federal Express (with receipt) or
mailed by first class registered or certified mail (return receipt requested),
postage and fees prepaid. Each notice delivered by hand shall be deemed given
on the day received or rejected, and each notice delivered by mailing or Federal
Express shall be deemed given three (3) Business Days after mailing or delivery
to said courier.
ARTICLE 12 Miscellaneous
------------------------
Section 12.01. This Sublease shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of law provisions.
Section 12.02. The table of contents and the headings of the various
subdivisions of this Sublease are used for reference only and are not to be
taken as part of this Sublease, or to be used in determining the intent of the
parties, or otherwise affect the meaning of this Sublease. All pronouns shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
Section 12.03. This Sublease shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, distributees, executors,
administrators, successors and permitted assigns. This Section shall not be
construed as a consent to any assignment or subletting by the Sublessee.
Section 12.04. No covenant, agreement, term or condition of this Sublease
to be performed or complied with by the Sublessee, and no breach thereof, shall
be waived, altered or modified except by a written instrument executed by the
Sublessor. No waiver of any breach shall affect or alter this Sublease, but each
and every term, covenant, condition and provision of this Sublease shall
continue in full force and effect with respect to any other then existing or
subsequent breach.
Section 12.05. No agreement to accept any surrender of the Subleased
Premises shall be valid unless in writing and duly executed by the Sublessor and
the Sublessee. Except pursuant to a written agreement duly executed by the
Sublessee and the Sublessor, no act or thing done by the Sublessor or its agents
during the Term shall be deemed an acceptance of a surrender of the Subleased
Premises. No agent or employee of the Sublessor shall have any power to accept
the keys of the Subleased Premises prior to the termination of this Sublease and
delivery of keys to any such agent or employee shall not operate as a
termination of this Sublease or a surrender of the Subleased Premises.
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Section 12.06. This Sublease embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. This Sublease may not be
modified or amended or any term or provision hereof waived or discharged except
in writing and signed by the party against whom such amendment, -modification,
waiver or discharge is sought to be enforced.
Section 12.07. This Sublease may be executed in several counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
Section 12.08. If any term or provision of this Sublease or the application
thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Sublease 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 remain valid and enforceable to the extent
permitted by law.
Section 12.09. The Sublessee shall from time to time, upon the request of
the Sublessor, execute, deliver and furnish such documents as the Sublessor may
reasonably deem necessary or desirable to (a) correct any errors which may be
contained in this Sublease and (b) fully consummate the transactions
contemplated under this Sublease.
Section 12.10. The parties hereto do not intend to confer any benefit
hereunder on any person, firm or corporation other than the parties hereto.
Section 12.11. Time shall be of the essence with respect to the Sublessee's
obligations contained in this Sublease.
Section 12.12. This Sublease shall not be binding or effective until
properly executed and delivered by the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be duly
executed by their authorized signatories on the day and year first hereinabove
written.
SUBLESSOR
DOVER CORPORATION
By: /s/ Robert G. Kuhback
-------------------------------------
Name: Robert G. Kuhback
Title: Vice President
SUBLESSEE
ONESOFT CORPORATION
By: /s/ Frederick C. Hawkins, III
-------------------------------------
Name: Frederick C. Hawkins, III
Title: Chief Financial Officer
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Exhibit A
Floor Plan Attached
14
<PAGE>
Exhibit 10.17
SUBLEASE
This Sublease ("Sublease") is dated as of the 25th day of May, 1999, by and
between NEXTEL COMMUNICATIONS, INC a Delaware corporation ("Sublandlord"), and
ONESOFT CORPORATION, a Delaware corporation ("Subtenant").
RECITALS:
- --------
R-l. Tyson-McLean Joint Venture, a Virginia general partnership
("Landlord"), and Sublandlord, as tenant, entered into that certain lease
relating to certain space located at 1505 Farm Credit Drive, McLean, Virginia
22102, (the "Building") which lease was amended by First Amendment to Lease
dated September 3, 1997 ("First Amendment") (collectively, the "Prime Lease").
A redacted copy of the Prime Lease is attached hereto as Exhibit A and made a
---------
part hereof.
R-2. Sublandlord desires to sublease to Subtenant a portion of the
premises described in the Prime Lease, and Subtenant desires to sublease the
same from Sublandlord, upon the terms and conditions hereinafter set forth.
R-3. Sublandlord and Subtenant desire that Landlord consent to
Sublandlord's leasing a portion of the premises to Subtenant and to the terms
and conditions of the Sublease and to evidence such consent by signing that
certain Landlord's Consent and Agreement ("Landlord's Consent") dated of even
date herewith.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and between
the parties hereto as follows:
1. Definitions. Except as otherwise expressly defined herein, all
-----------
capitalized terms used in this Sublease and/or in the Landlord Consent attached
hereto shall have the meanings ascribed to them in the Prime Lease.
2. Subleased Premises. Sublandlord hereby subleases to Subtenant, and
------------------
Subtenant hereby subleases from Sublandlord, that portion of the premises leased
in the Prime Lease which is totals approximately seventy thousand one hundred
four (70,104) rentable square feet of space, measured in accordance with the
calculations as set forth in Exhibit F of the Prime Lease, and located as
---------
follows: (i) twenty-five thousand one hundred twenty-eight (25,128) rentable
square feet on the first floor of the Building ("First Floor Space"); (ii)
twenty-five thousand five hundred sixty-five (25,565) rentable square feet on
the second floor of the Building ("Second Floor Space"); and (iii) nineteen
thousand four hundred eleven (19,411) rentable square feet on the third floor of
the Building ("Third Floor Space"), as identified on Exhibit B attached hereto
---------
and made a part hereof (hereinafter sometimes referred to as the "Subleased
Premises").
3. Prime Lease: Role of Sublandlord and Landlord. Except as modified
---------------------------------------------
herein or as may be manifestly inconsistent with the terms of this Sublease, all
terms of the Prime Lease are incorporated by reference herein, and all
references to "Landlord" in the Prime Lease shall be
<PAGE>
deemed to refer to Sublandlord, and, all references to "Tenant" will be deemed
to refer to Subtenant. Except as otherwise provided in this Sublease, Subtenant
shall have all the benefits and/or rights of Sublandlord, as tenant, and
Subtenant agrees to abide by and perform all obligations of "Tenant" therein,
insofar as they relate to the Subleased Premises and Subtenant's use thereof.
Sublandlord shall abide by and perform all obligations of "Landlord" therein,
except as set forth in this Sublease. In the event of any conflict or
inconsistency between the terms of this Sublease and the terms of the Prime
Lease incorporated herein to describe the rights and duties of Sublandlord and
Subtenant, the terms of this Sublease shall prevail and supersede the
incorporated terms of the Prime Lease.
As Sublandlord is not the owner of the Subleased Premises, Sublandlord
shall not be obligated to perform those obligations of Landlord which
Sublandlord cannot immediately and unilaterally perform as "Tenant", nor shall
Sublandlord be deemed to have adopted as its own any representations made by
Landlord in the Prime Lease. Without limiting the foregoing, under no
circumstances shall Sublandlord be obligated to repair, reconstruct or rebuild
the Subleased Premises, the Building, common areas, or any part thereof.
Sublandlord shall reasonably cooperate with Subtenant in attempting to cause
Landlord to fulfill its obligations to Sublandlord in the Prime Lease.
Subtenant agrees to indemnify and hold Sublandlord harmless from all loss, cost,
expense or liability incurred by Sublandlord in such regard. Except to the
extent Sublandlord recovers damages from Landlord which relate to its actions
necessary to cause Landlord to perform its obligations, Sublandlord shall have
no liability to Subtenant resulting from any such breach of Landlord under the
Prime Lease. The parties also acknowledge that in certain circumstances,
Sublandlord has no authority to grant privileges to, or consent to actions by,
Subtenant which were granted to Sublandlord or consented to by Landlord in the
Prime Lease. In such instances, including, without limitation, Sublandlord's
right to approve any signage of Subtenant, the consent of both Sublandlord and
Landlord must be obtained.
4. Term: Subtenant's Access.
------------------------
(a) The term of this Sublease shall commence upon the later of (i) delivery
of the First Floor Space by Sublandlord, or (ii) June 1, 1999 and expiring at
12:00 midnight on September 14, 2006 ("Sublease Term").
(b) Subtenant and/or its contractors shall be allowed access to the (i)
First Floor Space no later than June 1, 1999; (ii) Second Floor Space no later
than July 1, 1999; and (iii) Third Floor Space no later than October 1, 1999.
In the event Sublandlord is unable to provide Subtenant access as stated herein,
the respective "Sublease Rent Commencement Date(s)" (as hereinafter defined)
shall be extended by the same number of days of such delay.
5. Condition, Acceptance and Use of Subleased Premises.
---------------------------------------------------
(a) At the commencement of the Sublease term for each floor as stipulated
in Section 6(b), Subtenant shall accept the Subleased Premises in their existing
condition and state of repair. Subtenant acknowledges that no representations,
statements or warranties, express or implied, have been made by or on behalf of
the Sublandlord in respect to their condition, or the use or occupation that may
be made thereof, and that Sublandlord shall in no event whatsoever be liable
2
<PAGE>
for any latent defects in the Subleased Premises or in the equipment therein.
Sublandlord shall enforce the provisions of the Prime Lease with regard to
Landlord's obligations to provide services to the Subleased Premises and common
areas.
(b) Acceptance of the Subleased Premises by Subtenant shall be construed as
recognition that the Subleased Premises are in a good state of repair and in
sanitary condition. Sublandlord shall not be liable for any losses or damages
incurred by Subtenant due to the failure of operation of the heating, cooling or
other utility equipment or due to the necessity of repair of same.
(c) Sublandlord shall use commercially reasonable efforts to leave uncut in
good working order, all communication and network wiring located in the
Subleased Premises which exists as of the date of execution of this Sublease.
Subtenant shall have access to and use of such wiring throughout the Sublease
Term at no additional charge.
(d) Subtenant shall use and occupy the Subleased Premises solely for
general office purposes, as permitted in Section 7 of the Prime Lease, and in
accordance with the uses permitted under applicable zoning regulations, and
shall not be used for any other purpose. Subtenant shall not use or occupy the
Subleased Premises for any unlawful purpose.
(e) Subtenant shall surrender the Subleased Premises at the expiration of
the term hereof, or any renewal thereof, or upon other termination hereunder, in
the same condition as when Subtenant took possession, reasonable wear and tear
excepted.
6. Rent.
----
(a) Minimum Rent. Subtenant covenants and agrees to pay Sublandlord as
------------
minimum rent ("Minimum Rent") for the Subleased Premises without notice or
demand, and without set-off deduction or abatement, except as stated herein,
annual rental at the rate of twenty-four and fifty one hundredths ($24.50) per
rentable square foot of the Subleased Premises per annum payable in equal
monthly installments, in advance, commencing as described herein and on the
first day of each and every successive month thereafter of the Term, each in the
amount as set forth herein, until adjusted as provided herein. The Minimum Rent
shall include Subtenant's Proportionate Share (as defined in Section 6(e)) of
the cost of Real Estate Taxes and Operating Expenses relating to the Subleased
Premises and the Building.
3
<PAGE>
Subject to (i) delivery of the Subleased Premises by Sublandlord on
the aforesaid dates, and (ii) this Section 6, Minimum Rent for the first year of
the Sublease Term shall be as follows:
Portion of Subleased Annual Minimum Rent Monthly
Premises Minimum
Rent
----------------------------------------------------------------
First Floor Space $615,636.00 $51,303.00
----------------------------------------------------------------
Second Floor Space $626,342.50 $52,195.21
----------------------------------------------------------------
Third Floor Space $475,569.50 $39,630.79
----------------------------------------------------------------
In order to provide Subtenant with control of the HVAC system serving
the Subleased Premises after Building hours as specified in the Prime Lease,
Sublandlord shall assist Subtenant in obtaining Landlord's consent to allow
Subtenant to separately meter Subtenant's use of HVAC and electricity. Any and
all cost and expense relating to such separately metered utilities shall be the
sole responsibility of Subtenant. In the event Landlord allows Subtenant to
separately meter such utilities, and pay such cost directly to the utility
company or Landlord, the Minimum Rent shall be reduced to twenty-three dollars
($23.00) per rentable square foot of the Subleased Premises.
(b) Sublease Rent Commencement Dates. Subject to Section 4(b), the
--------------------------------
Sublease Rent Commencement Date for the (i) First Floor Space shall be June 1,
1999; (ii) Second Floor Space shall be September 15, 1999; and (iii) Third Floor
Space shall be January 1, 2000.
(c) Rent Abatement. Minimum Rent shall abate for a total of three and one-
--------------
half months commencing on the respective Sublease Rent Commencement Date for the
First Floor Space, the Second Floor Space and the Third Floor Space. Such
abatement shall total five hundred thousand nine hundred thirty-seven and
twenty-three one hundredths dollars ($500,937.23), to be applied as a credit of
one-half month Minimum Rent for the respective Subleased Premises as follows:
Portion of Subleased Monthly Minimum
Premises Rent Abatement -
Months 1 thru 7 (inclusive)
-----------------------------------------------------------
First Floor Space $25,649.46
-----------------------------------------------------------
Second Floor Space $26,097.61
-----------------------------------------------------------
Third Floor Space $19,815.40
-----------------------------------------------------------
4
<PAGE>
(d) Minimum Rent Adjustment. Minimum Rent for the Subleased Premises shall
-----------------------
be adjusted annually by adding two and one-half percent (2.5%) to the Minimum
Rent for the previous twelve (12) month period of the Sublease Term, commencing
(i) one (1) year after the Sublease Rent Commencement Date for the First Floor
Space ("Second Sublease Year"), and (ii) October 1, 2000 for the Second Floor
Space and the Third Floor Space. Minimum Rent, as adjusted, for the Subleased
Premises shall increase annually at such rate on the date which is twelve (12)
months from the aforesaid dates and shall continue to increase as stated
throughout the Sublease Term.
(e) Additional Rent. Any and all additional charges as defined in the
---------------
Prime Lease attributable to the Subleased Premises shall be passed through as
Additional Rent to Subtenant, who shall pay such charges to Sublandlord, at
Sublandlord's option, either in accordance with the procedures and timetables
established under the Prime Lease or within ten (10) days after receipt by
Subtenant of notice of such additional rent being due and payable. Subtenant's
share of Additional Rent (including, but not limited to Operating Expenses and
Real Estate Taxes) attributable to the Subleased Premises is fifty-five percent
(55%) ("Subtenant's Proportionate Share").
Commencing on the Second Sublease Year, Subtenant shall pay
Subtenant's Proportionate Share of any increase in Operating Expenses and Real
Estate Taxes above the actual aggregated Operating Expenses and Real Estate
Taxes for the base year 1999 (January through December 1999), adjusted to
reflect a fully occupied and fully assessed Building.
(f) Payments. All rent payable pursuant to this Sublease shall be payable
--------
to Sublandlord at the address set forth for notices to Sublandlord in Section 20
below or at such other place as Sublandlord may from time to time designate.
7. Security Deposit. Subtenant shall deposit with Sublandlord a security
----------------
deposit totaling one million one hundred twenty-four thousand nine hundred
twenty-three dollars ($1,124,923), payable to the Sublandlord as follows: (i)
two hundred two thousand six hundred twelve dollars ($202,612.00) upon execution
of the Sublease; (ii) two hundred four thousand five hundred thirty-nine dollars
($204,539.00) not later than September 15, 1999; and (iii) seven hundred
seventeen thousand seven hundred seventy-two dollars ($717,772.00) not later
than January 1, 2000 (collectively, the "Security Deposit"). Notwithstanding
the foregoing, in the event Sublandlord is unable to provide Subtenant access as
stated in Section 4, which is not due to any delay caused by Subtenant, then
Subtenant's obligation to tender the Security Deposit to Sublandlord shall be
extended by the same number of days of such delay.
Subtenant shall have the right to post letters of credit as the
Security Deposit. Such letters of credit shall (i) be issued by a federally
insured banking having its office in Washington, D.C. or which is reasonably
acceptable to Sublandlord; (ii) be irrevocable; (iii) authorize the Sublandlord
to draw by its sight draft accompanied by a certificate by Sublandlord (or its
representative) that Sublandlord is entitled to draw upon the same pursuant to
the provisions of this Sublease; and (iv) by its terms shall not expire prior to
the Second Sublease Year. At least thirty (30) days prior to the expiration of
the letters of credit, Subtenant shall deliver to Sublandlord one of the
following: (i) cash in an amount equal to the Security Deposit,
5
<PAGE>
(ii) an amendment to the letters of credit extending the expiry date for an
additional year or (iii) a new letter of credit for the entire Security Deposit
having an expiry date of at least one (1) year from the existing letters of
credit (which is the first to expire). In the event Subtenant fails to deliver
the letters of credit as aforesaid, within twenty (20) days of the date of
expiration of the letters of credit, Sublandlord shall be allowed to draw upon
such letters of credit Sublandlord is holding and maintain the letters of credit
as the Security Deposit.
Within thirty (30) days after expiration of the Sublease Term, and
provided Subtenant has vacated the Subleased Premises and is not then in default
pursuant to the terms of the Sublease or Prime Lease, Sublandlord shall return
the Security Deposit to Subtenant, less such portion thereof as Sublandlord
shall have appropriated to satisfy any default by Subtenant hereunder.
8. Assignment and Subletting. Subject to the rights of Landlord and
-------------------------
Sublandlord pursuant to the Prime Lease, Subtenant shall have the right to
assign this Sublease or further sublease all or any portion of the Subleased
Premises provided Subtenant obtains the prior written consent of Sublandlord and
Landlord which consent shall not be unreasonably withheld or delayed. This
Sublease shall not be assigned by operation of law. Subtenant shall not pledge
its interest hereunder, or allow liens to be placed on such interest, or suffer
this Sublease or any portion thereof to be attached or taken upon execution. If
consent is once given by Sublandlord to the assignment of this Sublease or
sublease of the Subleased Premises or any interest therein, Sublandlord shall
not be barred from subsequently refusing to consent to any further assignment or
sublease. Any attempt to sell, assign or sublet without the consent of
Sublandlord and Landlord shall be deemed a default by Subtenant. Subtenant
shall be responsible for Sublandlord' s costs and expenses relating to any
assignment of the Sublease or sublease of the Subleased Premises.
9. Signage. Subject to (i) Exhibit D, Part 21 of the Prime Lease, (ii)
--------
the prior written consent of Landlord and Sublandlord, and (iii) Subtenant
occupying the entire Subleased Premises throughout the Subleased Term, Subtenant
shall have the non-exclusive right to install signage on the exterior of the
Building in a mutually agreeable location on the side of the Building facing the
Dulles Toll Road (Route 267). Such signage shall be proportionately equal in
size to Subtenant's Proportionate Share, but in no event larger than
Sublandlord's existing sign on the exterior of the Building. Sublandlord, at
Sublandlord's expense, shall remove its existing signage on the Dulles Toll Road
(Route 267) side of the Building and repair any damage caused thereby.
10. Parking. Subtenant shall be allowed to use approximately two hundred
-------
fifty-two (252) parking spaces (based on 3.6 parking spaces per 1,000 rentable
square feet) on a non-exclusive, non-reserved basis and in common with other
tenants in the Building throughout the Subleased Term at no additional cost to
Subtenant. Such parking spaces shall be available for Subtenant's use in the
parking garage and/or surface parking lot adjacent to the Building.
Notwithstanding anything to the contrary, ten (10) of such parking spaces shall
be reserved for Subtenant's exclusive use in a location to be mutually agreed
upon by Sublandlord and Subtenant.
6
<PAGE>
11. Right of Offer.
--------------
(a) Provided Subtenant is not then in default pursuant to the terms of
the Prime Lease or the Sublease, Subtenant shall have a continuous right of
first offer throughout the Sublease Term to expand the Subleased Premises to
include all or any portion of the remaining space in the Building which is
controlled by Sublandlord and is not a part of the Subleased Premises as of the
date of execution of the Sublease which may become available during the Sublease
Term (the "Offer Space").
(b) Subtenant shall have the right to lease the Offer Space, or any
portion thereof, on the same terms and conditions set forth in the Prime Lease
and the Sublease, except that Rent shall be consistent with the then current
market terms and conditions for comparable space in comparable buildings in the
Tysons Corner/McLean, Virginia area. The Offer Space shall be (i) leased in its
"as is" condition with any alterations or improvements required for Subtenant's
use to be performed at Subtenant's sole cost and expense and (ii) coterminous
with the Sublease Term. Subtenant shall have five (5) business days from the
date of written notice from Sublandlord to accept the Offer Space on the terms
as described herein and further described in such notice. In the event
Subtenant provides Sublandlord with written notice of its intent to accept the
Offer Space, this Sublease shall be amended to include the Offer Space as part
of the Subleased Premises.
(c) In the event Subtenant does not timely exercise the aforesaid
right to sublease the Offer Space, at such time that Sublandlord has received a
bonafide offer from a third party to sublease the Offer Space at a rate which is
one dollar ($1.00) less than the Rent Sublandlord previously offered to
Subtenant for the Offer Space, Sublandlord shall provide Subtenant with a
written notice of such third party offer. Subtenant shall have the right to
sublease the Offer Space at such reduced rate by providing Sublandlord written
notice of its intent to do the same within five (5) business days of the date of
Sublandlord's written notice to Subtenant of such third party offer.
12. Assumption of Obligations; Exclusion.
------------------------------------
(a) Subtenant agrees to assume and perform, according to the terms of
the Prime Lease, all of the duties, covenants, agreements and obligations of
Sublandlord under the Prime Lease, as and when required by the Prime Lease, with
respect to the Subleased Premises, except Sublandlord's duty to make Rent
payments to Landlord. Subtenant further agrees to keep and obey, according to
the terms of the Prime Lease, all of the rules, restrictions, conditions and
provisions which pertain to the Subleased Premises, and are imposed by the terms
of the Prime Lease upon Sublandlord with respect to the Subleased Premises or
upon the use of the Subleased Premises. Subtenant agrees that it will take good
care of the Subleased Premises, and will commit no waste, and will not do,
suffer, or permit to be done any injury to the same. It is hereby understood
and agreed that Subtenant's rights to use, possess and enjoy the Subleased
Premises are subject to the terms, conditions, rules and regulations of the
Prime Lease and the rights and remedies of Landlord thereunder. Subtenant
agrees to indemnify, defend and protect Sublandlord against, and to hold
Sublandlord harmless from, any liability, damages, costs or expenses of any kind
or nature, including court costs and reasonable attorneys' fees, resulting
7
<PAGE>
from any failure by Subtenant to perform, keep and obey the terms of this
Sublease and the requirements of the Prime Lease with respect to the Subleased
Premises. Any failure by Subtenant to perform, keep and obey the same shall be a
default by Subtenant hereunder.
Sublandlord agrees to use commercially reasonable efforts to cause
Landlord to perform all the duties, covenants, agreements and obligations of
Landlord under the Prime Lease except as stated herein. Sublandlord shall pay
any and all costs or expenses associated with the review and approval process of
this Sublease by Landlord.
(b) The rights and privileges granted to Sublandlord under Sections
1.01D. (Renewal Terms), 1.01F. (Lease Year), Article 3 (Renewal Option),
Article 4, Article 6, Exhibit C, (Leasehold Improvements), Exhibit D, Section
--------- ---------
21.01 (b)(i) (monument signage), Exhibit D, Part 23, Exhibit H (non-
--------- ---------
disturbance), Exhibit J (Lease Commencement Agreement), Exhibit A (monument
--------- ---------
signage) of the Prime Lease, First Amendment, Sections 7, 8 and 12 and any other
sections granting Sublandlord rights to (i) rooftop communications space in the
Building, if any, (ii) tenant improvements or tenant improvements related
allowances (iii) renewal options, (iv) expansion rights, (v) storage space, or
(vi) nondisturbance, are not assigned, subleased or transferred to Subtenant,
and Sublandlord retains all such rights and privileges.
13. Title and Possession. Sublandlord covenants, agrees and represents
--------------------
that it has full right and authority to enter into this Sublease for the full
term hereof, that Sublandlord is not in default beyond applicable cure periods
under the Prime Lease and that Subtenant, subject to the provisions of the Prime
Lease and upon paying the rents and other sums provided herein and upon
performing the duties, covenants, agreements and obligations hereof and upon
keeping and obeying all of the restrictions, conditions and provisions hereof,
will have, hold and enjoy quiet possession of the Subleased Premises, free from
claims of persons claiming by or through Sublandlord for the term herein granted
but subject to all of the duties, covenants, agreements, obligations,
restrictions, conditions and provisions set forth or incorporated herein.
14. Insurance.
---------
(a) Subtenant agrees, during the term hereof, to carry and maintain
such insurance as provided in Section 12.01 of the Prime Lease, with a company
reasonably satisfactory to Sublandlord, insuring Subtenant, with Sublandlord and
Landlord as additional insureds, against liability with respect to events
occurring on or about the Subleased Premises or arising out of the use and
occupancy thereof by the Subtenant. The policy maintained by Subtenant shall be
issued by a company licensed to do business in Virginia, and Subtenant shall
deposit a certificate evidencing the same with Sublandlord. Said policy or
policies shall contain a provision requiring the insurer to give Sublandlord and
Landlord thirty (30) days' written notice before canceling or terminating the
policy for any reason, including expiration of the policy period. Subtenant
agrees to indemnify, protect, defend and hold Sublandlord and Landlord harmless
against any and all claims, suits, actions, liabilities, costs and expenses,
including reasonable attorneys' fees, resulting from the use or occupancy of the
Subleased Premises by Subtenant, its employees, agents or contractors, or from
any breach by Subtenant of its covenants hereunder or from any act, omission,
accident, incident or occurrence upon the Subleased Premises during the term
hereof
8
<PAGE>
(b) Subtenant shall maintain "all risk" property insurance with respect
to its leasehold improvements in an amount equal to their replacement cost and
maintain or cause to be maintained by its contractor builder's risk insurance
for the leasehold improvements in the same amount if and when the Subleased
Premises are under construction, as may be approved by Sublandlord hereunder.
15. Sublandlord's Liability. Except as specifically provided herein,
-----------------------
Sublandlord shall have no responsibility whatsoever with respect to the
Subleased Premises, the condition thereof or Subtenant's property situated
therein, except for loss, injury or damage caused by Sublandlord's gross
negligence or willful misconduct. Sublandlord shall not be liable for the
failure by Landlord to keep and perform, according to the terms of the Prime
Lease, Landlord's duties, covenants, agreements, obligations, restrictions,
conditions and provisions, nor for any delay or interruption in Landlord's
keeping and performing the same. Sublandlord hereby assigns to Subtenant, for
so long as this Sublease shall be in force and effect, any and all rights of
Sublandlord under the Prime Lease with respect only to the Subleased Premises
and causes of action which Sublandlord may have against Landlord with respect to
the Subleased Premises due to default by Landlord under the Prime Lease,
excluding however (i) those provisions of the Prime Lease specifically excluded
from the Sublease, (ii) any right of self-help or rent abatement, unless
Sublandlord receives the benefit thereof and (iii) any right or remedy which
affects any portion of the premises leased by the Prime Lease other than the
Subleased Premises. Sublandlord agrees to cooperate with and join Subtenant in
any claims or suits brought by Subtenant against Landlord under the Prime Lease,
provided that such participation shall be without cost or expense to
Sublandlord. Subtenant has inspected the Subleased Premises and its contents to
its satisfaction and, except as specifically set forth herein, agrees to accept
the Subleased Premises and its contents in its "as-is, where-is" condition
without any obligations on Sublandlord to repair or modify the same. No
allowances for moving, plans or tenant improvements are provided to Subtenant.
16. Damage, Destruction or Condemnation. In the event of damage or
-----------------------------------
destruction of the Subleased Premises or the taking of all or any part thereof
under the power of eminent domain, this Sublease shall terminate only if the
Prime Lease is terminated as a result thereof, and the rent payable hereunder
shall abate only as long as and to the extent that the rent due from Sublandlord
to Landlord under the Prime Lease with respect to the Subleased Premises abates
as a result thereof. Subtenant shall have no claim to insurance or condemnation
proceeds (other than moving expenses or a taking of or damage to Subtenant's
fixtures or personal property other than its leasehold interest in the Subleased
Premises and then only to the extent the same does not diminish any award
payable to Landlord).
17. Release and Waiver of Subrogation. To the extent its insurance
---------------------------------
coverage is not thereby impaired, Sublandlord and Subtenant each hereby releases
all causes of action and rights of recovery against each other and their
respective agents, officers and employees for any loss, regardless of cause or
origin, to the extent of any recovery to either party from any policy(s) of
insurance carried or required to be carried hereunder. Sublandlord and
Subtenant agree that any policies presently existing or obtained on or after the
date hereof (including renewals of present policies) shall include a clause or
endorsement to the effect that any such release shall not
9
<PAGE>
adversely affect or impair said policies or prejudice the right of the releasor
to recover thereunder.
18. Alterations, Improvement. No alterations, additions or improvements
-----------
in or upon the Subleased Premises shall be made by Subtenant without the prior
written consent by Sublandlord, which consent shall not be unreasonably withheld
or delayed and, to the extent required by Section 9 of the Prime Lease, the
consent of Landlord. Subtenant shall comply with the provisions of Section 9 of
the Prime Lease with respect to any such alterations, additions or improvements.
All alterations, additions and improvements shall be made in accordance with
applicable building codes and laws. Upon the termination of the term hereof,
all such alterations, additions and improvements (except personal property,
business and trade fixtures, machinery and equipment, furniture and movable
partitions owned by Subtenant) shall be and remain part of the Subleased
Premises and be surrendered therewith without disturbance, molestation or injury
and shall not be removed by Subtenant unless such removal is required by
Sublandlord, in which case Subtenant shall remove the same and restore the
Subleased Premises to the same condition in which they were on the date hereof,
reasonable wear and tear excepted. If Subtenant shall fail to remove the same
and restore the Subleased Premises, then Sublandlord may, but shall not be
obligated to, do so at the expense of Subtenant. Personal property, business
and trade fixtures, machinery and equipment, furniture and movable partitions
owned by Subtenant shall be and remain the property of Subtenant and may be
removed by Subtenant at any time during the term hereof when Subtenant is not in
default hereunder, and in any event, shall be removed on or before the
expiration of the term hereof. Subtenant shall repair any damage caused by such
removal. Subtenant covenants and agrees to indemnify, protect and defend
Sublandlord against, and hold Sublandlord harmless from, all liens, whether for
labor or materials arising as the result of alterations, additions, repairs or
improvements to the Subleased Premises made by Subtenant during the term of this
Sublease.
19. Default. If any rent reserved or other monetary payment referred to
-------
herein, or any part thereof, whether the same be demanded or not, shall remain
unpaid for a period of five (5) days from the date of written notice to
Subtenant that such payment is past due; or if any other term, condition or
covenant of this Sublease, express or implied on the part of Subtenant to be
kept or performed, shall be violated or neglected, and if Subtenant shall fail
to cure the same within fifteen (15) days from the date of written notice from
Sublandlord to Subtenant specifying the violation, or such longer period as
provided in Section 22.01 of the Prime Lease if Subtenant commences action to
correct such violation and diligently prosecutes correction of such violation to
completion; or if the Subleased Premises or Subtenant's interest therein shall
be taken on execution or other process of law; or in the event of bankruptcy,
receivership, insolvency, liquidation, dissolution or similar proceedings with
respect to Subtenant, or if Subtenant shall enter into a general assignment for
the benefit of creditors; or if any default under the Prime Lease shall occur
with respect to Subtenant or the performance by Subtenant of any of its
covenants and obligations under this Sublease, then and in any of said cases,
Subtenant shall be deemed in default, and Sublandlord shall have the following
rights and remedies against Subtenant (in addition to all other rights and
remedies provided by law or in equity): (i) to terminate this Sublease, (ii) to
cure or attempt to cure the default, whereupon Subtenant shall upon demand
reimburse Sublandlord for all costs thus expended together with interest thereon
at the lesser rate (the "Interest Rate") of the highest rate permitted by law or
two percent (2%)
10
<PAGE>
above the prime interest rate as established in The Wall Street Journal, (iii)
-----------------------
to sue for Subtenant's performance, whereupon Subtenant shall upon demand
reimburse Sublandlord for all costs thus expended together with interest thereon
at the Interest Rate; (iv) to exercise all remedies set forth in the Prime Lease
as if Sublandlord were the Landlord and Subtenant were the Tenant thereunder, or
(v) to re-enter and take possession of the Subleased Premises, and to remove any
property therein, without liability for damage to, and without the obligation to
store such property but may store same at Subtenant's expense. In the event of
such re-entry, Sublandlord may, but shall not be obligated to, relet the
Subleased Premises, or any part thereof, from time to time, in the name of
Sublandlord or Subtenant, without further notice, for such term or terms, on
such conditions and for such uses and purposes as Sublandlord, in its reasonable
discretion, may determine, and Sublandlord may collect and receive all rents
derived therefrom and apply the same, after deduction of all appropriate
expenses (including broker's, consultant's and attorney's fees, if incurred, and
the expenses of putting the property in leasable condition), to the payment of
the rent and other sums payable hereunder, Subtenant remaining liable for any
deficiency. Sublandlord shall not be responsible or liable for any failure to
relet the Subleased Premises or any part thereof, or for failure to collect any
rent connected therewith. The exercise by Sublandlord of any remedy shall not
preclude the subsequent or simultaneous exercise of any other remedy. No delay
in exercising any remedy shall be deemed a waiver thereof In addition, any
payment not made when due shall bear interest until paid at the Interest Rate.
20. Notices. Any notice or communication required or permitted to be
-------
given or served by either party hereto upon the other shall be deemed given or
served in accordance with the provisions of this Sublease when mailed in a
sealed wrapper by United States registered or certified mail, return receipt
requested, or delivered to a nationally recognized overnight courier, postage
prepaid, properly addressed as follows:
If to Sublandlord: Nextel Communications
2001 Edmund Halley Drive
Reston, Virginia 22091
Attention: Director of Real Estate
Nextel Communications
2001 Edmund Halley Drive
Reston, Virginia 22091
Attention: Contracts Manager
With a copy to: Watt, Tieder, Hoffar & Fitzgerald, L.L.P.
7929 Westpark Drive
Suite 400
McLean, Virginia 22102
Attention: John U. Lavoie, Esquire
If to Subtenant: At the Subleased Premises
Each mailed notice or communication shall be deemed to have been given to, or
served upon, the party to which addressed on the date that is three (3) days
after the same is deposited in the
11
<PAGE>
United States registered or certified mail, postage prepaid, or the day after
the same is delivered for overnight delivery to such courier, properly addressed
in the manner above provided. Any party hereto may change its address for the
service of notice hereunder by serving written notice hereunder upon the other
party hereto, in the manner specified above, at least ten (10) days prior to the
effective date of such change.
Sublandlord and Subtenant appoint the following representative as a
point of contact for operational matters relating to the Sublease and the
Subleased Premises:
Subtenant: Randall Pevin (703) 916-7448
Sublandlord: Case Runolfson (703) 906-3029
21. Surrender of Subleased Premises. Upon the expiration of the term of
-------------------------------
this Sublease, or upon any earlier termination of this Sublease, Subtenant shall
quit and surrender possession of the Subleased Premises to Sublandlord in as
good order and condition as the same are now or hereafter may be improved by
Landlord or Subtenant, reasonable wear and tear and repairs which are Landlord's
obligation excepted, and shall, without expense to Sublandlord, remove or cause
to be removed from the Subleased Premises all debris and rubbish, all furniture,
equipment, business and trade fixtures, freestanding cabinet work, movable
partitioning and other articles of personal property owned by Subtenant of or
installed or placed by Subtenant at its expense in the Subleased Premises, and
all similar articles of any other persons claiming under Subtenant, and
Subtenant shall repair all damage to the Subleased Premises resulting from such
removal. Upon the expiration of this Sublease, or if Sublandlord or Landlord
re-enters or re-takes possession of the Subleased Premises prior to the normal
expiration of this Sublease, Sublandlord or Landlord shall have the right, but
not the obligation, to remove from the Subleased Premises all personal property
located therein belonging to Subtenant, and either party may discard such
debris, rubbish and personal property or place such personal property in storage
in a public warehouse, all at the expense and risk of Subtenant.
22. Termination of Prime Lease. It is understood and agreed by and
--------------------------
between the parties hereto that the existence of this Sublease is dependent and
conditioned upon the continued existence of the Prime Lease and this Sublease
shall automatically terminate on the termination, cancellation or expiration of
the Prime Lease. Notwithstanding the foregoing, Sublandlord will not
voluntarily terminate the Prime Lease as it relates to the Subleased Premises
during the Sublease Term.
23. Waiver. No provision of this Sublease shall be deemed to have been
------
waived unless such waiver is in writing signed by the party charged with such
waiver. A waiver by Sublandlord of any default, breach or failure of Subtenant
under this Sublease shall not be construed as a waiver of any subsequent or
different default, breach or failure.
24. Access to the Subleased Premises. Subtenant shall allow Sublandlord
--------------------------------
and/or Landlord, and the agents, employees and contractors of either, access to
the Subleased Premises under the terms and for the purposes set forth in the
Prime Lease or to exhibit the Subleased
12
<PAGE>
Premises to prospective purchasers, Mortgagees, ground lessors or tenants in
accordance with the provisions of the Prime Lease.
25. Holding Over. If Subtenant or anyone claiming under Subtenant holds
------------
over after the expiration or earlier termination of the term hereof without the
express written consent of Sublandlord, Subtenant shall become a tenant at
sufferance only, at the rental rate per square foot in effect under the Prime
Lease upon the date of such expiration, plus any amount payable to Landlord as a
result of such holdover, including any holdover costs for the entire premises
described in the Prime Lease, and otherwise upon the terms, covenants and
conditions herein specified, so far as applicable. Acceptance by Sublandlord of
rent after such termination shall not constitute a consent to a holdover
hereunder or result in a renewal. The foregoing provisions of this paragraph
are in addition to and do not affect Sublandlord's right of reentry or any other
rights of Sublandlord hereunder or as otherwise provided by law and Subtenant
shall be liable to Sublandlord for any holding over after the expiration or
earlier termination of the term hereof.
26. Subordination. This Sublease is subject and subordinate to the Prime
-------------
Lease and to any and all matters which the Prime Lease is or shall be
subordinate. In the event the Prime Lease is terminated, or re-entry or
dispossession of the Sublandlord by the Landlord under the Prime Lease,
Landlord, at its option, may either terminate the Sublease, in which case the
Subtenant agrees to peacefully vacate the Subleased Premises, or require the
Subtenant to attorn to Landlord as its sublessor pursuant to the then applicable
terms of the Sublease for the remaining term thereof, except that Landlord shall
not be (i) liable for any previous act or omission of Sublandlord under the
Sublease, (ii) subject to any offset where theretofore accrue to Subtenant
against Sublandlord, or (iii) bound by any previous modification of the Sublease
not agreed to in writing by Landlord or by a previous prepayment of Rent more
than one (1) month in advance.
27. Successors and Assigns. All of the terms, covenants, provisions and
----------------------
conditions of this Sublease shall be binding upon and inure to the benefit of
the successors and assigns of Sublandlord and on the successors and assigns of
Subtenant but only to the extent herein specified.
28. Captions. The captions herein are for convenience only and are not a
--------
part of this Sublease.
29. Interest. Subtenant shall pay to Sublandlord interest on all sums of
--------
whatever nature to be paid by Subtenant to Sublandlord hereunder from the time
said sum shall become due and payable until the same is paid at the Interest
Rate, unless such sums are paid in accordance with the terms and conditions of
the Prime Lease and no interest is due thereunder.
30. Relationship of Parties. This Sublease does not and shall not create
-----------------------
the relationship of principal and agent, or of partnership, or of joint venture,
or of any other association between Sublandlord and Subtenant, except that of
sublandlord and subtenant.
31. Brokerage. Sublandlord and Subtenant each represents to the other
---------
that no real estate broker or agent is involved in this Sublease, except The
Staubach Company, Cushman &
13
<PAGE>
Wakefield of Virginia and The Fred Ezra Company (collectively, "Brokers"), and
each shall indemnify and hold the other harmless from any breach by it of this
representation. Sublandlord shall be fully responsible for payment of all
commission due to the Brokers relating to the Sublease pursuant to separate
written agreements.
32. Approval of Predecessors. This Sublease is contingent upon the
------------------------
approval of Landlord or its successors in interest.
33. Severability. In the event any part of this Sublease is held to be
------------
unenforceable or invalid, for any reason, the balance of this Sublease shall not
be affected and shall remain in full force and effect during the term of this
Sublease.
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
executed as of the day and year first above written.
WITNESS/ATTEST: SUBLANDLORD:
NEXTEL COMMUNICATIONS, INC. a
Delaware corporation
/s/ Timothy Dan By: /s/ Albert P. Shotwell (SEAL)
- ---------------------------------- --------------------------------------
Albert P. Shotwell
Vice President
WITNESS/ATTEST: SUBTENANT:
ONESOFT CORPORATION, a
/s/ Randall V. Pevin Delaware corporation
- ----------------------------------
By: /s/ Frederick C. Hawkins, III(SEAL)
--------------------------------------
Name: Frederick C. Hawkins, III
------------------------------------
Title: CFO
-----------------------------------
14
<PAGE>
Landlord's Consent and Agreement
--------------------------------
The Landlord joins in the Sublease for the purpose of consenting to the
terms and conditions hereof, to confirm certain facts and to confirm the status
of the following matters:
1. Landlord Consent. Landlord hereby consents to each of the terms and
----------------
conditions of the Sublease by and between Sublandlord and Subtenant.
2. Status of Prime Lease. Notwithstanding any provisions of the Prime
---------------------
Lease to the contrary, Landlord confirms that the Prime Lease is in full force
and effect.
3. Authority. Landlord represents and warrants that no consents by other
---------
parties, lenders, mortgagees or lien holders are required in order to consent,
confirm and validate the terms of the Sublease.
4. Status of Obligations; Prime Lease. Landlord represents that the Prime
----------------------------------
Lease is in full force and effect and that Landlord and, to Landlord's best
knowledge, Sublandlord, have each performed all of their respective obligations
thereunder to the date hereof. A true and correct copy of the Prime Lease is
attached hereto as Exhibit A and made a part hereof.
---------
WITNESS: LANDLORD:
- ------- --------
TYSON-MCLEAN JOINT VENTURE, a Virginia general
partnership
By: Tyson-McLean Associates, L.P., a Virginia limited
partnership, its general partner
By: (SEAL)
- --------------------- ---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
By: Metropolitan Life Insurance Company, its general
Partner
By: (SEAL)
- --------------------- ---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
15
<PAGE>
Exhibit A
---------
(Prime Lease)
Attached hereto is a redacted copy of the Prime Lease. Sub landlord
represents and warrants that the sections deleted or blacked-out do not contain
language that would (i) materially adversely effect the Subtenant's rights or
economic terms of the Sublease, or (ii) materially increase its obligations to
Landlord or Sublandlord.
Sublandlord shall indemnify, defend and pay any actual and reasonable
costs and expenses of Subtenant associated with the breach of the warranty and
representation as described in this section.
16
<PAGE>
Exhibit B
(Subleased Premises)
17
<PAGE>
Exhibit 10.18
REGUS BUSINESS CENTRE SERVICE AGREEMENT
<TABLE>
<CAPTION>
Agreement number LA567234 Agreement date (MM/DD/YY) 11/8/99
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
The address of the business centre
- ------------------------------------------------------------------------------------------------------------------------------
Address 1620 26th Street, Suite 300 City Santa Monica
- ------------------------------------------------------------------------------------------------------------------------------
State CA Zip Code 90404
- ------------------------------------------------------------------------------------------------------------------------------
Your details - Client
- ------------------------------------------------------------------------------------------------------------------------------
Company name OneSoft Contact Name/Title Jamie Zamoff, Director of Operations
- ------------------------------------------------------------------------------------------------------------------------------
Address 1505 Farm Credit Drive City McLean
- ------------------------------------------------------------------------------------------------------------------------------
State VA Zip Code 22102
- ------------------------------------------------------------------------------------------------------------------------------
Telephone (703) 823-9190 x2221 Fax (703) 821-2248
- ------------------------------------------------------------------------------------------------------------------------------
Your invoicing details (if different) - Client
- ------------------------------------------------------------------------------------------------------------------------------
Company Name OneSoft Contact Name/Title Mr. Robin Rugg, Accounts Payable
- ------------------------------------------------------------------------------------------------------------------------------
Address 1505 Farm Credit Drive City McLean
- ------------------------------------------------------------------------------------------------------------------------------
State VA Zip Code 22102
- ------------------------------------------------------------------------------------------------------------------------------
Telephone (703) 821-9190 Fax (703) 821-2248
- ------------------------------------------------------------------------------------------------------------------------------
The nature of your business for the purpose of this Agreement
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
The number of workstations you are paying for and the room numbers allocated to you
- ------------------------------------------------------------------------------------------------------------------------------
Number of workstations 2-5 Rooms numbers initially allocated to you 32,33
- ------------------------------------------------------------------------------------------------------------------------------
The standard fee per calendar month The service retainer you have paid
- ------------------------------------------------------------------------------------------------------------------------------
$ 6,950 plus local taxes of $ 0 $ 16,600
- ------------------------------------------------------------------------------------------------------------------------------
The initial period for which the agreement lasts
- ------------------------------------------------------------------------------------------------------------------------------
Start date (MM/DD/YY) 11/15/99 End date (MM/DD/YY) 5/14/00
- ------------------------------------------------------------------------------------------------------------------------------
Comments
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
We are REGUS BUSINESS CENTRE CORPORATION of 100 Manhattanville Road, Purchase, NY 10577. This Agreement incorporates our Terms of
Business attached to this Agreement USING REGUS BUSINESS CENTRES which you confirm you have read and understood. We both agree to
comply with those terms and our obligations as set out in them. Note that the agreement does not come to an end automatically. See
"Bringing your agreement to an end" overleaf.
Name Randall Pevin (printed) Name Michele Pruitt (printed)
---------------------------------- ----------------------------------
Title Vice President, Operations (printed) Title Business Development Manager (printed)
---------------------------------- ----------------------------------
Date 11/8/99 (printed) Date 11/8/99 (printed)
---------------------------------- ----------------------------------
SIGNED on your behalf - Client SIGNED on our behalf - Regus
/s/ Randall V. Pevin /s/ Michele Pruitt
- ---------------------------------- ----------------------------------
</TABLE>
Rev 8/99
<PAGE>
USING REGUS BUSINESS CENTRES
We are Regus Business Centre Corp. These are our terms of business. They apply
to the service agreement which you the client have signed (which we refer to
simply as your agreement). If two or more of you have signed the agreement your
liabilities are joint and several. Your agreement supersedes any previous
agreement you may have had with us for the same services and contains all the
terms we have agreed.
STANDARD SERVICES INCLUDED IN YOUR STANDARD FEE
Furnished office accommodation : We are to provide the number of serviced and
fully furnished office rooms for which you have agreed to pay in the business
centre stated in your agreement. Your agreement lists the rooms we have
initially allocated for your use. We may need to allocate different rooms from
time to time, but these will be of equivalent size and we will try to agree
these with you in advance.
Office services : We are to provide the following office services during normal
opening hours Monday to Friday
. access to your accommodation
. personalised telephone answering by our operators
. reception of your visitors by our receptionist
. heating and (where available) air conditioning
. lighting and electrical power
. cleaning
. servicing, maintenance and repair of our equipment
. use of a kitchen, sanitary facilities and photocopying areas
We are happy to discuss special arrangements for use of these facilities outside
our normal opening hours.
Loyalty bonus : During each calendar month while this agreement lasts you are
entitled (subject to availability) to 4 hours free use of a standard 1 - 4
person meeting or board room in the business centre and 3 days' free use of a
1 - 2 person office at any other Regus business centre world wide.
ADDITIONAL SERVICES
The following services are available for an extra charge in accordance with our
published rates from time to time.
. Secretarial services . Photocopying
. Telephone line and usage . Messaging
. Courier services . Facsimile
. Travel arrangements . Office supplies
. Translations . Meeting and conference rooms
. Food and beverage services . Mail handling
. Voicemail * . Video conferencing *
. Car parking * . High speed internet access *
* available at some centres only
USING THE ACCOMMODATION
On moving in : You will be asked to sign an inventory of all accommodation,
furniture and equipment you are permitted to use, together with a note of its
condition, and details of the keys or entry cards issued to you.
The nature of your business : You must only use the accommodation for office
purposes, and only for the business stated in your agreement or subsequently
agreed with us. Office use of a "retail" nature, involving frequent visits by
members of the public, is not permitted. You must not carry on a business which
competes with our business of providing serviced office accommodation. You must
not use the name Regus in any way in connection with your business.
Your name and address : You may only carry on that business in your name or some
other name that we previously agree. At your request and cost we will include
that name in the house directory at the business centre, where this is
available. You must not put up any signs on the doors to your accommodation or
anywhere else which is visible from outside the rooms you are using. You may use
the business centre address as your business address.
Taking care of our property : You must take good care of all parts of the
business centre, its equipment, fittings and furnishings which you use. You must
not alter any part of it. You are liable for any damage caused by you or those
in the business centre with your permission or at your invitation.
Office furniture and equipment : You must not install any furniture or office
equipment, cabling, IT or telecom connections without our consent, which we may
refuse at our absolute discretion.
Keys and security : Any keys or entry cards which we let you use remain our
property at all times. You must not make any copies of them or allow anyone else
to use them without our consent. Any loss must be reported to us immediately and
you must pay the cost of replacement keys or cards and of changing locks, if
required. If you are permitted to use the business centre outside normal working
hours it is your responsibility to lock the doors to your accommodation and to
the business centre when you leave.
Comply with the law : You must comply with all relevant laws and regulations in
the conduct of your business. You must do nothing illegal. You must not do
anything that may interfere with the use of the business centre by us or by
others, cause any nuisance or annoyance, increase the insurance premiums we have
to pay or cause loss or damage to us or to the owner of any interest in the
building which contains the business centre. You acknowledge that (a) the terms
of the foregoing sentence are a material inducement to us for the execution of
your agreement and (b) any violation by you of the foregoing sentence shall
constitute a material default by you hereunder, entitling us to terminate your
agreement.
Comply with house rules : You must comply with any house rules which we impose
generally on users of the business centre whether for reasons of health and
safety, fire precautions or otherwise. You must not bring animals into the
business centre. You must not play music or use amplification equipment in a way
that can be heard outside your rooms.
Insurance : It is your responsibility to arrange insurance for your own property
which you bring into the business centre and for your own liability to your
employees and to third parties.
PROVIDING THE SERVICES
Access to your accommodation : We can enter your accommodation at any time.
However, unless there is an emergency we will as a matter of courtesy try to
inform you in advance when we need access to carry out testing, repair or works
other than routine inspection, cleaning and maintenance. We will also respect
security procedures to protect the confidentiality of your business.
At the start of your agreement : If for any reason we cannot provide the number
of rooms stated in your agreement by the date when your agreement is due to
start we have no liability to you for any loss or damages but you may cancel the
agreement without penalty. We will not charge you the standard fee for rooms you
cannot use until they become available.
Suspension of services : We may by notice suspend the provision of services
(including access to the accommodation) for reasons of political unrest,
strikes, or other events beyond our reasonable control, in which event payment
of the standard fee will also be suspended for the same period. Our liability :
We are not liable for any loss as a result of our failure to provide a service
as a result of mechanical breakdown, strike, delay, failure of staff,
termination of our interest in the building containing the business centre or
otherwise unless we do so deliberately or are grossly negligent. We are also not
liable for any failure until you have told us about it and given us a reasonable
time to put it right.
YOUR AGREEMENT
The nature of your agreement : Your agreement is the commercial equivalent of an
agreement for accommodation in a hotel. The whole of the business centre remains
our property and in our possession and control. You acknowledge that your
agreement creates no tenancy interest, leasehold estate or other real property
interest in your favor with respect to the accommodation. We are giving you just
the right to share with us the use of the business centre so that we can provide
the services to you. The agreement is personal to you and cannot be transferred
to anyone else. We may transfer the benefit of your agreement and our
obligations under it at any time.
Duration : Your agreement lasts for the period stated in it and will then
automatically be extended for successive periods of three months until brought
to an end by you or by us.
Bringing your agreement to an end : Either of us can terminate your agreement at
the end date stated in it, or at the end of any three month extension period, by
giving at least three months' notice to the other. However, if your agreement is
for three months or less and one of us wishes to terminate it, the notice period
is two months or (if shorter) one week less than the period stated in your
agreement.
Ending your agreement immediately : We may put an end to your agreement
immediately by giving you notice if:
. we have reason to suspect that you may not be able to pay fees on time
. you are in breach of one of your obligations which cannot be put right or
which we have given you notice to put right and which you have failed to put
right within fourteen days of that notice, or
. your conduct, or that of someone at the business centre with your permission
or at your invitation, is incompatible with ordinary office use
If we put an end to the agreement for any of these reasons it does not put an
end to any then outstanding obligations you may have and you must
. pay for additional services you have used
. pay the standard fee for the remainder of the period for which your agreement
would have lasted had we not ended it, or (if longer) for a further period of
a three months, and
. Indemnify us against all costs and losses we incur as a result of the
termination.
If the business centre is not available : In the unlikely event that we are no
longer able to provide the services and accommodation at the business centre
stated in your agreement then your agreement will end and you will only have to
pay standard fees up to the date it ends and for the additional services you
have used. We will try to find suitable alternative accommodation for you at
another Regus business centre.
When your agreement ends
. you are to vacate the accommodation immediately, leaving it in the same
condition as it was when you took it, save for fair wear and tear. If you
leave any of your own property in the business centre we may dispose of it in
any way we choose without owing you any responsibility for it or any proceeds
of sale
. you must also enter into a Link agreement with us on our standard terms at the
time for at least 3 months.
If you continue to use the accommodation when your agreement has ended
. you are responsible for any loss, claim or liability we incur as a result of
your failure to vacate on time
. we may, at our discretion, permit you an extension subject to a surcharge on
the standard fee.
Employees : While your agreement is in force and for a period of six months
after it ends, you must not solicit or offer employment to any of our staff. If
you do, we estimate our loss at the equivalent of one year's salary for each of
the employees concerned and you must pay us damages equal to that amount.
Notices : All formal notices must be in writing.
Confidentiality : The terms of your agreement are confidential. Neither of us
must disclose them without the other's consent unless required to do so by law
or an official authority. This obligation continues after your agreement ends.
Indemnities : You must indemnify us in respect of all liability, claims,
damages, loss and expenses which may arise
. if someone dies or is injured while in the accommodation you are using
. from a third party in respect of your use of the business centre and the
services
. from a third party in respect of our provision of services to you
. if you do not comply with the terms of your agreement
You must also pay any costs, including reasonable legal fees, which we incur in
enforcing your agreement.
Consequential loss : If for any reason we cannot provide you with any service
our liability is limited to crediting or returning to you a fair proportion of
the relevant fee. To the extent permitted by law we have no liability whatever
for any consequential loss as a result of anything we or our staff do or fail to
do.
Applicable law: Your agreement is interpreted and enforced in accordance with
the laws of the state in which the business centre in question is located. We
both accept the non-exclusive jurisdiction of the courts of such jurisdiction.
FEES
Standard services : The standard fee is payable in advance in full on the 10th
day of each month in respect of standard services to be provided during the
following calendar month. For a period of less than a month the fee will be
apportioned on a daily basis. You agree to pay promptly (i) all sales, use,
excise and any other taxes and licence fees which you are required to pay to any
governmental authority (and, at our request, will provide to us evidence of such
payment) and (ii) any taxes paid by us to any governmental authority that are
attributable to the accommodation, including, without limitation, any gross
receipts, rent and occupancy taxes, or tangible personal property taxes.
Additional services : Fees for additional services are invoiced in arrears and
payable on the 25th day of the month following the calendar month in which the
additional services were provided.
Payment terms : All payments are to be made by direct debit. You are required to
sign a direct debit mandate on or within seven days after entering into your
agreement.
Service retainer : The service retainer you paid on entering into your agreement
will be held by us as security for performance of all your obligations under
your agreement. The service retainer, or any balance after deducting outstanding
fees and other costs due to us, will be returned to you within 60 days after
your agreement ends. We may require you to pay an increased service retainer if
. outstanding fees exceed the service retainer held
. you frequently fail to pay fees when due
. you fail to sign a direct debit mandate when required.
Late payment : If you do not pay fees when due, we may charge interest at the
rate of 2% per month on the amounts outstanding. If you dispute any part of an
invoice you must pay the amount not in dispute by the due date.
Withholding services : We may withhold services (including for the avoidance of
doubt, denying you access to your accommodation) while there are any outstanding
fees and interest or you are in breach of your agreement.
Subordination : Your agreement is subordinate to our lease with our landlord and
to any other agreements to which our lease with our landlord is subordinate.
Rev 8/99
<PAGE>
Exhibit 10.19
LIMITED RECOURSE PROMISSORY NOTE
$500,000.00 August 13, 1999
Annandale, Virginia
For value received, James W. MacIntyre, IV (the "Borrower") promises to
pay to OneSoft Corporation, a Delaware corporation (the "Lender") at the office
of Lender located at 7010 Little River Turnpike, Annandale, Virginia, or such
other place as the holder hereof shall designate by prior written notice to the
Borrower, on the third anniversary of the date hereof, as such date for payment
may be extended as hereinafter provided (as extended, if extended, the "Due
Date") the sum of $500,000.00, together with interest accruing to the Due Date
at the fixed rate of five and thirty-two one-hundredths percent (5.43%) per
annum or, if different on the date hereof, the Applicable Federal Rate (AFR) for
determining below-market interest rates for loans of such kind for purposes of
determining the taxability thereof under the Internal Revenue Code of 1986, as
amended, compounded annually; provided that recourse against the Borrower for
payment of this Limited Recourse Promissory Note ("this Note") or otherwise for
payment of the indebtedness represented hereby shall be limited exclusively to
recourse against the pledged collateral (the "Pledged Collateral") provided for
in the Pledge and Security Agreement of even date herewith to which the Borrower
and the Lender are parties and which secures payment of this Note (the "Pledge
Agreement") and the Borrower shall have no personal liability for or with
respect to the payment of this Note or such indebtedness, as to all of which the
Lender hereby holds the Borrower personally harmless except to the extent of
such exclusive recourse against the Pledged Collateral. Interest shall be
calculated on the basis of actual days elapsed and a 360-day year. All amounts
owing under this Note shall become immediately due and payable upon the
occurrence of an Event of Default. If there shall be an Event of Default and so
long as such Event of Default shall be continuing, interest on the unpaid
balance shall thereafter be payable on demand at a fluctuating rate per annum
equal to the greater of three percent in excess of the fixed rate stated above
and three percent in excess of the prime rate of interest as published in the
Wall Street Journal from time to time. This Note may be prepaid, as a whole or
in part, at any time and without penalty. For purposes of this Note, an "Event
of Default" shall mean (1) the failure of the Borrower to pay or otherwise
satisfy or cause to be paid or otherwise satisfied the principal of and interest
on this Note on the Due Date, (2) the voluntary filing by the Borrower of a
petition in bankruptcy or other action by the Borrower seeking the protection
from the Borrower's creditors under bankruptcy or insolvency laws, or (3) the
filing of an involuntary bankruptcy petition by creditors of the Borrower and
the failure of such petition to be dismissed, rescinded or otherwise rendered of
no further legal effect within sixty (60) days after filing.
The Borrower hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement hereof and consent that this Note may be
extended from time to time and that no such extension or other indulgence, and
no substitution, release or surrender of any of the Pledged Collateral shall
discharge or otherwise affect the recourse of the holder hereof against the
Pledged Collateral for payment of this Note. No delay or omission on the part of
the holder in exercising any right hereunder shall operate as a waiver of any
such right or of any other right hereunder
/s/ FCH JWM
<PAGE>
and a waiver of any such right on any one occasion shall not be construed as a
bar to or waiver of any such right on any future occasion.
Notwithstanding any other provision hereof or of the Pledge Agreement
to the contrary, the Due Date shall be extended to that date (which shall
thereupon become the Due Date), if any, which is later than the Due Date set
forth hereinabove and which is also the earlier of (1) earliest date following
the expiration of the 180-day period immediately following the date of
effectiveness of the registration statement filed with the Securities and
Exchange Commission for the Lender's initial public offering ("IPO") of its
equity securities in which gross proceeds to the Lender equal or exceed
$25,000,000.00 at an implied pre-IPO valuation of the Lender equaling or
exceeding $100,000,000.00 on which the Borrower shall be free of any and all
conditions, limitations or other restrictions (other than limitations under Rule
144 of the General Rules and Regulations of the Securities and Exchange
Commission) applicable to the public sale of shares of the Corporation's Common
Stock held by the Borrower, or (2) the earliest date coinciding with or
following the date on which (a) the Borrower receives cash or marketable
securities representing proceeds from the sale of the Lender or all or
substantially all of the Borrower's interest in the Lender, whether through a
sale of all or substantially all of the assets of the Lender, a merger, stock
sale or otherwise, or the dissolution of the Lender and (b) the Borrower shall
be free to dispose of such proceeds.
This Note is not a negotiable instrument but may be assigned in writing
by the Lender or any subsequent holder hereof who or which shall have become
such through an assignment permitted hereby to any person or entity who or which
is an affiliate of the Lender or such holder; provided that, for purposes of
this Note, the term "affiliate" shall have the meaning ascribed thereto in Rule
12b-2 of the General Rules and Regulations of the Securities and Exchange
Commission. This Note shall be construed in accordance with and governed by the
law of The Commonwealth of Virginia.
/s/ Julie Ferrier /s/ James W. MacIntyre, IV
- --------------------------- --------------------------
Witness James W. MacIntyre, IV
/s/ Frederick C. Hawkins III
----------------------------
Frederick Hawkins, CFO
OneSoft Corporation
-2-
<PAGE>
FIRST AMENDMENT TO LIMITED RECOURSE PROMISSORY NOTE
WHEREAS, on or about August 13, 1999, James W. MacIntyre, IV entered
into a Limited Recourse Promissory Note ("Note") for Five Hundred Thousand
Dollars ($500,000.00) payable to OneSoft Corporation;
WHEREAS, a typographical error was found in the first sentence of the
Note;
WHEREAS, the location of the office of OneSoft Corporation has moved
since the execution of the Note;
WHEREAS, the parties desire to amend the Note to correct the error and
to accurately reflect the parties intention on the date of the execution of the
Note;
NOW THEREFORE, the first sentence of the Note shall be deleted and the
following language shall be inserted in its stead:
"For value received, James W. MacIntyre IV (the "Borrower") promises to
pay to OneSoft Corporation, a Delaware corporation (the "Lender") at the office
of Lender located at 1505 Farm Credit Drive, Suite 100, McLean, Virginia 22102,
---------------------------------------------------------
or such other place as the holder hereof shall designate by prior written notice
to the Borrower, on the third anniversary of the date hereof, as such date for
payment may be extended as hereinafter provided (as extended, if extended, the
"Due Date") the sum of $500,000.00, together with interest accruing to the Due
Date at the fixed rate of five and forth-three one-hundredths percent (5.43%)
-------------------------------------------
per annum or, if different on the date hereof, the Applicable Federal Rate (AFR)
for determining below-market interest rates for loans of such kind for purposes
of determining the taxability thereof under the Internal Revenue Code of 1986,
as amended, compounded annually; provided that recourse against the Borrower for
payment of this Limited Recourse Promissory Note ("this Note") or otherwise for
payment of the indebtedness represented hereby shall be limited exclusively to
recourse against the pledged collateral (the "Pledged Collateral") provided for
in the Pledge and Security Agreement of even date herewith to which the Borrower
and the Lender are parties and which secures payment of this Note (the "Pledge
Agreement") and the Borrower shall have no personal liability for or with
respect to the payment of this Note or such indebtedness, as to all of which the
Lender hereby holds the Borrower personally harmless except to the extent of
such exclusive recourse against the Pledged Collateral. (Emphasis added to
identify changes)"
Dated: 10/21/99
/s/ James W. MacIntyre, IV /s/ Julie Ferrier
- ------------------------------------ -----------------
James W. MacIntyre, IV Witness
/s/ Frederick C. Hawkins III
- ------------------------------------
Frederick Hawkins III
Chief Financial Officer
OneSoft Corporation
<PAGE>
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT is made as of August 13, 1999 by
James W. MacIntyre, IV (the "Pledgor"), in favor of OneSoft Corporation (the
"Secured Party").
WITNESETH
---------
WHEREAS, the Pledgor has borrowed $500,000.00 from the Secured Party
under a Limited Recourse Promissory Note dated the date hereof (the "Note");
WHEREAS, the Secured Party's willingness to make the loan under the
Note is subject to the condition that the Pledgor execute and deliver this
Pledge and Security Agreement;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgor agrees for the benefit of the Secured Party as
follows:
SECTION 1. DEFINED TERMS.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings provided therefore in the Note. In addition, the
following terms shall have the meanings set forth in this Section 1 or elsewhere
in this Pledge Agreement referred to below.
"Pledge Agreement" shall mean this Pledge and Security Agreement as it
may be amended, supplemented or otherwise modified.
"Pledged Collateral" has the meaning specified in Section 2 hereof.
"Pledged Securities" shall mean 100,000 shares of Common Stock owned by
the Pledgor.
SECTION 2. PLEDGE.
The Pledgor hereby (a) pledges, hypothecates, assigns and transfers to
the Secured Party all of the Pledged Securities and hereby grants to the Secured
Party a lien on, and security interest in, the Pledged Securities together with
all cash dividends, stock dividends, interest, profits, premiums, redemptions,
warrants, subscription rights, options, substitutions, exchanges and other
distributions now or hereafter made on the Pledged Securities and all proceeds
thereof (which shall be a first lien) and (b) delivers to the Secured Party, the
certificates evidencing the Pledged Securities, together with appropriate
undated powers and/or endorsements duly executed in blank, all as collateral
security for the payment and performance of the Note. All property at any time
pledged to the Secured Party hereunder (whether described herein or not) and all
income therefrom and proceeds thereof are herein collectively called the
"Pledged Collateral".
/s/ FCH JWM
<PAGE>
SECTION 3. DIVIDENDS AND DISTRIBUTIONS.
If, while this Pledge Agreement is in effect, the Pledgor becomes
entitled to receive or receives any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or issued
in connection with any reorganization), option or rights, whether as an addition
to, in substitution of, or in exchange for, any shares of Pledged Securities or
otherwise, the Pledgor agrees to accept the same as agent for the Secured Party,
to hold the same in trust on behalf of and for the benefit of the Secured Party
and to deliver the same forthwith to the Secured Party in the exact form
received, with the endorsement of the Pledgor when necessary and/or appropriate
undated stock or other powers duly executed in blank, to be held by the Secured
Party, subject to the terms hereof, as additional collateral security for the
Note. Any sums paid on or in respect of the Pledged Securities on the
liquidation or dissolution of the issuer thereof shall be paid over to the
Secured Party, to be held by the Secured Party, subject to the terms and
conditions hereof, as additional collateral security for the Note.
SECTION 4. VOTING RIGHTS.
Prior to the occurrence of an Event of Default under the Note and until
such Event of Default shall be cured or, in accordance herewith waived by the
Secured Party, the Pledgor shall be entitled to vote the Pledged Securities and
to give consents, waivers, and ratifications in respect of the Pledged
Securities.
SECTION 5. RIGHTS OF THE SECURED PARTY.
5.1 Certain Rights of the Secured Party. The Secured Party
-----------------------------------
shall not be liable for failure to collect or realize upon the Note or any
collateral security or guaranty thereof, or any part thereof, or for any delay
in so doing, nor shall Secured Party be under any obligation to take any action
whatsoever with regards thereto. Any or all shares of the Pledged Securities
held by the Secured Party hereunder may, if an Event of Default under the Note
has occurred and is continuing, and upon written notice by the Secured Party to
the Pledgor, be registered in the name of the Secured Party or its nominee, for
the benefit of the Secured Party, and the Secured Party or its nominee may at
any time thereafter, without notice, exercise all voting and corporate rights of
any issuer of any and all rights of conversion, exchange, subscription or any
other rights, privileges or options pertaining to any shares of the Pledged
Securities as if the Secured Party were the absolute owner thereof, including,
without limitation, the right to exchange, at its discretion, any and all of the
Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any issuer of any such shares or upon
the exercise by and such issuer or the Secured Party of any right, privilege or
option pertaining to any shares of the Pledged Securities and, in connection
therewith, to deposit and deliver any and all of the Pledged Securities with any
committee, depository, transfer agent, registrar or other designated agency on
such terms and conditions as the Secured Party may reasonably determine.
/s/ FCH JWM
<PAGE>
5.2 Secured Party as Attorney-in-Fact. The Secured Party is
---------------------------------
hereby appointed the attorney-in-fact of the Pledgor for the purpose of carrying
out the provisions of this Pledge Agreement and taking any action and executing
any instruments, in the name of the Pledgor or otherwise, that the Secured Party
may reasonably deem necessary or advisable to accomplish the purposes hereof,
which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, the Secured Party
shall, to the extent permitted hereunder, have the right and power, upon the
Secured Party's reasonable determination that such action is necessary or
desirable to preserve and protect its interest in the Pledged Collateral, to
receive, endorse and collect all checks and other orders for the payment of
money made payable to the Pledgor representing any dividend, interest payment or
other distribution payable or distributable with respect to the Pledged
Collateral or any part thereof and to give full discharge for the same.
5.3 Protection of Pledged Collateral. The Secured Party shall
--------------------------------
not have any obligation to protect, secure, perfect or insure any Pledged
Collateral at any time held as security for the Note other than to refrain from
acts or omissions constituting gross negligence or willful misconduct with
respect thereto.
SECTION 6. REMEDIES.
If an Event of Default under the Note has occurred and is continuing,
then, and in any such event, the Secured Party may exercise, in addition to all
other rights and remedies granted to it in this Pledge Agreement and in any
other instrument or agreement securing, evidencing or relating to the Note, all
rights and remedies of a secured party under the Uniform Commercial Code or
other applicable law. Without limiting the generality of the foregoing, the
Pledgor expressly agrees that in any such event, the Secured Party, without
demand of performance or other demand, advertisement or notice of any kind
(except public notice of the time and place of public or private sale, with a
copy thereof to be delivered to the Pledgor) to or on the Pledgor or any other
person (all and each of which demands, advertisements and/or notices, except
such notice of public or private sale, are hereby expressly waived), may
forthwith collect, receive, appropriate and realize on the Pledged Collateral,
or any part thereof, and forthwith sell, assign, give option or options to
purchase, contract to sell or otherwise dispose of and deliver the Pledged
Collateral, or any part thereof, in one or more units, parcels, or lots at one
or more public or private sales, on any stock exchange or through any recognized
securities trading system, at any of the Secured Party's offices or elsewhere,
on such terms and conditions as it may reasonably deem advisable and at such
prices as it may reasonably deem appropriate, for cash or on credit or for
future delivery without assumption of any credit risk; provided that either the
Secured Party or the Pledgor upon any such sale or sales, public or private, may
purchase the whole or any part of the Pledged Collateral so sold. Any purchaser
at any such sale or sales shall acquire the property sold absolutely free from
any claim or right on the part of the Pledgor.
/s/ FCH JWM
<PAGE>
SECTION 7. COVENANTS
The Pledgor covenants and agrees with the Secured Party that so long as
the Note is outstanding:
7.1 Defense of Claims. He will, upon the Secured Party's
-----------------
written request, defend the Secured Party's right, title and first-priority
security interest in and to the Pledged Securities and the proceeds thereof
against the claims and demands of all persons whomsoever;
7.2 Limitation on Transfers and Liens. He will not sell,
---------------------------------
assign, transfer, exchange or otherwise dispose of, or grant any option with
respect to any of the Pledged Collateral, nor will he create, incur or permit to
exist any lien with respect to any of the Pledged Collateral (except for the
lien created by this Pledge Agreement) which is not by its express terms junior
in priority to the lien created by this Pledge Agreement; and
SECTION 8. FURTHER ASSURANCES.
The Pledgor agrees that at anytime and from time to time, on the
written request of the Secured Party, the Pledgor will execute and deliver such
further documents and do such further acts and things as the Secured Party may
reasonably request in order to effectuate the purposes of this Pledge Agreement.
SECTION 9. NOTICES.
Except as otherwise provided herein, all notices, requests and demands
to or upon a party hereto, to be effective, shall be in writing and shall be
sent by personal delivery, by overnight courier, by certified or registered
mail, postage prepaid and return receipt requested, or by facsimile transmission
and, unless otherwise expressly provided herein, shall be deemed to have been
validly served, given or delivered immediately when delivered personally or by
overnight courier against receipt, three business days after deposit in the mail
or, in the case of facsimile transmission, when sent, addressed as follows:
If to the Secured Party: OneSoft Corporation
7010 Little River Turnpike
Annandale, Virginia 22003-3241
Attn: Chief Financial Officer
If to Pledgor: The address of the Pledgor on file
with the OneSoft Corporation
or to such other address as each party may designate for itself by notice given
in accordance with this Section.
/s/ FCH JWM
<PAGE>
SECTION 10. SEVERABILITY.
Wherever possible, each provision of this Pledge Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Pledge Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Pledge Agreement.
SECTION 11. NO WAIVER, CUMULATIVE REMEDIES.
The Secured Party shall not by any act, delay, omission or otherwise be
deemed to have waived any of its rights or remedies hereunder, and no waiver
shall be valid unless in writing, signed by the Secured Party, and then only to
the extent therein set forth. A waiver of any right or remedy hereunder on any
occasion shall not be construed as a bar to any right or remedy that the Secured
Party would otherwise have on any future occasion. No failure to exercise nor
any delay in exercising, on the part of the Secured Party, any right, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise of any right, power or privilege. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law to the Secured Party as
a secured party having a first-priority lien on the Pledged Collateral; provided
that the rights of the Secured Party with respect to the Pledged Collateral
hereunder or as provided by law to such a secured party shall be the Secured
Party's sole recourse for repayment of the loan secured hereby and the Secured
Party hereby acknowledges and agrees that it shall have no personal recourse
against the Pledgor or recourse against any of the Pledgor's property of any
kind or description other than the Pledged Collateral as aforesaid for the
repayment of such loan.
SECTION 12. NO ORAL MODIFICATION, SUCCESSORS, GOVERNING LAW.
None of the terms or provisions of this Pledge Agreement may be waived,
altered, modified or amended except by an instrument in writing, duly executed
by the Secured Party. This Pledge Agreement and all obligations of the Pledgor
hereunder shall be binding on his successors and assigns and shall, together
with the rights and remedies of the Secured Party hereunder, inure to the
benefit of the Secured Party and its respective successors and assigns. This
Pledge Agreement shall be governed by, and construed and interpreted in
accordance with, the law of The Commonwealth of Virginia.
SECTION 13. TERMINATION.
This Agreement shall terminate when the Note has been fully satisfied,
at which time the Secured Party shall reassign and deliver to the Pledgor,
against receipt, the Pledged Collateral, or such part thereof as shall not have
been sold or otherwise applied by Secured Party pursuant to
/s/ FCH JWM
<PAGE>
the terms hereof, and shall still be held by it hereunder, together with
appropriate instruments of reassignment.
SECTION 14. COUNTERPARTS.
This Pledge Agreement may be executed in any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
SECTION 15. DESCRIPTIVE HEADINGS.
The captions in this Pledge Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
IN WITNESS WHEREOF, the Pledgor and the Secured Party have executed and
delivered this Pledge Agreement under seal as of the date first written above.
/s/ James W. MacIntyre, IV
--------------------------
James W. MacIntyre, IV
ONESOFT CORPORATION
By: /s/ Frederick C. Hawkins, III
-----------------------------
Frederick Hawkins, CFO
OneSoft Corporation
/s/ FCH JWM
<PAGE>
Exhibit 10.21
OneSoft Corporation has omitted from this Exhibit 10.21 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
ONESOFT MANAGED APPLICATION AND SERVICES AGREEMENT *******
THIS AGREEMENT is entered into as of June 18, 1999 by and between OneSoft
Corporation ("ONESOFT"), a Delaware Corporation having an office at 7010 Little
River Turnpike Suite 460, Annandale, Virginia 22003, and SMARTCRUISER, LLC,
("CLIENT") having an office at 1717 N. Congress Ave., Boynton Beach, Florida,
33426
The parties hereby agree as follows:
ONESOFT STANDARD LICENSE AND SERVICES TERMS AND CONDITIONS
- --------------------------------------------------------------------------------
1. DEFINITIONS
(a) This "Agreement" means this document entitled OneSoft Managed Application
and Services Agreement together with each Product Addendum, Scope of Work,
Change Order, or Schedule, attached hereto and/or thereto, collectively (and
each Product Addendum, Scope of Work, Change Order, or Schedule attached hereto
or thereto, is hereby incorporated into this Agreement by reference and is made
a part of this Agreement as if fully set forth herein); and
(b) "Product Addendum" means a document attached hereto and signed by the CLIENT
and ONESOFT that identifies Software Product(s) licensed under this Agreement,
along with any additional terms and conditions for the licensing or management
thereof; and
(c) "Scope of Work" means a document attached hereto and signed by the CLIENT
and ONESOFT (including any Schedule(s) attached thereto) that identifies the
services to be provided under this Agreement, along with any additional terms
and conditions for the performance and/or management thereof; and
(d) "Change Order" means a document in either paper or electronic form (i.e.
email that can be reasonably dated, traced and/or otherwise identified) that
originates from an authorized representative of CLIENT (including any
Schedule(s) attached thereto), and is accepted by ONESOFT, authorizing
additional services or products under a Scope of Work and/or Product Addendum;
and
(e) "Schedule" means an attachment to this Agreement, Scope of Work, Product
Addendum, or Change Order and which provides additional or collateral
information for the document to which it is attached; and
(f) "Software Product" means the object code version of a ONESOFT software
product that is identified in an attached Product Addendum (including any
Schedule(s) attached thereto); and
(g) "Point of Contact" means a contact point, named with respect to ONESOFT or
CLIENT, in Paragraph 30 or in a Product Addendum, Scope of Work or Change Order;
and
(h) "Server" means, if with respect to a Software Product licensed for use on a
server furnished and operated by ONESOFT, then a server furnished and operated
by ONESOFT under this Agreement and described in a related Product Addendum,
Scope of Work, Change Order, or Schedule, or if with respect to a Software
Product licensed for use on a server furnished and operated by CLIENT then a
server used by the CLIENT that meets the requirements set forth in technical
documentation for a Software Product and that is installed at a location within
the United States; and
(i) "Site" means a World Wide Web site with one or multiple domain name(s)
mapped to one IP address and supported by a single instance of a database
schema; and
(j) "Processor" means a single Intel standard processor installed in a Server
that operates a Software Product; and
(k) "User" means a single individual accessing or using the Software Product;
and
(l) "Patch" means a one-time correction provided by ONESOFT to address a
reported problem in a Software Product; and
(m) "Letter Release" means a version of a Software Product that is generally
released by ONESOFT to its supported customers for that Software Product, and
which is identified by the addition of a letter to the previous Point Release
number (such as version 1.5A); and
(a) "Point Release" means a version of a supported Software Product that is
generally released by ONESOFT to its supported customers for that Software
Product, and which is identified by a decimal number change (such as 1.0 to
1.1); and
(o) "Version Release" means a version of a supported Software Product which is
identified by a number followed by a decimal point and a zero (0) (such as
version 2.0) for which ONESOFT may charge a separate license fee to its
supported customers; and.
(p) "Upgrade" means an upgrade to a new Software Product Release which contains
one or more significant new major features for which ONESOFT may charge a
separate license fee to its supported customers; and
(q) "Workaround" means a procedure to avoid a reported problem in a Software
Product; and
(r) "Support Materials" means anything delivered by ONESOFT to CLIENT under its
Software Maintenance Services, including, but not limited to, any Patches,
Workarounds, Letter Releases, Point Releases, and any related documentation; and
(s) "Software Maintenance Services" means, (i) when used in connection with a
Software Product license, other than a Managed Application license, maintenance
consisting
Confidential Information 1
<PAGE>
of the shipment to CLIENT of Patches, Workarounds, Letter Releases,
and Point Releases as generally released by ONESOFT for a Software Product; or
(ii) when used in connection with a Software Product Managed Application
license, maintenance consisting of the delivery to CLIENT of Patches,
Workarounds, Letter Releases, and Point Releases as generally released by
ONESOFT for a Software Product.
(t) "Services" (to the extent provided for under a Scope of Work or Change Order
attached hereto) shall mean and include, without limitation, professional
service bureau tasks, managed application services, co- location services,
customer support services, transaction processing services, or other services as
set forth in such Scope of Work or Change Order.
2. LICENSE GRANT
(a) Subject to the terms and conditions of this Agreement, ONESOFT grants to
CLIENT, and CLIENT accepts, a non-exclusive limited nontransferable license to
use, in the United States only, each Software Product identified in a Product
Addendum, in accordance with the provisions thereof, which Product Addendum is
incorporated herein by reference.
(b) CLIENT acknowledges receiving, and agrees to comply with, all the terms and
conditions of third party software sublicenses that apply to CLIENT's use of
ONESOFT's Software Products.
(c) The CLIENT agrees that it shall not:
(i) Copy any Software Product for any purpose other than for archival or
emergency restart purposes or program error verification; and/or
(ii) Sublicense, rent or otherwise make a Software Product available to any
third party for a fee or otherwise whether in a service bureau environment
or otherwise; or
(iii) Reverse engineer, decompile, disassemble, or modify a Software
Product or separate a Software Product into components or its component
files, recreate, or attempt to determine the makeup of any Software
Product.
3. DELIVERY
ONESOFT shall deliver to CLIENT a copy of each Software Product for which a
license is granted under this Agreement, in an electronic medium or by direct
loading onto a designated Server over the Internet.
4. SOFTWARE PRODUCT RELATED FEES
(a) CLIENT agrees to pay to ONESOFT, in accordance with the provisions of this
Agreement, and each Product Addendum, the applicable license fees, maintenance
fees, and other applicable fees related to the Software Products.
(b) All license fees, maintenance fees and other applicable fees for a perpetual
license are due upon the execution of the requisite Product Addendum.
(c) CLIENT must pay the ***** and ****** of all Recurring Monthly Managed
Application Services fees upon the execution of the requisite Product Addendum.
5. LICENSE TERM
(a) Each license granted with respect to a Software Product under this Agreement
shall continue in full force and effect for the term specified in the related
Product Addendum, unless earlier terminated in accordance with this Agreement or
the Product Addendum.
(b) Software Maintenance Services obligations of ONESOFT shall terminate to the
extent that related Software Product license has terminated.
6. SOFTWARE PRODUCT MAINTENANCE
(a) Subject to the terms and conditions of this Agreement, ONESOFT will provide
Software Maintenance Services to CLIENT for each Software Product for so long as
CLIENT has timely satisfied all payment obligations for Software Maintenance
Services Fees as defined in and set forth in the applicable Product Addendum.
ONESOFT shall have no obligation to provide Software Maintenance Services,
however, unless the installed Software Product is the then-current Version
Release and is utilized on a Server of a type supported by ONESOFT.
(b) If CLIENT, at the time ONESOFT releases a Version Release or an Upgrade to a
Software Product, is then-currently entitled to Software Maintenance Services
under this Agreement, then upon payment of any applicable fee set by ONESOFT for
such Version Release or Upgrade, ONESOFT shall provide such Version Release or
Upgrade to CLIENT to replace CLIENT's then-installed version of the Software
Product.
(c) CLIENT agrees that if a Software Product is installed on a Server not
furnished and operated by ONESOFT, then CLIENT will install and maintain the
equipment and Software Product as required by ONESOFT to permit Software
Maintenance Services to be delivered electronically with respect to such
Software Product.
(d) ONESOFT shall have no obligation under this Agreement to furnish maintenance
and/or support for a Software Product except as expressly provided herein, or
under an applicable Product Addendum.
7. SERVICES RETENTION AND TERMINATION
(a) To the extent provided under a Scope of Work or Change Order, CLIENT hereby
retains ONESOFT to provide certain services in accordance with the provisions of
this Agreement and such Scope of Work or Change Order ("Services"). Services may
include, without limitation professional service bureau tasks, managed
application services, co-location services, customer technical support services,
transaction processing services, or other services as set forth in such Scope of
Work or Change Order.
(b) ONESOFT agrees to use commercially reasonable efforts to perform such
Services.
(c) Except as otherwise provided herein or therein, either party may terminate a
Scope of Work or Change Order at any time with or without cause by giving
******** days prior written notice to the other party; provided, however, that,
in any event, ONESOFT shall be paid in full for all services it performs before
or during such **** day period.
(d) With respect to Services under a Scope of Work for Managed Application
Services that relates to a Product Addendum for a month-to-month Software
Product license, such Services shall continue (and shall not be subject to the
provisions of Subparagraph (c)), unless terminated in accordance with the
provisions of this Agreement, in full force and effect for a period of ********
months from the Commencement Date (as defined in the applicable Scope of Work),
and shall be renewed automatically for successive one-year periods unless a
party notifies the other party of its intention to not renew at least *********
days before the end of the then-current period, in which event, the Scope of
Work and/or Product Addendum for such Services shall terminate at the end of
such period. Any early termination, for any reason, of any Scope of Work,
Product Addendum, or Change Order of this Agreement shall not relieve CLIENT of
its payment obligations under this Subparagraph (d) except as provided in
Subparagraph (f).
(e) With respect to Services under a Scope of Work for Co-Location Services,
such Services shall continue (and shall not be subject to the provisions of
Subparagraph (c)),
Confidential Information 2
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unless terminated in accordance with the provisions of this Agreement, in full
force and effect for a period of ******* months from the Commencement Date (as
defined in the applicable Scope of Work), and shall be renewed automatically for
successive one-year periods unless a party notifies the other party of its
intention to not renew at least ******* days before the end of the then-current
period, in which event, the Scope of Work for such Services shall terminate at
the end of such period. Any early termination, for any reason, of any Scope of
Work and/or Change Order of this Agreement shall not relieve CLIENT of its
payment obligations under this Subparagraph (d) except as provided in
Subparagraph (f).
(f) CLIENT may request an early termination of a Managed Application Service or
Co-Location Scope of Work or Product Addendum with the provision for a dedicated
Server package, or with a provision for a shared Server package, for its
convenience; provided, however, that CLIENT shall be obligated to pay a fee for
such termination in an amount equal to ***************, but for the termination,
during the ***********after the date of termination.
8. SERVICES FEES AND GENERAL PAYMENT TERMS
(a) CLIENT agrees to pay ONESOFT in accordance with the provisions of this
Paragraph 8. Except as otherwise provided in a Scope of Work, Change Order, or
Schedule, CLIENT shall pay ONESOFT its published rates for services. Such rates
are subject to change upon ******** days notice to CLIENT.
(b) Except as otherwise provided in a Scope of Work, Change Order, or Schedule,
CLIENT shall pay ONESOFT a deposit of ******** percent (***%) of all
Professional Services fees identified in a Quotation/Estimate before
commencement of work by ONESOFT; the remaining balance to be billed for as
incurred. The deposit to be refundable if the amount exceeds work performed
under the requisite Scope of Work, Change Order, or Schedule.(b)
(c) CLIENT shall be responsible for and shall pay (and agrees to indemnify and
hold ONESOFT harmless from) all sales, use, gross receipts, value-added, GST,
data processing excise, personal property or similar taxes or duties (including
interest and penalties imposed thereon), which are levied or imposed by reason
of the Software Products, Services and other deliverables provided hereunder;
provided, however, that CLIENT shall not be responsible for paying any taxes
imposed on the net income or profits of ONESOFT.
(d) ONESOFT shall invoice CLIENT for payments due under this Paragraph 8 on a
monthly basis. Each ONESOFT invoice shall be due net ********* days from the
date of invoice. CLIENT acknowledges and agrees that under the terms of this
Agreement, no CLIENT Purchase Order ("PO") is required for the payment of
ONESOFT invoices by CLIENT. In the event that a PO is required by the CLIENT for
its internal processes, CLIENT shall issue such PO in a timely manner such that
ONESOFT invoices may be issued and paid in accordance with the provisions of
this Paragraph 8 and any failure by CLIENT to do so shall not excuse CLIENT from
its obligations under this Paragraph 8.
(e) CLIENT shall pay in full any travel expenses incurred by ONESOFT that result
from providing service to CLIENT under this Agreement in geographical locations
other than Annandale, VA.
(f) CLIENT shall advise ONESOFT of any dispute regarding an invoice within
********* days of the date of invoice but shall nevertheless pay all charges.
Any disputed item shall be reconciled, if necessary, promptly upon settlement of
the dispute. If CLIENT fails to notify ONESOFT of any dispute with respect to an
invoice within ****** days of receipt, CLIENT shall be deemed to have
accepted the invoice in its entirety. CLIENT shall not have any right to
withhold or setoff any amounts due hereunder.
(g) Notwithstanding any other provision of this Agreement, if CLIENT fails to
pay any ONESOFT invoice by the due date, ONESOFT may, in its sole discretion,
suspend all or any part of its Services to CLIENT until payment is received or,
upon notice to CLIENT, terminate Services under this Agreement. ONESOFT shall
incur no liability to CLIENT if ONESOFT so suspends or terminates its Services.
ONESOFT also reserves the right to charge interest at the maximum rate allowed
by law on all amounts past due, and to assert appropriate liens to ensure
payment.
(h) In the event that either party retains the services of attorneys or other
persons to enforce its rights under this Agreement, including for the recovery
of any sum due under this Agreement, or to defend any claim made by the other
party, then all costs and expenses, including reasonable attorney's fees,
incurred by the prevailing party of such an action, shall be paid by the
non-prevailing party, whether or not the action, if any, is prosecuted to
judgment. If an action is prosecuted to judgment, the prevailing party shall
also be entitled to recover attorney's fees and costs incurred in enforcing the
judgment. Unless the parties mutually agree otherwise, the prevailing party
shall be determined by the tribunal that presides over the action and such
determination shall be final and binding on the parties.
9. CONFIDENTIAL INFORMATION
(a) Each party hereby acknowledges that it may receive confidential information
of the other party including, without limitation, software, computer programs,
object code, source code, database schemas, specifications, flow charts,
marketing plans, financial information, business plans and procedures, the terms
of this Agreement, ONESOFT's Client Guide, Software Products, employee
information, and other confidential information (hereinafter referred to as
"Confidential Information"). Confidential Information does not include (i)
information independently developed by the recipient without reference to the
other party's Confidential Information; (ii) information in the public domain
through no wrongful act of the recipient, or (iii) information received by the
recipient from a third party who was rightfully in possession of such
information and had no obligation to refrain from disclosing it.
(b) Except as expressly authorized herein or as required by law, the recipient
of Confidential Information agrees that during the term hereof, and at all times
thereafter, it shall not use, commercialize or disclose such Confidential
Information to any person or entity, except to its own employees having a need
to know and to such other recipients as the other party may approve in writing.
Each party shall use at least the same degree of care in safeguarding the other
party's Confidential Information as it uses in safeguarding its own Confidential
Information, but in no event shall less than reasonable diligence and care be
exercised.
(c) All Confidential Information supplied by ONESOFT to CLIENT pursuant to this
Agreement shall remain the exclusive property of ONESOFT.
(d) CLIENT agrees that it will not remove any proprietary, trademark, copyright,
confidentiality, patent or other intellectual property notice or marking from
any Software
Confidential Information 3
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Product, documentation, display, media or other materials delivered under this
Agreement, or any copies thereof.
(e) CLIENT agrees that it will not violate any proprietary rights in the
Software Products and shall not reverse engineer, decompile, disassemble, or
modify a Software Product or separate a Software Product into components or its
component files, recreate, or attempt to determine the makeup of any Software
Product. CLIENT agrees that any information discovered thereby shall be deemed
ONESOFT's Confidential Information.
(f) CLIENT shall keep Software Products in its possession strictly confidential
and protected.
(g) CLIENT shall not use or reproduce the Software Products, or any
documentation or media or other materials associated therewith, except as
permitted by the terms of this Agreement.
(h) In the event that a party is required by law or judicial or administrative
process to disclose Confidential Information, such party shall, insofar as
practicable, promptly notify the party whose Confidential Information is
required to be disclosed and allow the party a reasonable opportunity to oppose
disclosure.
10. OWNERSHIP AND OTHER PROPRIETARY RIGHTS
(a) Except as otherwise expressly provided in this Paragraph 10, "Software,"
"Tools," and "Objects" (as such terms are defined in this Paragraph 10),
including all originals and all copies thereof regardless of form, are and shall
remain the sole and exclusive property of ONESOFT and shall be deemed its
Confidential Information.
(b) Except as expressly provided in this Agreement, CLIENT does not acquire any
right or license in ONESOFT's Software, Tools or Objects. (b)
(c) "Tools" means ONESOFT's proprietary information and know-how used at any
time by ONESOFT in the conduct of its business, including without limitation,
technical information, designs, templates, software modules, processes,
methodologies, systems used to create computer programs or software, procedures,
code books, computer programs, plans, or any other similar information including
improvements, modifications or developments thereto.
(d) "Objects" means ONESOFT's proprietary reusable software code.
(e) "Software" means any and all of ONESOFT's proprietary software code.
(f) Each party understands and agrees that any use or disclosure of any
information or materials in violation of this Paragraph 10 will cause the other
party irreparable harm, will leave such party with no adequate remedy at law,
and will entitle such party to injunctive relief in addition to all other
remedies available. A party that violates its obligations hereunder, shall
reimburse the other party for reasonable costs and expenses incurred in
enforcing its rights with respect to such violation.
(g) CLIENT shall have a non-exclusive license to use, for internal purposes only
and not on a service bureau basis (and to modify for such use), any custom
application originally developed for CLIENT under this Agreement, as an
integrated product, for so long as CLIENT has a license to use any Software
Products, Software, Tools and/or Objects necessary to operate the custom
application; provided, however, that CLIENT may not unbundle from the custom
application any Software, Software Products, Tools and/or Objects, apart from
their use as an integral part of the custom application.
(h) Except as expressly set forth in this Agreement, this Paragraph 10 does not
constitute a license to use Software, Software Products, Tools and Objects,
which CLIENT must separately license from ONESOFT as necessary to use any custom
application.
(i) Nothing in this Agreement shall be deemed to limit ONESOFT's rights to
develop and market functionally comparable products or deliverables based on the
same general concepts, techniques and routines used in connection with any
custom application.
(j) CLIENT acknowledges and agrees that, unless otherwise specified in any Scope
of Work, Product Addendum, and/or Schedules attached hereto, ONESOFT maintains
the ownership of all hardware and software upon which, and from which, all
ONESOFT Managed Application Services are provided hereunder.
(k) CLIENT warrants that all Data (as defined) delivered to ONESOFT by CLIENT
does not, and shall not, infringe or violate any copyright, trademark, trade
secret, patent or other intellectual property right, and that CLIENT has the
right to use, disclose, publish, translate, reproduce, or deliver any such Data.
CLIENT agrees to indemnify and hold harmless ONESOFT, its directors, officers,
employees and agents, against any and all losses, liabilities, judgments, awards
and costs (including reasonable legal fees and expenses), arising out of or
related to any claim that Data infringes or violates a copyright, trademark,
trade secret, patent or other intellectual property right.
(l) "Data" as used in this Paragraph 10 mean any data, software or other
information including, but not limited to, writings, designs, specifications,
reproductions, pictures, drawings, or other graphical representations, and any
works of a similar nature.
(m) With respect to any software, data, content or other materials supplied by
CLIENT, ONESOFT is hereby granted the nonexclusive irrevocable right and license
to use the same for use in providing the Services. CLIENT represents and
warrants to ONESOFT that utilization of any software, data, content or other
materials supplied by CLIENT in the manner contemplated by the terms of the
Agreement, and the Scope(s) of Work, will not infringe or misappropriate any
copyright, trademark, patent, trade secret or other intellectual property right
of any third person. CLIENT represents and warrants to ONESOFT that the use of
any software provided by the CLIENT for ONESOFT to manage under this Agreement
or Scope(s) of Work, when used as contemplated by the terms of this Agreement or
the Scope(s) of Work, will not infringe or misappropriate any copyright,
trademark, patent, trade secret or other intellectual property right of any
third person.
(n) All software modifications (whether or not specially ordered by CLIENT)
developed by ONESOFT, any discoveries made, improvements, modifications,
adaptations, or developments by ONESOFT (whether or not at CLIENT's request
pursuant to this Agreement or any other agreement between the parties), are and
shall remain, the exclusive property of ONESOFT, unless otherwise provided under
such other agreement, signed by both parties.
(o) Unless otherwise agreed in writing, nothing in this Agreement shall be
deemed to authorize the CLIENT to use any copyright, name, trademark, service
mark, or patent of ONESOFT.
11. PUBLIC RELATIONS
(a) ONESOFT shall have the right to release a selection announcement to the
public. CLIENT shall provide a supporting quote and shall have right to review
final release.
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(b) ONESOFT shall have the right to disclose its relationship with the CLIENT in
ONESOFT's promotional, advertising, and marketing materials.
(c) ONESOFT shall have the right to use CLIENT graphics, logos, imagery, and its
URL in ONESOFT's promotional, advertising, and marketing materials.
(d) CLIENT agrees to serve as a reference for potential press, analyst and
prospective customers when approached to do so by ONESOFT.
(e) ONESOFT reserves the right to provide CLIENT with ownership graphics and any
associated hypertext links, that shall be placed on the Web pages resulting from
the selection of a registered domain name URL or Web page that displays
functionality of a Software Product, subject to CLIENT's approval which shall
not be unreasonably withheld or delayed.
12. MARKS AND PATENTS
(a) CLIENT acknowledges that "OneSoft(TM)" and all other Software Product names
are or include trademarks, and/or service marks, and are the intellectual
property of the ONESOFT. Unless otherwise agreed in writing, nothing herein
shall be deemed to authorize the CLIENT to use any pending and/or existing name,
trademark and/or service mark of ONESOFT.
(b) CLIENT acknowledges that any underlying technology, know-how, or process
used in the design, development, programming, or coding of ONESOFT's Software,
Software Products, Tools, or Objects, is the intellectual property of ONESOFT,
and certain of the same are protected by Patents or Patents Pending.
13. LIMITATIONS ON WARRANTIES AND LIABILITY
(a) ONESOFT warrants only that each Software Product, at the time of initial
delivery to CLIENT pursuant to a Product Addendum, is capable of performing
substantially the functions described in ONESOFT's published technical
documentation at such time for such Software Product, or any product description
that accompanies a Product Addendum; provided, however, that each Software
Product is otherwise accepted by CLIENT "as is." ONESOFT does not warrant that
the operation of any Software Product will be uninterrupted or error free.
(b) ONESOFT warrants that each Software Product shall not, at the time of
execution of a Product Addendum infringe any valid United States Copyright,
United States Patent or United States Trademark. In the event such warranty is
breached, ONESOFT agrees to defend any and all actions alleging any such
infringement that may be brought against CLIENT during the term of this
Agreement, and to pay all damages and costs finally awarded against CLIENT in
such actions or suits on account of such infringement provided that:
(i) ONESOFT shall have received from CLIENT prompt notice of the
commencement of any such action;
(ii) CLIENT, and where applicable, those for whom CLIENT is in law
responsible, shall cooperate fully with ONESOFT in defense of the action;
(iii) The action shall not have resulted from the use of any Software
Product for purposes other than those for which it was authorized and
designed, or the use of any Software Product in combination with software
or other products not supplied by ONESOFT, or where the infringement would
have been avoided by use of the then current version of any of the Software
Products;
(iv) ONESOFT in its sole discretion instead of defending such action may
procure for CLIENT the right to continue the use of the Software Products
subject to such action or it may replace or modify such Software Products
so to become non-infringing or it may refund a portion of the license fees
for such Software Products as reduced based upon a five year straight line
amortization of such fees.
(c) A medium on which a Software Product is furnished is warranted to be free of
defects in materials and workmanship under normal use for a period of ******
days from the date of delivery of the Software Product.
(d) ONESOFT warrants that its Software is designed to be used in connection with
dates in the range of **** through **** and that the Software will operate
during each such time period without error relating to date data; provided,
however, that this warranty does not apply to any of ONESOFT's Software Products
used in combination with software or other products not supplied by ONESOFT.
(e) EXCLUSIVE REMEDIES:
(i) IF CLIENT NOTIFIES ONESOFT IN WRITING, WITHIN ******** DAYS OF THE
EFFECTIVE DATE OF THE PRODUCT ADDENDUM(S) IDENTIFYING A SOFTWARE PRODUCT OF
ANY ERROR OR FAILURE OF SUCH SOFTWARE PRODUCT COVERED BY THE EXPRESS
WARRANTIES IN SUBPARAGRAPHS (A) OR (C) OR (D), ONESOFT SHALL USE REASONABLE
EFFORTS TO PROMPTLY CORRECT ANY SUCH ERROR OR FAILURE.
(II) THE REMEDIES IN SUBPARAGRAPHS 13 (b) AND (e)(i) ABOVE, ARE THE
CLIENT'S SOLE AND EXCLUSIVE REMEDIES FOR ANY EXPRESS OR IMPLIED WARRANTIES
RELATED TO ANY SOFTWARE PRODUCT AND MAINTENANCE AND SUPPORT THEREOF. THE
WARRANTIES AND LIMITATIONS SET FORTH IN THIS PARAGRAPH 13 CONSTITUTE THE
ONLY WARRANTIES OF ONESOFT WITH RESPECT TO ANY SOFTWARE PRODUCT OR ITS
SUPPORT OR MAINTENANCE. SUCH WARRANTIES ARE IN LIEU OF, AND ONESOFT HEREBY
DISCLAIMS, ALL OTHER WARRANTIES, STATUTORY OR OTHERWISE, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE REMEDIES OF CLIENT
SHALL BE LIMITED TO THOSE PROVIDED IN THIS PARAGRAPH 13 TO THE EXCLUSION OF
ANY AND ALL OTHER REMEDIES, INCLUDING, WITHOUT LIMITATION, INCIDENTAL,
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR DAMAGES FOR LOST PROFITS,
WHETHER ANY CLAIM IS BASED UPON ANY AGREEMENT, NEGLIGENCE, WARRANTY, STRICT
LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY.. NO AGREEMENTS VARYING OR
EXTENDING THE FOREGOING WARRANTIES, REMEDIES OR LIMITATIONS WILL BE BINDING
ON ONESOFT UNLESS IN WRITING AND SIGNED BY A DULY AUTHORIZED OFFICER OF
ONESOFT.
(iii) ONESOFT MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE
SERVICES RENDERED OR THE RESULTS OBTAINED FROM ONESOFT'S WORK, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. IN NO EVENT SHALL ONESOFT OR ITS SUPPLIERS BE LIABLE
FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING WITHOUT LIMITATION LOST PROFIT), WITH RESPECT TO SERVICES, EVEN
IF ADVISED OF THE POSSIBILITY THEREOF, WHETHER ANY CLAIM IS BASED UPON ANY
AGREEMENT, NEGLIGENCE, WARRANTY, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY. ONESOFT'S TOTAL LIABILITY IN CONNECTION WITH SERVICES
UNDER THIS AGREEMENT SHALL BE LIMITED TO THE LESSER OF THE AGGREGATE FEES
FOR SERVICES RECEIVED BY ONESOFT FROM CLIENT HEREUNDER DURING THE THREE (3)
CALENDAR MONTHS PRECEDING THE TIME CLIENT'S CLAIM AROSE, OR WITH RESPECT TO
THE SPECIFIC SCOPE OF WORK UNDER WHICH THE CLAIM AROSE DURING THE TWELVE
(12) CALENDAR MONTHS PRECEDING THE TIME CLIENT'S
Confidential Information 5
<PAGE>
CLAIM AROSE, ALL NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSES OF ANY
LIMITED REMEDY.
14. AUDIT
(a) CLIENT agrees to maintain complete and accurate records containing all data
reasonably required for verification of its compliance with the terms of this
Agreement. ONESOFT, or its authorized representative, shall have the right,
during normal business hours, and upon at least five business days prior notice,
to physically inspect any Server upon which any Software Product is installed,
and to audit and analyze the relevant records of the CLIENT, to verify
compliance with the terms of this Agreement.
(b) CLIENT also agrees to permit remote license auditing of its web site by
ONESOFT to verify CLIENT's compliance with the terms of this Agreement and the
licenses granted hereunder.
15. INDEMNIFICATION
(a) Indemnification by ONESOFT. Except to the extent ONESOFT has acted at
--------------------------
CLIENT's direction or in accordance with CLIENT's specifications, ONESOFT will
indemnify, defend and hold harmless CLIENT from all costs (including reasonable
attorneys' fees) arising from a third party claim against CLIENT based on an
actual or alleged:
(i) Breach of ONESOFT's representations and warranties; or
(ii) Acts or omissions constituting gross negligence or willful misconduct,
committed by ONESOFT,
(iii) Failure by ONESOFT to comply with governmental laws and regulations;
(iv) Infringement by ONESOFT of United States patents, United States
copyrights, United States trademarks, United States trade secrets and other
United States intellectual property rights.
(v) This Subparagraph (a) shall not apply to claims arising as a result of
CLIENT's improper use of ONESOFT's products or services or other
deliverables under this Agreement.
(b) Indemnification by CLIENT. CLIENT will indemnify, defend and hold harmless
-------------------------
ONESOFT from all costs (including reasonable attorneys' fees) arising from a
third party claim against ONESOFT based on an actual or alleged:
(i) Failure by the CLIENT to perform its obligations under this Agreement;
(ii) Breach of CLIENT's representations and warranties;
(iii) Acts or omissions constituting negligence or willful misconduct,
committed by CLIENT; or
(iv) Failure by CLIENT to comply with governmental laws and regulations; or
(v) Infringement by CLIENT (or any property or data provided by CLIENT) of
any patent, copyright, trademark trade secret or other intellectual
property right.
(c) Notice of Claim. If a claim covered under this Paragraph 15 appears likely
---------------
or is made, the party against whom the claim is made (hereinafter referred to as
the "Indemnitee") will promptly provide the other party (hereinafter referred to
as the "Indemnitor") with notice of such claim. If a claim for infringement is
made, ONESOFT may elect to avoid the infringement by:
(i) Obtaining the necessary rights for the Indemnitee to continue to use
the data or software at issue; or
(ii) Modifying the data or software at issue at its expense; or
(iii) Terminating this Agreement, and/or Product Addendum(s) and/or
licenses or Scope(s) of Work and/or Change Orders, and equitably adjusting
the charges to the extent of such termination(s).
16. INJUNCTIVE RELIEF
The parties acknowledge that monetary damages may not be an adequate remedy if a
party breaches its obligations under Paragraphs 2(b) & (c), 9, 10 or 12, since
such breach will result in irreparable harm. The parties therefore agree that,
in the event of any such breach, the non-breaching party shall be entitled to
appropriate mandatory or prohibitory injunctive relief against the breaching
party, in addition to any other remedies at law, in equity or under this
Agreement. A party substantially prevailing in an action for injunctive relief
in connection with this Agreement shall be entitled to recover its costs
(including without limitation reasonable attorneys' fees) from the other party.
17. TERMINATION
(a) Unless otherwise expressly provided for in this Agreement, either party may
terminate this Agreement or any Scope(s) of Work and/or Change Order(s) and/or
Product Addendum(s), and/or any related licenses granted hereunder or
thereunder, by giving the other party written notice to that effect, effective
on the date of receipt of such notice, if:
(i) The other party enters into liquidation, whether or not voluntarily, or
a receiver is appointed to all or any part of its assets, or the other
party becomes bankrupt or insolvent or enters into any arrangement with its
creditors, or takes or suffers any similar action in consequence of debt or
becomes unable to pay its debts as they fall due; or
(ii) The other party materially breaches this Agreement and fails to cure
such breach to the non-breaching party's satisfaction within ten (10) days
of having received written notice of such breach.
(b) ONESOFT may immediately terminate any part of this Agreement if CLIENT
materially breaches any of the provisions of Paragraphs 2(b) & (c), 4, 8, 9, 10,
or 12, of this Agreement.
(c) If a license granted by ONESOFT is terminated for any reason, CLIENT shall,
on the effective date of such termination, cease using any and all of the
subject matter of the license and CLIENT shall promptly deliver to ONESOFT all
copies of any and all of such subject matter and any related documentation, or
shall provide evidence, satisfactory to ONESOFT, that all such copies have been
destroyed.
18. FORCE MAJEURE AND ACTS OF GOD
A party shall be relieved from an obligation while a cause outside the
reasonable control of the party prevents the performance of such obligation.
19. RELATIONSHIP OF THE PARTIES; CONTENT
(a) Nothing in this Agreement shall be construed as making a party an agent of
the other party, and neither party shall have the power to bind the other party
or to contract in the name of, or create a liability against, the other party.
Neither party shall be responsible for the acts or defaults of the other party
or any of the other party's employees or agents. The parties are independent
contractors with respect to all matters arising under this Agreement. Nothing
in this Agreement shall be deemed to establish a partnership, joint venture,
association or employment relationship between the parties. With respect to its
employees, a party shall remain responsible, and shall indemnify and hold
harmless the other party, for the withholding and payment of all Federal, state
and local personal income, wage, earnings, occupation, social security, worker's
compensation, unemployment, sickness and disability insurance taxes, payroll
levies or employee benefit obligations
Confidential Information 6
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(b) If a Scope of Work permits CLIENT to re-sell ONESOFT Services to end-users
then the provisions of this Paragraph 19(b) shall apply to such Services,
however, the CLIENT acknowledges that the Scope of Work still governs the
relationship between ONESOFT and the CLIENT. CLIENT's relationship with any
end-user of the Services that may be distributed by CLIENT shall be governed
solely by an end-user Agreement (made available to ONESOFT upon request) that
provides at least the same protections to ONESOFT as this Agreement and the
Scope of Work provides. Any warranty provided by ONESOFT shall be solely for the
benefit of CLIENT. In no event shall any end-user of CLIENT services be
considered a third party beneficiary of any ONESOFT warranty. CLIENT shall
indemnify and hold ONESOFT harmless from any end- user claim. The CLIENT is
responsible for ensuring that third party end- users of the Services do not
impose unexpected workloads on the Services.
(c) The parties acknowledge that the Internet is neither owned nor controlled by
any one entity and that a third party may gain access to ONESOFT. Electronic
mail and other transmissions passing through ONESOFT or over the Internet are
not secure, and ONESOFT cannot guarantee the security or privacy or any of the
information or communications passing through ONESFOT. ONESOFT agrees to provide
commercially reasonable security consistent with its business practices and
facilities, including (without limitation) access control software,
identification protection, logon passwords and physical site security. In no
event however, will ONESOFT be liable for any loss or damage caused by a breach
of security by a third-party. ONESOFT will not intentionally monitor or disclose
any private electronic communications, except to the extent necessary to
identify or resolve system problems or as otherwise permitted or required by
law. ONESOFT does, however, reserve the right to monitor transmissions, other
than private electronic communications, as necessary to provide the Service and
otherwise to protect the rights and property of ONESOFT. Notwithstanding the
foregoing, ONESOFT does not assume any liability for any action or inaction with
respect to such communication or content posted or provided by an authorized or
unauthorized third party. ONESOFT is a distributor and not a publisher of
CLIENT's data or any other content provided by CLIENT or others (including end
users). Because communication of data and other content over the Internet occurs
in real time, ONESOFT cannot, and does not intend to, screen, police, edit, or
monitor communications and content. If ONESOFT is notified of any content that
allegedly violates its Client Guide, Email Authorized Use Policies, and/or is
otherwise unlawful, ONESOFT may investigate and remove or request the removal of
such content as it deems appropriate in good faith and in its sole discretion.
In no event will ONESOFT be liable for any loss or damage caused by a user's
reliance on any data or other content obtained through ONESOFT
20. FURTHER ASSURANCES
The parties agree to do all such things and to execute such further documents as
may reasonably be required to give full effect to this Agreement.
21. WAIVER
No waiver of any part of this Agreement shall be effective unless made in
writing by the waiving party. No waiver of any breach of this Agreement shall
constitute a waiver of any other breach of the same, or any other provision, of
this Agreement.
22. ENTIRE AGREEMENT AND CONSTRUCTION
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter hereof and the parties agree that there are no other
representations, warranties or oral agreements relating to the subject matter of
this Agreement. Headings are included in the Agreement for convenience only and
shall not affect the meaning or construction of this Agreement's provisions.
23. AMENDMENT
This Agreement may be modified or amended only by means of a writing executed by
both parties.
24. ASSIGNIBILITY AND RESALE
Rights under this Agreement shall not be assigned, sublicensed, encumbered by
security interest or otherwise transferred or resold by CLIENT (whether by
operation of law or otherwise) without the prior written consent of ONESOFT, and
any purported assignment, sublicense, encumbrance or other transfer of such
rights, in violation of this Agreement, shall be void. An amalgamation,
acquisition, or merger of CLIENT by or with any person or entity who is not a
party to this Agreement shall be treated as an assignment of this Agreement that
is subject to the provisions of the next preceding sentence. Notwithstanding
the foregoing, if a Scope of Work so provides, CLIENT may use the Services under
the Scope of Work in support of its internal business operations and may also
distribute such Services to unrelated third parties for their internal use (by
such third party organization's own personnel) and to ultimate end-users in the
public at large, subject to the terms, conditions and limitations of this
Agreement and such Scope of Work, and provided that CLIENT shall defend,
indemnify and hold ONESOFT harmless from all costs (including reasonable
attorneys' fees) arising from any claim by a third party user such Services. In
connection with any acquisition, merger, consolidation or sale of assets to or
with another entity, ONESOFT may assign this Agreement.
25. COMPLIANCE WITH LAWS
CLIENT shall carry out the obligations contemplated by this Agreement and shall
otherwise deal with the subject matter hereof in compliance with all applicable
laws, rules and regulations, of all governmental authorities, including, without
limitation, the Export Act and any other legal restrictions on exports, and
shall obtain all permits and licenses required in connection with the subject
matter hereof.
26. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of, and be binding upon the parties,
their successors and permitted assigns.
27. SEVERABILITY
If any provision, of this Agreement or a Product Addendum or Schedule or Scope
of Work or Change Order, is held to be unenforceable, all remaining provisions
thereof shall remain in full force and effect.
28. GENERAL PROVISIONS
(a) CLIENT shall not directly or indirectly solicit or offer employment to, or
directly or indirectly accept services by an employee or contractor of ONESOFT,
during the term of this Agreement and for two (2) years thereafter, without
consent of ONESOFT. For purposes of this Agreement, use of general employment
advertising and independent employment agencies, if not directed at ONESOFT
employees, shall not constitute solicitation.
(b) Each party (i) agrees to inform the other party of any information made
available to such other party that is classified or restricted data, (ii) if
given such information agrees to comply with the security requirements imposed
by any state or local government, or by the United States Government, and (iii)
if given such information agrees
Confidential Information 7
<PAGE>
return all copies of such information upon request.
(c) Each party warrants and represents that its participation in this Agreement
does not conflict with any contractual or other obligation of the party or
create any conflict of interest prohibited by the U.S. Government or any other
governmental authority, and shall promptly notify the other party if any such
conflict arises during the term of this Agreement.
(d) Each party shall maintain commercially reasonable and adequate insurance
protection covering its respective activities hereunder, including coverage for
statutory worker's compensation, comprehensive general liability for bodily
injury and tangible property damage, as well as adequate coverage for vehicles.
Each party shall indemnify and hold the other harmless from liability for bodily
injury, death and tangible property damage resulting from the acts or omissions
of such party, its officers, agents, employees or representatives acting within
the scope of their work. (e) Paragraphs 1, 2(b) 2(c), 4, 9, 10, and 12 through
30 shall survive any termination of this Agreement.
29. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE COMMONWEALTH OF VIRGINIA, EXCLUDING ITS CHOICE OF LAW
RULES. ANY PROCEEDING OR DISPUTE RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, SHALL BE INITIATED AND MAINTAINED IN COURTS LOCATED IN SUCH
COMMONWEALTH.
Confidential Information 8
<PAGE>
30. NOTICES
(a) Any notice or other communication to the parties shall be sent to the
contact points identified below or at such other places as they may from time to
time specify by notice in writing to the other party. Any such notice or other
communication shall be in writing and shall be given by delivery to the
designated party of the addressee by pre-paid courier or facsimile with receipt
acknowledgment. Any such notice or other communication shall be deemed to have
been given when the designated party of the addressee receives such notice.
(b) Point of Contact addresses are as follows:
For ONESOFT: (Technical) For CLIENT: (Technical )
Jeffrey M. MacIntyre
OneSoft Corporation ------------------------------------
7010 Little River Turnpike, Suite 460 ------------------------------------
Annandale, VA 22003-9998 ------------------------------------
Telephone: (703) 916-7448
For ONESOFT: (Contractual and Admin.) For CLIENT: (Contractual and Admin)
Paul D. Economon, Esq.
OneSoft Corporation ------------------------------------
7010 Little River Turnpike, Suite 460 ------------------------------------
Annandale, VA 22003-9998 ------------------------------------
Telephone: (703) 916-7448
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
OneSoft Corporation SMARTCRUISER, LLC
By: /s/ Richard Borenstein By: /s/ Lee Smolinski
--------------------------- ---------------------------
Name: Richard Borenstein Name: Lee Smolinski
--------------------------- ---------------------------
Title: Senior Vice President Title: President
--------------------------- ---------------------------
Confidential Information 9
<PAGE>
OneSoft Corporation SmartCruiser, LLC
PRODUCT ADDENDUM # **********
- ----------------
THIS PRODUCT ADDENDUM relates to OneSoft Managed Application and Services
Agreement Number: *********** (hereinafter "Agreement") as of June 18, 1999,
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement.
Each Software Product identified in the Quotation/Estimate in the attached
Schedule(s) A shall, upon execution of this Product Addendum, and subject to the
provisions of this Product Addendum and the Agreement, be deemed a Software
Product for purposes of the Agreement, for the term specified in the attached
Schedule(s), but in any event only for so long as: (a)(i) all related Recurring
Monthly Managed Application, Software Maintenance and Support Services (as
defined below) fees are and have been timely paid by CLIENT with respect to such
Software Product or (ii) the license for the Software Product is a perpetual
license; and (b) each limitation on the number of Processors, Servers, Sites,
Seats, Users and/or other limitations identified in the attached Schedule(s), if
any for each such Software Product, is and has been complied with by CLIENT with
respect to such Software Product. ONESOFT shall in no event have any obligation
to provide Software Maintenance or Support Services with respect to a Software
Product unless the installed Software Product is the then current Release.
Subject to the provisions of the Agreement and this Product Addendum, if a
license identified in Schedule A is designated as "perpetual" then such license
shall continue indefinitely unless terminated pursuant to the Agreement or this
Product Addendum.
Under this Product Addendum, CLIENT is receiving a license only for use with the
unit(s) of measure specified for each Software Product, and only for use on a
Server operated by ONESOFT, CLIENT, or CLIENT's designee inside the continental
United States. The Initial License fees (including the first year of Software
Maintenance and Installation fees), are listed for each Software Product on
Schedule A. For those Software Products that are to be managed on a Server
operated by ONESOFT, the monthly Managed Application and any additional Software
Maintenance and Support Services fees associated with each Software Product are
also listed on Schedule A. As long as all applicable fees are and have been
timely paid by CLIENT for each Software Product listed on Schedule A, ONESOFT
shall supply Software Maintenance and Support Services for the Software
Product(s) pursuant to the Agreement.
If the Software Products are not used on a Server operated by ONESOFT on a
Managed Application basis then Software Maintenance and Support Services fees
for any Renewal Support Year (defined as each yearly period beginning with the
first anniversary of the effective date of this Product Addendum), shall be
billed to the CLIENT at the rate of ***% of then-current ******** license fee
for each Software Product. If fees for Software Maintenance and Support Services
are not timely paid for a Renewal Support Year, Maintenance and Support Services
shall lapse and may only be re-instated if CLIENT pays all unpaid fees for each
Renewal Support Year (whether or not services were received) since the effective
date of this Product Addendum together with an additional fee equal to *******
(***%) percent of such unpaid fees.
For a Software Product licensed on a month-to-month basis, upon completion of
the related Managed Application term, the CLIENT has the option to purchase a
perpetual, non-exclusive object code license of such Software Product for a
discounted fee of ***% of the ********** for each Software Product.
Error Correction and Telephone Support Services Provisions
ONESOFT shall provide a 24/7 toll free support number monitored by a
ONESOFT employee, to handle all customer inquiries. ONESOFT shall use reasonable
commercial efforts to correct or provide a usable work-around solution for any
reproducible material error in the Software Product(s) within a reasonable
period of time. Additionally, ONESOFT shall use reasonable commercial efforts to
provide technical support for its managed hardware that mechanically
malfunctions. ONESOFT agrees, if feasible, to the following response times when
such an error or malfunction is detected: 1) for Severe situations (those in
which the Customer is unable to conduct its normal Internet business
operations), *****************; 2) for Moderate situations (those in which the
Customer's System is substantially operational but requires a patch, workaround
or bug fix), **************; and 3) for Minor situations (those in which the
error or malfunction is merely an annoyance), **************.
ONESOFT shall, during the hours of 8:00 a.m. to 8:00 p.m. in ONESOFT's home
office time zone on weekdays (exclusive of
1
<PAGE>
OneSoft Corporation SmartCruiser, LLC
holidays), make reasonable knowledge base telephone support available to
CLIENT's Point of Contact identified in the Agreement, a Scope of Work, and/or
this Product Addendum, and other personnel of CLIENT who have been trained in
the use of the Software Product(s). ONESOFT reserves the right to require CLIENT
to reimburse ONESOFT for long distance telephone charges incurred by ONESOFT in
the provision of telephone support and for expenses associated with determining
if technical support was reasonably required by CLIENT.
If ONESOFT, in its discretion, requests written verification of an error or
malfunction discovered by CLIENT, CLIENT shall promptly provide such
verification, by email, facsimile, or overnight mail, setting forth in
reasonable detail the respects in which the Software Product(s) fail to perform.
An error or malfunction shall be "material" if it represents a nonconformity
with ONESOFT's current published specifications for the Software Product(s) that
interferes with the usability of the Software Product(s). ONESOFT is not
obligated to fix errors that are not material. If applicable to a perpetual
license, and upon request, CLIENT shall provide ONESOFT remote access to
CLIENT's Server for the purpose of remote diagnostics.
If applicable to a perpetual license, CLIENT will install the equipment and
software as required by ONESOFT to permit any of the Software Maintenance and
Support Services to be delivered electronically.
CLIENT shall pay ONESOFT at ONESOFT'S then current time and material rates
for work of ONESOFT spent investigating an error or malfunction that ONESOFT
reasonably determines to have been caused by a modification to the Software
Product(s) not made nor authorized in writing by ONESOFT.
IN WITNESS WHEREOF, the parties have executed this Product Addendum effective as
of the date first written above.
OneSoft Corporation SmartCruiser, LLC
By: /s/ Richard Borenstein By: /s/ Lee Smolinski
---------------------- -----------------
Name: Richard Borenstein
---------------------- Name: Lee Smolinski
-----------------
Title: Senior Vice President
---------------------- Title: President
-----------------
2
<PAGE>
OneSoft Corporation SmartCruiser, LLC
SCHEDULE A
PRODUCT LISTING AND PRICING
**************
3
<PAGE>
OneSoft Corporation has omitted from this Exhibit 10.22 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
EXHIBIT 10.22
NON-BINDING LETTER OF INTENT
THIS NON-BINDING LETTER OF INTENT (this "LOI") is made and entered into as of
April 16, 1999 (the "Effective Date"), by and between OneSoft Corporation, a
Delaware corporation ("OneSoft") and Microsoft Corporation, a Washington
corporation ("Microsoft"):
1. Background and Representations. OneSoft and Microsoft and their respective
------------------------------
successors and assigns, are sometimes individually referred to herein as a
"Party" or collectively referred to herein as the "Parties."
1.1. OneSoft and Microsoft and their respective successors and assigns, are
sometimes individually referred to herein as a "Party" or collectively
referred to herein as the "Parties." The Parties represent that:
1.2. Microsoft Corporation is the leader in the development and marketing
of software products and solutions, and is bringing to market a wide
range of products, services and programs to support the development
and deployment of Internet commerce solutions.
1.3. OneSoft Corporation is a leader in the development and marketing of
Internet commerce software products and solutions. OneSoft's products
and solutions leverage the operating system, application server,
development tools, and application software developed and marketed by
Microsoft Corporation.
1.4. OneSoft Corporation and Microsoft Corporation understand that it is in
their mutual interest to form a strategic alliance in the marketing,
development, distribution and support of products and solutions that
system integrators, consultancies, application service providers, and
other service companies ("the channel") can use to support end
customers.
1.5. OneSoft's products and solutions supplement and are complementary with
those provided by Microsoft. Together, Microsoft and OneSoft are
competing against
<PAGE>
products and solutions provided by other vendors in the marketplace;
the parties have no intention of competing against each other, and
have so stated.
1.6. It is OneSoft's and Microsoft's intention to form a strategic alliance
("Alliance") that will help each other compete against other vendors
of competitive products that operate on operating systems and
platforms other than the Microsoft Windows NT platform. It is the
Parties' intention that this alliance will generate significant market
share, revenue and profit for both Parties in the growing Internet
commerce software and solutions marketplace.
1.7. It is understood that the Alliance between Microsoft and OneSoft may
take *******. It is the intention of the Parties to document these
agreements as is necessary and prudent. The remainder of this Letter
of Intent lists some of these intended agreements, and it is
anticipated that the Alliance will develop additional programs and
initiatives going forward.
1.8. OneSoft and Microsoft desire to confirm their understanding regarding
the marketing and support for a ******* package of ****** and *******
to be offered to Microsoft Certified Solution Provider and other
channel partners.
2. JOINT MARKETING PROGRAMS.
------------------------
2.1. Joint Marketing Agreement and Program Business Plan. The Parties shall
----------------------------------------------------
enter into a joint marketing agreement to include coordinated
participation in the following marketing activities and other they may
define in the course of business. Following execution of this LOI, the
Parties will work together to prepare a business plan for a marketing
program to promote and deliver complete and targeted packages of
Internet commerce products and services to MCSPs and their customers.
2.2. Initial Size and Expansion of Programs. The program will initially
--------------------------------------
target the signing of ** MCSP partners into the OC2CSP program to
begin in ***** and expand to support additional MCSP partners
worldwide thereafter. With the launch of the initially planned
program, Microsoft and OneSoft will expand the program to additional
channel partners as the Microsoft and OneSoft sales and support
infrastructure is scaled to support these opportunities.
2.3. Industry Solution Marketing Programs. The Parties shall develop and
------------------------------------
implement marketing programs to reach potential MCSP customers in the
following market segments: (a) *****; (b) ***** and *******; (c)
****** and ******; and (d) related and other markets as research and
opportunity dictate.
2.3.1. System Integrator and Application Service Provision channel
partners will be signed up to carry these packages to market
through O2CSP program.
2.3.2. Identify high profile customer prospects in each vertical
market for channel partners and distribute leads.
2.3.3. Deploy initial customer systems and track results with channel
partners.
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<PAGE>
2.3.4. Prepare case studies on success stories for publication and
sales support.
2.3.5. Co-develop white papers and sales materials for channel.
2.3.6. Partner with leading MCSPs within the targeted industry groups.
2.3.7. Co-branded advertising and promotions to promote programs to
channel and to generate customer leads for the channel.
2.3.8. Prepare other materials, programs and strategies to penetrate
market segments with joint solutions.
2.4. Channel Program Management. Microsoft and OneSoft will provide
--------------------------
dedicated channel manager(s) who will coordinate the relationship in
regard to the jointly created and operated programs.
2.5. Co-creation and Co-promotion of Solution Packages for Marketplace. The
-----------------------------------------------------------------
Parties will jointly prepare market specific (B2B, B2C, Value Chain,
et. al.) solution packages that reduce time to market for joint
customers, including:
2.5.1. Joint Presentation. On April 16, 1999, the Parties will jointly
------------------
present the O2CSP program and a demonstration site built with
an existing channel partner (to be determined) and a jointly
branded product/service offering of the Parties to the
Microsoft Solution Provider partners who sign into the program.
2.5.2. Joint Presentation Script. The Parties will collaborate on the
-------------------------
presentation script, with Microsoft providing information
regarding duration and requested inclusions and OneSoft
co-editing the script. The Parties will agree on how their
relationship will be described prior to the joint presentation.
The Parties will make additional such presentations as possible
to alert the Microsoft Solution Providers to the program.
2.6. Post-Presentation Follow-Up. The Parties will agree upon and prepare a
---------------------------
web-based follow-up mechanism for Solution Providers interested in the
program. The costs involved and the information generated through the
operation of this follow-up communication mechanism will be
*************.
2.7. Joint Public Relations Effort. The public relations teams of the
-----------------------------
Parties will work together to promote and gain press coverage for
co-branded Internet and electronic commerce packages, software tools,
applications and platforms. The Parties intend to undertake the
following joint public relations efforts and announcements:
2.7.1. OneSoft implementing the Microsoft Digital Nervous System
vision.
2.7.2. OneSoft implementing and extending ******** vision.
2.7.3. The appointment of OneSoft to the Microsoft CPAC and other PACs
as relevant
2.7.4. OneSoft and Microsoft joint support for XML standards.
2.7.5. OneSoft support for Microsoft SSCE components CIP, OPP, etc.
2.7.6. OneSoft support for Microsoft development tools and platform
technologies.
CONFIDENTIAL
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2.7.7. Scalability of OneSoft OneCommerce and Microsoft SSCE, NT, MTS
and demonstration of the same.
2.7.8. OneSoft's status as fundamental Microsoft Complete Commerce
partner.
2.7.9. Microsoft to announce or co-announce customer wins, product
announcements, et. al., on key press releases.
2.7.10. Microsoft to announce or co-announce on marketing positioning,
issue or theme related public announcements.
2.7.11. OneSoft and Microsoft to co-announce channel partners signed
to joint marketing programs.
2.7.12. Announcement regarding the portability/accessibility of
OneSoft XML-based product and content offers between
respective customer and aggregate catalogs.
2.7.13. The Parties to develop ********* of ******* that will be used
in ******* including ***** from ********.
2.7.14. The Parties to prepare other press releases as mutually
agreed.
3. OFFERING OF PRODUCTS AND SERVICES TO SOLUTION PROVIDERS CHANNEL
---------------------------------------------------------------
3.1. The Parties Shall Coordinate Delivery of Support Programs for Channel
---------------------------------------------------------------------
Partners. To be included are deployment and sales support. The program
---------
will be defined to address the needs of the channel and cost
sharing that is appropriate for the services provided by each Party.
OneSoft will offer support programs based on its and Microsoft's
products and services to O2CSP Program members.
3.2. Internet Commerce Solution Packages. OneSoft will initially package
-----------------------------------
two Internet commerce solution package offerings for market, one that
will address the needs of small-to-mid size customers and another that
will address the needs of mid-to-large size customers. Customized
packages can be created on for specific cases using OneSoft's
**********. The package objective is to be easy- to-buy, easy-to-sell,
and easy-to-operate.
3.2.1. Solution Packages have been initially developed by OneSoft, and
use the Microsoft Commerce Solutions platform. Additional
solutions packages will be developed during the program by
OneSoft.
3.2.2. Solution packages will be represented with marketing
collateral, case studies, and other support materials and
guides.
3.2.3. Bundled MCSP Web Developer Integration Services.
3.2.4. Bundled ASP Services Packages.
3.2.5. Bundled Web Marketing Services and Products from Solution
Providers.
3.3. Technical Education for Solution Providers in Optimized Sales and
-----------------------------------------------------------------
Deployment of Internet Commerce Systems.
----------------------------------------
3.3.1. OneSoft will create and hold training seminars for Solution
Providers to train them in Strategic ROI based selling and
rapid fixed time deployment of Internet commerce solutions.
CONFIDENTIAL
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<PAGE>
3.3.2. Microsoft will provide scheduling and program implementation
assistance as well as access to relevant Microsoft course
material and standard curriculum in relation to support of
jointly packaged and marketed solutions.
3.3.3. OneSoft will become Microsoft ATEC certified with Microsoft's
assistance.
3.3.4. Microsoft and OneSoft will offer certification adjuncts to
existing Microsoft and OneSoft certification programs.
3.4. Internet Commerce Sales Cycle Optimization Training and Tools. OneSoft
-------------------------------------------------------------
will package sales tools including **** tools and ***** tools to offer
to the service partner channel. Microsoft will contribute relevant
resources to the creation and packaging of related tools. This will be
offered at a price to be determined and with revenue distribution to
OneSoft and Microsoft relative to specific contribution.
3.4.1. Product and solutions sales support materials.
3.4.2. Competitive analysis.
3.4.3. **** Tools based on OneSoft's ****** application
3.4.4. Workbooks, sales guides, etc.
3.4.5. Sales support, lead capture and distribution extranet portal.
3.4.6. Financial ***** sales tools.
3.4.7. Demonstrations of Internet commerce system functionality.
3.4.8. Partner sales support hotline.
3.4.9. White papers and descriptions.
3.4.10. Customer support program offers.
3.4.11. Other items as the Parties deem necessary to support marketing
and sales programs.
3.5. Internet Commerce Deployment Cycle Optimization Training and Tools.
------------------------------------------------------------------
3.5.1. Software Products and Templates to be Offered to Channel
Partners:
3.5.1.1. OneSoft's OneCommerce applications, components and tools.
3.5.1.2. Microsoft's platform products including: MT, MTS, IIS,
SSCE, SQL, MSMQ, Biztalk, etc.
3.5.1.3. OneSoft Solution Template Packages for vertical
industries or common business models.
3.5.1.4. Customer and Solution Provider convenient packaging of
software products to the degree possible by both parties.
3.5.1.5. Simplified licensing and license administration policies
to the degree possible by both parties.
3.5.2 ********** and ******* to be offered to channel partners.
3.5.2.1 OneSoft will package a strategy consulting offering that
could be given by channel partners including the strategy
segment of the OneSoft *****************.
3.5.2.2 OneSoft will provide ************ Documentation and
Curriculum to speed Solution Provider time to market.
3.6. Program Web Site Content and Marketing Collateral Materials. The
-----------------------------------------------------------
Parties will deploy and produce and Internet Commerce Portal site with
content resources for
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<PAGE>
channel partners, potential customers, customers and employees as well
as marketing and sales collateral materials for marketing and sales
use including:
3.6.1. Case Study on OneSoft customer examples and use of Microsoft
platform to be jointly prepared for publication on sites.
3.6.2. OneSoft to be represented with logo, trademarks, and links
throughout the appropriate areas of the Microsoft web site
where other Internet commerce and ISV partners are featured.
Microsoft to be represented with reciprocal links and
references at OneSoft sites.
3.6.3. White paper on OneCommerce and OneSoft use of Microsoft
platform to be jointly prepared and published on Microsoft and
OneSoft site.
3.6.4. Microsoft to be represented on OneSoft site and in OneSoft
marketing material as primary OneSoft technology and marketing
partner.
3.6.5. The Parties to work together to obtain joint client
testimonials and publish on Web sites and as printed
collateral.
3.6.6. OneSoft and Microsoft will develop collateral marketing
material in regards to the joint marketing and support programs
undertaken.
3.6.7. Each Party will be permitted to use the other Party's logos,
trade and service names to promote joint efforts with
permission of the other as defined in Joint Marketing
Agreement.
3.7. Internet Solution Center Showcase Environment. The Parties will create
---------------------------------------------
a showcase lab with multiple application server clusters and staffing
to showcase solutions offered to market, case studies, comparisons
with competitors, display examples, co-market solutions in action,
etc. The showcase may include the following:
3.7.1. OneSoft/Microsoft software product and solution functionality.
3.7.2. Linear scalability of server arrays running Microsoft and
OneSoft stack (requires testing software).
3.7.3. Fault tolerance of Microsoft and OneSoft Internet solutions.
3.7.4. Demonstration integration with partner ISV and ERP systems.
3.7.5. Showcase placed in high visibility location (potentially
Manhattan).
3.7.6. Solution Provider example sites showcase.
3.7.7. Co-marketing of customer sites.
3.8 Sales Force Leverage. Each Party will train and leverage its
--------------------
respective sales force to assist in the dissemination of marketing
messages and the delivery of marketing programs to customers:
3.8.1 Create OneSoft-Microsoft Intranet portal for sales force and
staff.
3.8.2 Microsoft slicks on Commerce products, solutions and platform
used in program for OneSoft sales force.
3.8.3 OneSoft presentations in Microsoft sales meetings for training.
3.8.4 Minimum sales levels agreed upon to evaluate and predict ROI on
sales force expenditures.
3.8.5 Training for Microsoft sales team on OneSoft products and
solutions and vice versa.
CONFIDENTIAL
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<PAGE>
3.9 Seminar Series. The Parties will develop and conduct a seminar series
--------------
on Internet commerce opportunities for C level executives during 1999
and 2000 with Solution Providers in multiple cities.
3.10 Joint Trade Show Participation. Microsoft will, where possible, allow
------------------------------
OneSoft to participate in trade show events, with premier placement,
that it has planned around the Internet commerce market space at
*********. OneSoft will include Microsoft representation in its trade
show attendance if requested and applicable.
3.11 Executive Support. Microsoft executives will support the closing of
-----------------
important sales transactions, lending credibility as to the
scalability and capability of Microsoft platform products and OneSoft
Internet commerce products. OneSoft executives will support Microsoft
marketing messages and positioning, and support Microsoft sales
efforts with testimonial where relevant.
3.12 OneSoft is a Microsoft Certified Solution Developer. OneSoft shall be
---------------------------------------------------
featured as the nationally highlighted Microsoft MCSD alliance in
Internet and electronic commerce press releases, announcements, white
papers and web pages.
3.13 Microsoft is Primary OneSoft Technology Partner. Microsoft will be
-----------------------------------------------
featured as OneSoft's platform technology partner in Internet and
electronic commerce press releases, white papers and web pages.
4. PRODUCT MANAGEMENT COOPERATION AND PRODUCT SUPPORT
--------------------------------------------------
4.1. Product Management. Microsoft and OneSoft will coordinate product
------------------
management related to Microsoft-OneSoft co-branded packaged offerings.
4.2. Training Materials and Programs. Microsoft will provide related
-------------------------------
Official Curriculum and Curriculum development guides.
4.3. Engineering Team Coordination. OneSoft product managers will have
-----------------------------
direct access to Microsoft development organizations (Site Service
Commerce Edition, Active Directory, NT, SQLServer, MTS and IIS teams)
to allow for rapid resolution of ********** and other ***********
encountered during the program.
4.4. Engineering Support. Microsoft to provide its highest level technical
-------------------
support to OneSoft's product development team to rapidly escalate
engineering issues for resolution.
4.5. Product Management and Support-Synchronization of Direction. Microsoft
-----------------------------------------------------------
and OneSoft product management and executive direction synchronization
and analyses to support vertical packaging and application
development, in order to eliminate redundant development or
unnecessary overlap of product development investment.
CONFIDENTIAL
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<PAGE>
4.6. Microsoft engineers to evaluate and help to configure Solution Center
Policies and Procedures related to the efficient management of
Microsoft products by Solution Providers in ASP-based Internet
Commerce applications.
4.7. Microsoft engineers to help OneSoft understand and create migration
policies and scripts for Microsoft product upgrade e.g., SQL 7.0 and
Windows 2000 and any subsequent versions released during this
relationship.
4.8. Microsoft engineers to evaluate and help to augment OneSoft's
methodology related to the deployment of Microsoft's software
products.
4.9. Microsoft point of contact to help OneSoft's managed application
services understand all relevant Microsoft product licensing models,
e.g., new ********- based ******* model to ******* tools for Solution
Providers.
5. MISCELLANEOUS BUSINESS
----------------------
5.1 *******. The Parties will define a strategy, methodology and agreement
-------
for ***************.
5.2 Potential Microsoft *************. Microsoft will consider potential
---------------------------------
************* OneSoft as OneSoft offers *****************, to be
consummated only if terms are acceptable to both parties. Any
************ to be conducted by ******* within *******.
5.3 Intellectual Property and Confidentiality.
-----------------------------------------
5.3.1 Intellectual Property. Both Parties agree to protect the
---------------------
intellectual property of the other Party with the same diligence
used to protect its own intellectual property.
5.3.2 Confidentiality Agreement. The Parties are subject to a
-------------------------
pre-existing mutual confidentiality agreement.
5.3.3 Confidentiality Restrictions of LOI. Except as may be required
-----------------------------------
by law, regulation, or court order, or rules or regulations of any
securities exchange, or as set forth herein, the prior approval of the
other Party, not to be unreasonably withheld or delayed, shall be
required for any other disclosure of the existence of this LOI or the
terms hereof. Except as expressly provided, each Party agrees to keep
confidential the terms of this LOI other than in connection with
confidential disclosures on a need-to-know basis to employees,
consultants, counsel, accountants, investors, and other professional
advisers of the Party and its affiliates. The foregoing
notwithstanding, either Party may disclose the existence of this LOI
or the terms hereof in response to a judicial or similar investigative
inquiry (including a discovery request in a lawsuit); provided
--------
however, that it shall first provide reasonable notice to the other
--------
Party and that the other Party shall be afforded the opportunity to
seek to limit, prevent, or protect such disclosure.
CONFIDENTIAL
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<PAGE>
5.4 Non-Binding Nature. This LOI reflects the present understanding
------------------
and intention of the Parties with respect to the transactions contemplated
above and except as specified in the following sentence is not intended to
constitute a binding agreement between the parties. Notwithstanding the
foregoing, the provisions of Section 5.3 and 5.6 hereof shall be binding
upon and enforceable against the Parties.
5.5 Waiver. Any of the provisions of this LOI may be waived by the
------
Party entitled to the benefits hereof. No Party shall be deemed,
by any act or omission, to have waived any of its rights or
remedies hereunder unless such waiver is in writing and signed by
the waiving Party, and then only to the extent specifically set
forth in such writing. A waiver with reference to one event shall
not be construed as continuing or as a bar to or waiver of any
right or remedy as to a subsequent event.
5.6 No Joint Venture. Prior to Closing, neither Party shall make any
----------------
warranties or representations, or assume or create any
obligations, on another Party's behalf except as may be expressly
permitted hereunder or in writing by such other Party. Each Party
shall be solely responsible for the actions of all its respective
employees, agents and representatives.
IN WITNESS WHEREOF, the Parties hereto have executed this LOI as of the
Effective Date.
ONESOFT CORPORATION MICROSOFT CORPORATION
By:/s/ James W. MacIntyre, IV By: /s/ John Ford
-------------------------- -------------
Name: James W. MacIntyre, IV Name: John Ford
Title: President Title: Commerce Channel Marketing
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OneSoft Corporation has omitted from this Exhibit 10.23 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
EXHIBIT 10.23
MASTER ALLIANCE AND LICENSE AGREEMENT
This Master Alliance and License Agreement (this "Agreement") is made and
entered into as of November 17, 1999, between USWeb Corporation ("USWeb/CKS")
and OneSoft Corporation ("OneSoft"). Together USWeb/CKS and OneSoft may be
referred to herein as the Parties.
In consideration of the mutual covenants and conditions contained in this
Agreement, the parties agree as stated herein. Each schedule ("Schedule")
referred to in this Agreement is hereby incorporated by reference into and made
part of this Agreement as if fully set forth herein.
In the event of a conflict between this Agreement and a Schedule, this Agreement
shall govern.
1. MARKETING, RELATIONSHIP, AND PUBLIC RELATIONS PROGRAM
(a) Statement of Alliance Efforts. Each of USWeb/CKS and OneSoft agrees to use
all commercially reasonable efforts and provide reasonable cooperation to the
other to complete the tasks and activities as set forth in this Section 1 and in
Section 1 of the Statement of Alliance Efforts, attached as Schedule 1 (the
"Statement of Alliance Efforts"), including without limitation ******** of the
****** and *****. Each party shall obtain the pre-approval of the other party
before releasing marketing collateral and press material related to this
Agreement, except those specified in the Statement of Alliance Efforts Section
1.
(b) Alliance Managers. Each of USWeb/CKS and OneSoft agrees to assign a
dedicated alliance manager who will perform the alliance manager duties set
forth in Section 1 of the Statement of Alliance Efforts.
(c) Marketing Material. Each Party agrees to use commercially reasonable efforts
to provide a prominent display of the other Party's logo on all marketing
materials for USWeb/CKS iAMcommerce solutions that include any of OneSoft's
products and on other additional marketing materials as may be agreed upon by
the Parties, subject to logo guidelines set forth in Section 1 of the Statement
of Alliance Efforts. Each Party will provide links on its website to the other
Party's website in accordance with Section 1 of the Statement of Alliance
Efforts. Each Party hereby disclaims any and all responsibility or liability in
connection with the other Party's web site, and each Party ****** to ****** for
the **** for ****** that may arise in connection with the other Party's *****
and/or *******. Each Party may reference by name as a customer of such Party the
customers of USWeb/CKS iAMcommerce Solutions Powered by OneSoft (except for
those customers that have not consented to be so referenced by USWeb/CKS). Each
Party may reference the other (including the logo) as an "ally" or other similar
mutually agreed term in connection with marketing activities approved in advance
by the other Party.
(d) Endorsement and Relationship Scope. Each Party shall formally and publicly
endorse the USWeb/CKS iAMcommerce Solutions Powered by OneSoft and provide
reasonable levels of executive support in the form of telephone reference calls,
analyst tours, press tours, signature of proposal commitment letters and other
similar activities; USWeb/CKS shall formally and publicly endorse OneSoft as an
enterprise iAMsystem partner with cooperative focus in E-commerce and other
iAMsystem solutions as agreed upon by both parties and provide
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reasonable executive support in the form of telephone reference calls, analyst
tours, press tours, signature of proposal commitment letters and other similar
activities. USWeb/CKS agrees that OneSoft may ***** this Agreement upon ********
if USWeb/CKS's managed services business ****** an ******** to its customers
that ********* listed on Schedule 1(d) (as Schedule 1(d) may be amended from
time to time by OneSoft with consent of USWeb/CKS); provided, however, that
USWeb/CKS shall have the **********within such ****** in which event such ****
shall be deemed *******.
(e) Marketing Funding. OneSoft will allocate co-marketing funds focused on
USWeb/CKS iAMcommerce Solutions Powered by OneSoft to be used as agreed upon by
both parties in the Marketing and PR Plan, as follows: 1999 - $***, 2000 - $***,
2001 - $***; USWeb/CKS will allocate marketing funds focused on USWeb/CKS
iAMcommerce Solutions Powered by OneSoft, to be used as agreed upon by both
parties in the Marketing and PR Plan, as follows: 1999 - $***, 2000 - $***, 2001
- - $***. OneSoft and USWeb/CKS agree to give reasonable consideration to
proposals for providing additional joint marketing funds for events or
activities sponsored by OneSoft or USWeb/CKS beyond the foregoing minimum
commitments; contribution ratios for these additional funds will be as mutually
agreed on a case-by-case basis. The parties will expend funds for approved
marketing activities in accordance with the Marketing and PR Plan and will
exchange annual expenditure reports. Amounts remaining in a given year will be
carried over to the next year (and will be settled as payment in kind or cash at
the end of the initial term of the Agreement) or upon termination of this
Agreement if earlier.
(f) OCP Status. USWeb/CKS may refer to itself as a member of OneSoft's OCP
Program. OneSoft will provide USWeb/CKS access to training, sales and deployment
tools (those currently in existence as well as those that may be developed in
the future), to the ***** and **** the ****** to any ****(subject to any
licensing restrictions of such sales and deployment tools). OneSoft will offer
access to USWeb/CKS to all OneSoft events and activities for OCP Program
members, at a *** that is ***** the *** for the event or activity for ********.
(g) Internet Commerce Solutions Portal. USWeb/CKS will have access to the
Internet Commerce Solutions Portal, created by OneSoft to facilitate
communication between the Parties. A single user identification and password
will be available to USWeb/CKS, and will be delivered to its alliance manager
for use within USWeb/CKS, promptly following execution of this Agreement.
2. SALES AND BUSINESS DEVELOPMENT COOPERATION
(a) Statement of Alliance Efforts. Each of USWeb/CKS and OneSoft agrees to use
all commercially reasonable efforts (and to provide all reasonable cooperation
to the other Party) to complete the tasks and activities as set forth in Section
2 of the Statement of Alliance Efforts.
(b) Business Development Executives. OneSoft will provide, at no cost to
USWeb/CKS, a dedicated business development executive who will perform the
OneSoft business development executive duties set forth in Section 2 of the
Statement of Alliance Efforts. USWeb/CKS will provide, at no cost to OneSoft, a
dedicated business development executive to perform the USWeb/CKS business
development executive duties set forth in Section 2 of the Statement of Alliance
Efforts.
(c) Sales Efforts. USWeb/CKS will be responsible to sell the USWeb/CKS
iAMcommerce Solutions Powered by OneSoft and OneSoft will be responsible to
support USWeb/CKS in selling the iAMcommerce Solutions Powered by OneSoft, all
as set forth in Section 2 of the Statement of Alliance Efforts.
(d) Facilities. Each Party shall make its respective facilities (OneSoft
Executive Briefing Center and USWeb/CKS Executive Briefing Center(s)) available
to the other Party's personnel, according to an agreed upon process, to use
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for, among other purposes, mock-ups, staging, prototyping, demonstrations and
related activities. Access to such personnel shall be allowed during normal
business hours (8am-5pm local time). Either Party's personnel's use of such
facilities shall be subject to availability and prior notice by the requesting
Party and approval by the other Party. Each Party shall make all mutually
agreed-upon equipment, supplies, and utilities available to the other Party's
personnel, so long as such use does not conflict with ongoing projects. ****of
****** shall be at ***** to the *******; provided, however, that the ***** shall
be responsible for ***** of the ****** and ******** by such Party while *****
******.
3. PROGRAM MANAGEMENT
(a) Statement of Alliance Efforts. The Parties agree to promptly establish
escalation processes, reporting processes, planning processes (including without
limitation a process to develop annual business plans) and management processes,
and to otherwise conduct program management, in accordance with Section 3 of the
Statement of Alliance Efforts. The Parties agree to use all commercially
reasonable efforts to prepare a mutually agreeable first annual business plan
within 30 days after the date first set forth above.
(b) Within 30 days from execution of this Agreement, the Parties will mutually
agree to defined initial joint integration projects necessary to launch the
USWeb/CKS iAMcommerce Solutions Powered by OneSoft. To that end, the parties
will agree to the specific scope of these joint integration projects based upon
the Lab Addendum set forth in Schedule 3(b). Projects that obtain the desired
operating leverage from the technology platform such as multiple customers
sharing common database servers and application servers and combining core
databases into a smaller set will be among the initial projects defined.
(c) Alliance Executive Steering Committee. The Parties agree to promptly
establish an Alliance Executive Steering Committee, to operate in accordance
with Section 3 of the Statement of Alliance Efforts.
(d) Executive Sponsors. Each party shall appoint an Executive Sponsor who shall
have overall responsibility for the Parties' relationship and the execution of
mutually agreed upon programs and the escalation of issues and opportunities as
appropriate.
4. LICENSES
(a) Demo Software License. OneSoft hereby grants to USWeb/CKS a non-exclusive
and nontransferable license (the "Demo License"), subject to the terms and
conditions of this Agreement, to use the components shipped to OneSoft's
customers generally of the software identified in Schedule 4(a) (the "Demo
Software") on the Demo Servers (as defined) during the term of this Agreement,
solely for purposes of sales demonstrations, internal testing, internal training
and marketing; provided, however, that: the Demo License may not in any event be
used in connection with any activity for which USWeb/CKS receives compensation
or processes commercial transactions. Under the Demo License, USWeb/CKS may not:
(1) rent, lease, or loan the Demo Software; (2) electronically transmit the Demo
Software over a network except as incidental to USWeb/CKS's licensed use of the
Demo Software; (3) use run-time versions of any third-party products embedded in
the Demo Software, if any, for any use other than the intended use of the Demo
Software, (4) modify, disassemble, translate, decompile, or reverse engineer the
Demo Software, except that in connection with a mutually agreed lab project and
then only to the extent expressly agreed to in writing by an authorized
representative of OneSoft the Demo Software may be modified by OneSoft; (5)
transfer possession of any copy of the Demo Software to any third party; or (6)
use the Demo Software in any way not expressly provided for in this Agreement.
There are no implied licenses granted to
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the Demo Software under this Agreement and USWeb/CKS agrees not to exceed the
scope of the Demo License. The "Demo Servers" means a total of up to 20 servers
located in the USWeb/CKS Technology Lab and a total of up to seven servers
located in USWeb/CKS regional professional services offices. "Demo Software"
means OneSoft's OneCommerce Enterprise Edition and OneWorkstation products.
(b) Commercial Service. Subject to the provisions of this Agreement, OneSoft
hereby grants to USWeb/CKS the nontransferable (except with OneSoft's consent,
to which consent Section 15(i) will not apply) nonexclusive right to:
i) purchase and install, for purposes of providing Commercial
Service, Licensed Copies (as defined) of the components shipped to
OneSoft's customers generally of the software identified on Schedule
[4(a)] (the "Software") including installing Licensed Copies of the
Software on a Server (as defined);
ii) use Licensed Copies of the Software installed on Servers to
provide Commercial Service (as defined) to each third party that has
agreed in writing to the conditions of use set forth in Schedule [4(b)]
(each a "Third Party Customer"); and
iii) permit each Third Party Customer access to Licensed Copies of the
Software installed on Servers as necessary to provide to such Third
Party Customer Commercial Service.
USWeb/CKS shall have the right, at no charge, to make a reasonable number of
copies of the Software solely for backup and archival purposes. OneSoft
acknowledges and agrees that the Third Party Customers shall have no obligation
to obtain any further license or other permission from OneSoft for their access
to or use of Software if as part of the Commercial Service provided by
USWeb/CKS. There are no implied licenses granted to the Software under this
Agreement and USWeb/CKS agrees not to exceed the scope of express licenses to
the Software. "Commercial Service" shall mean a combined service, including one
or more USWeb/CKS Servers together with deployment services and internet
connectivity services and access to the Software (subject to the provisions of
Schedule 4(a)), all provided to a Third Party such that the Third Party is able
to use the Software on a USWeb/CKS Server by remote access, but does not
maintain or operate a copy of the Software other than on USWeb/CKS Servers.
"Server" shall mean a server operated by USWeb/CKS (or, with OneSoft's consent,
operated by another co-location services provider that is not a developer of
products in competition with OneSoft) that meets the requirements set forth in
technical documentation for the Software and that is installed at a location
within the United States or at a ******** ******* the ******* that: (i) ******
with ******; and (ii) is not included in the ************, as amended from time
to time; (iii) is not included in a ***** of ****** or ******* provided in a
notice from OneSoft to USWeb/CKS from time to time subject to its consent.
OneSoft may amend Schedule [4(a)] (but not with respect to license terms then in
effect and not with respect to initial terms under any *********from time to
time upon ********* ("******"), in which event such Schedule as so amended shall
govern all rights under this Agreement; provided however, that if such change
****** in an ****** in the ********of the licensees ******* that USWeb/CKS would
be ***** to **** for ******** or the ***** of the license ******* that USWeb/CKS
would be ***** to *** for *******, then USWeb/CKS may ****** to OneSoft within
such ****** in which event the Parties shall ****** for **** using ******* to
***** an ******* of the *****. In the event such *********** during such
*******, either Party may ****** the ******* and if the ****** is not so *****
the amendment to Schedule 4(a) shall immediately become effective. ****** shall
mean, with respect to an ********, a ****** (i) delivered before such ********
is given if the ****** is accepted by the ******* within **** after such ******
is given; or (ii) that OneSoft agrees to exempt from the ******.
(c) Licensed Copies. A copy of the Software shall be considered a "Licensed
Copy" during a calendar month under this Agreement if **************.
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(d) No Benchmark. USWeb/CKS shall not release the results of any benchmark of
the Software or the Demo Software, or of any third party products embedded in
the Software or Demo Software, without OneSoft's prior written approval, which
OneSoft may give or withhold in its sole and absolute discretion.
(e) Software Delivery. Demo Software and Software will be shipped to USWeb/CKS's
facility in Virginia, U.S.A. POB at OneSoft's facility in Virginia, U.S.A., by
commercial surface transportation reasonably selected by OneSoft. Transportation
charges in excess of rates for such transportation will be billed to USWeb/CKS
in the event that USWeb/CKS requests alternative transportation arrangements.
Software shall be deemed accepted upon delivery.
(f) Notices and No Title. USWeb/CKS shall include OneSoft's copyright or
proprietary rights notice on any copies of the Demo Software or Software or
application interfaces (or associated documentation for any of them), including
any copyright or proprietary rights notices of third parties that are included
on media or in documentation provided by OneSoft. USWeb/CKS acknowledges that
the Software and the Demo Software is the property of OneSoft or its suppliers
and that title thereto is not transferred under this Agreement.
(g) The Parties agree to negotiate in good faith (i) to determine within 60 days
a process and license similar to the OCP process and license to facilitate sale
and delivery of perpetual licenses of OneSoft products outside the context of
the Commercial Service but with the same discount structure; and (ii) to
determine a pricing structure and process for converting existing OneSoft
perpetual licensees who desire to use the Commercial Service; and (iii) the
Parties may agree on the terms of and may enter into purchase orders or purchase
agreements, on a case-by-case basis, for OneSoft products, in advance of the
completion of such determinations and for such purchase orders or purchase
agreements the discount structure under this Agreement shall apply.
5. PAYMENT AND TAXES
(a) USWeb/CKS shall pay monthly fees to OneSoft as such fees accrue with respect
to each Third Party Customer, in accordance with the provisions of Schedule
4(a). (There will be no charge accrued with respect to a new Third Party
Customer before the earlier of the first use under Section 4(c)(i) or 30
calendar days after the first use under Section 4(c)(ii). The initial partial
month, if any, shall be subject to prorated charges.) Within 15 calendar days
after the end of each calendar month, USWeb/CKS shall provide to OneSoft a
report detailing licensing and use of the Software under this Agreement, in
accordance with the provisions of Schedule 5. USWeb/CKS shall also provide other
reports in accordance with the provisions of Schedule 5.
(b) Not later than ** calendar days after the end of a calendar month, USWeb/CKS
shall pay the amount of fees due to OneSoft as accrued during such calendar
month under the provisions of Section 5(a). OneSoft shall not be required to
invoice such fees.
(c) Except as set forth in this Agreement or otherwise agreed by the Parties,
invoices shall be issued upon or after delivery of the products or services to
which they relate. Invoices shall be due and payable in United States currency
upon receipt by USWeb/CKS. Payment shall be past due ***** days after the
delivery of the invoice to USWeb/CKS.
(d) Overdue amounts shall be subject to a finance charge of **** percent (**%)
for each month or fraction thereof that the invoice is overdue, or the highest
interest rate permitted by applicable law, whichever is less. OneSoft shall be
entitled to reimbursement for its reasonable collection costs in the event of
late payment or nonpayment, including reasonable attorneys' fees.
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(e) All fees, prices and other charges under this Agreement are exclusive of any
federal, state, municipal, value-added, foreign withholding or other
governmental taxes, duties, fees, excises, or tariffs now or hereafter imported
on the production, storage, licensing, sale, transportation, import, expect or
use of the Software or any improvements, alterations, or amendments to the
Software. USWeb/CKS shall be responsible for, and if necessary reimburse,
OneSoft for all such taxes, duties, fees, excises, or tariffs, except for taxes
imposed on OneSoft's corporate net income.
6. AUDIT RIGHTS.
OneSoft shall have the right at all times to electronically audit use of the
Software and Demo Software through a disclosed documented IP interface (the
nature of such interface shall be subject to USWeb/CKS's consent) to the servers
on which such software is installed. At OneSoft's request USWeb/CKS shall
provide OneSoft with a report detailing use of the the Demo Software under this
Agreement. OneSoft may, upon fifteen (15) days prior written notice, not more
often than quarterly, audit USWeb/CKS's records to ensure that license and other
fees have been properly paid in compliance with this Agreement. Any such audit
will be conducted with the full cooperation of USWeb/CKS during regular business
hours at USWeb/CKS's offices but shall not interfere unreasonably with
USWeb/CKS's business activities. If an audit reveals that USWeb/CKS has
underpaid its total fees for the audited period by more than three percent (3%),
then USWeb/CKS shall pay OneSoft's reasonable costs of conducting the audit.
USWeb/CKS shall promptly pay to OneSoft the amount of any underpayment
(including without limitation the amount of interest applicable thereto under
Section 5) and OneSoft shall promptly pay to USWeb/CKS the amount of any
overpayment.
7. iFRAME TECHNOLOGY COORDINATION.
(a) Role of USWeb/CKS. USWeb/CKS, at its expense will: (1) operate, own and
manage a technology integration facility ("OneSoft USWeb/CKS Technology Lab")
that will focus on specialized technical work involving the integration of
OneSoft's product(s) into the USWeb/CKS iFrame; (2) provide integration tools,
hardware and office space for the OneSoft USWeb/CKS Technology Lab, located in
Northern Virginia; (3) provide necessary staff, management and resources for the
OneSoft USWeb/CKS Technology Lab; (4) provide, through the dedicated team,
quality assurance (QA) of the integrated iFrame/OneSoft product; (5) provide a
dedicated architecture and integration manager to manage technical issues
related to the alliance, in accordance with Section 4 of the Statement of
Alliance Efforts. At USWeb/CKS's request and expense, USWeb/CKS may provide a
staff person for one full-time product advisory position in the OneSoft
integration lab to provide feedback on current and future enhancements to
OneSoft products, in accordance with Section 4 of the Statement of Alliance
Efforts.
(b) Role of OneSoft. OneSoft, at its expense, will: (1) provide staff to the
USWeb/CKS Technology Lab who will be responsible for specialized technical work
involving the integration of OneSoft's products into USWeb/CKS iFrame, in
accordance with Section 4 of the Statement of Alliance Efforts; (2) provide
commercially reasonable assistance with QA (including for new releases of the
Software) for the integrated OneSoft iFrame/iamSystem product; (3) provide a
dedicated architecture and integration manager to manage technical issues, in
accordance with Section 4 of the Statement of Alliance Efforts.
8. TRAINING PROGRAM.
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(a) Training Program Development. OneSoft will provide to USWeb/CKS a reasonable
number of copies of OneSoft training material related to selling and deploying
OneCommerce Enterprise Edition and USWeb/CKS will have the right and license to
use such material to prepare custom training courseware for use in training
employees and customers; provided, however, that (i) USWeb/CKS shall charge
commercially reasonable rates for and pay a royalty to OneSoft for any use
thereof in non-employee training at the rate of **% of non-employee training
revenue; and (ii) USWeb/CKS shall have the right to prepare from such courseware
derivative works ("Derivative Courseware") in which USWeb/CKS shall have all
right, title and interest if the Derivative Courseware does not contain any
material that is derivative of such OneSoft training material. USWeb/CKS and
OneSoftwill prepare a plan for training activities (the "Training Plan") to be
included as part of the Parties' annual business plan.The parties will expend
funds for approved training activities in accordance with the Training Plan and
will exchange annual expenditure reports. Amounts remaining in a given year will
be carried over to the next year (and will be settled as payment in kind or cash
at the end of the initial term of the Agreement) or upon termination of this
Agreement if earlier, all based upon actual costs for out of pocket costs and in
all other cases as measured by the Parties' most favorable rates offered to
customers. USWeb/CKS's planned minimum commitment for activities in the Training
Plan is as follows (to be defined in the Training Plan): 2000 - $***; 2001 -
$***. OneSoft's planned minimum commitment for such activities is as follows (to
be defined in the Training Plan): 2000 - $***; 2001 - $***.
(b) Training Activities. The Parties agree to perform the ongoing training
activities and responsibilities set forth in Section [5] of the Statement of
Alliance Efforts. Each Party will exercise commercially reasonable efforts to
ensure that the other Party's personnel are notified reasonably in advance of
key training event opportunities. OneSoft will provide free of charge, training
for *** USWeb/CKS employees (in OneSoft's sales or deployment course) over the
period from the date first set forth above through June 30, 2000, if during such
period USWeb/CKS is in compliance with the train the trainer provision
commitment in the next sentence. USWeb/CKS agrees to train Trainers (trainers
are dedicated resources to the function of training USWeb/CKS employees) on the
OneSoft product, and assume the responsibility of training USWeb/CKS employees
on the OneSoft products and services after June 30, 2000. USWeb/CKS agrees to
train *** of its employees on OneSoft products and services over the initial
term of this Agreement.
(c) Training Facilities. OneSoft agrees to provide, at its expense, reasonable
training facilities for conducting USWeb/CKS employee training, on the USWeb/CKS
iAMcommerce Solutions Powered by OneSoft, until *****. Thereafter, training
facilities for USWeb/CKS employees will be provided at a charge to USWeb/CKS of
$**** per room, per day. Reasonable training facilities will also be provided
for conducting end-user training, on the USWeb/CKS iAMcommerce Solutions Powered
by OneSoft, at **% of the total cost charged by USWeb/CKS to the customer for
such training, subject to a minimum charge of $****/day per room. Facilities
shall include required machines and software for a minimum class size of *** and
are limited to then-current OneSoft training locations. OneSoft-furnished
materials for USWeb/CKS employee training will be provided at OneSoft's expense
until June 30, 2000. Thereafter, OneSoft-furnished materials for employee
training will be charged at OneSoft's cost (as defined in the Training Plan).
OneSoft-furnished materials for end-user training will be charged at OneSoft's
cost (as defined in the Training Plan) plus **** percent (**%).. USWeb/CKS
agrees to provide OneSoft 30 days notice for the use of such facilities and
shall not exceed agreed to capacity projections as set forth in the Training
Plan.
9. SOFTWARE MAINTENANCE AND TECHNICAL SUPPORT
(a) OneSoft Product Support. USWeb/CKS will, through its Global Network
Operations Center provide necessary Tier 1 and Tier 2 support for OneSoft
products and related service to all customers. USWeb/CKS also agrees to fund
100% of the development cost of software agents ("Software Agents") to
proactively monitor the health of
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USWeb/CKS iAMcommerce Solutions Powered by OneSoft. Software Agents will not
interface directly with OneCommerce Enterprise Edition but instead will obtain
necessary data from operating system logs (including without limitation NT Event
Viewer and Performance Monitor) written to by OneCommerce Enterprise Edition.
All right title and interest in any Software Agent created that is not
derivative of OneSoft intellectual property and for which development is paid
for in full by USWeb/CKS pursuant to such funding shall be vested in USWeb/CKS.
OneSoft agrees to develop at its expense extensions (the "Extensions") to
OneCommerce Enterprise Edition to write reasonable types and amounts of data to
such logs to reasonably support proactive monitoring of the health of
OneCommerce Enterprise Edition. All right title and interest in the Extensions
shall be vested in OneSoft.OneSoft will also provide necessary Tier 3 level
support to USWeb/CKS for the Software, to assist USWeb/CKS in its support of its
USWeb/CKS iAMcommerce Solutions Powered by OneSoft customers. OneSoft will
provide advance notice to USWeb/CKS with planned version support and maintenance
discontinuation plans. OneSoft will provide Tier 3 support for all current
releases of software, and for the previous release for 6 months (for example
with v3 released on November 1, 1999 support would continue for release 2.1
until April 30, 2000, thereafter level 3 support for v2.1 would no longer be
covered by OneSoft). OneSoft shall provide USWeb/CKS, any and all enhancements,
bug fixes, modifications, revisions, updates, new releases and new versions, of
or to the Software, as and when provided to OneSoft's customers generally under
OneSoft's standard maintenance agreement, for Software. The support process and
other related responsibilities of the Parties shall be as set forth in Section
[6] of the Statement of Alliance Efforts.
(b) OneSoft Maintenance and Support Fee. USWeb/CKS will pay OneSoft maintenance
and support fees in accordance with the provision of Schedule 4(a). Monthly
maintenance must be contracted and paid for all of a Third Party Customer's
licensed Software (based on applicable pricing units) during the entire term of
a Third Party Customer's USWeb/CKS Commercial Service agreement.
(c) Technical Support. USWeb/CKS will provide, at its expense, a dedicated
Technical Account Manager to serve as a contact and liaison between the Parties
in supporting the USWeb/CKS iAMcommerce Solutions Powered by OneSoft, as well as
to facilitate joint resolution of software and solution defects. OneSoft will
provide, at its expense, an identified and USWeb/CKS focused technical support
manager to serve as a contact and liaison between the Parties in supporting the
USWeb/CKS iAMcommerce Solutions Powered by OneSoft, as well as to facilitate
joint resolution of software and solution defects. This individual (or his or
her designate(s)) will be available during normal business hours (8:30AM-5:30PM
Eastern time Monday through Friday) and will assign responsibility to a named
support specialist during non-business hours and vacations.
10. PROFESSIONAL SERVICES AND TECHNICAL SUPPORT
Professional Services. USWeb/CKS will provide OneSoft with adequate advance
notice (of no less than 4 weeks), of a request for OneSoft professional
services. Upon such request, OneSoft will make available professional services
resources of an aggregate of up to three professionals for initial
OneSoft-USWeb/CKS deployments of the USWeb/CKS iAMcommerce Solutions Powered by
OneSoft. These resources will be made available at OneSoft's expense until the
earlier of completion of the first five customer engagements or April 30, 2000.
Thereafter professional services resources necessary to deploy E-commerce sites
built on USWeb/CKS iAMcommerce Solutions Powered by OneSoft, will be charged to
USWeb/CKS on a time and materials basis, at OneSoft's prevailing hourly rates.
11. REPRESENTATIONS AND WARRANTIES
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(a)EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 11, NEITHER PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES EXPRESS OR IMPLIED AND EXCEPT AS EXPRESSLY SET
FORTH IN THIS SECTION 11 EACH PARTY EXPRESSLY DISCLAIMS ALL WARRANTIES EXPRESS
OR IMPLIED INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF FITNESS FOR A
PARTICULAR USE OR OF MERCHATABILITY OR OF NON-INFRINGEMENT.
(b) USWeb/CKS warrants and represents: (i) that it has all power and authority
to enter into this Agreement and (ii) that the execution, delivery and
performance of this Agreement (including without limitation any amendment or
modification pursuant to Section 15(j)), and all transactions contemplated
thereby, have been duly authorized by USWeb/CKS and (iii) this Agreement
(including without limitation any amendment or modification pursuant to Section
15(j)) is enforceable against USWeb/CKS in accordance with its terms, subject to
bankruptcy laws and other law applicable to creditors' rights generally.
(c) OneSoft warrants and represents: (i) that it has all power and authority to
enter into this Agreement and (ii) that the execution, delivery and performance
of this Agreement (including without limitation any amendment or modification
pursuant to Section 15(j)), and all transactions contemplated thereby, have been
duly authorized by OneSoft and (iii) this Agreement (including without
limitation any amendment or modification pursuant to Section 15(j)) is
enforceable against OneSoft in accordance with its terms, subject to bankruptcy
laws and other law applicable to creditors' rights generally.
(d) Each Party warrants and represents that any licenses to such Party's
products provided to the other Party under this Agreement do not infringe any
third party's (i) duly issued patent existing or issued prior to the initial
delivery date of the applicable license, or (ii) copyright, or (iii) trademark,
or (iv) trade secret; provided, however, that as the sole remedy of a
non-breaching Party for breach of this Section 11(d) the breaching Party shall
either: (i) procure for the other Party the right to continue use of the license
as furnished; or (ii) replace the licensed item; or (iii) modify the licensed
item to make it non-infringing, provided that it still substantially conforms to
the applicable specifications; (at *********) or if *********** then (iv)
************ . Breaching Party shall have no obligation under this Section 11(d)
if the alleged infringement arises from: (i) the use of other than a currently
supported, unaltered release of the item, if software; (ii) the use of an item
that has been modified or merged with other product by anyone other than the
breaching Party; or (iii) the use of the licensed item in combination with
software or hardware not provided under this Agreement..
(e) (1) OneSoft warrants only that the Software, when used in conjunction with
hardware and software recommended by OneSoft, is capable of performing
substantially in accordance with its specifications as set forth in the
OneCommerce Enterprise Edition API Reference and that the Software is designed
to be used in connection with dates in the range of **** through **** (referring
to the 20th and 21st centuries) and that the Software will operate without an
Error arising solely from use of date data within such range; provided, however,
that (i) the warranty in this Section 11(e)(1) does not apply to Software used
in combination with software, or other products, not supplied by OneSoft; and
(ii) except as set forth in this Section 11(e)(1) the Software is otherwise
accepted by USWeb/CKS "as is" and (iii) OneSoft does not warrant that the
operation of the Software will be uninterrupted or error free or interoperable
with non-OneSoft products. (2) As USWeb/CKS's sole remedy for nonconformance of
the Software to the warranty set forth in Section 11(e)(1) OneSoft, will, upon
notification in writing of a failure of the Software to conform to the warranty
set forth in Section 11(e)(1), ********* in compliance with the provisions
therefor forth in Schedule 11(e) and in the event OneSoft fails to *******, such
failure shall constitute a material breach of this Agreement.
12. INTELLECTUAL PROPERTY RIGHTS AND INDEMNITY.
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(a) Each Party agrees that (1) the other Party shall have all right, title and
interest in and to all intellectual property ("Owned IP") created solely by such
other Party that is (i) derivative of such other Party's existing intellectual
property; or (ii) a new work and not derivative of any existing intellectual
property; and (2) there shall be no implied licenses granted to a Party with
respect to the other Party's Owned IP whether by reason of this Agreement or
otherwise. Rights to other intellectual property created as part of a joint
project under this Agreement including without limitation intellectual property
created pursuant to joint projects under this Agreement shall be as agreed in
writing on a case-by-case basis with respect to each such project.
(b) Except as expressly provided otherwise, nothing in this Agreement shall be
deemed to authorize a Party to use any copyright, name, trademark, service mark,
or patent or other intellectual property right of the Other Party. Each Party
acknowledges that any underlying technology, know-how, or process used in the
design, development, programming, or coding of the other Party's software
products, tools, or objects, is exclusively the intellectual property of the
other Party, and certain of the same are or may be protected by patents or
patents pending. Each Party agrees that it may not (nor shall it permit any
third party to) make unauthorized copies, reverse engineer, decompile,
disassemble, inspect, or modify software intellectual property of the other
Party, or separate such software into components or its component files, or
recreate, or attempt to determine the makeup of such software.
(c) Each Party ("Indemnitor") will defend any action by a third party against
the other Party claiming that a license to Indemnitor's product infringes such
third party's (i) duly issued patent existing or issued prior to the initial
delivery date of the applicable license, or (ii) copyright, or (iii) trademark,
or (iv) trade secret; and the Indemnitor will pay the amount of any final award
under such action. Indemnitor's obligations under this section are conditioned
upon it having sole control of any such action, and upon the other Party
notifying Indemnitor immediately in writing of the claim and giving all
authority, information, and assistance necessary to settle or defend such claim.
If the use of the license infringes or is enjoined, or ******* it is ********,
Indemnitor may, at its sole option, (i) procure for the other Party the right to
continue use of the license as furnished; (ii) replace the licensed item; (iii)
modify the licensed item to make it non-infringing, provided that it still
substantially conforms to the applicable specifications; or if ********** then
(iv) **************. Indemnitor shall have no obligation under this Section
12(c) if the alleged infringement arises from: (i) the use of other than a
currently supported, unaltered release of the item, if software; (ii) the use of
an item that has been modified or merged with other product by anyone other than
Indemnitor; or (iii) the use of the licensed item in combination with software
or hardware not provided under this Agreement. The foregoing states Indemnitor's
sole and exclusive obligation and liability for patent, copyright, or other
intellectual property or proprietary rights infringement.
(d) The Parties agree to comply with the provisions of the Mutual Non-disclosure
Agreement set forth in Schedule 12(d).
13. LIMITATION OF LIABILITY
A PARTY'S TOTAL AGGREGATE LIABILITY TO THE OTHER PARTY UNDER THIS AGREEMENT OR
FOR ANY OTHER REASON RELATING TO THE PRODUCTS AND SERVICES PROVIDED UNDER THIS
AGREEMENT, INCLUDING CLAIMS FOR CONTRIBUTION OR INDEMNITY, SHALL BE LIMITED TO
THE TOTAL AMOUNT PAID TO ONESOFT DURING THE PRECEDING ***** CALENDAR MONTHS,
EXCEPT THAT: (1) THERE SHALL BE ****** ON A PARTY'S LIABILITY TO THE OTHER PARTY
WITH RESPECT A BREACH OF SECTION 12(D) OR WITH RESPECT TO EXPRESS OBLIGATIONS
FOR PAYMENT OF MONEY UNDER THE AGREEMENT; AND (2) A PARTY'S TOTAL AGGREGATE
LIABILITY TO THE OTHER PARTY UNDER SECTION 12(C) OF THE AGREEMENT SHALL BE
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$******(BUT NOT TO EXCEED A TOTAL AGGREGATE LIABILITY FOR INTERNATIONAL CLAIMS
THEREUNDER OF $******).
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OR ANY REMEDY UNDER THIS
AGREEMENT, BUT WITHOUT LIMITING LIABILITY FOR EXPRESS OBLIGATIONS FOR PAYMENT OF
MONEY UNDER THIS AGREEMENT OR FOR OTHER DIRECT DAMAGES, IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR ANY INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE OR
EXEMPLARY DAMAGES, IRRESPECTIVE OF WHETHER THE OTHER PARTY HAS BEEN INFORMED OF,
KNEW OF, OR SHOULD HAVE KNOWN OF THE LIKELIHOOD OF SUCH DAMAGES.
14. TERM AND TERMINATION
This Agreement shall become effective on the date first set forth above. Unless
earlier terminated in accordance with the provisions of this Agreement or by
agreement of the Parties this Agreement shall continue in effect for an initial
term ending on December 31, 2001 and thereafter may be renewed by agreement of
the Parties. In the event this Agreement so terminates or terminates as a result
of OneSoft's exercise of termination rights under Section 1(d), any Third Party
Customer of USWeb/CKS iAMcommerce Solutions Powered by OneSoft having a
then-current term of service that will not expire before such termination may
elect to continue as a customer of USWeb/CKS iAMcommerce Solutions Powered by
OneSoft in which event such customer's license(s) to Software shall continue in
effect until the end of their then-current term ("Continuation Licenses") and
the provisions of Sections 4, 5 and 9 of this Agreement (in addition to the
provisions that survive any expiration or termination of this Agreement) shall
continue in effect with respect to such customer until the end of such term
except that provisions with respect to renewal shall not apply. USWeb/CKS may
terminate this Agreement by notice to OneSoft upon any material breach of this
Agreement by OneSoft that is not cured within 10 business days following written
notice of such breach. OneSoft may terminate this Agreement by notice to
USWeb/CKS upon: (a) any material breach of this Agreement by USWeb/CKS that is
not cured within 10 business days following written notice of such breach; or
(b) failure by USWeb/CKS timely to pay license fees for Software under the
payment terms specified in this Agreement. Upon termination of this Agreement,
all licenses granted by OneSoft under this Agreement, except for Continuation
Licenses if any, shall immediately terminate and USWeb/CKS shall immediately
return or destroy and certify the destruction of the Software and the Demo
Software, and all copies of either in any form, except with respect to Converted
Licenses. All unsatisfied payment obligations, and all rights and obligations
under Sections 6, 11, 12, 13, 14 and 15, shall survive any termination or
expiration of this Agreement.
15. GENERAL
(a) Waiver. No waiver of any provision of this Agreement shall be effective
unless in writing and signed by the party against whom such waiver is sought to
be enforced. No failure or delay by either party in exercising any right, power
or remedy under this Agreement, except as specifically provided herein, shall be
deemed as a waiver of any such right, power, or remedy.
(b) Assignment. Either party may assign this Agreement to an entity acquiring
substantially all of its assets or merging with it, provided that such assignee
agrees in writing to assume all obligations under this Agreement. Except as set
forth in this paragraph, neither party may assign any of its rights or delegate
any of its obligations under this Agreement to any third party without the
express written consent of the other. Any attempted assignment in violation of
this Agreement shall be void and of no effect. Each of a Party's subsidiaries,
as of the date hereof or named in Schedule 15(b) (as amended from time to time
by a Party with the consent of the other Party) shall be
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treated as a Party hereto; and each Party hereby guarantees the performance of
obligations under this Agreement of each of its such subsidiaries. Subject to
this paragraph, this Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the parties hereto.
(c) Disputes. The rights of the parties hereunder shall be governed by the laws
of the State of New York without giving effect to principles of conflicts of
laws. The parties expressly exclude the application of the 1980 United Nations
Convention on Contracts for the international Sale of Goods to the extent
otherwise applicable. In the event of a dispute between the Parties for which
the amount at issue is less than $500,000, the Parties agree that the dispute
shall be resolved pursuant to the rules applicable to commercial dispute
arbitration of the American Arbitration Association.
(d) Severability. If any provision of this Agreement shall be held by a court of
competent jurisdiction to be unenforceable, the remaining provisions of this
Agreement shall remain in full force and effect.
(e) Export Limitations. USWeb/CKS acknowledges that the laws and regulations of
the United States and other nations restrict the export of the Software and
agrees to comply with such laws and regulations. USWeb/CKS agrees that it will
not export or re-export or import the Software in any form without first
obtaining the appropriate United States and foreign government approvals.
(f) Notice. Any notice, consent, or other communication hereunder shall be in
writing, and shall be given personally, by confirmed fax or express delivery to
either party at their respective addresses:
(i) to OneSoft at: Legal Department, 1505 Farm Credit Drive, McLean,
VA 22102
(ii) to USWeb/CKS at: : Legal Department, 2880 Lakeside Drive, Suite
300, Santa Clara, California, 95054, Fax: 408-987-3279
or such other address as may be designated by written notice of either party.
Notice shall be deemed given when delivered, or when transmitted by facsimile
with confirmation, or seven days after deposit in the U.S. mail postage prepaid.
(g) Independent Contractor Relationship and No-hire. The Parties' relationship
shall be solely that of independent contractor and nothing contained in this
Agreement shall be construed to make either party an agent, partner, joint
venturer, or representative of the other for any purpose. Each Party agrees that
while this Agreement is in effect and for a period of one (2) years thereafter,
such Party shall not hire or solicit to hire or directly or indirectly engage
the services of the other Party's employees without the other Party's consent,
which may be withheld or delayed in the other Party's sole and absolute
discretion. General advertising not directed at a Party's employees shall not
constitute solicitation for purposes of this Paragraph 15(g).
(h) Force Majeure. If the performance of this Agreement, or any obligation
hereunder, except the making of payments (but such exception shall not apply in
the event of extraordinary National Bank closings), is prevented, restricted, or
interfered with by reason of any act or condition beyond the reasonable control
of the affected party, the party so affected will be excused from performance to
the extent of such prevention, restriction, or interference.
(i) Cooperation. Wherever in this Agreement a provision calls for the "consent"
or "approval" of a Party such consent or approval shall not be unreasonably
withheld or delayed, except as otherwise provided in this Agreement.
(j) Entire Agreement and Amendment. Except as provided in this paragraph, this
Agreement, including all Schedules and Attachments hereto, constitutes the
complete and exclusive agreement between the parties with
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respect to the subject matter hereof and supersedes all proposals, oral, or
written, all previous negotiations, and all other communications between the
parties with respect to the subject matter hereof. The terms of this Agreement
shall prevail notwithstanding any different, conflicting, or additional terms
that may appear in any purchase order or other document; provided, however, that
this Agreement, including all Schedules and Attachments hereto , may be (and
only may be) amended or modified by a writing signed by an Authorized
Representative (as defined) of each Party in which writing each Authorized
Representative states that the writing has been approved by its respective
Party's legal department. All products and services delivered by OneSoft to
USWeb/CKS are subject to the terms of this Agreement, unless specifically
addressed in a separate agreement. executed by an Authorized Representative of
each Party. "Authorized Representative" shall include (without limitation): (i)
in the case of USWeb/CKS, each person named in Schedule 15(j) Part 1 (as amended
from time to time by notice from USWeb/CKS to OneSoft) and (ii) in the case of
OneSoft, each person named in Schedule 15(j) Part 2 (as amended from time to
time by notice from OneSoft to USWeb).
(k) The Parties agree that the OneSoft Training and Product Evaluation Agreement
between the Parties dated October 12, 1999 is hereby terminated.
OneSoft Corporation USWeb Corporation
By: /s/ James W. MacIntyre, IV By: /s/ Alex Hawkinson
-------------------------------- ------------------------
Name: James W. MacIntyre, IV Name: Alex Hawkinson
Title: Chairman and CEO Title: Senior V.P., Managed Services
-----------------------------
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SCHEDULE 1
STATEMENT OF ALLIANCE EFFORTS
Section 1: Marketing and Public Relations Program
Alliance Manager Duties Include: Primary point of contact between the two
organizations for all matters related to the alliance. Coordinator of all
resources brought to bear within each organization dedicated or focused on the
alliance. The champion within each of their respective organizations for the
Alliance. Responsible for creation of the annual business plan, as well as
ensuring that all annual functional plans are crafted. Ensure that all elements
of the agreement are being adhered to by the respective organizations. Motivated
on the financial success of the Alliance.
Reciprocal website listing: Each party will place the respective parties logo on
their corporate website, with a link to the respective parties website.
Location, formatting and link text are at the sole discretion of each party. In
addition, each website will list a brief description of the nature of the
alliance. An appropriate digital logo will be provided by each organization, and
the description of the alliance will be mutually agreed to.
Approved marketing activities: The following represent approved marketing
activities that each party may reference the other (including the logo) as an
"Ally" or other similar mutually agreed term without advanced approval by the
other party: Any document that references a list of partners, any document for
general marketing purposes that references information about the alliance that
is in the public domain and is not specific to the OneSoft-USWeb/CKS alliance.
Document can be a press release, printed collateral, giveaways, signage,
advertisement, and presentations.
Marketing and PR Plan: Plan shall be part of the annual business plan and shall
be completed within 30 days of Definitive Agreement execution. Plan will include
a format and procedure for funds expenditure reporting. Plan will define when
the parties will create mutually agreed positioning regarding suitability of
each party's technologies (collectively or as separate products) to address the
requirements of the targeted markets, as well as how the parties with develop
and evangelize integrated solution initiatives such as USWeb/CKS' iAMcommerce
solutions powered by OneSoft products and other iAMsystems. The plan will
identify opportunities to solicit matching co-marketing funds from other
companies based on the joint marketing and PR plan, and for additional
activities sponsored by either party.
Early Adopter/Rapid Deployment Programs. OneSoft agrees to include USWeb/CKS in
appropriate Early Adopter and Rapid Deployment Programs.
Technology Briefings. On at least a quarterly basis (under NDA), OneSoft will
brief USWeb/CKS on future OneSoft product directions and USWeb/CKS will brief
OneSoft on future iFrame and iAMsystem directions.
OneSoft Beta Products. OneSoft will exercise commercially reasonable effort to
provide beta release software to USWeb/CKS before general release and in any
event no later than general release to OCPs.
SECTION 2: SALES AND BUSINESS DEVELOPMENT COOPERATION
Role of the dedicated OneSoft Business Development Executive: Support USWeb/CKS
in there iAMcommerce powered by OneSoft sales activities, act as the Primary
Point of Contact for all USWeb/CKS iAMcommerce
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powered by OneSoft sales activities that draw on OneSoft resources, assist in
the specific sales process, access other OneSoft resources (as they deem
necessary) to support the sales activities.
Role of the dedicated USWeb/CKS Business Development Executive: act as the
Primary Point of Contact for all USWeb/CKS iAMcommerce powered by OneSoft sales
activities that draw on OneSoft resources, assist OneSoft in drawing on the
appropriate USWeb/CKS resources to jointly pursue OneSoft prospects.
USWeb/CKS is responsible for selling the USWeb/CKS iAMcommerce powered by
OneSoft solution, and OneSoft is responsible for supporting USWeb/CKS selling
the solution, including sales, marketing and technical support.
Sales and Business Development Scope: OneSoft and USWeb/CKS will initially
pursue U.S. opportunities, and anticipate pursuing international opportunities.
This agreement is designed to be global in scope, in addition, this agreement
applies to USWeb/CKS corporate wide, including all current and future divisions.
SECTION 3: PROGRAM MANAGEMENT
iFrame Executive Steering Committee: Create a USWeb/CKS and OneSoft Alliance
Executive Steering Committee: *************** for *******of the *********,
********** of *********** and **********of ******and ********.
Escalation process:
Establish escalation processes that will:
- Offer both parties a process to formally engage the other party in
the event issues appear to prevent solution deployment using the
combined technology.
- Facilitate resolution of critical account situations in a timely
manner.
Define mutually defined and measurable objectives, metrics and
management process.
On an annual basis, create a business plan, the business plan will be completed
by the Alliance managers, and will cover annual goals and objectives, resource
commitments, revenue plan and commitments, go to market strategy, joint
marketing plan, joint development plan, joint management activities, and other
investments.
On a semi-annual basis, participate planning meetings business review and
report, these planning meetings will review the actual results versus the
planned results in the business plan, as well as update the annual business plan
with the latest most accurate business information.
On a minimum of a quarterly basis, USWeb/CKS will make best efforts to share
accurate internal pertinent forecast and pipeline information, which include
forecasts for a rolling 12 months.
SECTION 4: IFRAME TECHNOLOGY COORDINATION.
The USWeb/CKS Architecture and Development Manager that is dedicated to OneSoft
will manage technical issues related to the alliance. In addition, this
individual will act as both liaison for OneSoft resources located in the
USWeb/CKS development lab as well as technical liaison for OneSoft professional
services and sales resources. In addition, this individual will act as
Point-of-Contact (POC) for OneSoft technical resources requested in support of
iAMcommerce powered by OneSoft sales and deployment efforts.
The OneSoft Architecture and Development Manager that is dedicated to USWeb/CKS
will manage technical issues related to alliance, as the annual business plan
dictates. In addition, this individual will act as both manager of
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OneSoft resources located in the USWeb/CKS development lab as well as technical
liaison and leader for dedicated professional services and sales resources.
OneSoft will staff employees in the USWeb/CKS Technology Lab who will complete
specialized technical work of mutual benefit. Refer to OneSoft-USWeb/CKS lab
addendum on the agreed to process for engaging one another in joint projects, as
well as outlining specific projects that we agree to staff.
A USWeb/CKS ************* with OneSoft ************* to ********* on ********
and ********** to OneSoft ********. USWeb/CKS ********** may ******* at ********
in the OneSoft ******** to ***********and *******.
SECTION 5: TRAINING PROGRAM.
OneSoft *********** USWeb/CKS Trainers ************** on OneSoft ******* for the
******** of ************, for the duration of the agreement.
************* of ************* will be a *********** OneSoft and USWeb/CKS
******* and *********** of ********* as ********** in the OneSoft USWeb/CKS
Training Plan.
SECTION 6: SOFTWARE MAINTENANCE AND TECHNICAL SUPPORT
End-client support process: USWeb/CKS is responsible for taking all calls from
source customers, and for handling level 1 and level 2 inquiries. Where a
customer inquiry is a level 3 inquiry, the designated USWeb/CKS Technical
Support manager (or client services team) will contact the designated OneSoft
Technical Support Account Manager (or the OneSoft support team) for resolution.
The OneSoft support team will assist the USWeb/CKS client services team, though
resolution, in a manner that will not require direct contact between the OneSoft
support team and the end client, unless specifically needed or requested.
USWeb/CKS Support Process: USWeb/CKS team will have access to a designated
Technical Support manager at OneSoft. As appropriate projects will have
regularly scheduled calls with the Technical Support manager, to ensure that all
issues are being addressed in a timely manner. As well, this dedicated resource
will be available for non-customer related technical support. OneSoft also will
have available additional support resources, on an as required basis, which are
available on a time and material basis.
Each organization will designate Points of Contact within each organization for
support, and the USWeb/CKS Points of Contact will be certified on OneCommerce.
Software Product Maintenance includes the delivery of documented workarounds,
and version, patch, and point releases to the Software Product(s).
Support Levels:
Level 1: USWeb/CKS will take customer call and open incident report. USWeb/CKS
will use available materials to resolve issue and/or provided requested
information. USWeb/CKS will process orders for software upgrades. Level 2:
USWeb/CKS will perform diagnostic analysis of errors including remote electronic
monitoring of application. If issue is with OneSoft Software products, USWeb/CKS
will attempt to identify a workaround and escalate issue to Level 3 support for
code change resolution is necessary.
Level 3: USWeb/CKS will contact OneSoft to assist its Level 2 support in
recreating and isolating documented issues and identifying workarounds. OneSoft
will provide code fixes for software defects. OneSoft is responsible for
creating and delivering maintenance releases.
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All USWeb/CKS clients with active maintenance and support agreements are
entitled to a USWeb/CKS Level 1 support representative contact within ********of
call during contracted support hours to create incident report. Level 1
USWeb/CKS Support representatives will qualify the severity level of incident
with customer and escalate for resolution as defined by severity level related
escalation procedure below, contacting OneSoft for Level 3 assistance when
necessary.
Severity types:
<TABLE>
<CAPTION>
--------------------- ------------------------------------- ---------------------------------------------------
Issue Severity Definition Escalation Procedure
--------------------- ------------------------------------- ---------------------------------------------------
<S> <C> <C>
Critical Customer's live system is at a halt During **************, work will begin
and unable to process data through immediately upon classification of the error as
the software as a result of a critical and work will continue during contracted
catastrophic event in the system support hours until resolution or workaround is
database or software, or a major provided.
application failure in a critical
processing period. *********** efforts will be made to provide
resolution/workaround ********. A resolution may
include without limitation a software patch.
Include in next maintenance release.
--------------------- ------------------------------------- ---------------------------------------------------
High Serious disruption of a business All commercially reasonable efforts will be made
function that limits the customer's to provide resolution/workaround ********.
ability to conduct some portion of
production business. May downgrade to medium once resolution or
workaround is provided.
Attempt fix or attempt to prevent in next
maintenance release.
--------------------- ------------------------------------- ---------------------------------------------------
Medium A non-critical problem in the Respond to requests for information *******.
software resulting where the
customer is able to continue to run Attempt fix or attempt to prevent in next
the application without serious maintenance release.
impact on production business.
--------------------- ------------------------------------- ---------------------------------------------------
Low Minor application issue, all Respond to requests for information *******.
questions and requests for
information on use or Attempt fix or attempt to prevent in future
implementation of software. maintenance release.
--------------------- ------------------------------------- ---------------------------------------------------
</TABLE>
USWeb/CKS will make all commercially reasonable efforts to comply with the above
escalation procedure and response time for the corresponding Issue Severity.
OneSoft will make all commercially reasonable effort to comply with the above
escalation procedure is support of USWeb/CKS (for Level 3 support).
USWeb/CKS agrees to provide OneSoft with timely written notification containing
all details of software problems necessary for OneSoft to diagnose such
problems. USWeb/CKS agrees to cooperate fully in providing OneSoft with all
materials necessary to reproduce a reported software problem. USWeb/CKS agrees
to provide OneSoft reasonable direct or remote access and test time, for the
purpose of diagnosing reported software problems. If OneSoft provides on-site
services at USWeb/CKS's request in connection with software maintenance,
USWeb/CKS shall reimburse OneSoft for all ************* incurred with respect to
such services.
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OneSoft shall not be responsible for maintaining Software that fails to comply
with its published specifications if such noncompliance is the result of
modification of the Software by USWeb/CKS or third parties. If OneSoft expends
its time on a noncompliance found to be the result of any of the foregoing,
USWeb/CKS shall pay OneSoft for such time at OneSoft's *********.
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Schedule 1(d)
***********
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SCHEDULE 3(b)
OneSoft-USWeb/CKS lab addendum
PROJECT STRUCTURE
The IL will be project focused with clear success metrics and goals. All
projects will be driven by direct and indirect client requirements as qualified
by USWeb/CKS. Each initiative will be managed with strict timelines and interim
deliverables in accordance with USWeb/CKS' methodology. Project teams will
consist of USWeb/CKS and OneSoft personnel as well as any applicable ISV
employees. Each project will include a project proposal and thorough project
plan including
**************
Each project will produce documented outputs in the form of benchmark metrics,
platform schematics, case studies, or white papers. USWeb/CKS will provide
targeted feedback to applicable product teams at OneSoft for every initiative in
the lab.
SERVICE READY PROJECTS
Demo Site
Business Case/Objectives
USWeb/CKS Business Development must have a fully branded site to begin
selling the OneSoft based E-Commerce solution. The current OneSoft Demo
site (Sportswarehouse.com) will be redesigned to provide the look and
feel of a USWeb/CKS site. This will be the starting point of MSD's
E-Commerce SDK.
Resources
USWeb/CKS
***********
OneSoft
********
Primary Location
USWeb/CKS
Deliverables
. Fully USWeb/CKS branded Sportswarehouse.com site
including list of all pages and their description.
Start Date and Due Date
Start: Soon after agreement is signed, End: **********
COMMERCE CONNECTORS
Payment Processor Connector
Business Case/Objectives
USWeb/CKS must possess an understanding of what it takes to create
backend connectors to third party vendors. To facilitate this process
USWeb/CKS will leverage
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it's strategic partnership with ************* to develop a OneCommerce
payment connector to ********** payment gateway.
Resources
The following breakdown of expected resources are a preliminary
projection based on expected workloads.
USWeb/CKS
***********
OneSoft
********
*********
. *********
Primary Location
OneSoft
Deliverables
. ************
Start and Due Date
Start: By Mid-November End:**********
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BUSINESS LAYER (BUSINESS LOGIC AND DATABASE TIER)
************* and ************ of ************** a *************** and ********.
Business Case/Objectives
USWeb/CKS will be ***************, in **************** on
*************. This ************* on the *********** and ************ ,
to ********* and ***************.
Resources
The ************** of ************ are a ************ on **********.
USWeb/CKS
******
OneSoft
******
Deliverables
. ************ the ********** of ********* the *******
In addition, **********
for ********* may ********.
Start Date
******
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********** Into ***********
Business Case/Objectives
For ************** and *********** to ******** the ********* into
********* of ********* . For example, the *********** (possibly more)
********. By doing this:
. *********
Resources
The **********of ********* are a ******** on ********* .
USWeb/CKS
*******
OneSoft
*******
Location:
*******
Deliverables
. ********* the ********* that ******** to ***** the
******* a ******* of ****** . Start Date and Due Date
Start Mid-December End *******
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PLATFORM AND ARCHITECTURAL INTEGRATION
iFrame and MS DNA 2000 Integration
Business Case/Objectives
As new technologies are released it will be imperative for USWeb/CKS
and OneSoft to work together to integrate these technologies into the
E-Commerce offering. Two foreseeable technologies that must be
integrated into OneSoft's OneCommerce product are MSD's iFrame and
Microsoft's DNA 2000. The ***** of ***** of ****** , which ********* ,
is the **********. OneCommerce's components will be modified to
leverage iFrame in order to ******** for ********** .
Resources
The following breakdown of expected resources are a preliminary
projection based on expected workloads.
USWeb/CKS
******
OneSoft
*******
Primary Location:
********
Deliverables
********
Timeline
********
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SCHEDULE 4(a)
ONESOFT PRODUCTS AND PRICING
*************
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SCHEDULE 4(b)
CONDITIONS OF USE
1. OneSoft is an intended thirty-party beneficiary of these conditions of use.
2. Third Party Customer has no right to duplicate the Software.
3. Third Party Customer may not make the Software available as an application
service provider or on a service bureau basis or through timesharing or other
arrangements similar to any of the foregoing.
4. Third Party Customer may not transfer any rights with respect to the
Software.
5. Third Party Customer may not (nor shall it permit anyone else to) make
unauthorized copies, reverse engineer, decompile, disassemble, inspect, or
modify the Software, or separate the Software into components or its component
files, or recreate, or attempt to determine the makeup of the Software.
6. Third Party Customer may not remove any proprietary, trademark, copyright,
confidentiality, patent or other intellectual property notice or marking from an
original or any copy of the Software, documentation, display, media or other
materials or confidential information of OneSoft. Third Party Customer may not
use any tradename or trademark of OneSoft.
7. Third Party Customer acknowledges that any underlying technology, know-how,
or process used in the design, development, programming, or coding of the
Software is exclusively the intellectual property of OneSoft, and certain of the
same are protected by patents or patents pending.
8. Title to Software will not pass to Third Party Customer.
9. THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE SOFTWARE AND
ALL WARRANTIES WITH RESPECT TO THE SOFTWARE ARE DISCLAIMED, WHETHER EXPRESS OR
IMPLIED INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF FITNESS FOR A
PARTICULAR PURPOSE OR OF NON-INFRINGEMENT. THE ENTIRE RISK OF USE OF THE
SOFTWARE IS WITH THE THIRD PARTY CUSTOMER.
10. UNDER NO CIRCUMSTANCES SHALL ONESOFT BE LIABLE FOR ANY DIRECT, INDIRECT,
SPECIAL, INCIDENTAL, , STATUTORY, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES,
OF ANY KIND WHATSOEVER, OR FOR ANY LOST PROFITS, BUSINESS OR REVENUE, LOSS OF
USE OR GOODWILL, OR OTHER LOST ECONOMIC ADVANTAGE, ARISING OUT OF OR RELATED TO
THE SOFTWARE, WHETHER SUCH CLAIMS ARE BASED ON BREACH OF CONTRACT, STRICT
LIABILITY, TORT, ANY FEDERAL OR STATE STATUTORY CLAIM, OR ANY OTHER LEGAL
THEORY, EVEN IF ONESOFT KNEW, SHOULD HAVE KNOWN, OR HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. THE FOREGOING LIMITATION SHALL SURVIVE AND APPLY
EVEN IF ANY LIMITED REMEDY IS DETERMINED TO HAVE FAILED OF ITS ESSENTIAL
PURPOSE.
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11. Third Party Customer shall not publish any result of benchmark tests run on
the Software.
12. Third Party Customer shall comply fully with all applicable export and
import laws, rules and regulations applicable to the Software.
13. Third Party Customer (i) agrees to permit OneSoft to reference it as a
customer and to list Third Party Customer as a OneSoft customer in OneSoft's
marketing materials and (ii) and agrees that USWeb/CKS may provide Third Party
Customer contact, project and site information to OneSoft.
14. Third Party Customer will contact USWeb/CKS with all support questions and
issues.
15. If any provision of the agreement with Third Party Customer is held to be
unenforceable, the remaining provisions shall remain in full force and effect.
16. Third Party Customer acknowledges that monetary damages will not be an
adequate remedy if it breaches its obligations with respect to OneSoft's
intellectual property under the agreement and such breach will result in
irreparable harm. Third Party Customer therefore agrees that, in the event of
any such breach, OneSoft shall be entitled to appropriate mandatory or
prohibitory injunctive relief against Third Party Customer, in addition to any
other remedies at law, in equity. If OneSoft substantially prevails in an action
for injunctive relief under this paragraph it shall be entitled to recover its
costs and expenses for obtaining such relief (including without limitation
reasonable attorneys' fees and court costs) from Third Party Customer.
17. Third Party Customer agrees that OneSoft may conduct remote monitoring of
Third Party Customer's web site to verify compliance with the terms of the
agreement.
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SCHEDULE 5
Reports
The following templates identify the types of information that USWeb/CKS will
provide to OneSoft.
Each report represents a format that is initially acceptable to OneSoft, but
OneSoft may request reasonable additions to or revisions of or deletions of the
information fields in each report, and may request that the report be sent in a
Microsoft Excel spreadsheet in a database format (where each row represents a
unique record).
1. *******************. ****************** after each new site sign date
(the date a customer signs for a USWeb/CKS service that includes
OneSoft licenses), USWeb/CKS will furnish the information contained
within the "*************". In addition, USWeb/CKS will notify OneSoft
within ********** after development with OneSoft licenses for the site
begins (the notification will include the Site URL and the date that
development began).
*************:
- ---------------------------------------------------
Site URL (a)
Customer Name: (b)
Corporate Address: (c)
Site Sign Date (d)
- ---------------------------------------------------
3 year committed purchase:
- --------------------------------------------------------------------------------
Monthly *****
Software Pricing Unit Quantity: Price Maintenance ******** ********
- --------------------------------------------------------------------------------
(e) (f) (g) (h) (i) (j) (k)
- --------------------------------------------------------------------------------
Total (l) (m)
- --------------------------------------------------------------------------------
----------------------------------------------------------------------
Notes: (n)
----------------------------------------------------------------------
(a) The site URL for which USWeb/CKS was contracted to deliver iAMcommerce
Powered by OneSoft
(b) Customer name that corresponds to the URL
(c) The corporate address for the customer
(d) The date that a customer signs for service that includes OneSoft's
licenses for a the corresponding Site URL.
(e) The product name (from schedule 4a)
(f) The pricing unit (from schedule 4a)
(g) The quantity committed to in the initial purchase
(h) The current net price to oneSoft for the application component
(i) The maintenance fee - for a single unit
(j) The number of calendar days remaining in the month (inclusive of the
day of the contract) mulitipled by the quantity and multipled by
the price
(k) The number of calendar days remaining in the month (includive of the
day of the contract) multiplied by the quantity and multiplied by the
Monthly Maintenance
(l) The sum of the *********. This is payable within ****** of the end of
the month
(m) The sum of the *********. This is payable within ****** of the end of
the month
(n) Notes
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2. *******************. *********** after each month, USWeb/CKS will
furnish the information contained within the "****************",
including the license usage based on Server processors for each Third
Party Customer (and each of their unique Brand URLs).
- ---------------------------------------------------
Month: (a)
- ---------------------------------------------------
- ---------------------------------------------------
Site URL (b)
Customer Name (c)
Customer since (d)
- ---------------------------------------------------
- --------------------------------------------------------------------------------
Month Monthly
Service Maintenance Total
Software Pricing Unit Quantity: Began Price Amount Fees Notes
- --------------------------------------------------------------------------------
(e) (f) (g) (h) (i) (j) (k) (l)
- --------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------
(a) **********
(b) The Site URL that the usage applies to
(c) Customer that corresponds to the URL
(d) Date the customer signed up for service for the site
(e) The product name (from schedule 4a)
(f) The pricing unit (from schedule 4a)
(g) The quantity that was consumed in period (h)
(h) The period the associates quantity (g) was first initiated
(i) The net price to OneSoft of the Software in the period (h)
(j) The maintenance fee
(k) (g) times (i) plus (g) times (j)
(l) Notes
3. Customer Data Request Report. Upon OneSoft's request, USWeb/CKS will
provide within a reasonable time frame the information contained within
the "Customer Data Request Report" for the customers that OneSoft
requests it for (except for customers as to which OneSoft has waived
Section 13(ii) of the Conditions of Use).
Customer Data Request Report
-------------------------------------------------------
Name Title Phone Email Address
End Client:
- --------------------------------------------------------------------------------
Executive (a) (b) (c) (d) (e)
Project Manager
Technical
USWeb/CKS:
- --------------------------------------------------------------------------------
Lead Partner:
Project Manager:
Technical Lead:
- --------------------------------------------------------------------------------
(a) The name of the corresponding contract
(b) The title of the corresponding contact
(c) The phone number of the corresponding contact
(d) The email address of the corresponding contact
(e) The address of the corresponding contact
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SCHEDULE 11(e)
Warranty Service Obligations
OneSoft will be responsible to provide the following warranty service
obligations in accordance with severity type and subject to the other provisions
of this Schedule 11(e) and the Agreement.
Severity types:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Issue Severity Definition Escalation Procedure
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Critical Third Party Customer's live system During business hours, work will begin
is at a halt and unable to process immediately upon classification of the error as
data through the software as a critical and work will continue during business
result of a catastrophic event in hours until resolution or workaround is
the system database or software, or provided.
a major application failure in a
critical processing period. Best commercially reasonable efforts will be
made to provide ********within **********. A
resolution may include without limitation a
software patch.
---------------------------------------------------------------------------------------------------------------
High Serious disruption of a business All commercially reasonable efforts will be made
function that limits the Third to provide *********within *******.
Party Customer's ability to conduct
some portion of production business. May downgrade to medium once resolution or
workaround is provided.
---------------------------------------------------------------------------------------------------------------
Medium A non-critical problem in the Respond to requests for information within
software resulting where the Third *******.
Party Customer is able to continue
to run the application without Attempt fix or attempt to prevent in next
serious impact on production maintenance release.
business.
---------------------------------------------------------------------------------------------------------------
Low Minor application issue, all Respond to requests for information within
questions and requests for *******.
information on use or
implementation of software. Attempt fix or attempt to prevent in future
maintenance release.
---------------------------------------------------------------------------------------------------------------
</TABLE>
USWeb/CKS agrees to provide OneSoft with timely written notification containing
all details of Software problems necessary for OneSoft to diagnose such
problems. USWeb/CKS agrees to cooperate fully in providing OneSoft with all
materials necessary to reproduce a reported Software problem. USWeb/CKS agrees
to provide OneSoft reasonable direct or remote access and test time, for the
purpose of diagnosing reported Software problems. If OneSoft provides on-site
services at USWeb/CKS's request in connection with the Software warranty,
USWeb/CKS shall reimburse OneSoft for ************ incurred with respect to such
services.
OneSoft shall not be responsible for maintaining Software that fails to comply
with its published specifications if such noncompliance is the result of
modification of the Software by USWeb/CKS or third parties. If OneSoft expends
its time on a noncompliance found to be the result of any of the foregoing,
USWeb/CKS shall pay OneSoft for such time at OneSoft's *********.
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Schedule 12(d)
MUTUAL NON-DISCLOSURE AGREEMENT
- --------------------------------------------------------------------------------
THIS MUTUAL NON-DISCLOSURE AGREEMENT is entered into as of the ___ day
of _________________________, 199__, by and between OneSoft Corporation and the
undersigned _________________________________.
Each party hereto (individually a "Party" and together, the "Parties") has
requested and/or will learn (including, without limitation, learning through an
audit) from the other party hereto, its subsidiaries or affiliates
(collectively, the "Disclosing Party"), from or through the Disclosing Party's
employees, officers, directors, independent contractors, agents or
representatives, information, both orally and in writing, concerning the
intellectual property and/or business of the Disclosing Party and/or current or
potential customers of the Disclosing Party, including, without limitation,
discoveries, ideas, concepts, know-how, techniques, designs, specifications,
drawings, blueprints, tracings, diagrams, models, samples, flow charts, data,
computer programs, source code, software, disks, diskettes, tapes, customer
lists, customer addresses, products and services provided to specific customers,
sales volumes, customer pricing, equipment specifications, locations and use,
network configurations, capacities and capabilities, current or prospective
relationship with vendors and independent contractors (including, without
limitation, information regarding the types of products and services contracted
for and the cost of such products and services to the Disclosing Party),
implementation of technology, data and programs, finance, sales, marketing, and
development of internet, telecommunication and related technology and services.
Such information, in whole or in part, together with analyses, compilations,
programs, reports, proposals, studies, or any other documentation, prepared by
the Disclosing Party or the other Party (the "Receiving Party"), as the case may
be, which contain or otherwise reflect or make reference to such information,
whether or not specifically marked as confidential by the Disclosing Party, are
hereinafter referred to as "Confidential Information."
All Confidential Information is deemed proprietary to the Disclosing Party.
Accordingly, as a condition precedent to entering into discussions, and in
connection with any business relationship, whether formal or informal, which is
or may be established between the Parties, the Receiving Party hereby agrees, as
set forth below, to hold Confidential Information of the Disclosing Party,
whether furnished before, on or after the date of this agreement, in the
strictest confidence and not to disclose such information to anyone except as
otherwise provided for in this agreement.
1. NON-EXHAUSTIVE DEFINITION OF CONFIDENTIAL INFORMATION; NON-MARKING The
Receiving Party hereby agrees that Confidential Information will also
include information that is not specifically encompassed in the
definition thereof above, but that would reasonably be expected to be
considered confidential by the Disclosing Party. Any issue as to the
confidentiality expectations of the Disclosing Party regarding
particular information shall be submitted to the Disclosing Party for
determination. In addition, the Parties hereby agree that although
Confidential Information is not required to be marked as such under
this agreement, some Confidential Information which is delivered to the
Receiving Party hereunder may indeed be so marked.
2. USE OF CONFIDENTIAL INFORMATION The Receiving Party agrees that the
Confidential Information will be used solely for the purpose of
evaluating a potential transaction between the Parties and in
connection with a business relationship, whether formal or informal,
which is or may be established between the Parties, and not for any
other purpose, except as otherwise agreed by the Parties in writing.
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3. OWNERSHIP OF CONFIDENTIAL INFORMATION The Receiving Party acknowledges
that the Disclosing Party claims the Confidential Information as its
sole and exclusive property (or that the Disclosing Party is a valid
licensee of such information) and that the Receiving Party shall not
have any right, title, or interest in or to such Confidential
Information except as expressly provided in this agreement.
4. DISCLOSURE OF CONFIDENTIAL INFORMATION The Receiving Party agrees to
hold in the strictest confidence and not to disclose to anyone for any
reason Confidential Information of the Disclosing Party; provided,
however, that:
(a) such Confidential Information may be disclosed to the
officers, directors, employees, agents, or representatives
(collectively, "Representatives") of the Receiving Party on a
"need to know" basis for the purpose of evaluating a potential
transaction between the Parties or in connection with a
business relationship, whether formal or informal, which is or
may be established between the Parties, on the condition that
(i) each such Representative will be informed of the
confidential nature of such Confidential Information and will
agree to be bound by the terms of this agreement and not to
disclose such Confidential Information to any other person and
(ii) each Party agrees to accept full responsibility for any
breach of this agreement by that Party's Representatives; and
(b) Confidential Information of the Disclosing Party may be
disclosed by the Receiving Party upon the prior written
consent of the Disclosing Party.
5. DISCLOSURE OF DISCUSSIONS Each Party agrees not to disclose, and will
direct its Representatives not to disclose, to any person that
discussions or negotiations are taking place between the Parties unless
otherwise required by law or upon the prior written consent of the
other Party. This paragraph applies, without limitation, to any use,
other than strictly internal use, by a Party of the other Party's name
and marks.
6. RETURN OF CONFIDENTIAL INFORMATION The Receiving Party agrees, upon the
request of the Disclosing Party, to promptly deliver to the Disclosing
Party (or, with the Disclosing Party's consent, destroy) the originals
and all copies of the Disclosing Party's Confidential Information then
in the Receiving Party's possession or control, including, without
limitation, the portion of the Confidential Information that consists
of analyses, compilations, programs, reports, proposals, studies, or
other documentation prepared by a Receiving Party or its
Representatives.
7. LIMITATIONS ON CONFIDENTIAL INFORMATION The term "Confidential
Information" does not include any information which:
(a) Is or becomes generally available to or known by the
public (other than as a result of a disclosure directly or
indirectly by the Receiving Party);
(b) Is independently developed by the Receiving Party without
breach of this agreement;
(c) Is lawfully received by the Receiving Party without
restriction from a third party who obtained the Confidential
Information other than as a result of a breach of any
confidentiality obligation; or
(d) Is disclosed by the Receiving Party pursuant to judicial
action or governmental regulations, provided that the
Receiving Party notifies the Disclosing Party prior to such
disclosure and the Receiving Party cooperates with the
Disclosing Party in the event that the Disclosing Party elects
legally to contest and avoid such disclosure.
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8. TERM The terms and conditions of this agreement shall continue for a
period of three years from the date hereof; provided, however, that the
Parties agree that the obligations of confidentiality hereunder shall
survive such term.
9. SPECIFIC PERFORMANCE The Parties acknowledge and agree that the rights
being protected by the terms of this agreement are of a special,
unique, unusual and extraordinary character, which gives them a
particular value, and that the breach of any provision of this
agreement shall cause irreparable injury and damage to the nonbreaching
Party. In such event, the nonbreaching Party shall be entitled to
require specific performance of all of the acts and the undertakings
required of the breaching Party hereunder and to obtain injunctive and
other equitable relief in any court of competent jurisdiction to
prevent the violation or threatened violation of any of the provisions
of this agreement. Neither this paragraph 9 nor any exercise by the
nonbreaching Party of its right to equitable relief or specific
performance herein granted shall constitute a waiver by the
nonbreaching Party of any other rights which it may have to damages or
other relief.
10. ENFORCEABILITY If any of the provisions contained in this agreement is
held to be unenforceable, in whole or in part, by a court of competent
jurisdiction, the Parties agree to be bound by all other provisions of
this agreement.
11. SUCCESSORS The Parties agree that this agreement shall be binding upon
the successors and assigns of such Party and shall inure to the benefit
of, and be enforceable by, such successors and assigns, and any
officers or directors thereof.
12. WAIVER The Parties agree that a Party's failure at any time to require
performance of any provision of this agreement shall in no way affect
such Party's right at a later time to enforce the same. No waiver by a
Party of a breach of a term contained in this agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to
be or construed as a further or continuing waiver of such breach of any
other term of this agreement.
13. APPLICABLE LAW This agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to
its conflicts of laws provisions. Any proceeding related to this
agreement shall be brought only in a court of competent jurisdiction
located in the Commonwealth of Virginia.
...
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above:
OneSoft Corporation USWeb Corporation
By: /s/ James W. MacIntyre, IV By: /s/ Alexander Hawkinson
---------------------------- ----------------------------
Print Name: James W. MacIntyre, IV Print Name: Alexander Hawkinson
----------------------- -----------------------
Title: CEO, President Title: EVP, Managed Services
---------------------------- ----------------------------
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Schedule 15(b)
PARTICIPATING SUBSIDIARIES
USWeb/CKS
(none)
OneSoft
(none)
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Schedule 15(j)
AUTHORIZED PERSONS
PART 1
Alex Hawkinson
PART 2
James W. MacIntyre, IV
Thomas Young
35
<PAGE>
OneSoft Corporation The Mark Group, Inc.
OneSoft Corporation has omitted from this Exhibit 10.24 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
EXHIBIT 10.24
ONESOFT MANAGED APPLICATION AND SERVICES AGREEMENT ***********
THIS AGREEMENT is entered into as of November 17, 1999 by and between OneSoft
Corporation ("ONESOFT"), a Delaware Corporation having an office at 7010 Little
River Turnpike Suite 460, Annandale, Virginia 22003, and The Mark Group, Inc.
("CLIENT"), having an office at 6500 Park Commerce Blvd., NW, Boca Raton, FL
33487.
The parties hereby agree as follows:
ONESOFT STANDARD LICENSE AND SERVICES TERMS AND CONDITIONS
- --------------------------------------------------------------------------------
1. DEFINITIONS
(a) This "Agreement" means this document entitled OneSoft Managed Application
and Services Agreement together with each Product Addendum, Scope of Work,
Change Order, or Schedule, attached hereto and/or thereto, collectively (and
each Product Addendum, Scope of Work, Change Order, or Schedule attached hereto
or thereto, is hereby incorporated into this Agreement by reference and is made
a part of this Agreement as if fully set forth herein); and
(b) "Product Addendum" means a document attached hereto and signed by the CLIENT
and ONESOFT that identifies Software Product(s) licensed under this Agreement,
along with any additional terms and conditions for the licensing or management
thereof; and
(c) "Scope of Work" means a document attached hereto and signed by the CLIENT
and ONESOFT (including any Schedule(s) attached thereto) that identifies the
services to be provided under this Agreement, along with any additional terms
and conditions for the performance and/or management thereof; and
(d) "Change Order" means a document in either paper or electronic form (i.e.
email that can be reasonably dated, traced and/or otherwise identified) that
originates from an authorized representative of CLIENT (including any
Schedule(s) attached thereto), and is accepted by ONESOFT, authorizing
additional services or products under a Scope of Work and/or Product Addendum;
and
(e) "Schedule" means an attachment to this Agreement, Scope of Work, Product
Addendum, or Change Order and which provides additional or collateral
information for the document to which it is attached; and
(f) "Software Product" means the object code version of a ONESOFT software
product that is identified in an attached Product Addendum (including any
Schedule(s) attached thereto); and
(g) "Point of Contact" means a contact point, named with respect to ONESOFT or
CLIENT, in Paragraph 30 or in a Product Addendum, Scope of Work or Change Order;
and
(h) "Server" means, if with respect to a Software Product licensed for use on a
server furnished and operated by ONESOFT, then a server furnished and operated
by ONESOFT under this Agreement and described in a related Product Addendum,
Scope of Work, Change Order, or Schedule, or if with respect to a Software
Product licensed for use on a server furnished and operated by CLIENT then a
server used by the CLIENT that meets the requirements set forth in technical
documentation for a Software Product and that is installed at a location within
the United States; and
(i) "Site" means a World Wide Web site with one or multiple domain name(s)
mapped to one IP address and supported by a single instance of a database
schema; and
(j) "Processor" means a single Intel standard processor installed in a Server
that operates a Software Product; and
(k) "User" means a single individual accessing or using the Software Product;
and
(l) "Patch" means a one-time correction provided by ONESOFT to address a
reported problem in a Software Product; and
(m) "Letter Release" means a version of a Software Product that is generally
released by ONESOFT to its supported customers for that Software Product, and
which is identified by the addition of a letter to the previous Point Release
number (such as version 1.5A); and
(n) "Point Release" means a version of a supported Software Product that is
generally released by ONESOFT to its supported customers for that Software
Product, and which is identified by a decimal number change (such as 1.0 to
1.1); and
(o) "Version Release" means a version of a supported Software Product which is
identified by a number followed by a decimal point and a zero (0) (such as
version 2.0) for which ONESOFT may charge a separate license fee to its
supported customers if new functionality is requested and/or required; and.
(p) "Upgrade" means an upgrade to a new Software Product Release which contains
one or more significant new major features for which ONESOFT may charge a
separate license fee to its supported customers if new functionality is
requested and/or required; and
(q) "Workaround" means a procedure to avoid a reported problem in a Software
Product; and
(r) "Support Materials" means anything delivered by ONESOFT to CLIENT under its
Software Maintenance
Confidential Information
<PAGE>
OneSoft Corporation The Mark Group, Inc.
Services, including, but not limited to, any Patches, Workarounds, Letter
Releases, Point Releases, and any related documentation; and
(s) "Software Maintenance Services" means, (i) when used in connection with a
Software Product license, other than a Managed Application license, maintenance
consisting of the shipment to CLIENT of Patches, Workarounds, Letter Releases,
and Point Releases as generally released by ONESOFT for a Software Product, as
well as Version Releases and Upgrades if new functionality is not required; or
(ii) when used in connection with a Software Product Managed Application
license, maintenance consisting of the delivery to CLIENT of Patches,
Workarounds, Letter Releases, and Point Releases as generally released by
ONESOFT for a Software Product, as well as Version Releases and Upgrades if new
functionality is not required.
(t) "Services" (to the extent provided for under a Scope of Work or Change Order
attached hereto) shall mean and include, without limitation, professional
service bureau tasks, managed application services, co- location services,
customer support services, transaction processing services, or other services as
set forth in such Scope of Work or Change Order.
(u) "Managed Application Services" refers to services provided by the Internet
Solutions Center, or their designee, that support the successful operation of
the Software Product. This includes application monitoring, on-going
configuration management, daily application data source and store threshold
management, performance tuning, and applying patches.
(v) "Co-Location Services" refers to the services provided by the Internet
Solution Center or their designee, that support the successful operation of the
systems hardware (e.g., application and database servers, routers) necessary to
run the Software Product.
2. LICENSE GRANT
(a) Subject to the terms and conditions of this Agreement, ONESOFT grants to
CLIENT, and CLIENT accepts, a non-exclusive limited nontransferable license to
use on a Server, in the United States each Software Product identified in a
Product Addendum, in accordance with the provisions thereof, which Product
Addendum is incorporated herein by reference.
(b) CLIENT agrees to comply with all the terms and conditions of third party
software sublicenses that are provided to CLIENT.
(c) The CLIENT agrees that it shall not:
(i) Copy any Software Product for any purpose other than for archival or
emergency restart purposes or program error verification; and/or
(ii) Sublicense, rent or otherwise make a Software Product available to any
third party for a fee or otherwise whether in a service bureau environment
or otherwise; or
(iii) Reverse engineer, decompile, disassemble, or modify a Software Product
or separate a Software Product into components or its component files,
recreate, or attempt to determine the makeup of any Software Product.
3. DELIVERY
ONESOFT shall deliver to CLIENT a copy of each Software Product for which a
license is granted under this Agreement, in an electronic medium or by direct
loading onto a designated Server over the Internet.
4. SOFTWARE PRODUCT RELATED FEES
(a) CLIENT agrees to pay to ONESOFT, in accordance with the provisions of this
Agreement, and each Product Addendum, the applicable license fees, maintenance
fees, and other applicable fees related to the Software Products.
(b) All license fees, maintenance fees and other applicable fees for a perpetual
license are due upon the execution of the requisite Product Addendum.
(c) CLIENT must pay ************************ Recurring Monthly Managed
Application Services fees upon the execution of the requisite Product Addendum.
5. LICENSE TERM
(a) Each license granted with respect to a Software Product under this Agreement
shall continue in full force and effect for the term specified in the related
Product Addendum, unless earlier terminated in accordance with this Agreement or
the Product Addendum.
(b) Software Maintenance Services obligations of ONESOFT shall terminate to the
extent that related Software Product license has terminated.
6. SOFTWARE PRODUCT MAINTENANCE
(a) Subject to the terms and conditions of this Agreement, ONESOFT will provide
Software Maintenance Services to CLIENT for each Software Product for so long as
CLIENT has timely satisfied all payment obligations for Software Maintenance
Services Fees as defined in and set forth in the applicable Product Addendum.
After October 31, 2001, ONESOFT shall have no obligation to provide Software
Maintenance Services unless the installed Software Product is the then-current
Version Release and is utilized on a Server of a type supported by ONESOFT.
(b) If CLIENT, at the time ONESOFT releases a Version Release or an Upgrade to a
Software Product, is then-currently entitled to Software Maintenance Services
under this Agreement, then upon payment of any applicable fee set by ONESOFT for
such Version Release or Upgrade, ONESOFT shall provide such Version Release or
Upgrade to CLIENT to replace CLIENT's then-installed version of the Software
Product.
(c) CLIENT agrees that if a Software Product is installed on a Server not
furnished and operated by ONESOFT, then CLIENT will install and maintain the
equipment and Software Product as required by ONESOFT to permit Software
Maintenance Services to be delivered electronically with respect to such
Software Product.
(d) ONESOFT shall have no obligation under this Agreement to furnish maintenance
and/or support for a Software Product except as expressly provided herein, or
under an applicable Product Addendum.
7. SERVICES RETENTION AND TERMINATION
(a) To the extent provided under a Scope of Work or Change Order, CLIENT hereby
retains ONESOFT to provide certain services in accordance with the provisions of
this Agreement and such Scope of Work or Change Order ("Services"). Services may
include, without limitation professional service bureau tasks, managed
application services, Co-location Services, customer technical support services,
transaction processing services, or other services as set forth in such Scope of
Work or Change Order.
(b) ONESOFT agrees to use commercially reasonable efforts to perform such
Services.
(c) Except as otherwise provided herein or therein, either party may terminate a
Scope of Work or Change Order at any time with or without cause by giving
************** written notice to the other party; provided, however, that: (i)
in any event, ONESOFT shall be paid in full for all services it performs before
or during such *************; (ii) if ONESOFT terminates Scope of Work
*********** under this Section 7(c) then ONESOFT will pay the reasonable
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costs of moving the site(s) covered under such Scope of Work to another hosting
service.
(d) With respect to Services under a Scope of Work for Managed Application
Services that relates to a Product Addendum for a month-to-month Software
Product license, such Services shall continue (and shall not be subject to the
provisions of Subparagraph (c)), unless terminated in accordance with the
provisions of this Agreement, in full force and effect for a period of
************* from the Commencement Date (as defined in the applicable Scope of
Work). Any early termination, for any reason, of any Scope of Work, Product
Addendum, or Change Order of this Agreement shall not relieve CLIENT of its
payment obligations under this Subparagraph (d) except as provided in
Subparagraph (f).
(e) With respect to Services under a Scope of Work for Co-Location Services,
such Services shall continue (and shall not be subject to the provisions of
Subparagraph (c)), unless terminated in accordance with the provisions of this
Agreement, in full force and effect for a period of *********** from the
Commencement Date (as defined in the applicable Scope of Work). Any early
termination, for any reason, of any Scope of Work and/or Change Order of this
Agreement shall not relieve CLIENT of its payment obligations under this
Subparagraph (d) except as provided in Subparagraph (f).
(f) CLIENT may request an early termination of a Managed Application Service or
Co-Location Scope of Work or Product Addendum with the provision for a dedicated
Server package, or with a provision for a shared Server package, for its
convenience; provided, however, that CLIENT shall be obligated to pay a fee for
such termination in an amount equal to all fees that would be due, but for the
termination, during the ********** after the date of termination.
8. SERVICES FEES AND GENERAL PAYMENT TERMS
(a) CLIENT agrees to pay ONESOFT in accordance with the provisions of this
Paragraph 8. Except as otherwise provided in a Scope of Work, Change Order, or
Schedule, CLIENT shall pay ONESOFT for Services at its then current Time and
Material Rates as offered to its customers generally.
(b) Except as otherwise provided in a Scope of Work, Change Order, or Schedule,
CLIENT shall pay ONESOFT a deposit of ****** percent (***%) of all Services fees
identified in a quotation/estimate before commencement of work by ONESOFT; the
remaining balance to be billed for as incurred. The deposit to be refundable if
the amount exceeds work performed under the requisite Scope of Work, Change
Order, or Schedule.
(c) CLIENT shall be responsible for and shall pay (and agrees to indemnify and
hold ONESOFT harmless from) all sales, use, gross receipts, value-added, GST,
data processing excise, personal property or similar taxes or duties (including
interest and penalties imposed thereon), which are levied or imposed by reason
of the Software Products, Services and other deliverables provided hereunder;
provided, however, that CLIENT shall not be responsible for paying any taxes
imposed on the net income or profits of ONESOFT.
(d) ONESOFT shall invoice CLIENT for payments due under this Paragraph 8 on a
monthly basis. Each ONESOFT invoice shall be due net ********* days from the
date of invoice. CLIENT acknowledges and agrees that under the terms of this
Agreement, no CLIENT Purchase Order ("PO") is required for the payment of
ONESOFT invoices by CLIENT. In the event that a PO is required by the CLIENT for
its internal processes, CLIENT shall issue such PO in a timely manner such that
ONESOFT invoices may be issued and paid in accordance with the provisions of
this Paragraph 8 and any failure by CLIENT to do so shall not excuse CLIENT from
its obligations under this Paragraph 8.
(e) CLIENT shall pay in full any travel expenses incurred by ONESOFT that result
from providing service to CLIENT under this Agreement in geographical locations
other than Annandale, VA, provided such expenses are approved in writing by
CLIENT.
(f) CLIENT shall use its best efforts to advise ONESOFT of any dispute regarding
an invoice within ****** days of the date of invoice. Any disputed item
shall be reconciled, if necessary, promptly upon settlement of the dispute.
CLIENT shall not have any right to withhold or setoff any amounts due hereunder.
(g) Notwithstanding any other provision of this Agreement, if CLIENT fails to
pay any ONESOFT invoice by the due date, ONESOFT may, in its sole discretion,
upon ******* notice if such failure has not been cured by the end of such
******* period, suspend all or any part of its Services to CLIENT until payment
is received or, upon notice to CLIENT, terminate Services under this Agreement.
ONESOFT shall incur no liability to CLIENT if ONESOFT so suspends or terminates
its Services. ONESOFT also reserves the right to charge interest at the maximum
rate allowed by law on all amounts past due, and to assert appropriate liens to
ensure payment.
(h) If it is necessary to enforce the provisions of this Agreement, the
prevailing party in any such litigation, arbitration, or other legal proceeding
shall recover from the non-prevailing party, all costs associated with the
litigation, including reasonable attorney's and paralegal's fees at the trial
and all appellate levels.
9. CONFIDENTIAL INFORMATION
(a) Each party hereby acknowledges that it may receive confidential information
of the other party including, without limitation, software, computer programs,
object code, source code, database schemas, specifications, flow charts,
marketing plans, financial information, business plans and procedures, the terms
of this Agreement, ONESOFT's Client Guide, Software Products, employee
information, and other confidential information (hereinafter referred to as
"Confidential Information"). Confidential Information does not include (i)
information independently developed by the recipient without reference to the
other party's Confidential Information; (ii) information in the public domain
through no wrongful act of the recipient, or (iii) information received by the
recipient from a third party who was rightfully in possession of such
information and had no obligation to refrain from disclosing it.
(b) Except as expressly authorized herein or as required by law, subpoena or
court order the recipient of Confidential Information agrees that during the
term hereof, and at all times thereafter, it shall not use, commercialize or
disclose such Confidential Information to any person or entity, except to its
own employees and consultants having a need to know and to such other recipients
as the other party may approve in writing. Each party shall use at least the
same degree of care in safeguarding the other party's Confidential Information
as it uses in safeguarding its own Confidential Information, but in no event
shall less than reasonable diligence and care be exercised.
(c) All Confidential Information supplied by a party to the other party pursuant
to this Agreement shall remain the exclusive property of the supplying party.
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(d) CLIENT agrees that it will not remove any proprietary, trademark, copyright,
confidentiality, patent or other intellectual property notice or marking from
any Software Product, documentation, display, media or other materials delivered
under this Agreement, or any copies thereof.
(e) CLIENT agrees that it will not violate any proprietary rights in the
Software Products and shall not reverse engineer, decompile, disassemble, or
modify a Software Product or separate a Software Product into components or its
component files, recreate, or attempt to determine the makeup of any Software
Product. CLIENT agrees that any information discovered thereby shall be deemed
ONESOFT's Confidential Information.
(f) CLIENT shall keep Software Products in its possession strictly confidential
and protected.
(g) CLIENT shall not use or reproduce the Software Products, or any
documentation or media or other materials associated therewith, except as
permitted by the terms of this Agreement.
(h) In the event that a party is required by law or judicial or administrative
process to disclose Confidential Information, such party shall, insofar as
practicable, promptly notify the party whose Confidential Information is
required to be disclosed and allow the party a reasonable opportunity to oppose
disclosure.
10. OWNERSHIP AND OTHER PROPRIETARY RIGHTS
(a) Subject to the grant of Software Products licenses hereunder and as
otherwise expressly provided in this Paragraph 10, "Software," "Tools," and
"Objects" (as such terms are defined in this Paragraph 10), including all
originals and all copies thereof regardless of form, are and shall remain the
sole and exclusive property of ONESOFT and shall be deemed its Confidential
Information.
(b) Except as expressly provided in this Agreement, CLIENT does not acquire any
right or license in ONESOFT's Software, Tools or Objects.
(c) "Tools" means ONESOFT's proprietary information and know-how used at any
time by ONESOFT in the conduct of its business, including without limitation,
technical information, designs, templates, software modules, processes,
methodologies, systems used to create computer programs or software, procedures,
code books, computer programs, plans, or any other similar information including
improvements, modifications or developments thereto.
(d) "Objects" means ONESOFT's proprietary reusable software code.
(e) "Software" means any and all of ONESOFT's proprietary software code.
(f) Each party understands and agrees that any use or disclosure of any
information or materials in violation of this Paragraph 10 will cause the other
party irreparable harm, will leave such party with no adequate remedy at law,
and will entitle such party to injunctive relief in addition to all other
remedies available. A party that violates its obligations hereunder, shall
reimburse the other party for reasonable costs and expenses incurred in
enforcing its rights with respect to such violation.
(g) Each ********* developed under an attached Scope of Work or Change Order,
and other ********* identified and originated or prepared by ONESOFT as a
********** pursuant to a specific Scope of Work or Change Order shall be
********** and CLIENT is hereby granted a ********** license to use such
application; provided, however, that CLIENT may not unbundle from the *********
any ************* and/or *********, apart from their use as an ********** of the
*********. ONESOFT agrees that any *********** or *********** developed under
this Agreement ("********") has been ********** or ************ to be included
in a **********. All ********** is and ********* the ********* and all ********
and ********* and *********** to be a ********** and ***** in the ***********
under this Agreement. To the extent that *********** does not by operation of
law ********* or the ********* is not **********, all ******** and
*******************. ********* agrees to give ******** at *********** any
*********** to ******* the ***********.
(h) Except as expressly set forth in this Agreement, this Paragraph 10 does not
constitute a license to use Software, Software Products, Tools and Objects,
which CLIENT must separately license from ONESOFT as necessary to use any custom
application.
(i) Except as described in Subparagraph 28 (b), nothing in this Agreement shall
be deemed to limit ONESOFT's rights to develop and market functionally
comparable products or deliverables based on the same general concepts,
techniques and routines used in connection with any custom application.
(j) CLIENT acknowledges and agrees that, unless otherwise specified in any Scope
of Work, Product Addendum, and/or Schedules attached hereto, ONESOFT maintains
the ownership of all hardware and software upon which, and from which, all
ONESOFT Managed Application Services are provided hereunder.
(k) CLIENT warrants that all Data (as defined) delivered to ONESOFT by CLIENT
does not, and shall not, infringe or violate any United States copyright, United
States trademark, United States trade secret, United States patent or other
United States intellectual property right, and that CLIENT has the right to use,
disclose, publish, translate, reproduce, or deliver any such Data. CLIENT agrees
to indemnify and hold harmless ONESOFT, its directors, officers, employees and
agents, against any and all losses, liabilities, judgments, awards and costs
(including reasonable legal fees and expenses), arising out of or related to any
claim that Data infringes or violates a United States copyright, United States
trademark, United States trade secret, United States patent or other i United
States ntellectual property right.
(l) "Data" as used in this Paragraph 10 mean any data, software or other
information including, but not limited to, writings, designs, specifications,
reproductions, pictures, drawings, or other graphical representations, and any
works of a similar nature.
(m) With respect to any software, data, content or other materials supplied by
CLIENT, ONESOFT is hereby granted the nonexclusive right and license to use the
same as necessary in providing the Services. CLIENT represents and warrants to
ONESOFT that utilization of any software, data, content or other materials
supplied by CLIENT in the manner contemplated by the terms of the Agreement, and
the Scope(s) of Work, will not infringe or misappropriate any copyright,
trademark, patent, trade secret or other intellectual property right of any
third person. CLIENT represents and warrants to ONESOFT that the use of any
software provided by the CLIENT for ONESOFT to manage under this Agreement or
Scope(s) of Work, when used as contemplated by the terms of this Agreement or
the Scope(s) of Work, will not infringe or misappropriate any copyright,
trademark, patent, trade secret or other intellectual property right of any
third person.
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(n) Subject to Section 10(g), all software modifications (whether or not
specially ordered by CLIENT) developed by ONESOFT, any discoveries made,
improvements, modifications, adaptations, or developments by ONESOFT (whether or
not at CLIENT's request pursuant to this Agreement or any other agreement
between the parties), are and shall remain, the exclusive property of ONESOFT,
unless otherwise provided under such other agreement, signed by both parties.
(o) Unless otherwise agreed in writing, nothing in this Agreement shall be
deemed to authorize the CLIENT to use any copyright, name, trademark, service
mark, or patent of ONESOFT.
11. PUBLIC RELATIONS
(a) ONESOFT shall have the right to release a selection announcement to the
public. CLIENT shall provide a supporting quote and shall have right to review
final release.
(b) The parties shall have the right to disclose their relationship with the
other party in promotional, advertising, and marketing materials.
(c) ONESOFT shall have the right to use CLIENT graphics, logos, imagery, and its
URL in ONESOFT's promotional, advertising, and marketing materials.
(d) CLIENT agrees to serve as a reference for potential press, analyst and
prospective customers when approached to do so by ONESOFT.
(e) ONESOFT reserves the right to provide CLIENT with ownership graphics and any
associated hypertext links, that shall be placed on the Web pages resulting from
the selection of a registered domain name URL or Web page that displays
functionality of a Software Product, subject to CLIENT's approval which shall
not be unreasonably withheld or delayed.
12. MARKS AND PATENTS
(a) CLIENT acknowledges that "OneSoft(TM)" and all other Software Product names
are or include trademarks, and/or service marks, and are the intellectual
property of the ONESOFT. Unless otherwise agreed in writing, nothing herein
shall be deemed to authorize the CLIENT to use any pending and/or existing name,
trademark and/or service mark of ONESOFT.
(b) CLIENT acknowledges that any underlying technology, know-how, or process
used in the design, development, programming, or coding of ONESOFT's Software,
Software Products, Tools, or Objects, is the intellectual property of ONESOFT,
and certain of the same are protected by Patents or Patents Pending.
13. LIMITATIONS ON WARRANTIES AND LIABILITY
(a) ONESOFT warrants only that each Software Product, at the effective date that
such Software Product is being used on a live Internet site and for a period of
one hundred and twenty days (120) therefrom, is capable of performing
substantially the functions described in ONESOFT's published technical
documentation at such time for such Software Product, or any product description
that accompanies a Product Addendum. ONESOFT does not warrant that the operation
of any Software Product will be uninterrupted or error free, however, exclusive
remedies in connection with this limited warranty are provided for under
Subsection 13 (e) herein.
(b) ONESOFT warrants that each Software Product shall not infringe any valid
United States Copyright, United States Patent or United States Trademark. In the
event such warranty is breached, ONESOFT agrees to defend any and all actions
alleging any such infringement that may be brought against CLIENT during the
term of this Agreement, and to pay all damages and costs finally awarded against
CLIENT in such actions or suits on account of such infringement provided that:
(i) ONESOFT shall have received from CLIENT prompt notice of the
commencement of any such action;
(ii) CLIENT, and where applicable, those for whom CLIENT is in law
responsible, shall cooperate fully with ONESOFT in defense of the action;
(iii) The action shall not have resulted from the use of any Software
Product for purposes other than those for which it was authorized and
designed, or the use of any Software Product in combination with software or
other products not supplied by ONESOFT, or where the infringement would have
been avoided by use of the then current version of any of the Software
Products;
(iv) ONESOFT in its sole discretion instead of defending such action may
procure for CLIENT the right to continue the use of the Software Products
subject to such action or it may replace or modify such Software Products so
to become non-infringing or it may refund a portion of the license fees for
such Software Products as reduced based upon a five year straight line
amortization of such fees.
(c) A medium on which a Software Product is furnished is warranted to be free of
defects in materials and workmanship under normal use for a period of thirty
(30) days from the date of delivery of the Software Product.
(d) ONESOFT warrants that its Software is designed to be used in connection with
dates in the range of **** through **** and that the Software will operate
during each such time period without error relating to date data; provided,
however, that this warranty does not apply to any error caused by use in
combination with software or other products not supplied by ONESOFT.
(e) ONESOFT guarantees a CLIENT platform uptime of ********** percent (****** %)
of the time. ONESOFT will calculate the platform's unavailability in any given
calendar month at the written request of the CLIENT. Platform unavailability
will consist of the number of minutes that the application components are not
available to the CLIENT, excluding unavailability resulting from or caused by
scheduled ONESOFT maintenance (which ONESOFT will use reasonable efforts to
co-ordinate with CLIENT as practicable given the large number of sites that
ONESOFT supports), applications provided by CLIENT, acts, omissions and/or
failure of CLIENT or third party supplier equipment or facilities, any use of
the platform authorized by CLIENT, or for any reason beyond ONESOFT's reasonable
control. ONESOFT also guarantees to maintain data storage, back-up and disaster
recovery procedures that are considered standard within the industry.
(f) REMEDIES:
(i) IF CLIENT NOTIFIES ONESOFT IN WRITING, WITHIN *********** DAYS OF THE
DATE THAT A SOFTWARE PRODUCT IS BEING USED ON A LIVE INTERNET SITE,
IDENTIFYING A SOFTWARE PRODUCT OF ANY SIGNIFICANT ERROR OR FAILURE OF SUCH
SOFTWARE PRODUCT COVERED BY THE EXPRESS WARRANTIES IN SUBPARAGRAPHS (a) OR
(c) OR (d), ONESOFT SHALL USE ALL COMMERCIALLY REASONABLE EFFORTS TO
PROMPTLY CORRECT ANY SUCH SIGNIFICANT ERROR OR FAILURE.
(ii) THE WARRANTIES AND LIMITATIONS SET FORTH IN THIS PARAGRAPH 13
CONSTITUTE THE ONLY WARRANTIES OF ONESOFT WITH RESPECT TO ANY SOFTWARE
PRODUCT OR ITS SUPPORT OR MAINTENANCE. SUCH WARRANTIES ARE IN LIEU OF, AND
ONESOFT HEREBY DISCLAIMS, ALL OTHER WARRANTIES, STATUTORY OR OTHERWISE,
EXPRESS OR
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IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE REMEDIES OF CLIENT
SHALL BE LIMITED TO THOSE PROVIDED IN THIS PARAGRAPH 13. NO AGREEMENTS
VARYING OR EXTENDING THE FOREGOING WARRANTIES, REMEDIES OR LIMITATIONS WILL
BE BINDING ON ONESOFT UNLESS IN WRITING AND SIGNED BY A DULY AUTHORIZED
OFFICER OF ONESOFT.
(iii) ONESOFT REPRESENTS THAT ITS PROFESSIONAL SERVICES PERSONNEL WILL BE AT
A LEVEL OF SKILL AND COMPETENCY THAT IS CONSIDERED STANDARD FOR THE
INDUSTRY, AND THAT PROFESSIONAL SERVICES RENDERED WILL SUBSTANTIALLY COMPLY
WITH THE WRITTEN SPECIFICATIONS DRAFTED BETWEEN THE PARTIES FOR ANY GIVEN
PROJECT. THE WARRANTIES AND LIMITATIONS SET FORTH IN THIS PARAGRAPH 13
CONSTITUTE THE ONLY WARRANTIES OF ONESOFT WITH RESPECT TO ANY PROFESSIONAL
SERVICES. SUCH WARRANTIES ARE IN LIEU OF, AND ONESOFT HEREBY DISCLAIMS, ALL
OTHER OTHER WARRANTIES, STATUTORY OR OTHERWISE , EXPRESS OR IMPLIED, WITH
RESPECT TO THE SERVICES RENDERED OR THE RESULTS OBTAINED FROM ONESOFT'S
WORK, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE. THE REMEDIES OF CLIENT SHALL BE LIMITED
TO THOSE PROVIDED IN THIS PARAGRAPH 13. ONESOFT'S TOTAL LIABILITY UNDER THIS
AGREEMENT SHALL BE LIMITED TO THE GREATER OF THE AGGREGATE FEES RECEIVED BY
ONESOFT FROM CLIENT HEREUNDER DURING THE THREE (3) CALENDAR MONTHS PRECEDING
THE TIME CLIENT'S CLAIM AROSE, OR WITH RESPECT TO THE SPECIFIC SCOPE OF WORK
UNDER WHICH THE CLAIM AROSE DURING THE TWELVE (12) CALENDAR MONTHS PRECEDING
THE TIME CLIENT'S CLAIM AROSE, ALL NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSES OF ANY LIMITED REMEDY.
14. AUDIT
(a) CLIENT agrees to maintain complete and accurate records containing all data
reasonably required for verification of its compliance with the terms of this
Agreement. If ONESOFT has reasonable basis to believe that CLIENT is not in
compliance with the terms of this Agreement ONESOFT, or its authorized
representative, shall have the right, during normal business hours, and upon at
least five business days prior notice, to physically inspect any Server upon
which any Software Product is installed, and to audit and analyze the relevant
records of the CLIENT, to verify compliance with the terms of this Agreement.
(b) CLIENT also agrees to permit remote license auditing of its web site by
ONESOFT to verify CLIENT's compliance with the terms of this Agreement and the
licenses granted hereunder.
15. INDEMNIFICATION
(a) Indemnification by ONESOFT. Except to the extent ONESOFT has acted at
--------------------------
CLIENT's direction or in accordance with CLIENT's specifications, ONESOFT will
indemnify, defend and hold harmless CLIENT from all losses, liabilities,
judgments, awards and costs (including reasonable attorneys' fees) arising from
a third party claim against CLIENT based on an actual or alleged:
(i) Failure by ONESOFT to perform its obligations under this Agreement;
(ii) Breach of ONESOFT's representations and warranties;
(iii) Acts or omissions constituting gross negligence or willful misconduct,
committed by ONESOFT,
(iv) Failure by ONESOFT to comply with governmental laws and regulations;
(v) Infringement by ONESOFT of United States patents, United States
copyrights, United States trademarks, United States trade secrets and other
United States intellectual property rights.
(vi) This Subparagraph (a) shall not apply to claims arising as a result of
CLIENT's improper use of ONESOFT's products or services or other
deliverables under this Agreement.
(b) Indemnification by CLIENT. CLIENT will indemnify, defend and hold harmless
-------------------------
ONESOFT from all losses, liabilities, judgments, awards and costs (including
reasonable attorneys' fees) arising from a third party claim against ONESOFT
based on an actual or alleged:
(i) Failure by the CLIENT to perform its obligations under this Agreement;
(ii) Breach of CLIENT's representations and warranties;
(iii) Acts or omissions constituting gross negligence or willful misconduct,
committed by CLIENT; or
(iv) Failure by CLIENT to comply with governmental laws and regulations; or
(v) Infringement by CLIENT of United States patents, United States
copyrights, United States trademarks, United States trade secrets and other
United States intellectual property rights.
(c) Notice of Claim. If a claim covered under this Paragraph 15 appears likely
---------------
or is made, the party against whom the claim is made (hereinafter referred to as
the "Indemnitee") will promptly provide the other party (hereinafter referred to
as the "Indemnitor") with notice of such claim. If a claim for infringement is
made, ONESOFT may elect to avoid the infringement by:
(i) Obtaining the necessary rights for the Indemnitee to continue to use
the data or software at issue; or
(ii) Modifying the data or software at issue at its expense.
16. INJUNCTIVE RELIEF
The parties acknowledge that monetary damages may not be an adequate remedy if a
party breaches its obligations under Paragraphs 2(b) & (c), 9, 10 or 12, since
such breach will result in irreparable harm. The parties therefore agree that,
in the event of any such breach, the non-breaching party shall be entitled to
appropriate mandatory or prohibitory injunctive relief against the breaching
party, in addition to any other remedies at law, in equity or under this
Agreement. A party substantially prevailing in an action for injunctive relief
in connection with this Agreement shall be entitled to recover its costs
(including without limitation reasonable attorneys' fees) from the other party.
17. TERMINATION
(a) Unless otherwise expressly provided for in this Agreement, either party may
terminate this Agreement or any Scope(s) of Work and/or Change Order(s) and/or
Product Addendum(s), and/or any related licenses granted hereunder or
thereunder, by giving the other party written notice to that effect, effective
on the date of receipt of such notice, if:
(i) The other party enters into liquidation, whether or not voluntarily,
or a receiver is appointed to all or any part of its assets, or the other
party becomes bankrupt or insolvent or enters into any arrangement with its
creditors, or takes or suffers any similar action in consequence of debt or
becomes unable to pay its debts as they fall due; or
(ii) The other party materially breaches this Agreement and fails to cure
such breach to the non-breaching party's satisfaction within ********* days
of having received written notice of such breach.
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(b) In the event that a party materially breaches this Agreement, the non-
breaching party may terminate this Agreement if the breaching party fails to
cure such breach within ********* days of having received written notice of such
breach.
(c) If a license granted by ONESOFT is properly terminated for any reason,
CLIENT shall, on the effective date of such termination, cease using any and all
of the subject matter of the license and CLIENT shall promptly deliver to
ONESOFT all copies of any and all of such subject matter and any related
documentation, or shall provide evidence, satisfactory to ONESOFT, that all such
copies have been destroyed.
18. FORCE MAJEURE AND ACTS OF GOD
A party shall be relieved from an obligation (other than the obligation to make
payments) while a cause outside the reasonable control of the party prevents the
performance of such obligation.
19. RELATIONSHIP OF THE PARTIES; CONTENT
(a) Nothing in this Agreement shall be construed as making a party an agent of
the other party, and neither party shall have the power to bind the other party
or to contract in the name of, or create a liability against, the other party.
Neither party shall be responsible for the acts or defaults of the other party
or any of the other party's employees or agents. The parties are independent
contractors with respect to all matters arising under this Agreement. Nothing in
this Agreement shall be deemed to establish a partnership, joint venture,
association or employment relationship between the parties. With respect to its
employees, a party shall remain responsible, and shall indemnify and hold
harmless the other party, for the withholding and payment of all Federal, state
and local personal income, wage, earnings, occupation, social security, worker's
compensation, unemployment, sickness and disability insurance taxes, payroll
levies or employee benefit obligations
(b) If a Scope of Work permits CLIENT to re-sell ONESOFT Services to end-users
then the provisions of this Paragraph 19(b) shall apply to such Services,
however, the CLIENT acknowledges that the Scope of Work still governs the
relationship between ONESOFT and the CLIENT. CLIENT's relationship with any
end-user of the Services that may be distributed by CLIENT shall be governed
solely by an end-user Agreement (made available to ONESOFT upon request) that
provides at least the same protections to ONESOFT as this Agreement and the
Scope of Work provides. Any warranty provided by ONESOFT shall be solely for the
benefit of CLIENT. In no event shall any end-user of CLIENT services be
considered a third party beneficiary of any ONESOFT warranty. CLIENT shall
indemnify and hold ONESOFT harmless from any end- user claim. The CLIENT is
responsible for ensuring that third party end- users of the Services do not
impose unexpected workloads on the Services.
(c) The parties acknowledge that the Internet is neither owned nor controlled by
any one entity and that a third party may gain access to ONESOFT. Electronic
mail and other transmissions passing through ONESOFT or over the Internet are
not secure, and ONESOFT cannot guarantee the security or privacy or any of the
information or communications passing through ONESOFT. ONESOFT agrees to provide
commercially reasonable security consistent with its business practices and
facilities, including (without limitation) access control software,
identification protection, logon passwords and physical site security. In no
event however, will ONESOFT be liable for any loss or damage caused by a breach
of security by a third-party. ONESOFT will not intentionally monitor or disclose
any private electronic communications, except to the extent necessary to
identify or resolve system problems or as otherwise permitted or required by
law. ONESOFT does, however, reserve the right to monitor transmissions, other
than private electronic communications, as necessary to provide the Service and
otherwise to protect the rights and property of ONESOFT. Notwithstanding the
foregoing, ONESOFT does not assume any liability for any action or inaction with
respect to such communication or content posted or provided by an authorized or
unauthorized third party. ONESOFT is a distributor and not a publisher of
CLIENT's data or any other content provided by CLIENT or others (including end
users). Because communication of data and other content over the Internet occurs
in real time, ONESOFT cannot, and does not intend to, screen, police, edit, or
monitor communications and content. If ONESOFT is notified of any content that
allegedly violates its Client Guide, Email Authorized Use Policies, and/or is
otherwise unlawful, ONESOFT may investigate and remove or request the removal of
such content as it deems appropriate in good faith and in its sole discretion.
In no event will ONESOFT be liable for any loss or damage caused by a user's
reliance on any data or other content obtained through ONESOFT
20. FURTHER ASSURANCES
The parties agree to do all such things and to execute such further documents as
may reasonably be required to give full effect to this Agreement.
21. WAIVER
No waiver of any part of this Agreement shall be effective unless made in
writing by the waiving party. No waiver of any breach of this Agreement shall
constitute a waiver of any other breach of the same, or any other provision, of
this Agreement.
22. ENTIRE AGREEMENT AND CONSTRUCTION
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter hereof and the parties agree that there are no other
representations, warranties or oral agreements relating to the subject matter of
this Agreement. Headings are included in the Agreement for convenience only and
shall not affect the meaning or construction of this Agreement's provisions.
23. AMENDMENT
This Agreement may be modified or amended only by means of a writing executed by
both parties.
24. ASSIGNIBILITY AND RESALE
Rights under this Agreement shall not be assigned, sublicensed, encumbered
by security interest or otherwise transferred or resold by CLIENT or ONESOFT
(whether by operation of law or otherwise) without the prior written consent
of the other, and any purported assignment, sublicense, encumbrance or other
transfer of such rights, in violation of this Agreement, shall be void. An
amalgamation, acquisition, or merger of CLIENT by or with any person or
entity who is not a party to this Agreement, but who intends to carry on
substantially the business of the CLIENT, shall not be treated as an
assignment of this Agreement that is subject to the provisions of the next
preceding sentence. Notwithstanding the foregoing, if a Scope of Work so
provides, CLIENT may use the Services under the Scope of Work in support of
its internal business operations and may also distribute such Services to
unrelated third parties for their internal use (by such third party
organization's own personnel) and to ultimate end-users in the public at
large, subject to the terms, conditions and
Confidential Information 7
<PAGE>
OneSoft Corporation The Mark Group, Inc.
limitations of this Agreement and such Scope of Work, and provided that
CLIENT shall defend, indemnify and hold ONESOFT harmless from all costs
(including reasonable attorneys' fees) arising from any claim by a third
party user such Services. An amalgamation, acquisition, or merger of ONESOFT
by or with any person or entity who is not a party to this Agreement, but
who intends to carry on substantially the business of the ONESOFT, shall not
be treated as an assignment of this Agreement that is subject to the
provisions of this Paragraph.
25. COMPLIANCE WITH LAWS
Each party shall carry out the obligations contemplated by this Agreement and
shall otherwise deal with the subject matter hereof in compliance with all
applicable laws, rules and regulations, of all governmental authorities,
including, without limitation, the Export Act and any other legal restrictions
on exports, and shall obtain all permits and licenses required in connection
with the subject matter hereof.
26. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of, and be binding upon the parties,
their successors and permitted assigns.
27. SEVERABILITY
If any provision, of this Agreement or a Product Addendum or Schedule or Scope
of Work or Change Order, is held to be unenforceable, all remaining provisions
thereof shall remain in full force and effect.
28. GENERAL PROVISIONS
(a) CLIENT shall not directly or indirectly solicit or offer employment to, or
directly or indirectly accept services by an employee or contractor of ONESOFT,
during the term of this Agreement and for ********* thereafter, without consent
of ONESOFT; provided, however, that if this Agreement is terminated by reason of
a material breach of this Agreement by OneSoft then the provisions of this
sentence shall not apply. For purposes of this Agreement, use of general
employment advertising and independent employment agencies, if not directed at
ONESOFT employees, shall not constitute solicitation.
(b) OneSoft agrees not to offer or sell the Software Product for ******* from
the date of this Agreement to the ********* and/or *********.
(c) Each party (i) agrees to inform the other party of any information made
available to such other party that is classified or restricted data, (ii) if
given such information agrees to comply with the security requirements imposed
by any state or local government, or by the United States Government, and (iii)
if given such information agrees return all copies of such information upon
request.
(d) Each party warrants and represents that its participation in this Agreement
does not conflict with any contractual or other obligation of the party or
create any conflict of interest prohibited by the U.S. Government or any other
governmental authority, and shall promptly notify the other party if any such
conflict arises during the term of this Agreement.
(e) Each party shall maintain commercially reasonable and adequate insurance
protection covering its respective activities hereunder, including coverage for
statutory worker's compensation, comprehensive general liability for bodily
injury and tangible property damage, as well as adequate coverage for vehicles.
Each party shall indemnify and hold the other harmless from liability for bodily
injury, death and tangible property damage resulting from the acts or omissions
of such party, its officers, agents, employees or representatives acting within
the scope of their work.
(e) Paragraphs 1, 2(b) 2(c), 4, 9, 10, and 12 through 30 shall survive any
termination of this Agreement.
29. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE COMMONWEALTH OF VIRGINIA, EXCLUDING ITS CHOICE OF LAW
RULES. ANY PROCEEDING OR DISPUTE RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, SHALL BE INITIATED AND MAINTAINED IN COURTS LOCATED IN SUCH
COMMONWEALTH.
30. NOTICES
(a) Any notice or other communication to a party shall be in writing and
delivered to the address below or at such other places as a party may from time
to time specify by notice in writing to the other party.
(b) Point of Contact addresses are as follows:
For ONESOFT: (Technical)
Jeffrey M. MacIntyre
OneSoft Corporation
7010 Little River Turnpike, Suite 460
Annandale, VA 22003-9998
Telephone: (703) 916-7448
For ONESOFT: (Contractual and Admin.)
Paul D. Economon, Esq.
OneSoft Corporation
7010 Little River Turnpike, Suite 460
Annandale, VA 22003-9998
Telephone: (703) 916-7448
For CLIENT: (Contractual and Admin)
Seth Miller
- -----------
6500 Park of Commerce Blvd, NW
- ------------------------------
Boca Raton, FL 33487
- --------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
OneSoft Corporation The Mark Group, Inc.
Confidential Information 8
<PAGE>
OneSoft Corporation The Mark Group, Inc.
By: /s/ Paul Economon By: /s/ Seth Miller
--------------------- -----------------------
Name: Paul Economon Name: Seth Miller
--------------------- -----------------------
Title: General Counsel Title: Chief Operating Officer
--------------------- -----------------------
Confidential Information 9
<PAGE>
Exhibit 10.25
[LOGO OF ONESOFT]
OneSoft Letter of Engagement
November 30, 1999
Mr. Michael Hemenway
Manager, Internet Business Development
Maytag Corporation
403 West Fourth Street North
P.O. Box 39
Newton, Iowa 50208-0039
Re: Letter of Engagement
OneSoft ID# ******
Dear Mr. Hemenway,
Thank you for taking the time to come to our offices so that we could further
introduce you to OneSoft's Maytag team. The information you exchanged has
recognized a need to immediately engage OneSoft into the requirements phase of
the project.
This letter confirms engagement by Maytag Corporation (or the "Company") of
OneSoft to commence Phase I of its proposed project with the Company. Our
understanding of the terms of this engagement is set forth below.
Summary of Engagement
- ---------------------
Company engages OneSoft to provide ****** that may include *********** of
************* and ********** for approximately a *********** starting on
************* ("**********") for the purpose of commencing the **********, and
*********** for ******* of the project. OneSoft will provide these services on
an as needed basis at the Company's request or approved designee.
Project Schedule and Fees
- -------------------------
Company agrees to compensate OneSoft for each team member at the hourly rates
stated in the attachment A. The team will be provided on a time and materials
basis,
<PAGE>
and Company acknowledges that the estimate is subject to actual time and
material used. ******* of the ******** *********** may be effectuated with
************* ********** by *********. However, it is expected that a
************ between the parties *************.
In addition, the Company will be responsible for reimbursing OneSoft's
reasonable out of pocket expenses related to this engagement.
General Terms
- -------------
OneSoft invoices on a monthly basis. Invoices are payable upon receipt. Invoices
that remain unpaid more than ***** days are subject to late fees(********* or
the maximum permissible by law whichever is less). OneSoft makes no warranty
express or implied, with respect to the services rendered hereunder or the
results obtained from OneSoft's work, including without limitation, any implied
warranties of merchantability or fitness for a particular purpose. In no event
shall OneSoft or its suppliers be liable for: (a) any indirect, special,
incidental or consequential damages, even if advised of the possibility thereof,
and regardless of whether any claim is based upon any agreement, negligence,
warranty, strict liability or other legal or equitable theory; or (b) direct
damages in excess of the aggregate amount of fees received by OneSoft from the
Company hereunder, notwithstanding any failure of essential purposes of any
limited remedy.
Confirmation
- ------------
Please sign this letter below in the space provided to confirm our understanding
of this engagement and to indicate the Company's acceptance of the terms of the
engagement as set forth in this letter. OneSoft is prepared to commence this
project immediately upon receipt of a signed copy of this letter.
Sincerely,
/s/ Stuart L. Claggett
- --------------------------------------
Stuart L. Claggett, Vice President
Acknowledged, Accepted and Agreed:
Maytag Corporation
/s/ Michael Hemenway
- --------------------------------------
<PAGE>
We charge for the following types of services: Long distance telephone, telex,
telecopying, messenger, postage and other communication costs; duplication and
laser printer use, staff overtime, computer research and other costs incurred on
your behalf. We sometimes refer to these costs as "disbursements", although some
of these disbursements are not direct reimbursements of out of pocket costs we
pay to third parties, but rather are amounts we believe reasonable and
appropriate which we charge our clients for certain services involved.
<PAGE>
Attachment A
Labor Rate Price Schedule
-------------------------
**********************
<PAGE>
OneSoft Corporation has omitted from this Exhibit 10.26 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
EXHIBIT 10.26
ONESOFT SERVICES AGREEMENT
Number: *****
This OneSoft Services Agreement (this "Services Agreement") is entered into
as of September 14,1999 by and between OneSoft Corporation, a Delaware
corporation having an office at 1505 Farm Credit Drive, McLean, VA 22102
("ONESOFT"), and Phillips Publishing, Inc. having an office at 7811 Montrose
Road, Potomac, MD 20854 ("CUSTOMER").
Per Paragraph 16 herein, this Services Agreement may be modified or amended
only by means of a writing executed by both parties.
The parties hereby agree as follows:
- --------------------------------------------------------------------------------
1. DEFINITIONS
(a) "Agreement" means this Services Agreement together with each Scope of
Work and each Change Order, attached to this Services Agreement and executed by
both parties' duly authorized representatives.
(b) "Change Order" means a document in either paper or electronic form
(e.g., e-mail that can be reasonably dated, traced and/or otherwise identified)
that originates from a representative of CUSTOMER, and is accepted by ONESOFT,
authorizing additional services or changes to services under a Scope of Work.
(c) "Data" means data, software, content and other information including,
but not limited to, writings, designs, specifications, reproductions, pictures,
drawings, or other graphical representations, and any works of a similar nature.
(d) "Managed Services" means reoccurring services for which a monthly fee is
charged.
(e) "Objects" means ONESOFT's proprietary reusable software code.
(f) "Scope of Work" means a document attached to this Services Agreement
that describes Services to be provided by ONESOFT (and any additional related
terms and conditions) under this Services Agreement.
(g) "Services" means services to be provided by ONESOFT in accordance with
the Agreement, as specified in Scope(s) of Work and Change Orders.
(h) "Software Product" means any software developed, licensed or delivered
by ONESOFT .
(i) "Tools" means ONESOFT's proprietary information and know-how used at any
time by ONESOFT in the conduct of its business, including without limitation,
technical information, designs, templates, software modules, processes,
methodologies, systems used to create computer programs or software, procedures,
code books, computer programs, plans, or any other similar information including
improvements, modifications or developments thereto.
2. SERVICES, FEES AND GENERAL PAYMENT TERMS
(a) CUSTOMER hereby retains ONESOFT to provide Services in accordance with
the Agreement, as specified on Scope(s) of Work or Change Order(s).
(b) ONESOFT shall use commercially reasonable efforts to perform Services in
a workmanlike manner, in conformity with the professional standards for
comparable services in the industry.
(c) Except as otherwise provided herein or therein, either party may
terminate a Scope of Work or a Change Order, at any time, with or without cause,
by giving ******** days prior written notice to the other party; provided,
however, that, in any event, ONESOFT shall be paid in full for all Services it
performs before termination. CUSTOMER may only terminate a Scope of Work for
Managed Services, without cause, upon its payment of a termination fee in an
amount equal to all fees that would be due, but for the termination, during the
six (6) months after the date of termination. Either party may terminate the
portions of a Scope of Work or a Change Order, that relate to one or more
particular Software Product licenses, immediately upon the termination of such
licenses.
(d) Services under a Scope of Work for Managed Services on a month-to-month
basis shall have an initial term of *********** months from the date such
Services commence, and shall be renewed automatically on a month to month basis,
at ONESOFT's then current rates, until a party provides the other party at least
********** advance notice to the contrary.
(e) Except as otherwise provided in a Scope of Work or Change Order,
CUSTOMER shall pay ONESOFT its then-current published rates for Services
provided, as such rates may be adjusted from time to time. All ONESOFT rates are
exclusive of any applicable sales, use, value-added, or other federal, state or
local taxes, or any import duties or tariffs imposed on the subject matter or
transactions under this Agreement, and CUSTOMER shall be responsible for all
such taxes, duties and tariffs, except that ONESOFT shall be responsible for any
corporate franchise
ONESOFT CONFIDENTIAL
<PAGE>
taxes imposed on ONESOFT by law and for any taxes based on its net income or
gross receipts.
(f) CUSTOMER agrees to pre-pay the ************ fees for which a monthly fee
is charged ("Managed Services") and to pre-pay a retainer in the amount of
******* of the estimated fees with respect to any other Services. Except as
otherwise provided above or in a Product Schedule or Services Schedule, ONESOFT
shall invoice CUSTOMER for payments due under the Agreement on a monthly basis.
Each ONESOFT invoice shall be due ********** days from the date of invoice.
CUSTOMER acknowledges and agrees that under the terms of the Agreement, no
CUSTOMER purchase order ("PO") is required for the payment of ONESOFT invoices
by CUSTOMER. In the event that a PO is required by CUSTOMER for its internal
processes, (i) CUSTOMER shall issue such PO in a timely manner such that ONESOFT
invoices may be issued and paid in accordance with the provisions of the
Agreement and any failure by CUSTOMER to do so shall not excuse CUSTOMER from
its obligations under the Agreement; and (ii) any terms stated on a PO shall not
apply for purposes of the Agreement and the PO shall be deemed merely to
indicate CUSTOMER's authorization of the Agreement in accordance solely with the
provisions of the Agreement.
(g) CUSTOMER shall pay in full all travel expenses incurred by ONESOFT that
result from providing services to CUSTOMER under the Agreement in geographic
locations other than at a OneSoft facility, subject to CUSTOMER's approval,
which shall not be unreasonably withheld or delayed.
(h) CUSTOMER shall notify ONESOFT of any dispute regarding an invoice within
******** days of the date of invoice. If CUSTOMER fails to notify ONESOFT of any
dispute with respect to an invoice within such ******* period, CUSTOMER shall be
deemed to have accepted the invoice in its entirety. CUSTOMER shall have such
******* day period to resolve the dispute or make payment in full of all amounts
so disputed. ONESOFT shall work with CUSTOMER in good faith to resolve
CUSTOMER's dispute in a timely manner. CUSTOMER shall not have any right to
withhold or setoff any amounts due ONESOFT.
(i) If CUSTOMER fails to pay any ONESOFT invoice in full by the due date,
and if such failure remains uncured ******** days after notice to CUSTOMER by
ONESOFT, ONESOFT may suspend all or any part of its services to CUSTOMER until
payment is received, or, at its discretion, terminate Services in whole or part.
ONESOFT shall incur no liability to CUSTOMER if ONESOFT so suspends or
terminates its services. ONESOFT also reserves the right to charge interest of
****** per month on all amounts past due, and to assert appropriate liens to
ensure payment.
(j) In the event that ONESOFT is substantially the prevailing party in an
action to collect any sum due under the Agreement, ONESOFT shall be entitled to
recover its related costs and expenses (including without limitation reasonable
attornys' fees and court costs) from CUSTOMER.
(k) In the event that CUSTOMER is substantially the prevailing party in an
action to collect any sum due under the Agreement, CUSTOMER shall be entitled to
recover its related costs and expenses (including without limitation reasonable
attorneys' fees and court costs) from ONESOFT.
3. CONFIDENTIAL INFORMATION
(a) Each party acknowledges that it may be the recipient of confidential
information ("Confidential Information") of the other party including, without
limitation, software, computer programs, object code, source code, database
schemas, specifications, flow charts, marketing plans, financial information,
business plans and procedures, the terms of the Agreement, ONESOFT's [Client[?]]
Guide, employee information, and other information that the receiving party may
reasonably understand, from legends, the nature of such information or the
circumstances of its disclosure, to be confidential. Confidential Information
does not include (i) information independently developed by the recipient
without reference to the other party's Confidential Information; (ii)
information in the public domain through no wrongful act of the recipient, or
(iii) information received by the recipient from a third party who was
rightfully in possession of such information and had no obligation to refrain
from disclosing it.
(b) Except as expressly authorized in the Agreement, or as required by law,
the party that is the recipient of Confidential Information of the other party
agrees that during the term hereof, and at all times thereafter, it shall not
use, commercialize or disclose such Confidential Information to any person or
entity, except to its own employees having a need to know and to such other
recipients as the other party may approve in writing. Each party shall use at
least the same degree of care in safeguarding the other party's Confidential
Information as it uses in safeguarding its own Confidential Information, but in
no event shall less than reasonable care be exercised.
(c) All Confidential Information of ONESOFT disclosed to CUSTOMER shall
remain the exclusive property of ONESOFT. All Confidential Information of
CUSTOMER disclosed to ONESOFT shall remain the exclusive property of CUSTOMER.
(d) Each party agrees that it will not remove any proprietary, trademark,
copyright, confidentiality, patent or other intellectual property notice or
marking from an original or any copy of any software, documentation, display,
media or other materials or Confidential Information, delivered or disclosed to
such party, by the other party or under the Agreement.
(e) CUSTOMER agrees that is shall not (nor shall it permit anyone else to)
decompile, disassemble, or modify any software delivered or disclosed to
CUSTOMER by ONESOFT or separate any such software into components or its
component files, or recreate, or attempt to determine the makeup of any such
software. CUSTOMER agrees that all information discovered through any failure to
comply with the next preceding sentence is and shall at all times remain the
exclusive property and Confidential Information of ONESOFT.
(f) In the event that a party is required by law or judicial or
administrative process to disclose Confidential Information of the other party,
such party shall use all reasonable efforts to promptly notify the other party
and allow the party a reasonable opportunity to oppose disclosure. In addition,
a party shall furnish only the portion of the Confidential Information that it
is legally required to disclose and shall use all reasonable efforts to obtain
reliable assurances that confidential treatment will be accorded the
Confidential Information.
4. INTELLECTUAL PROPERTY
ONESOFT CONFIDENTIAL
2
<PAGE>
(a) Except as expressly set forth in Section 4(c), nothing in the Agreement
shall be deemed to authorize the CUSTOMER to use any copyright, name, trademark,
service mark, or patent or other intellectual property right of ONESOFT.
(b) Except as expressly provided in Section 4(c), CLIENT does not acquire
any right or license in ONESOFT's Software Products, Tools or Objects. ONESOFT's
Data, Software Products, Tools and Objects, including all originals and all
copies thereof, regardless of form, are and shall remain the sole and exclusive
property of ONESOFT and shall be deemed its Confidential Information. All
software or modifications (whether or not specially ordered by CLIENT),
developed by ONESOFT, any discoveries made, improvements, adaptations, or
developments by ONESOFT (whether or not at CLIENT's request pursuant to the
Agreement), are and shall remain, the exclusive property of ONESOFT. CUSTOMER
acknowledges that any underlying technology, know-how, or process used in
connection with ONESOFT's Data, Software Products, Tools, or Objects, remains
exclusively the intellectual property of ONESOFT, and certain of the same are
protected by patents or patents pending.
(c) CLIENT shall have a non-exclusive, irrevocable license to use (and to
modify for such use), for internal purposes only (and not (i) on a service
bureau basis or (ii) as an application services provider), any custom
application originally developed for CLIENT under this Agreement, as an
integrated product, for so long as CLIENT has a license to use all Software
Products, Tools and/or Objects necessary to operate the custom application. This
Section 3(c) does not constitute a license to use such Software Products, Tools
and/or Objects, which CLIENT must separately license from ONESOFT as necessary
to use the custom application. CLIENT may not unbundle from the integrated
product any part of the custom application, Software Products, Tools and/or
Objects, apart from use as an integral part of the integrated product.
(d) Nothing in this Agreement shall be deemed to limit ONESOFT's rights to
develop and market functionally comparable products or deliverables based on the
same general concepts, techniques and routines used in connection with any
custom application.
(e) CLIENT acknowledges and agrees that, except as otherwise specified in
this Agreement, ONESOFT is and shall at all times remain the exclusive owner of
all software upon which, and from which, all ONESOFT Managed Services are
provided hereunder.
(f) CLIENT represents and warrants that (A) all Data and other materials
delivered to ONESOFT by CLIENT, and ONESOFT's use thereof in connection with
transactions contemplated under the Agreement, does not and shall not, infringe
any copyright, trademark, trade secret, patent or other intellectual property
right, (B) that CLIENT has the right to use, disclose, publish, translate,
reproduce, and deliver all such Data and other materials, and (C) ONESOFT has
the right to use, disclose, publish, translate, reproduce and deliver all such
Data and other materials in accordance with the Agreement. CLIENT shall
indemnify and hold harmless ONESOFT, its directors, officers, employees and
agents, against any and all losses, liabilities, costs and expenses (including
reasonable attorneys' fees and court costs), arising out of or related to any
claim that Data or other materials, or use, disclosure, publication, translation
or reproduction thereof, infringes a copyright, trademark, trade secret, patent
or other intellectual property right.
(g) With respect to any Data or other materials supplied by CLIENT, ONESOFT
is hereby granted the nonexclusive irrevocable right and license to use the same
in connection with providing Services hereunder. Except as specified in the
preceding sentence, ONESOFT is acquiring no rights in, or title to, the Data or
other materials supplied by CLIENT hereunder.
5. PUBLIC RELATIONS
(a) Either party, after review and consent of the other party (such consent
not to be unreasonably withheld), may issue a press release, regarding this
Agreement, for which the other party agrees to provide a supporting quote. After
review and consent of the other party (such consent not to be unreasonably
withheld), either party may disclose its relationship with the other in its
promotional, advertising, and marketing materials and may use the other party's
standard graphics, logos, imagery, and its name and URL in its promotional,
advertising and marketing materials. CUSTOMER agrees to serve as a reference for
potential press, analysts and prospective customers, when requested by ONESOFT.
ONESOFT may, in its sole discretion, elect to provide CUSTOMER with ownership
graphics and any associated hypertext links, that shall be placed on the web
pages that include functionality of a ONESOFT software product, subject to
CUSTOMER's approval, which shall not be unreasonably withheld or delayed.
6. DISCLAIMER OF WARRANTY AND LIMITATIONS ON LIABILITY
(A) ONESOFT MAKES NO WARRANTY EXPRESS OR IMPLIED AND EXPRESSLY DISCLAIMS ALL
WARRANTIES EXPRESS OR IMPLIED, WITH RESPECT TO SERVICES OR THE RESULTS OBTAINED
FROM ONESOFT'S WORK, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
(b) UNDER NO CIRCUMSTANCES SHALL ONESOFT BE LIABLE FOR ANY SPECIAL,
INCIDENTAL, INDIRECT, STATUTORY, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES,
OF ANY KIND WHATSOEVER, OR FOR ANY LOST PROFITS, BUSINESS OR REVENUE, LOSS OF
USE OR GOODWILL, OR OTHER LOST ECONOMIC ADVANTAGE, ARISING OUT OF OR RELATED TO
THE AGREEMENT OR THE BREACH HEREOF, WHETHER SUCH CLAIMS ARE BASED ON BREACH OF
CONTRACT, STRICT LIABILITY, TORT, ANY FEDERAL OR STATE STATUTORY CLAIM, OR ANY
OTHER LEGAL THEORY, EVEN IF ONESOFT KNEW, SHOULD HAVE KNOWN, OR HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. tHE FOREGOING LIMITATION SHALL SURVIVE AND
APPLY EVEN IF ANY LIMITED REMEDY SPECIFIED IN THE AGREEMENT IS DETERMINED TO
HAVE FAILED OF ITS ESSENTIAL PURPOSE.
(c) EXCEPT FOR ONESOFT'S LIABILITY FOR INFRINGEMENT CLAIMS UNDER SECTION
8(a)(iv) OR FOR THE BREACH OF ITS OBLIGATIONS UNDER SECTION 3, THE TOTAL
AGGREGATE LIABILITY OF ONESOFT FOR DAMAGES UNDER THE AGREEMENT SHALL BE LIMITED
TO THE AMOUNT OF FEES PAID BY CUSTOMER UNDER THE AGREEMENT; PROVIDED HOWEVER
THAT, IN ANY EVENT ONESOFT'S LIABILITY FOR DAMAGES RELATING TO ONESOFT
ONESOFT CONFIDENTIAL
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SERVICES SHALL BE LIMITED TO THE LESSER OF: THE TOTAL AGGREGATE FEES RECEIVED BY
ONESOFT FROM CUSTOMER FOR SERVICES ONESOFT PROVIDED DURING THE THREE (3)
CALENDAR MONTHS PRECEDING THE TIME CUSTOMER'S CLAIM AROSE, OR THE TOTAL
AGGREGATE FEES RECEIVED BY ONESOFT FROM CUSTOMER FOR SERVICES ONESOFT PROVIDED
WITH RESPECT TO THE SCOPE OF WORK UNDER WHICH THE CUSTOMER'S CLAIM AROSE, DURING
THE TWELVE (12) CALENDAR MONTHS PRECEDING THE TIME CUSTOMER'S CLAIM AROSE.
7. AUDIT
CUSTOMER agrees to maintain complete and accurate records containing all
data reasonably required for verification of its compliance with the terms of
the Agreement.
8. INDEMNIFICATION
(a) Except to the extent ONESOFT has acted at CUSTOMER's direction or in
accordance with CUSTOMER's specifications, ONESOFT will indemnify, defend and
hold harmless CUSTOMER from all costs and expenses (including reasonable
attorneys' fees and court costs) arising from a third party claim against
CUSTOMER based on an actual or alleged:
(i) Breach of ONESOFT's representations and warranties;
(ii) Acts or omissions constituting gross negligence or willful
misconduct, committed by ONESOFT;
(iii) Failure by ONESOFT to comply with applicable governmental laws and
regulations; or
(iv) Subject to Section 8(c), Infringement by ONESOFT of United States
patents, United States copyrights, United States trademarks, United States trade
secrets or other United States intellectual property rights.
This Section 8(a) shall not apply to claims arising as a result of CUSTOMER's
improper use of ONESOFT work products or services.
(b) CUSTOMER will indemnify, defend and hold harmless ONESOFT from all costs
and expenses (including reasonable attorneys' fees and court costs) arising from
a third party claim against ONESOFT based on an actual or alleged:
(i) Breach by CUSTOMER of Section 3, 4, 7, 10(b), 17 or 18 of this
Services Agreement;
(ii) Breach of any of CUSTOMER's representations and warranties;
(iii) Act or omission constituting negligence or willful misconduct,
committed by CUSTOMER;
(iv) Infringement by CUSTOMER (or any property or data provided by
CUSTOMER) of any patent, copyright, trademark, trade secret or other
intellectual property right.
(c) If a claim covered under this Section 8 appears likely or is made, the
party against whom the claim is made (hereinafter referred to as the
"Indemnitee") will promptly provide the other party (hereinafter referred to as
the "Indemnitor") with notice of such claim. If a claim for infringement is
made, ONESOFT may elect to avoid the infringement by:
(i) Obtaining the necessary rights for CUSTOMER to continue to use the
intellectual property at issue; or
(ii) Modifying the intellectual property at issue at its expense; or
(iii) Terminating this Services Agreement, applicable Services
Schedule(s), and/or Scope(s) of Work, and equitably adjusting charges under the
Agreement.
9. INJUNCTIVE RELIEF
The parties acknowledge that monetary damages will not be an adequate remedy
if a party breaches its obligations under Sections 3 or 4 or 7 or 10(b) of this
Services Agreement, or Section 3 of any Services Schedule, and such breach will
result in irreparable harm. The parties therefore agree that, in the event of
any such breach, the non-breaching party shall be entitled to appropriate
mandatory or prohibitory injunctive relief against the breaching party, in
addition to any other remedies at law, in equity or under the Agreement. A party
substantially prevailing in an action for injunctive relief under this Section 9
shall be entitled to recover its costs and expenses for obtaining such relief
(including without limitation reasonable attorneys' fees and court costs) from
the other party.
10. TERMINATION
(a) Except as otherwise provided in the Agreement, either party may
terminate the Agreement or any Services Schedule, and/or any related licenses
granted hereunder or thereunder, by giving the other party written notice to
that effect, effective on the date of receipt of such notice, if:
(i) The other party enters into liquidation, whether or not voluntarily,
or a receiver is appointed to all or any material part of its assets, or the
other party becomes bankrupt or insolvent or enters into any arrangement with
its creditors, or takes or suffers any similar action in consequence of debt or
becomes unable to pay its debts as they become due; or
(ii) The other party materially breaches the Agreement and fails to cure
such breach within ten (10) days of delivery to the breaching party of written
notice of such breach.
(b) If a license granted by ONESOFT to CUSTOMER is terminated for any
reason, CUSTOMER shall, on the effective date of such termination, cease using
any and all of the subject matter of the license and CUSTOMER shall promptly
deliver to ONESOFT all originals and all copies of any and all of such subject
matter and any related documentation.
11. FORCE MAJEURE
A party shall be relieved from an obligation (other than the obligation to
make payments or an obligation under Section 3 or 10(b)) while a cause, outside
of its reasonable control, and that it cannot reasonably circumvent, prevents
the performance of such obligation.
12. RELATIONSHIP OF THE PARTIES; CONTENT
ONESOFT CONFIDENTIAL
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(a) Nothing in the Agreement shall be construed as making either party an
agent of the other party, and neither party shall have the power to bind the
other party or to contract in the name of, or create a liability against, the
other party. Neither party shall be responsible for the acts or defaults of the
other party or any of the other party's employees or agents. The parties are
independent contractors with respect to all matters arising under the Agreement.
Nothing in the Agreement shall be deemed to establish a partnership, joint
venture, association or employment relationship between the parties. With
respect to its employees, a party shall remain responsible, and shall indemnify
and hold harmless the other party, for the withholding and payment of all
federal, state and local personal income, wage, earnings, occupation, social
security, worker's compensation, unemployment, sickness and disability insurance
taxes, payroll levies, or employee benefit obligations.
(b) To the extent ONESOFT is providing Managed Services hereunder, and has
actual control over systems or facilities, ONESOFT agrees to use commercially
reasonable security consistent with industry practices. The parties acknowledge
that the Internet is neither owned nor controlled by any one entity and that one
or more third parties may gain access to ONESOFT systems. Electronic mail and
other transmissions passing through ONESOFT systems or over the Internet are not
secure, and ONESOFT cannot guarantee the security or privacy of any of the
information or communications passing through ONESOFT systems from or onto the
Internet. ONESOFT shall use commercially reasonable efforts consistent with
those in the industry to maintain the integrity of CUSTOMER's systems. EXCEPT
FOR CASES OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF ONESOFT, In
no event will ONESOFT be liable for any loss or damage caused by a breach of
security. ONESOFT will not intentionally monitor or disclose any private
electronic communications, except to the extent necessary to identify or resolve
system problems or as otherwise permitted or required by law. ONESOFT does,
however, reserve the right to monitor transmissions, other than private
electronic communications, as necessary to provide the services hereunder and
otherwise to protect the rights and property of ONESOFT. Notwithstanding the
foregoing, ONESOFT does not assume any liability for any action or inaction with
respect to such communication or content posted or provided by an authorized or
unauthorized third party. ONESOFT is a distributor and not a publisher of
CUSTOMER's data or any other content provided by CUSTOMER or others (including
end users). Because communication of data and other content over the Internet
occurs in real time, ONESOFT cannot, and does not intend to, screen, police,
edit, or monitor communications and content. If ONESOFT is notified of any
content that allegedly violates its [Client[?]] Guide, Email Authorized Use
Policies, and/or is otherwise unlawful, ONESOFT may investigate and remove or
request the removal of such content as it deems appropriate in good faith and in
its sole discretion. In no event will ONESOFT be liable for any loss or damage
caused by a user's reliance on any data or other content obtained through
ONESOFT.
13. FURTHER ASSURANCES
The parties agree to do all such things and to execute such further
documents as may reasonably be required to give full effect to the Agreement.
14. WAIVER
No waiver of any part of the Agreement shall be effective unless made in
writing by the waiving party. No waiver of any breach of the Agreement shall
constitute a waiver of any other breach of the same, or any other provision, of
the Agreement.
15. ENTIRE AGREEMENT AND CONSTRUCTION
The Agreement constitutes an initial agreement between the parties with
respect to the specific subject matter hereof. The parties agree that there are
no other representations or warranties relating to the subject matter of the
Agreement. Headings are included in the Agreement for convenience only and shall
not affect the meaning or construction of the Agreement's provisions.
16. AMENDMENT
The Agreement may be modified or amended only by means of a writing executed
by both parties (but not by means of a PO).
17. ASSIGNIBILITY AND RESALE
Rights under the Agreement shall not be assigned, sublicensed, encumbered by
security interest, or otherwise transferred or resold by either party (whether
by operation of law or otherwise) without the prior written consent of the
other, and any purported assignment, sublicense, encumbrance or other transfer
of such rights, in violation of the Agreement, shall be void. An amalgamation,
acquisition, or merger of a party by or with any person or entity who is not a
party to the Agreement shall be treated as an assignment of the Agreement that
is subject to the provisions of the next preceding sentence if the other party
determines in its sole discretion, that such person or entity (a) is a
competitor of it or (b) has a financial condition that is materially inferior to
original party's.
18. COMPLIANCE WITH LAWS
CUSTOMER shall carry out the obligations contemplated by the Agreement and
shall otherwise deal with the subject matter hereof in compliance with all
applicable laws, rules and regulations, of all governmental authorities,
including, without limitation, any applicable legal restrictions on exports, and
shall, at its own expense, obtain all permits and licenses required in
connection with the subject matter hereof. Without limiting the foregoing,
CUSTOMER agrees that it shall comply fully with all applicable export and import
laws, rules and regulations of the United States and other jurisdictions so that
nothing provided by ONESOFT under the Agreement is either (a) exported or
imported, whether directly or indirectly, in violation of such laws, rules or
regulations; or (b) used for any illegal purpose, including without limitation
the proliferation of nuclear, chemical or biological weapons.
19. SUCCESSORS AND ASSIGNS
The Agreement shall inure to the benefit of, and be binding upon the
parties, their successors and permitted assigns.
20. SEVERABILITY
If any provision of the Agreement is held to be unenforceable, all remaining
provisions shall remain in full force and effect.
ONESOFT CONFIDENTIAL
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21. GENERAL PROVISIONS
(a) A party shall not directly or indirectly solicit or offer employment to,
or directly or indirectly accept services, by an employee or contractor of the
other party, during the term of the Agreement and for one (1) year thereafter,
without the prior written consent of the other party. For purposes of the
Agreement, use of general employment advertising and independent employment
agencies, if not directed at one or more of the other party's employees, shall
not constitute solicitation.
(b) Each party (i) agrees to inform the other party of any information made
available to the other party that is classified or restricted data, (ii) if
given such information and so informed, agrees to comply with the security
requirements imposed by any state or local government, or by the United States
Government, and (iii) if given such information and so informed, agrees return
all copies of such information upon request.
(c) Each party warrants and represents that its entering into and performing
its obligations under the Agreement does not conflict with any contractual or
other obligation of such party or create any conflict of interest prohibited by
the U.S. Government or any other governmental authority, and that it shall
promptly notify the other party if any such conflict arises during the term of
the Agreement.
(d) Each party shall maintain commercially reasonable and adequate insurance
protection covering its respective activities hereunder, including coverage for
statutory workers' compensation, comprehensive general liability for bodily
injury and tangible property damage, as well as adequate coverage for vehicles.
Each party shall indemnify and hold the other harmless from and against any and
all liability for bodily injury, death and tangible property damage resulting
from the acts or omissions of the indemnifying party(or its officers, agents,
employees or representatives acting within the scope of their work).
(e) Sections 1, 2(c) through (j) and, 3 through 23 shall survive the
expiration or termination of the Agreement.
22. ENFORCEMENT
(a) The Agreement shall be governed by and construed in accordance with the
law of the Commonwealth of Virginia, applied without regard to its law of
conflicts.
(b) Subject to Section 22(c), any controversy or claim arising out of or
relating to the Agreement for which the value of the claim at issue is less than
$*********, shall be resolved by arbitration on accordance with the Commercial
Arbitration Rules and supplementary procedures for international commerce
arbitrations of the American Arbitration Association, except that (1) the
parties shall be entitled to reasonable document and deposition discovery from
each other limited to the matters in dispute and (2) the arbitrator shall
prepare a statement of findings of fact and conclusions of law and deliver the
statement to the Parties with respect to which the Parties shall be bound by the
findings of fact, but a Party may appeal issues of law (or application of law to
the facts) to any court of competent jurisdiction. Otherwise, judgment upon the
award rendered by the arbitrator may be entered in any court of competent
jurisdiction. The arbitration proceeding shall be conducted by a single
arbitrator selected by agreement of the parties but if the parties do not agree
on such selection then the arbitration proceeding shall be conducted by a panel
of three arbitrators. The arbitration shall be held in the Washington, D.C.
metropolitan area.
(c) Either party may seek from any court of competent jurisdiction,
injunctive and other equitable relief.
23. NOTICES
(a) Any notice or other communication to the parties shall be sent to the
contact points identified below or at such other places as they may from time to
time specify by notice in writing to the other party. Any such notice or other
communication shall be in writing and shall be given by delivery to the
designated party of the addressee by pre-paid courier or facsimile with
confirmation. Any such notice or other communication shall be deemed to have
been given when the designated party of the addressee receives such notice.
(b) Point of Contact addresses are as follows:
For ONESOFT: (Technical)
Jeffrey M. MacIntyre
OneSoft Corporation
1505 Farm Credit Drive
McLean, VA 22102
Telephone: (703) 821-9190
For ONESOFT: (Contract and Admin.)
Paul D. Economon, Esq.
OneSoft Corporation
1505 Farm Credit Drive
McLean, VA 22102
Telephone: (703) 821-9190
For CUSTOMER: (Technical)
For CUSTOMER: (Contractual and Admin.)
IN WITNESS WHEREOF, the parties have caused this Services Agreement to be
executed by their duly authorized representatives as of the date first written
above.
OneSoft Corporation Phillips Publishing
By: /s/ Paul Economon By: /s/ James E. Jordan
----------------- -------------------
ONESOFT CONFIDENTIAL
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Name: Paul D. Economon, Esq. Name: James Jordan
--------------------------- ---------------------------
Title: Corporate Counsel Title: Sr. V.P.
--------------------------- ---------------------------
ONESOFT CONFIDENTIAL
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OneSoft Corporation Customer Compaq
------
OneSoft Corporation has omitted from this Exhibit 10.27 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
EXHIBIT 10.27
ONESOFT COMMERCE PARTNER
JUMPSTART TRAINING PROGRAM AGREEMENT
THIS JUMPSTART TRAINING PROGRAM AGREEMENT (including any attachments
incorporated herein by reference, this "Agreement") is entered into as of the
25th day of August, 1999, between ONESOFT CORPORATION ("ONESOFT"), a Delaware
corporation, having an office at 1505 Farm Credit Drive, Suite 100, McLean, VA
22102, and Compaq Computer Corporation("CUSTOMER"), having an office at 131
Hartwell Avenue, Lexington, MA 02421.
A. PURPOSE.
--------
This Agreement is intended, among other things, to outline the JumpStart
Training Program for OneSoft Commerce Partners, conducted for the purpose of
certifying CUSTOMER to be a OneSoft Commerce Partner (a "OCP").
B. RELATIONSHIP OF ONESOFT TO CUSTOMER.
------------------------------------
It is expressly agreed that the parties, for the sole purpose of this Agreement,
are not, and shall not be, considered as joint venturers, partners, servants,
employees or fiduciaries of each other, and neither shall have the power to bind
or obligate the other except as expressly set forth in this Agreement.
C. SCOPE OF SERVICES.
------------------
ONESOFT shall provide CUSTOMER with certification training as set forth on
Schedule 1 attached hereto and made a part hereof. OCP designation is
contingent upon successful completion of the training requirements as set forth
in Schedule 1 for three full-time employed individuals from the CUSTOMER
(pursuant to Section D.2 of the OCP Master Agreement), and contingent upon the
successful execution of the OCP Master Agreement.
D. TERMS.
------
1. ONESOFT shall *********** for the JumpStart Training Program as set forth
in the attached Schedule 2 for **************** the JumpStart Training
Program *********** and ********** . ONESOFT shall charge a fee of
$********** for each additional personnel of CUSTOMER that attend or
complete the JumpStart Training Program *********** .
2. The training tracks are identified as Sales Track and Technical Track.
CUSTOMER is required to certify at least ******** through the Sales
Training track and at least ********** through the Technical Training Track
in order to qualify for the OCP designation. Training of these ********* is
included in the *************** of the OCP JumpStart Training Program as
shown in Schedule 2. Additional personnel may be included in the JumpStart
Training Program ************** as specified in Schedule 2 CUSTOMER shall
provide ONESOFT with the names and titles of individuals participating in
the JumpStart Training Program as set forth on Schedule 3.
3. The CUSTOMER must complete the OCP JumpStart training program to become an
OCP.
4. Upon execution of an OCP Master Agreement and successful completion of the
OCP JumpStart Training Program, CUSTOMER will receive the OCP designation
and the OCP materials.
5. By entering into this Agreement, CUSTOMER hereby agrees to complete the
JumpStart Training Program within 12 months. Until such time, the CUSTOMER
is proscribed from using the OCP designation. If the CUSTOMER does not
complete the required OCP training ************ , they will forfeit any and
all fees to OneSoft, and will need to re-qualify for consideration into the
OCP program.
E. DURATION.
---------
The provisions of this Agreement shall become effective immediately upon its
execution and shall remain in full force and effect for a period of ONE YEAR
from the date hereof.
F. CONFIDENTIALITY.
----------------
1. CUSTOMER agrees that in connection with the parties' performance under this
Agreement, CUSTOMER may have access to confidential, proprietary or trade
secret information owned and/or provided by ONESOFT relating to software
computer programs, object
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OneSoft Corporation Customer Compaq
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code, source code, database schemes, marketing plans, business plans,
financial information, specifications, flow charts, other disclosed
documents and other information as described in Schedule 1 of this
Agreement ("Confidential Information"). All Confidential Information
supplied by ONESOFT to CUSTOMER shall remain the exclusive property of
ONESOFT. While ONESOFT agrees to make reasonable efforts to identify
Confidential Information to CUSTOMER, CUSTOMER acknowledges that common
business practices will also apply to the recognition and definition of
such Confidential Information. CUSTOMER shall use such Confidential
Information only for the purposes permitted under this Agreement and shall
not copy, disclose, convey or transfer any such Confidential Information or
any part thereof to any third party.
2. Information is not Confidential Information under this Agreement if it:
. Was already known by the party to which the information was disclosed
before the time of its disclosure by the disclosing party, as
evidenced by written records prepared prior to such disclosure;
. Is or becomes publicly known through no wrongful act of the party to
which the information was disclosed;
. Is rightfully received by the party to which the information was
disclosed from a third person having no obligation to refrain from
disclosing such information to such party; or
. Is required by law to be disclosed.
3. In the event that the CUSTOMER fails to complete the training requirements
within one (1) year from the date of this Agreement, the CUSTOMER shall
cease all use, licensing or distribution, whatsoever of the OCP Starter Kit
materials and any other Confidential Information provided to CUSTOMER by
ONESOFT pursuant to this Agreement, all related documentation and ONESOFT's
names and marks, including the OCP designation, and shall return to ONESOFT
all copies of the OCP Starter Kit, related documentation, specifications,
training materials and all other materials provided by ONESOFT to CUSTOMER
and materials incorporating any of ONESOFT's products or ONESOFT's names or
marks, in CUSTOMER's possession or under its control.
G. DISCLAIMER.
-----------
ONESOFT MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE TRAINING
SERVICES RENDERED OR THE RESULTS OBTAINED FROM THE TRAINING, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. IN NO EVENT SHALL ONESOFT (OR ITS EMPLOYEES, AGENTS OR SUPPLIERS) BE
LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING WITHOUT LIMITATION LOST PROFIT), EVEN IF ADVISED OF THE POSSIBILITY
THEREOF, AND REGARDLESS OF WHETHER ANY CLAIM IS BASED UPON ANY AGREEMENT,
NEGLIGENCE, WARRANTY, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY.
ONESOFT'S TOTAL LIABILITY UNDER THIS AGREEMENT SHALL BE LIMITED TO THE LESSER OF
THE AGGREGATE FEES RECEIVED BY ONESOFT FROM CUSTOMER HEREUNDER, NOTWITHSTANDING
ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
H. OWNERSHIP; PROPRIETARY RIGHTS
-----------------------------
1. Except as otherwise expressly provided in Subparagraph H(10), all
"Software," all "Tools," and all "Objects" (as such terms are defined), in
any form, are and shall remain the sole and exclusive property of ONESOFT
and shall be deemed its Confidential Information.
2. Except as expressly provided in this Agreement, CUSTOMER does not acquire
any right or license in ONESOFT's Software, Tools, and/or Objects.
3. "Tools" means ONESOFT's proprietary information and know-how and used at
any time by ONESOFT in the conduct of its business. This includes, by way
of illustration but not limitation, technical information, designs,
templates, software modules, processes, methodologies, systems used to
create computer programs and/or software, procedures, code books, computer
programs, plans, and/or any other similar information including
improvements, modifications or developments thereto.
4. "Objects" mean any and all of ONESOFT's proprietary reusable software code.
5. "Software" means any and all of ONESOFT's proprietary software code.
6. In the event that either party is required by judicial or administrative
process to disclose any or all of the materials or information to treated
as Confidential Information in this Agreement, such party shall promptly
notify the disclosing party and allow the disclosing party a reasonable
period of time, subject to the requirements to disclose such materials or
information, to oppose such process before making disclosure.
7. Each party understands and agrees that any use or dissemination of any
information or materials in violation of this Agreement will cause the
other party irreparable harm, will leave such party with no adequate remedy
at law, and thus will entitle such party to injunctive relief in addition
to all other remedies available under law. A party that violates its
obligations concerning Confidential Information, shall reimburse the other
party for reasonable costs and expenses (including reasonable attorneys'
fees) incurred in enforcing its rights with respect to such violation.
8. Subject to the limitations set forth herein, ONESOFT grants, without
charge, and CUSTOMER accepts, a limited, non-exclusive, non-transferable,
royalty free, revocable license to use ONESOFT's Evaluation Edition
OneCommerce(TM) suite of internet commerce software, and/or any application
provided in the Starter Kit under this Agreement (the "Software" or
"ONESOFT Product"). ONESOFT shall provide CUSTOMER with one copy of the
Software (as defined), in object-code form, to be used solely for purposes
authorized in this Subparagraph H.10. CUSTOMER shall not copy the Software,
except as provided in this Agreement. CUSTOMER shall not modify, decompile,
reverse engineer, recreate, disassemble, or otherwise attempt to determine
the makeup of the Software. CUSTOMER shall not use the Software except as
expressly provided in this Agreement. CUSTOMER shall not permit employees
of CUSTOMER (or any other persons) to use the Software except for those
employees with a need to use the Software to effect the
2
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OneSoft Corporation Customer Compaq
------
purposes of this Agreement, and, in any event, CUSTOMER may use the
Software only for the purpose of sales and marketing and internal training
necessary to effect the purposes of this Agreement. It is expressly agreed,
without limiting the generality of the foregoing, that CUSTOMER shall not:
(i) use the Software for the purpose of engaging in electronic commerce or
other commercial purposes; (ii) lend the Software to potential or current
clients, use the Software on hardware not owned by CUSTOMER; (iii) or
provide access to anyone who is not an employee or contract worker of
CUSTOMER; (iv) use the Software to develop applications for the purpose of
supporting internal or commercial CUSTOMER activities; (v) except as
provided for herein, copy any part of the Software for any reason other
than for archival or emergency restart purposes or program error
verification; (vi) sublicense, rent or otherwise make the Software
available outside of CUSTOMER's legal business entity or to any third party
for a fee (in a service bureau environment or otherwise) or otherwise
transfer or grant any rights or access to third parties; (vii) modify,
decompile, reverse engineer, recreate, disassemble, or otherwise attempt to
determine the makeup of the Software. Except as expressly set forth herein,
this Paragraph H does not constitute a license to use Software, Software
Products, Tools, or Objects, which CUSTOMER must separately license from
ONESOFT as necessary.
9. Nothing in this Agreement shall be deemed to limit CUSTOMER's rights to
develop and market functionally comparable products to the ONESOFT Product,
or to provide e-commerce solutions, provided CUSTOMER does not violate the
terms and conditions of Sections F and H herein.
10. Unless otherwise agreed in writing, nothing herein shall be deemed to
authorize the CUSTOMER to use any pending and/or existing trademark or
service mark of ONESOFT. The CUSTOMER shall not remove or alter any pending
and/or existing copyright and/or trade secret notice affixed to any
software or documentation provided by or through ONESOFT, without the
express written consent of ONESOFT.
I. GENERAL PROVISIONS
------------------
1. Rights under this Agreement shall not be assigned, sublicensed, encumbered
by security interest or otherwise transferred or resold by CUSTOMER
(whether by operation of law or otherwise) without the prior written
consent of ONESOFT, and any purported assignment, sublicense, encumbrance
or other transfer of such rights, in violation of this Agreement, shall be
void. An , acquisition, or merger of CUSTOMER by or with any person or
entity who is not a party to this Agreement shall be treated as an
assignment of this Agreement that is subject to the provisions of the
foregoing sentence. ONESOFT may assign its rights and obligations under
this Agreement to any party acquiring all or substantially all of its
business, regardless of the form of the transaction.
2. This Agreement may only be amended by instrument in writing signed by both
parties. Schedules attached hereto are to be considered such a writing, and
are hereby incorporated herein, once they are signed by both parties.
3. The failure of either party to require the strict performance of any
provisions of this Agreement in any one or more instances, or to exercise
its rights hereunder or at law or equity, shall not constitute a waiver of
any provisions or rights under this Agreement, and such provisions and
rights shall continue in full force and effect.
4. Neither party shall directly or indirectly solicit or offer employment to
an employee or subcontractor of the other party during the term of this
Agreement, and for *************** thereafter, unless otherwise agreed to
by the respective party. For purposes of this Agreement, use of general
advertising and independent employment agencies, if not directed at
CUSTOMER's or ONESOFT employees, shall not constitute solicitation.
5. If any provision of this Agreement is held to be invalid, the remaining
provisions will continue to be valid and enforceable.
6. ONESOFT shall be excused from performance hereunder to the extent that
performance is prevented or delayed by causes beyond ONESOFT's reasonable
control, including without limitation, Acts of God (fire, storm, floods,
earthquakes, etc.), civil disturbances or disruption of telecommunications
or other essential services.
7. CUSTOMER shall not directly or indirectly export or re-export any services,
software, equipment, technology or data supplied by ONESOFT under this
Agreement to Afghanistan, the People's Republic of China or any Group Q, S,
W, Y or Z country specified in Supplement 1 to Part 770 of the U.S. Export
Administration Regulations. This provision and the assurances made herein
shall survive termination of this Agreement whether in part or whole.
8. Each party agrees to inform the other of any information made available to
the other party that is classified or restricted data, agrees to comply
with the security requirements imposed by any state or local government, or
by the United States Government, and shall return all such material upon
request. Each party warrants that its participation in this Agreement does
not conflict with any contractual or other obligation of the party or
create any conflict of interest prohibited by the U.S. Government or any
other governmental authority, and shall promptly notify the other party if
any such conflict arises during the term of this Agreement.
9. Each party shall maintain commercially reasonable and adequate insurance
protection covering its respective activities hereunder, including coverage
for statutory worker's compensation, comprehensive general liability for
bodily injury and tangible property damage, as well as adequate coverage
for vehicles. Each party shall indemnify and hold the other harmless from
liability for bodily injury, death and tangible property damage to the
extent of the acts or omissions of such party, its officers, agents,
employees or representatives acting within the scope of their work.
10. The parties acknowledge that violation by a party of the provisions of
Section H would cause irreparable harm to the other party that could not be
adequately compensated for by monetary damages. In addition to other
relief, it is agreed that temporary and permanent injunctive relief shall
be available without necessity of posting bond to prevent any actual or
threatened violation of such provisions or to enforce such provisions
according to their terms.
3
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OneSoft Corporation Customer Compaq
------
11. THIS AGREEMENT, AND SCHEDULES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE COMMONWEALTH OF VIRGINIA,
EXCLUDING ITS CHOICE OF LAW RULES. ANY PROCEEDING OR DISPUTE RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, SHALL BE INITIATED
AND MAINTAINED IN COURTS LOCATED IN SUCH COMMONWEALTH.
12. The headings of this Agreement are for reference purposes only and do not
affect the meaning or construction of the provisions of this Agreement.
13. This Agreement constitutes the entire agreement of the parties with respect
to the subject matter hereof and the parties agree that there are no other
representations, warranties or oral agreements relating to the subject
matter of this agreement.
4
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OneSoft Corporation Customer Compaq
------
NOTICES
All notices, requests, consents and other communications hereunder shall be in
writing, shall be addressed to the receiving party's address set forth below, or
to other addresses as a party may designate by notice hereunder, and shall be
either (i) delivered by hand, (ii) made by telex or facsimile transmission,
(iii) sent by overnight courier or, (iv) sent by registered or certified mail,
return receipt requested, postage prepaid.
If to ONESOFT:
Name: Paul D. Economon, Esq.
Title: Corporate Counsel
OneSoft Corporation
1505 Farm Credit Drive
Suite 100
McLean, VA 22102
If to CUSTOMER:
Name: Denise Greenberg
Title: E-Commerce Marketing Manager
Compaq Computer Corporation
19191 Vallco Parkway
Cupertino, CA 95014
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on
the date stated above.
ONESOFT CORPORATION COMPAQ COMPUTER CORPORATION
By: /s/ Paul Economon By: /s/ Sally McGuire
--------------------- --------------------------
Title: Corporate Counsel Title: 3rd Party Contracts Mgr.
-------------------- -------------------------
Date: 8-25-99 Date: August 24, 1999
--------------------- --------------------------
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OneSoft Commerce Partner (OCP) Program
================================================================================
JUMPSTART AGREEMENT SCHEDULE 1
PROGRAM DETAILS
The OCP JumpStart program is designed specifically to provide MCSPs with
the knowledge, skills, tools, and products required for successfully
selling and rapidly deploying Internet commerce solutions.
PROGRAM LOGISTICS
All Training will be conducted at OneSoft's Corporate Headquarters, located
at:
1505 Farm Credit Drive, Suite 100
McLean, VA 22101
PROGRAM AGENDAS
Sales Professional Certification course will cover:
. **************
Deployment Professional Certification: This course will cover:
OneStrategy consulting engagements
********
PROGRAM TOOLS/SOFTWARE
At the end of training, OCPs will receive the following materials:
SOFTWARE
. One (1) *********** of ***********
. One (1) ********** of *********
**********
SALES TOOLS
. One (1) ********** of ********** , designed specifically to **********
the ability to ************
. One (1) ********** of ********** that enables ********* to **********
for their customers.
. Sales and marketing collateral
IMPLEMENTATION TOOLS
. **************** Detailing all **********
SUPPORT
. ***** FREE ********* Calls
- --------------------------------------------------------------------------------
Confidential Information 01/26/0001/26/00
<PAGE>
OneSoft Commerce Partner (OCP) Program
================================================================================
JUMPSTART AGREEMENT SCHEDULE 2
PROGRAM FEES
OCP JumpStart fee ******************** for all of CUSTOMER's personnel that
complete the JumpStart Training Program ************ and ************ . ONESOFT
shall **************** additional personnel of CUSTOMER that attend or complete
the JumpStart Training Program ***********.
All MCSPs participating in the program are required to enroll one (1) Sales
Professional and two (2) Deployment Professionals in OCP training.
- --------------------------------------------------------------------------------
Confidential Information 01/26/0001/26/00
<PAGE>
OneSoft Commerce Partner (OCP) Program
================================================================================
JUMPSTART AGREEMENT SCHEDULE 3
LIST OF JUMPSTART TRAINING ATTENDEES
***************
- --------------------------------------------------------------------------------
Confidential Information 01/26/0001/26/00
<PAGE>
ADDENDUM #1 TO ONESOFT COMMERCE PARTNER
JUMPSTART TRAINING PROGRAM AGREEMENT
This Addendum to OneSoft Commerce Partner Jumpstart Training Program
Agreement is dated this 13/th/ day of September 1999 by and between OneSoft
Corporation ("OneSoft") and Compaq Computer Corporation ("Compaq"). This
Addendum shall amend the OneSoft Commerce Partner Jumpstart Training Program
entered between the parties dated August 25, 1999 ("Agreement") as follows:
1. Compaq, at its expense, shall ship to OneSoft a server on which OneSoft
will install OneSoft's OneCommerce/TM/ 2.1 software ("Software"). Once
the Software is installed, the server shall be returned to Compaq at
OneSoft's expense.
2. Compaq shall be authorized to use the Software as specified in
paragraph H.8 of the Agreement solely for evaluation purposes for ****
days commencing on the date that Compaq is in receipt of the server on
which the Software has been installed. Compaq is expressly prohibited
from using the Software to develop websites for clients until the
parties have entered into an agreement in which OneSoft extends Compaq
a license to use the Software for additional purposes. Compaq's use of
the Software for non-evaluation purposes shall constitute a material
breach of the Jumpstart Training Program Agreement and its right to use
the Software shall automatically be rescinded without further notice.
3. It is further stipulated and agreed that all other terms and conditions
of said Agreement shall remain the same.
COMPAQ COMPUTER CORPORATION ONESOFT CORPORATION
/s/ Sally McGuire /s/ Paul Economon
- --------------------------------- --------------------------------
By: Sally McGuire By: Paul Economon
----------------------------- ----------------------------
Title: 3/rd/ party Contracts Mgr. Title: Corporate Counsel
-------------------------- -------------------------
<PAGE>
OneSoft Corporation has omitted from this Exhibit 10.28 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
EXHIBIT 10.28
SERVICES AGREEMENT CONTRACT NUMBER *****
- --------------------------------------------------------------------------------
THIS AGREEMENT, is entered into on February 9, 1999 between OneSoft Corporation
(hereinafter "OneSoft" having an office at 7010 Little River Turnpike, Suite
410, Annandale, VA 22003, and Alloy Designs, Inc. (hereinafter "Alloy"), with
its principal office at 115 West 30th Street, Suite 201, New York, NY 10001.
WHEREAS, OneSoft is a service provider; and
WHEREAS, OneSoft thereby offers managed information and communication services
and facilities for its customers under the definitions, terms and conditions set
forth in this Agreement, and as in Scope(s) of Work that may from time to time
be attached, incorporated and/or amended hereto; and
WHEREAS, Alloy will utilize OneSoft's services and its facilities, and will
compensate OneSoft for said services as provided for and defined under this
Agreement and as in Scope(s) of Work that may from time to time be attached,
incorporated and/or amended hereto.
NOW THEREFORE, in consideration of the terms, mutual promises and agreements
contained herein, the parties do hereby agree as follows:
Commerce
1. OneSoft will work to integrate the AlloyOnline.com, or its successor, order
and inventory data transactions with the *********** (hereinafter *****) systems
by providing and accepting files to and from ******** at a frequency specified
by Alloy. OneSoft understands that Alloy is committed to this initiative and
will have the influence to make available the ******* management and staff
necessary to complete this initiative in an efficient manner.
2. OneSoft Commerce Server(TM) product business application objects support
flexible product display, shopping cart processing, and order processing.
OneSoft will work with Alloy to provide direction and additional alternatives or
modifications to these objects so that Alloy has the flexibility needed to
present product offerings effectively to its consumers.
4. OneSoft will provide additional order notification to Alloyonline.com
customers via email and on-line. Once an order is placed, customers will be
notified via email that their order is being processed. In order for customers
to check their order online they will need to create an account and log into
that account. OneSoft will set up such accounts at the direction of Alloy.
Chat
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1. OneSoft's Java-based chat application currently provides administrative
monitoring and other features that are enabled when users and administrators are
logged into the system. OneSoft will provide more instruction and documentation
regarding the current features and functionality as requested by Alloy.
2. The Chat interface can be customized as necessary to meet the requirements of
the AlloyOnline.com users. OneSoft will work with Alloy to provide the interface
and features to this application that best meet the goals of Alloy, subject to
reasonable commercial limitations.
3. Celebrity Chat has been mocked-up per Alloy's requirements. This
functionality will be available for Alloy to use for its celebrity chat events.
Additional monitoring functionality will be added to the Java Chat application
in the coming weeks and months.
Community Functionality / Personalization
1. OneSoft will work with Alloy to determine the way in which users will
register and log into their AlloyOnline.com accounts. Once Alloy is comfortable
with the user account creation and log in procedures, account registration and
authentication features of OneSoft's software will be activated.
2. OneSoft will work with Alloy to determine the type of user and content
profile data required to support personalized product offerings and
advertisements on the AlloyOnline.com system. Once users and content have been
profiled, OneSoft will activate personalization features of OneSoft's product to
serve targeted ads and product offerings.
3. OneSoft will work with Alloy to identify the business rules around
personalization functionality. OneSoft will also collaborate with third party
vendors to support additional personalization processing. Once the requirements
are defined, it will be implemented through attached Scopes of Work to this
Agreement. This functionality is critical to OneSoft and will be a major area of
focus over the coming year. This is a primary area in which OneSoft will expend
significant resources to differentiate its products. Alloy will benefit directly
from this.
Co-Location
1. OneSoft will allocate up to ********* of Internet connectivity bandwidth for
the AlloyOnline.com system. At current and forecasted usage levels, this amount
of connectivity will provide fast access and distribution of AlloyOnline.com
system data. Should AlloyOnline.com require additional connectivity due to
increasing system requests, OneSoft will notify Alloy and, subject to Alloy's
consent, adjust the amount of required connectivity and associated service
pricing accordingly through attached Scopes of Work to this Agreement.
2. OneSoft will provide monthly AlloyOnline.com system traffic statistic reports
by page and section to Alloy's reasonable specifications.
3. OneSoft will provide tape management and backup services to Alloy's
reasonable specifications for the AlloyOnline.com system.
4. OneSoft will provide 24/7 monitoring of the AlloyOnline.com systems.
Service/Cost Agreement
1. Alloy will pay $********* per month as a fixed fee.
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<PAGE>
2. This Services Agreement will be for a period of ********* from the date of
its execution.
3. OneSoft will provide maintenance to ensure that the above functionality is
working correctly and to acceptable commercial standards.
4. In the event of non-renewal of this Service Agreement, OneSoft will use
reasonable best efforts to ensure the non-disruptive, safe and secure transfer
of user data.
5. OneSoft will provide to Alloy ******** of "special project" time per month.
6. Alloy will retain sole, exclusive and continuing rights to all data within
its site(s) which shall include, but not be limited to, User name, User address,
and other User demographic information.
7. OneSoft will retain rights to all software object and source code that it
provides and creates (all third-party software provided by Alloy will of course
remain as Alloy Designs property).
Additional Services
OneSoft shall remain available to perform modifications and updates to the
System on a time and material basis. Such additional services will be available
as follows:
. Alloy shall inform OneSoft of a desired change or modification and OneSoft
will complete a project change request form with an estimate as to the level
of effort and fee.
. Alloy will sign the form to approve OneSoft to perform the work.
For example and illustration purposes only:
. As Alloy's site traffic increases and OneSoft's attention to analyze system
bottlenecks and to recommend system scalability.
. Alloy informs OneSoft and requests the changes.
. OneSoft reviews the system issues and calculates the level of effort to
scale the system then provides Alloy with the written project change request
form.
. Alloy decides to proceed by executing the form and returning it to OneSoft.
. OneSoft performs the services.
Confidential Information
1. ACKNOWLEDGMENT OF CONFIDENTIALITY. EACH PARTY HEREBY ACKNOWLEDGES THAT IT
MAY BE EXPOSED TO CONFIDENTIAL INFORMATION BELONGING TO OR SUPPLIED BY THE
OTHER PARTY OR RELATING TO ITS AFFAIRS INCLUDING, WITHOUT LIMITATION,
SOFTWARE, BUSINESS PLANS AND PROCEDURES, THE TERMS OF THIS AGREEMENT, THE
CLIENT GUIDE, AND OTHER CONFIDENTIAL INFORMATION (HEREINAFTER REFERRED TO AS
"CONFIDENTIAL INFORMATION"). CONFIDENTIAL INFORMATION DOES NOT INCLUDE (a)
INFORMATION ALREADY KNOWN OR INDEPENDENTLY DEVELOPED BY THE RECIPIENT
OUTSIDE THE SCOPE OF THIS PROJECT; (b) INFORMATION IN THE PUBLIC DOMAIN
THROUGH NO WRONGFUL ACT OF THE RECIPIENT, OR (c) INFORMATION RECEIVED BY THE
RECIPIENT FROM A THIRD PARTY WHO WAS FREE TO DISCLOSE IT.
2. COVENANT NOT TO DISCLOSE. WITH RESPECT TO THE OTHER PARTY'S CONFIDENTIAL
INFORMATION, AND EXCEPT AS EXPRESSLY AUTHORIZED HEREIN OR AS REQUIRED BY A
COURT OF COMPETENT JURISDICTION, THE RECIPIENT HEREBY AGREES THAT DURING THE
TERM HEREOF, AND AT ALL TIMES THEREAFTER, IT SHALL COMMERCIALIZE OR DISCLOSE
SUCH CONFIDENTIAL INFORMATION TO ANY PERSON OR ENTITY, EXCEPT TO EMPLOYEES
HAVING A "NEED TO KNOW" (AND WHO ARE THEMSELVES BOUND BY SIMILAR
NONDISCLOSURE RESTRICTIONS), AND TO SUCH OTHER RECIPIENTS AS
3
<PAGE>
THE OTHER PARTY MAY APPROVE IN WRITING. IN NO EVENT SHALL EITHER PARTY
ATTEMPT TO DECOMPILE, DISASSEMBLE OR REVERSE ENGINEER THE OTHER PARTY'S
CONFIDENTIAL OR PROPRIETARY INFORMATION AND ANY INFORMATION DISCOVERED IN
VIOLATION OF THIS PROVISION SHALL BE TREATED AS CONFIDENTIAL INFORMATION
BELONGING EXCLUSIVELY TO THE OTHER PARTY. EACH PARTY SHALL USE AT LEAST THE
SAME DEGREE OF CARE IN SAFEGUARDING THE OTHER PARTY'S CONFIDENTIAL
INFORMATION AS IT USES IN SAFEGUARDING ITS OWN CONFIDENTIAL INFORMATION, BUT
IN NO EVENT SHALL LESS THAN DUE DILIGENCE AND CARE BE EXERCISED.
Choice of Law
THIS AGREEMENT SHALL BE INTERPRETED, GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE SUBSTANTIVE LAWS OF THE COMMONWEALTH OF VIRGINIA, EXCLUSIVE OF ITS
CHOICE OF LAW RULES. ANY PROCEEDING OR DISPUTE RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, SHALL BE INITIATED AND MAINTAINED IN THE COURT
SYSTEM OF SAID DESIGNATED STATE.
Warranty Disclaimer
ONESOFT MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES
RENDERED OR THE RESULTS OBTAINED FROM ONESOFT'S WORK, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. IN NO EVENT SHALL ONESOFT OR ITS SUPPLIERS BE LIABLE FOR: (1) ANY
DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, EVEN IF ADVISED
OF THE POSSIBILITY THEREOF, AND REGARDLESS OF WHETHER ANY CLAIM IS BASED UPON
ANY AGREEMENT, NEGLIGENCE, WARRANTY, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY; OR (2) ANY AMOUNTS OF DIRECT DAMAGES IN EXCESS OF THE
AGGREGATE OF THE FEES RECEIVED BY ONESOFT FROM ALLOY HEREUNDER, NOTWITHSTANDING
ANY FAILURE OF ESSENTIAL PURPOSES OF ANY LIMITED REMEDY.
Liabilities
ONESOFT SHALL NOT BE LIABLE FOR ANY AMOUNT ***************** TO THE EVENT
GIVING RISE TO THE ALLEGED CLAIM. EXCEPT FOR INDEMNIFICATION CLAIMS OR
DISCLOSURE OF CONFIDENTIAL INFORMATION, NEITHER PARTY SHALL BE LIABLE, WHETHER
IN CONTRACT OR TORT LAW (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR ANY INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST SAVINGS, PROFIT OR BUSINESS
INTERRUPTION EVEN IF NOTIFIED IN ADVANCE OF SUCH POSSIBILITY) ARISING OUT OF, OR
PERTAINING TO THE SUBJECT MATTER OF THIS AGREEMENT, AND/OR ANY SCOPE(S) OF WORK
ATTACHED HERETO.
Modification, Waiver & Miscellaneous
This document, as well as other Scope(s) of Work that may be legally
attached hereto in the future, which are hereby incorporated by reference in
their entirety, constitute the entire agreement between the parties with respect
to the subject matter hereof, and supersede all other communications, whether
written or oral. This Agreement, and/or any Scope(s) of Work attached hereto,
may be modified or amended only by a writing signed by both parties, which may
be in the form of a Scope of Work. 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.
IN WITNESS WHEREOF, for adequate consideration and intending to be legally
bound, the parties hereto have caused this Agreement to be executed by their
duly authorized representatives.
OneSoft Corporation Alloy Designs, Inc.
By: /s/ Jeff MacIntyre By: /s/ Matt Diamond
-------------------------- --------------------------
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<PAGE>
Name: Jeff MacIntyre Name: Matt Diamond
--------------------------- --------------------------
Title: VP IOC Title: CEO
--------------------------- --------------------------
Date: 2/1//99 Date: 2/15/99
--------------------------- --------------------------
5
<PAGE>
OneSoft Corporation Totally Wireless
OneSoft Corporation has omitted from this Exhibit 10.29 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
EXHIBIT 10.29
ONESOFT MANAGED APPLICATION AND SERVICES AGREEMENT ********
THIS AGREEMENT is entered into as of March 4, 1999 by and between OneSoft
Corporation ("ONESOFT"), a Delaware Corporation having an office at 7010 Little
River Turnpike Suite 460, Annandale, Virginia 22003, and Skyway Communications,
Inc., (d.b.a. Totally Wireless) ("CLIENT"), having an office at 46653 Fremont
Blvd., Fremont, CA 94538.
The parties hereby agree as follows:
ONESOFT STANDARD LICENSE AND SERVICES TERMS AND CONDITIONS
- --------------------------------------------------------------------------------
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OneSoft Corporation Totally Wireless
1. DEFINITIONS
(a) This "AGREEMENT" means this document entitled OneSoft Managed Application
and Services Agreement together with each Product Addendum, Scope of Work,
Change Order, or Schedule, attached hereto and/or thereto, collectively
(and each Product Addendum, Scope of Work, Change Order, or Schedule
attached hereto or thereto, is hereby incorporated into this Agreement by
reference and is made a part of this Agreement as if fully set forth
herein); and
(b) "PRODUCT ADDENDUM" means a document attached hereto and signed by the
CLIENT and ONESOFT that identifies Software Product(s) licensed under this
Agreement, along with any additional terms and conditions for the licensing
or management thereof; and
(C) "SCOPE OF WORK" means a document attached hereto and signed by the CLIENT
and ONESOFT (including any Schedule(s) attached thereto) that identifies
the services to be provided under this Agreement, along with any additional
terms and conditions for the performance and/or management thereof; and
(D) "CHANGE ORDER" means a document in either paper or electronic form (i.e.
email that can be reasonably dated, traced and/or otherwise identified)
that originates from an authorized representative of CLIENT (including any
Schedule(s) attached thereto), and is accepted by ONESOFT, authorizing
additional services or products under a Scope of Work and/or Product
Addendum; and
(E) "SCHEDULE" means an attachment to this Agreement, Scope of Work, Product
Addendum, or Change Order and which provides additional or collateral
information for the document to which it is attached; and
(f) "SOFTWARE PRODUCT" means the object code version of a ONESOFT software
product that is identified in an attached Product Addendum (including any
Schedule(s) attached therto); and
(g) "POINT OF CONTACT" means a contact point, named with respect to ONESOFT or
CLIENT, in Paragraph 30 or in a Product Addendum, Scope of Work or Change
Order; and
(h) "SERVER" means, if with respect to a Software Product licensed for use on a
server furnished and operated by ONESOFT, then a server furnished and
operated by ONESOFT under this Agreement and described in a related Product
Addendum, Scope of Work, Change Order, or Schedule, or if with respect to a
Software Product licensed for use on a server furnished and operated by
CLIENT then a server used by the CLIENT that meets the requirements set
forth in technical documentation for a Software Product and that is
installed at a location within the United States; and
(i) "SITE" means a World Wide Web site with one or multiple domain name(s)
mapped to one IP address and supported by a single instance of a database
schema; and
(j) "PROCESSOR" means a single Intel standard processor installed in a Server
that operates a Software Product; and
(k) "USER" means a single individual accessing or using the Software Product;
and
(L) "PATCH" means a one-time correction provided by ONESOFT to address a
reported problem in a Software Product; and
(M) "LETTER RELEASE" means a version of a Software Product that is generally
released by ONESOFT to its supported customers for that Software Product,
and which is identified by the addition of a letter to the previous Point
Release number (such as version 1.5A); and
(N) "POINT RELEASE" means a version of a supported Software Product that is
generally released by ONESOFT to its supported customers for that Software
Product, and which is identified by a decimal number change (such as 1.0 to
1.1); and
(O) "VERSION RELEASE" means a version of a supported Software Product which is
identified by a number followed by a decimal point and a zero (0) (such as
version 2.0); and .
(P) "UPGRADE" means an upgrade to a new Software Product Release which contains
one or more significant new major features for which ONESOFT may charge a
separate license fee to its supported customers; and
(Q) "WORKAROUND" means a procedure to avoid a reported problem in a Software
Product; and
(R) "SUPPORT MATERIALS" means anything delivered by ONESOFT to CLIENT under its
Software Maintenance Services, including, but not limited to, any Patches,
Workarounds, Letter Releases, Point Releases, and any related
documentation; and
(S) "SOFTWARE MAINTENANCE SERVICES" means, (i) when used in connection with a
Software Product license, other than a month-to-month license, maintenance
consisting of the delivery to CLIENT of Patches, Workarounds, Letter
Releases, and Point Releases as generally released by ONESOFT for a
Software Product; or (ii) when used in connection with a Software Product
month-to-month license, maintenance consisting of the delivery to CLIENT of
Patches, Workarounds, Letter Releases, and Point Releases as generally
released by ONESOFT for a Software Product.
(T) "SERVICES" (to the extent provided for under a Scope of Work or Change
Order attached hereto) shall mean and include, without limitation, service
bureau tasks, managed application services, co-location services, customer
technical support services, transaction processing services, or other
services as set forth in such Scope of Work or Change Order.
2. LICENSE GRANT
(a) Subject to the terms and conditions of this Agreement, ONESOFT grants to
CLIENT, and CLIENT accepts, a non-exclusive limited nontransferable license
to use, in the United States only, each Software Product identified in a
Product Addendum, in accordance with the provisions thereof, which Product
Addendum is incorporated herein by reference.
(b) CLIENT acknowledges receiving, and agrees to comply with, all the terms and
conditions of third party software sublicenses that apply to CLIENT's use
of ONESOFT's Software Products.
(c) The CLIENT agrees that it shall not:
(i) Copy any Software Product for any purpose other than for archival or
emergency restart purposes or program error verification; and/or
(ii) Sublicense, rent or otherwise make a Software Product available to any
third party for a fee or otherwise whether in a service bureau
environment or otherwise; or
(iii) Reverse engineer, decompile, disassemble, or modify a Software
Product or separate a Software Product into components or its
component files, recreate, or attempt to determine the makeup of any
Software Product.
3. DELIVERY
ONESOFT shall deliver to CLIENT a copy of each Software Product for which a
license is granted under this Agreement, in an electronic medium or by direct
loading onto a designated Server over the Internet.
4. SOFTWARE PRODUCT RELATED FEES
CLIENT agrees to pay to ONESOFT, in accordance with the provisions of this
Agreement, and each Product Addendum, the applicable license fees, maintenance
fees, and other applicable fees related to the Software Products.
2
<PAGE>
OneSoft Corporation Totally Wireless
5. LICENSE TERM
(a) Each license granted with respect to a Software Product under this
Agreement shall continue in full force and effect for the term specified in
the related Product Addendum, unless earlier terminated in accordance with
this Agreement or the Product Addendum.
(b) Software Maintenance Services obligations of ONESOFT shall terminate to the
extent that related Software Product license has terminated.
6. SOFTWARE PRODUCT MAINTENANCE
(a) Subject to the terms and conditions of this Agreement, ONESOFT will provide
Software Maintenance Services to CLIENT for each Software Product for so
long as CLIENT has timely satisfied all payment obligations for Software
Maintenance Services Fees as defined in and set forth in the applicable
Product Addendum. ONESOFT shall have no obligation to provide Software
Maintenance Services, however, unless the installed Software Product is the
then-current Version Release and is utilized on a Server of a type
supported by ONESOFT.
(b) If CLIENT, at the time ONESOFT releases a Version Release or an Upgrade to
a Software Product, is then-currently entitled to Software Maintenance
Services under this Agreement, then upon payment of any applicable fee set
by ONESOFT for such Version Release or Upgrade, ONESOFT shall provide such
Version Release or Upgrade to CLIENT to replace CLIENT's then-installed
version of the Software Product.
(c) CLIENT agrees that if a Software Product is installed on a Server not
furnished and operated by ONESOFT, then CLIENT will install and maintain
the equipment and Software Product as required by ONESOFT to permit
Software Maintenance Services to be delivered electronically with respect
to such Software Product.
(d) ONESOFT shall have no obligation under this Agreement to furnish
maintenance and/or support for a Software Product except as expressly
provided herein, or under an applicable Product Addendum.
7. SERVICES RETENTION AND TERMINATION
(a) To the extent provided under a Scope of Work or Change Order, CLIENT hereby
retains ONESOFT to provide certain services in accordance with the
provisions of this Agreement and such Scope of Work or Change Order
("Services"). Services may include, without limitation service bureau
tasks, managed application services, co-location services, customer
technical support services, transaction processing services, or other
services as set forth in such Scope of Work or Change Order.
(b) ONESOFT agrees to use commercially reasonable efforts to perform such
Services.
(c) Except as otherwise provided herein or therein, either party may terminate
a Scope of Work or Change Order at any time with or without cause by giving
************* prior written notice to the other party; provided, however,
that, in any event, ONESOFT shall be paid in full for all services it
performs before or during such ******* period.
(d) With respect to Services under a Scope of Work for Managed Application
Services that relates to a Product Addendum for a month-to-month Software
Product license, such Services shall continue (and shall not be subject to
the provisions of Subparagraph (c)), unless terminated in accordance with
the provisions of this Agreement, in full force and effect for a period of
*********** from the Commencement Date (as defined in the applicable Scope
of Work), and shall be renewed automatically for successive ******** unless
a party notifies the other party of its intention to not renew at least
******* before the end of the then-current period, in which event, the
Scope of Work and/or Product Addendum for such Services shall terminate at
the end of such period. Any early termination, for any reason, of any
Scope of Work, Product Addendum, or Change Order of this Agreement shall
not relieve CLIENT of its payment obligations under this Subparagraph (d)
except as provided in Subparagraph (f).
(e) With respect to Services under a Scope of Work for Co-Location Services,
such Services shall continue (and shall not be subject to the provisions of
Subparagraph (c)), unless terminated in accordance with the provisions of
this Agreement, in full force and effect for a period of ******* from the
Commencement Date (as defined in the applicable Scope of Work), and shall
be renewed automatically for successive ******** unless a party notifies
the other party of its intention to not renew at least ****** days before
the end of the then-current period, in which event, the Scope of Work for
such Services shall terminate at the end of such period. Any early
termination, for any reason, of any Scope of Work and/or Change Order of
this Agreement shall not relieve CLIENT of its payment obligations under
this Subparagraph (d) except as provided in Subparagraph (f).
(f) CLIENT may request an early termination of a Managed Application Service or
Co-Location Scope of Work or Product Addendum with the provision for a
dedicated Server package, or with a provision for a shared Server package,
for its convenience; provided, however, that CLIENT shall be obligated to
pay a fee for such termination in an amount equal to all fees that would be
due, but for the termination, during the ********* after the date of
termination.
8. SERVICES FEES AND GENERAL PAYMENT TERMS
a) CLIENT agrees to pay ONESOFT in accordance with the provisions of this
Paragraph 8. Except as otherwise provided in a Scope of Work, Change Order, or
Schedule, CLIENT shall pay ONESOFT its published rates for services. Such rates
are subject to change upon ********* notice to CLIENT.
b) CLIENT shall be responsible for and shall pay (and agrees to indemnify and
hold ONESOFT harmless from) all sales, use, gross receipts, value-added, GST,
data processing excise, personal property or similar taxes or duties (including
interest and penalties imposed thereon), which are levied or imposed by reason
of the Software Products, Services and other deliverables provided hereunder;
provided, however, that CLIENT shall not be responsible for paying any taxes
imposed on the net income or profits of ONESOFT.
c) ONESOFT shall invoice CLIENT for payments due under this Paragraph 8 on a
*********** basis. Each ONESOFT invoice shall be due net thirty (30) days from
the date of invoice. CLIENT acknowledges and agrees that under the terms of
this Agreement, no CLIENT Purchase Order ("PO") is required for the payment of
ONESOFT invoices by CLIENT. In the event that a PO is required by the CLIENT
for its internal processes, CLIENT shall issue such PO in a timely manner such
that ONESOFT invoices may be issued and paid in accordance with the provisions
of this Paragraph 8 and any failure by CLIENT to do so shall not excuse CLIENT
from its obligations under this Paragraph 8.
d) CLIENT shall pay ******* any travel expenses incurred by ONESOFT that result
from providing service to CLIENT under this Agreement in geographical locations
other than Annandale, VA.
e) CLIENT shall advise ONESOFT of any dispute regarding an invoice within ***
days of the date of invoice but shall nevertheless pay all charges. Any
disputed item shall be reconciled, if necessary, promptly upon settlement of the
dispute. If CLIENT fails to notify ONESOFT of any dispute with respect to an
invoice within *********** days of receipt, CLIENT shall be
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deemed to have accepted the invoice in its entirety. CLIENT shall not have any
right to withhold or setoff any amounts due hereunder.
f) Notwithstanding any other provision of this Agreement, if CLIENT fails to
pay any ONESOFT invoice by the due date, ONESOFT may, in its sole discretion,
suspend all or any part of its Services to CLIENT until payment is received or,
upon notice to CLIENT, terminate Services under this Agreement. ONESOFT shall
incur no liability to CLIENT if ONESOFT so suspends or terminates its Services.
ONESOFT also reserves the right to charge interest at the maximum rate allowed
by law on all amounts past due, and to assert appropriate liens to ensure
payment.
g) In the event that ONESOFT retains the services of attorneys or other persons
to enforce its rights under this Agreement, including for the recovery of any
sum due under this Agreement, or to defend any claim by CLIENT against ONESOFT,
whether or not suit is filed, then all costs and expenses, including reasonable
attorney's fees, incurred by ONESOFT arising therefrom, shall be paid by CLIENT,
whether or not the action, if any, is prosecuted to judgment. If an action is
prosecuted to judgment, ONESOFT shall also be entitled to recover attorney's
fees and costs incurred in enforcing the judgment.
9. CONFIDENTIAL INFORMATION
(a) Each party hereby acknowledges that it may receive confidential information
of the other party including, without limitation, software, computer
programs, object code, source code, database schemas, specifications, flow
charts, marketing plans, financial information, business plans and
procedures, the terms of this Agreement, ONESOFT's Client Guide, Software
Products, employee information, and other confidential information
(hereinafter referred to as "Confidential Information"). Confidential
Information does not include (i) information independently developed by the
recipient without reference to the other party's Confidential Information;
(ii) information in the public domain through no wrongful act of the
recipient, or (iii) information received by the recipient from a third
party who was rightfully in possession of such information and had no
obligation to refrain from disclosing it.
(b) Except as expressly authorized herein or as required by law, the recipient
of Confidential Information agrees that during the term hereof, and at all
times thereafter, it shall not use, commercialize or disclose such
Confidential Information to any person or entity, except to its own
employees having a need to know and to such other recipients as the other
party may approve in writing. Each party shall use at least the same
degree of care in safeguarding the other party's Confidential Information
as it uses in safeguarding its own Confidential Information, but in no
event shall less than reasonable diligence and care be exercised.
(c) All Confidential Information supplied by ONESOFT to CLIENT pursuant to this
Agreement shall remain the exclusive property of ONESOFT.
(d) CLIENT agrees that it will not remove any proprietary, trademark,
copyright, confidentiality, patent or other intellectual property notice or
marking from any Software Product, documentation, display, media or other
materials delivered under this Agreement, or any copies thereof.
(e) CLIENT agrees that it will not violate any proprietary rights in the
Software Products and shall not reverse engineer, decompile, disassemble,
or modify a Software Product or separate a Software Product into components
or its component files, recreate, or attempt to determine the makeup of any
Software Product. CLIENT agrees that any information discovered thereby
shall be deemed ONESOFT's Confidential Information.
(f) CLIENT shall keep Software Products in its possession strictly confidential
and protected.
(g) CLIENT shall not use or reproduce the Software Products, or any
documentation or media or other materials associated therewith, except as
permitted by the terms of this Agreement.
(h) In the event that a party is required by law or judicial or administrative
process to disclose Confidential Information, such party shall, insofar as
practicable, promptly notify the party whose Confidential Information is
required to be disclosed and allow the party a reasonable opportunity to
oppose disclosure.
10. OWNERSHIP AND OTHER PROPRIETARY RIGHTS
(a) Except as otherwise expressly provided in this Paragraph 10, "Software,"
"Tools," and "Objects" (as such terms are defined in this Paragraph 10),
including all originals and all copies thereof regardless of form, are and
shall remain the sole and exclusive property of ONESOFT and shall be deemed
its Confidential Information.
(b) Except as expressly provided in this Agreement, CLIENT does not acquire any
right or license in ONESOFT's Software, Tools or Objects.
(c) "Tools" means ONESOFT's proprietary information and know-how used at any
time by ONESOFT in the conduct of its business, including without
limitation, technical information, designs, templates, software modules,
processes, methodologies, systems used to create computer programs or
software, procedures, code books, computer programs, plans, or any other
similar information including improvements, modifications or developments
thereto.
(d) "Objects" means ONESOFT's proprietary reusable software code.
(e) "Software" means any and all of ONESOFT's proprietary software code.
(f) Each party understands and agrees that any use or disclosure of any
information or materials in violation of this Paragraph 10 will cause the
other party irreparable harm, will leave such party with no adequate remedy
at law, and will entitle such party to injunctive relief in addition to all
other remedies available. A party that violates its obligations hereunder,
shall reimburse the other party for reasonable costs and expenses incurred
in enforcing its rights with respect to such violation.
(g) CLIENT shall have a non-exclusive license to use, for internal purposes
only and not on a service bureau basis (and to modify for such use), any
custom application originally developed for CLIENT under this Agreement, as
an integrated product, for so long as CLIENT has a license to use any
Software Products, Software, Tools and/or Objects necessary to operate the
custom application; provided, however, that CLIENT may not unbundle from
the custom application any Software, Software Products, Tools and/or
Objects, apart from their use as an integral part of the custom
application.
(h) Except as expressly set forth in this Agreement, this Paragraph 10 does not
constitute a license to use Software, Software Products, Tools and Objects,
which CLIENT must separately license from ONESOFT as necessary to use any
custom application.
(i) Nothing in this Agreement shall be deemed to limit ONESOFT's rights to
develop and market functionally comparable products or deliverables based
on the same general concepts, techniques and routines used in connection
with any custom application.
(j) CLIENT acknowledges and agrees that, unless otherwise specified in any
Scope of Work, Product Addendum, and/or Schedules attached hereto, ONESOFT
maintains the ownership of all hardware and software upon which, and from
which, all ONESOFT Managed Application Services are provided hereunder.
(k) CLIENT warrants that all Data (as defined) delivered to ONESOFT by CLIENT
does not, and shall not, infringe or violate any
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copyright, trademark, trade secret, patent or other intellectual property
right, and that CLIENT has the right to use, disclose, publish, translate,
reproduce, or deliver any such Data. CLIENT agrees to indemnify and hold
harmless ONESOFT, its directors, officers, employees and agents, against
any and all losses, liabilities, judgments, awards and costs (including
reasonable legal fees and expenses), arising out of or related to any claim
that Data infringes or violates a copyright, trademark, trade secret,
patent or other intellectual property right.
(l) "Data" as used in this Paragraph 10 mean any data, software or other
information including, but not limited to, writings, designs,
specifications, reproductions, pictures, drawings, or other graphical
representations, and any works of a similar nature.
(m) Except as provided for herein, with respect to any software, data, content
or other materials supplied by CLIENT, ONESOFT is hereby granted the
nonexclusive irrevocable right and license to use the same for use in
providing the Services. CLIENT represents and warrants to ONESOFT that
utilization of any software, data, content or other materials supplied by
CLIENT in the manner contemplated by the terms of the Agreement, and the
Scope(s) of Work, will not infringe or misappropriate any copyright,
trademark, patent, trade secret or other intellectual property right of any
third person. CLIENT represents and warrants to ONESOFT that the use of any
software provided by the CLIENT for ONESOFT to manage under this Agreement
or Scope(s) of Work, when used as contemplated by the terms of this
Agreement or the Scope(s) of Work, will not infringe or misappropriate any
copyright, trademark, patent, trade secret or other intellectual property
right of any third person.
(n) All software modifications (whether or not specially ordered by CLIENT)
developed by ONESOFT, any discoveries made, improvements, modifications,
adaptations, or developments by ONESOFT (whether or not at CLIENT's request
pursuant to this Agreement or any other agreement between the parties), are
and shall remain, the exclusive property of ONESOFT, unless otherwise
provided under this or such other agreement, signed by both parties.
(o) All *********** and/or ********* and ************** or **************as a
********** pursuant to this Agreement ("*******"); but not including
ONESOFT's administrative communications, records, files and working papers
relating to this Agreement, *********to and ********* the ******** of
********** and ************** in *********. ONESOFT agrees that it will not
******** to any ******* or *********. Notwithstanding the foregoing,
nothing herein shall prevent ONESOFT's ability to develop and market
functionally comparable products or deliverables based on the same general
concepts, techniques and routines.
(p) To the extent that ONESOFT incorporates any pre-existing and/or copyrighted
work into the ******, such pre-existing and/or copyrighted work shall
*********** of *********and ******** to ******** a perpetual, royalty-free,
irrevocable, worldwide, non-exclusive license to use such pre-existing work
in connection with satisfying the requirements of this Agreement.
(q) Unless otherwise agreed in writing, nothing in this Agreement shall be
deemed to authorize the CLIENT to use any copyright, name, trademark,
service mark, or patent of ONESOFT.
11. PUBLIC RELATIONS
(a) ONESOFT shall have the right to disclose its relationship with the CLIENT
in ONESOFT's promotional, advertising, and marketing materials.
(b) ONESOFT reserves the right to provide CLIENT with ownership graphics and
any associated hypertext links, that shall be placed on the Web pages
resulting from the selection of a registered domain name URL or Web page
that displays functionality of a Software Product, subject to CLIENT's
approval which shall not be unreasonably withheld or delayed.
12. MARKS AND PATENTS
(a) CLIENT acknowledges that "OneSoft(TM)" and all other Software Product names
are or include trademarks, and/or service marks, and are the intellectual
property of the ONESOFT. Unless otherwise agreed in writing, nothing
herein shall be deemed to authorize the CLIENT to use any pending and/or
existing name, trademark and/or service mark of ONESOFT.
(b) CLIENT acknowledges that any underlying technology, know-how, or process
used in the design, development, programming, or coding of ONESOFT's
Software, Software Products, Tools, or Objects, is the intellectual
property of ONESOFT, and certain of the same are protected by Patents or
Patents Pending.
13. LIMITATIONS ON WARRANTIES AND LIABILITY
(a) ONESOFT warrants only that each Software Product, at the time of initial
delivery to CLIENT pursuant to a Product Addendum, is capable of performing
substantially the functions described in ONESOFT's published technical
documentation at such time for such Software Product, or any product
description that accompanies a Product Addendum; provided, however, that
each Software Product is otherwise accepted by CLIENT "as is." ONESOFT
does not warrant that the operation of any Software Product will be
uninterrupted or error free.
(b) ONESOFT warrants that each Software Product shall not, at the time of
execution of a Product Addendum infringe any valid United States Copyright,
United States Patent or United States Trademark. In the event such
warranty is breached, ONESOFT agrees to defend any and all actions alleging
any such infringement that may be brought against CLIENT during the term of
this Agreement, and to pay all damages and costs finally awarded against
CLIENT in such actions or suits on account of such infringement provided
that:
(i) ONESOFT shall have received from CLIENT prompt notice of the
commencement of any such action;
(ii) CLIENT, and where applicable, those for whom CLIENT is in law
responsible, shall cooperate fully with ONESOFT in defense of the
action;
(iii) The action shall not have resulted from the use of any Software
Product for purposes other than those for which it was authorized and
designed, or the use of any Software Product in combination with
software or other products not supplied by ONESOFT, or where the
infringement would have been avoided by use of the then current
version of any of the Software Products;
(iv) ONESOFT in its sole discretion instead of defending such action may
procure for CLIENT the right to continue the use of the Software
Products subject to such action or it may replace or modify such
Software Products so to become non-infringing or it may refund a
portion of the license fees for such Software Products as reduced
based upon a five year straight line amortization of such fees.
(c) A medium on which a Software Product is furnished is warranted to be free
of defects in materials and workmanship under normal use for a period of
thirty (30) days from the date of delivery of the Software Product.
(d) ONESOFT warrants that its Software is designed to be used in connection
with dates in the range of **** through **** and that the Software will
operate during each such time period without error relating to date data;
provided, however, that this warranty
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does not apply to any of ONESOFT's Software Products used in combination
with software or other products not supplied by ONESOFT.
(e) EXCLUSIVE REMEDIES:
(i) IF CLIENT NOTIFIES ONESOFT IN WRITING, WITHIN SIXTY (60) DAYS OF THE
EFFECTIVE DATE OF THE PRODUCT ADDENDUM(S) IDENTIFYING A SOFTWARE PRODUCT OF
ANY ERROR OR FAILURE OF SUCH SOFTWARE PRODUCT COVERED BY THE EXPRESS
WARRANTIES IN SUBPARAGRAPHS (A) OR (C) OR (D), ONESOFT SHALL USE REASONABLE
EFFORTS TO PROMPTLY CORRECT ANY SUCH ERROR OR FAILURE.
(II) THE REMEDIES IN SUBPARAGRAPHS 13 (b) AND (e)(i) ABOVE, ARE THE CLIENT'S
SOLE AND EXCLUSIVE REMEDIES FOR ANY EXPRESS OR IMPLIED WARRANTIES RELATED
TO ANY SOFTWARE PRODUCT AND MAINTENANCE AND SUPPORT THEREOF. THE
WARRANTIES AND LIMITATIONS SET FORTH IN THIS PARAGRAPH 13 CONSTITUTE THE
ONLY WARRANTIES OF ONESOFT WITH RESPECT TO ANY SOFTWARE PRODUCT OR ITS
SUPPORT OR MAINTENANCE. SUCH WARRANTIES ARE IN LIEU OF, AND ONESOFT HEREBY
DISCLAIMS, ALL OTHER WARRANTIES, STATUTORY OR OTHERWISE, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE REMEDIES OF
CLIENT SHALL BE LIMITED TO THOSE PROVIDED IN THIS PARAGRAPH 13 TO THE
EXCLUSION OF ANY AND ALL OTHER REMEDIES, INCLUDING, WITHOUT LIMITATION,
INCIDENTAL, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR DAMAGES FOR LOST
PROFITS, WHETHER ANY CLAIM IS BASED UPON ANY AGREEMENT, NEGLIGENCE,
WARRANTY, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY.. NO
AGREEMENTS VARYING OR EXTENDING THE FOREGOING WARRANTIES, REMEDIES OR
LIMITATIONS WILL BE BINDING ON ONESOFT UNLESS IN WRITING AND SIGNED BY A
DULY AUTHORIZED OFFICER OF ONESOFT.
(iii) ONESOFT MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE
SERVICES RENDERED OR THE RESULTS OBTAINED FROM ONESOFT'S WORK, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. IN NO EVENT SHALL ONESOFT OR ITS SUPPLIERS BE LIABLE
FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING WITHOUT LIMITATION LOST PROFIT), WITH RESPECT TO SERVICES, EVEN
IF ADVISED OF THE POSSIBILITY THEREOF, WHETHER ANY CLAIM IS BASED UPON ANY
AGREEMENT, NEGLIGENCE, WARRANTY, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY. ONESOFT'S TOTAL LIABILITY IN CONNECTION WITH SERVICES
UNDER THIS AGREEMENT SHALL BE LIMITED TO THE LESSER OF THE AGGREGATE FEES
FOR SERVICES RECEIVED BY ONESOFT FROM CLIENT HEREUNDER DURING THE THREE (3)
CALENDAR MONTHS PRECEDING THE TIME CLIENT'S CLAIM AROSE, OR WITH RESPECT TO
THE SPECIFIC SCOPE OF WORK UNDER WHICH THE CLAIM AROSE DURING THE TWELVE
(12) CALENDAR MONTHS PRECEDING THE TIME CLIENT'S CLAIM AROSE, ALL
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSES OF ANY LIMITED REMEDY.
14. AUDIT
(a) CLIENT agrees to maintain complete and accurate records containing all data
reasonably required for verification of its compliance with the terms of
this Agreement. ONESOFT, or its authorized representative, shall have the
right, during normal business hours, and upon at least five business days
prior notice, to physically inspect any Server upon which any Software
Product is installed, and to audit and analyze the relevant records of the
CLIENT, to verify compliance with the terms of this Agreement.
(b) CLIENT also agrees to permit remote license auditing of its web site by
ONESOFT to verify CLIENT's compliance with the terms of this Agreement and
the licenses granted hereunder.
15. INDEMNIFICATION
(a) Indemnification by ONESOFT. Except to the extent ONESOFT has acted at
CLIENT's direction or in accordance with CLIENT's specifications, ONESOFT
will indemnify, defend and hold harmless CLIENT from all costs (including
reasonable attorneys' fees) arising from a third party claim against CLIENT
based on an actual or alleged:
(i) Breach of ONESOFT's representations and warranties; or
(ii) Acts or omissions constituting gross negligence or willful misconduct,
committed by ONESOFT,
(iii) Failure by ONESOFT to comply with governmental laws and regulations;
(iv) Infringement by ONESOFT of United States patents, United States
copyrights, United States trademarks, United States trade secrets and
other United States intellectual property rights.
(v) This Subparagraph (a) shall not apply to claims arising as a result of
CLIENT's improper use of ONESOFT's products or services or other
deliverables under this Agreement.
(b) Indemnification by CLIENT. CLIENT will indemnify, defend and hold harmless
ONESOFT from all costs (including reasonable attorneys' fees) arising from
a third party claim against ONESOFT based on an actual or alleged:
(i) Failure by the CLIENT to perform its obligations under this Agreement;
(ii) Breach of CLIENT's representations and warranties;
(iii) Acts or omissions constituting negligence or willful misconduct,
committed by CLIENT; or
(iv) Failure by CLIENT to comply with governmental laws and regulations; or
(v) Infringement by CLIENT (or any property or data provided by CLIENT) of
any patent, copyright, trademark trade secret or other intellectual
property right.
(c) Notice of Claim. If a claim covered under this Paragraph 15 appears likely
or is made, the party against whom the claim is made (hereinafter referred
to as the "Indemnitee") will promptly provide the other party (hereinafter
referred to as the "Indemnitor") with notice of such claim. If a claim for
infringement is made, ONESOFT may elect to avoid the infringement by:
(i) Obtaining the necessary rights for the Indemnitee to continue to use
the data or software at issue; or
(ii) Modifying the data or software at issue at its expense; or
(iii) Terminating this Agreement, and/or Product Addendum(s) and/or
licenses or Scope(s) of Work and/or Change Orders, and equitably
adjusting the charges to the extent of such termination(s).
16. INJUNCTIVE RELIEF
The parties acknowledge that monetary damages may not be an adequate remedy if a
party breaches its obligations under Paragraphs *********** or **, since such
breach will result in irreparable harm. The parties therefore agree that, in
the event of any such breach, the non-breaching party shall be entitled to
appropriate mandatory or prohibitory injunctive relief against the breaching
party, in addition to any other remedies at law, in equity or under this
Agreement. A party substantially prevailing in an action for injunctive relief
in connection with this Agreement shall be entitled to recover its costs
(including without limitation reasonable attorneys' fees) from the other party.
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17. TERMINATION
(a) Unless otherwise expressly provided for in this Agreement, either party may
terminate this Agreement or any Scope(s) of Work and/or Change Order(s)
and/or Product Addendum(s), and/or any related licenses granted hereunder
or thereunder, by giving the other party written notice to that effect,
effective on the date of receipt of such notice, if:
(i) The other party enters into liquidation, whether or not voluntarily,
or a receiver is appointed to all or any part of its assets, or the
other party becomes bankrupt or insolvent or enters into any
arrangement with its creditors, or takes or suffers any similar action
in consequence of debt or becomes unable to pay its debts as they fall
due; or
(ii) The other party materially breaches this Agreement and fails to cure
such breach to the non-breaching party's satisfaction within ********
days of having received written notice of such breach.
(b) ONESOFT may immediately terminate any part of this Agreement if CLIENT
materially breaches any of the provisions of Paragraphs ********* or ***,
of this Agreement.
(c) If a license granted by ONESOFT is terminated for any reason, CLIENT shall,
on the effective date of such termination, cease using any and all of the
subject matter of the license and CLIENT shall promptly deliver to ONESOFT
all copies of any and all of such subject matter and any related
documentation, or shall provide evidence, satisfactory to ONESOFT, that all
such copies have been destroyed.
18. FORCE MAJEURE AND ACTS OF GOD
A party shall be relieved from an obligation (other than the obligation to make
payments) while a cause outside the reasonable control of the party prevents the
performance of such obligation.
19. RELATIONSHIP OF THE PARTIES; CONTENT
(a) Nothing in this Agreement shall be construed as making a party an agent of
the other party, and neither party shall have the power to bind the other
party or to contract in the name of, or create a liability against, the
other party. Neither party shall be responsible for the acts or defaults of
the other party or any of the other party's employees or agents. The
parties are independent contractors with respect to all matters arising
under this Agreement. Nothing in this Agreement shall be deemed to
establish a partnership, joint venture, association or employment
relationship between the parties. With respect to its employees, a party
shall remain responsible, and shall indemnify and hold harmless the other
party, for the withholding and payment of all Federal, state and local
personal income, wage, earnings, occupation, social security, worker's
compensation, unemployment, sickness and disability insurance taxes,
payroll levies or employee benefit obligations
(b) If a Scope of Work permits CLIENT to re-sell ONESOFT Services to end-users
then the provisions of this Paragraph 19(b) shall apply to such Services,
however, the CLIENT acknowledges that the Scope of Work still governs the
relationship between ONESOFT and the CLIENT. CLIENT's relationship with
any end-user of the Services that may be distributed by CLIENT shall be
governed solely by an end-user Agreement (made available to ONESOFT upon
request) that provides at least the same protections to ONESOFT as this
Agreement and the Scope of Work provides. Any warranty provided by ONESOFT
shall be solely for the benefit of CLIENT. In no event shall any end-user
of CLIENT services be considered a third party beneficiary of any ONESOFT
warranty. CLIENT shall indemnify and hold ONESOFT harmless from any end-
user claim. The CLIENT is responsible for ensuring that third party end-
users of the Services do not impose unexpected workloads on the Services.
(c) The parties acknowledge that the Internet is neither owned nor controlled
by any one entity and that a third party may gain access to ONESOFT.
Electronic mail and other transmissions passing through ONESOFT or over the
Internet are not secure, and ONESOFT cannot guarantee the security or
privacy or any of the information or communications passing through
ONESFOT. ONESOFT agrees to provide commercially reasonable security
consistent with its business practices and facilities, including (without
limitation) access control software, identification protection, logon
passwords and physical site security. In no event however, will ONESOFT be
liable for any loss or damage caused by a breach of security by a
third-party. ONESOFT will not intentionally monitor or disclose any private
electronic communications, except to the extent necessary to identify or
resolve system problems or as otherwise permitted or required by law.
ONESOFT does, however, reserve the right to monitor transmissions, other
than private electronic communications, as necessary to provide the Service
and otherwise to protect the rights and property of ONESOFT.
Notwithstanding the foregoing, ONESOFT does not assume any liability for
any action or inaction with respect to such communication or content posted
or provided by an authorized or unauthorized third party. ONESOFT is a
distributor and not a publisher of CLIENT's data or any other content
provided by CLIENT or others (including end users). Because communication
of data and other content over the Internet occurs in real time, ONESOFT
cannot, and does not intend to, screen, police, edit, or monitor
communications and content. If ONESOFT is notified of any content that
allegedly violates its Client Guide, Email Authorized Use Policies, and/or
is otherwise unlawful, ONESOFT may investigate and remove or request the
removal of such content as it deems appropriate in good faith and in its
sole discretion. In no event will ONESOFT be liable for any loss or damage
caused by a user's reliance on any data or other content obtained through
ONESOFT
20. FURTHER ASSURANCES
The parties agree to do all such things and to execute such further documents as
may reasonably be required to give full effect to this Agreement.
21. WAIVER
No waiver of any part of this Agreement shall be effective unless made in
writing by the waiving party. No waiver of any breach of this Agreement shall
constitute a waiver of any other breach of the same, or any other provision, of
this Agreement.
22. ENTIRE AGREEMENT AND CONSTRUCTION
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter hereof and the parties agree that there are no other
representations, warranties or oral agreements relating to the subject matter of
this Agreement. Headings are included in the Agreement for convenience only and
shall not affect the meaning or construction of this Agreement's provisions.
23. AMENDMENT
This Agreement may be modified or amended only by means of a writing executed by
both parties.
24. ASSIGNIBILITY AND RESALE
Rights under this Agreement shall not be assigned, sublicensed, encumbered
by security interest or otherwise transferred or resold by CLIENT (whether
by operation of law or otherwise) without the prior written consent of
ONESOFT, and any purported assignment, sublicense, encumbrance or other
transfer of such rights, in violation of this Agreement, shall be void. An
amalgamation, acquisition, or merger of CLIENT by or with any person or
entity who is not a party to this Agreement shall
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be treated as an assignment of this Agreement that is subject to the
provisions of the next preceding sentence. Notwithstanding the foregoing,
if a Scope of Work so provides, CLIENT may use the Services under the Scope
of Work in support of its internal business operations and may also
distribute such Services to unrelated third parties for their internal use
(by such third party organization's own personnel) and to ultimate
end-users in the public at large, subject to the terms, conditions and
limitations of this Agreement and such Scope of Work, and provided that
CLIENT shall defend, indemnify and hold ONESOFT harmless from all costs
(including reasonable attorneys' fees) arising from any claim by a third
party user such Services. In connection with any acquisition, merger,
consolidation or sale of assets to or with another entity, ONESOFT may
assign this Agreement.
25. COMPLIANCE WITH LAWS
CLIENT shall carry out the obligations contemplated by this Agreement and shall
otherwise deal with the subject matter hereof in compliance with all applicable
laws, rules and regulations, of all governmental authorities, including, without
limitation, the Export Act and any other legal restrictions on exports, and
shall obtain all permits and licenses required in connection with the subject
matter hereof.
26. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of, and be binding upon the parties,
their successors and permitted assigns.
27. SEVERABILITY
If any provision, of this Agreement or a Product Addendum or Schedule or Scope
of Work or Change Order, is held to be unenforceable, all remaining provisions
thereof shall remain in full force and effect.
28. GENERAL PROVISIONS
(a) CLIENT shall not directly or indirectly solicit or offer employment to, or
directly or indirectly accept services by an employee or contractor of
ONESOFT, during the term of this Agreement and for ******** thereafter,
without consent of ONESOFT. For purposes of this Agreement, use of general
employment advertising and independent employment agencies, if not directed
at ONESOFT employees, shall not constitute solicitation.
(b) Each party (i) agrees to inform the other party of any information made
available to such other party that is classified or restricted data, (ii)
if given such information agrees to comply with the security requirements
imposed by any state or local government, or by the United States
Government, and (iii) if given such information agrees return all copies of
such information upon request.
(c) Each party warrants and represents that its participation in this Agreement
does not conflict with any contractual or other obligation of the party or
create any conflict of interest prohibited by the U.S. Government or any
other governmental authority, and shall promptly notify the other party if
any such conflict arises during the term of this Agreement.
(d) Each party shall maintain commercially reasonable and adequate insurance
protection covering its respective activities hereunder, including coverage
for statutory worker's compensation, comprehensive general liability for
bodily injury and tangible property damage, as well as adequate coverage
for vehicles. Each party shall indemnify and hold the other harmless from
liability for bodily injury, death and tangible property damage resulting
from the acts or omissions of such party, its officers, agents, employees
or representatives acting within the scope of their work.
(e) Paragraphs ********* and *** through *****shall survive any termination of
this Agreement.
29. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE COMMONWEALTH OF VIRGINIA, EXCLUDING ITS CHOICE OF LAW
RULES. ANY PROCEEDING OR DISPUTE RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, SHALL BE INITIATED AND MAINTAINED IN COURTS LOCATED IN SUCH
COMMONWEALTH.
8
<PAGE>
OneSoft Corporation Totally Wireless
30. NOTICES
(a) Any notice or other communication to the parties shall be sent to the
contact points identified below or at such other places as they may from
time to time specify by notice in writing to the other party. Any such
notice or other communication shall be in writing and shall be given by
delivery to the designated party of the addressee by pre-paid courier or
facsimile with receipt acknowledgment. Any such notice or other
communication shall be deemed to have been given when the designated party
of the addressee receives such notice.
(b) Point of Contact addresses are as follows:
<TABLE>
<S> <C>
For ONESOFT: (Technical) For CLIENT: (Technical )
Jeffrey M. MacIntyre
OneSoft Corporation Lawrence Moon
7010 Little River Turnpike, Suite 460 -------------
Annandale, VA 22003-9998 46653 Fremont Blvd., Fremont, CA 94538
Telephone: (703) 916-7448 --------------------------------------
For ONESOFT: (Contractual and Admin.) 510.651.3555 ext.219
Paul D. Economon, Esq. --------------------
OneSoft Corporation For CLIENT: (Contractual and Admin)
7010 Little River Turnpike, Suite 460 Michael Merrill, CEO
Annandale, VA 22003-9998 --------------------
Telephone: (703) 916-7448 46653 Fremont Blvd., Fremont, CA 94538
--------------------------------------
510.651.3555
------------
</TABLE>
31. CONTINGENCIES
(a) This Agreement, and any payment hereunder, shall be according to the terms
and conditions set forth herein, or any Scope of Work, Product Addendum,
Change Order, and/or Schedule attached hereto or thereto, and shall NOT be
contingent upon CLIENT obtaining financing from any source, internal or
external, private or public.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
<TABLE>
<CAPTION>
ONESOFT CORPORATION SKYWAY COMMUNICATIONS, INC. (D.B.A. TOTALLY WIRELESS)
<S> <C>
By: /s/Richard Borenstein By: /s/ Michael Merrill
--------------------- -------------------
Name: Richard Borenstein Name: Michael Merrill
--------------------- -------------------
Title: VP, Worldwide Sales Title: CEO
--------------------- -------------------
</TABLE>
9
<PAGE>
OneSoft Corporation Totally Wireless
PRODUCT ADDENDUM # *****
- -----------------
THIS PRODUCT ADDENDUM relates to OneSoft Managed Application and Services
Agreement Number: **** (hereinafter "Agreement") as of the March 4, 1999.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement.
Each Software Product identified in the Quotation/Estimate in the attached
Schedule(s) shall, upon execution of this Product Addendum, and subject to the
provisions of this Product Addendum and the Agreement, be deemed a Software
Product for purposes of the Agreement, for the term specified in the attached
Schedule(s), but in any event only for so long as: (a)(i) all related Recurring
Monthly Managed Application, Software Maintenance and Support Services (as
defined below) fees are and have been timely paid by CLIENT with respect to such
Software Product or (ii) the license for the Software Product is a perpetual
license; and (b) each limitation on the number of Processors, Servers, Sites,
Seats, Users and/or other limitations identified in the attached Schedule(s), if
any for each such Software Product, is and has been complied with by CLIENT with
respect to such Software Product. ONESOFT shall in no event have any obligation
to provide Software Maintenance or Support Services with respect to a Software
Product unless the installed Software Product is the then current Release.
Subject to the provisions of the Agreement and this Product Addendum, if a
license identified in Schedule A is designated as "perpetual" then such license
shall continue indefinitely unless terminated pursuant to the Agreement or this
Product Addendum.
Under this Product Addendum, CLIENT is receiving a license only for use with the
unit(s) of measure specified for each Software Product, and only for use on a
Server operated by ONESOFT. The Initial License fees (including the first year
of Software Maintenance and Installation fees), are listed for each Software
Product on Schedule A. For those Software Products that are to be managed on a
Server operated by ONESOFT, the monthly Managed Application and any additional
Software Maintenance and Support Services fees associated with each Software
Product are also listed on Schedule A. As long as all applicable fees are and
have been timely paid by CLIENT for each Software Product listed on Schedule A,
ONESOFT shall supply Software Maintenance and Support Services for the Software
Product(s) pursuant to the Agreement.
If the Software Products are not used on a Server operated by ONESOFT on a
Managed Application basis then Software Maintenance and Support Services fees
for any Renewal Support Year (defined as each yearly period beginning with the
first anniversary of the effective date of this Product Addendum), shall be
billed to the CLIENT at the rate of **% of then-current ****** license fee
for each Software Product. If fees for Software Maintenance and Support
Services are not timely paid for a Renewal Support Year, Maintenance and Support
Services shall lapse and may only be re-instated if CLIENT pays all unpaid fees
for each Renewal Support Year (whether or not services were received) since the
effective date of this Product Addendum together with an additional fee equal to
***** (**%) percent of such unpaid fees.
For a Software Product licensed on a month-to-month basis, upon completion of
the related Managed Application term, the CLIENT has the option to purchase a
perpetual, non-exclusive object code license of such Software Product for a
discounted fee of **% of the **** for each Software Product.
SPECIAL PAYMENT TERMS OF THIS PRODUCT ADDENDUM:
ONESOFT, in a gesture of professional courtesy, shall allow CLIENT to *** for
the *** (including the *** of Software Maintenance and Installation fees), ***
in *** and priced at a total of $**** in the following manner:
. *** of the price, or $****, at the date of the CLIENT's Self-Service
Internet Commerce Portal web site launch, as defined and scheduled for in
ONESOFT Scope of Work 143-300-001; and
<PAGE>
OneSoft Corporation Totally Wireless
. The remaining ***, or $**** to be due and payable **** days from the
launch of said site.
ERROR CORRECTION AND TELEPHONE SUPPORT SERVICES PROVISIONS
ONESOFT shall use reasonable commercial efforts to correct or provide a usable
work-around solution for any reproducible material error in the Software
Product(s) within a reasonable period of time. ONESOFT agrees, if feasible, to
commence correction within **** after such error or malfunction is detected. If
ONESOFT, in its discretion, requests written verification of an error or
malfunction discovered by CLIENT, CLIENT shall promptly provide such
verification, by email, facsimile, or overnight mail, setting forth in
reasonable detail the respects in which the Software Product(s) fail to perform.
An error or malfunction shall be "material" if it represents a nonconformity
with ONESOFT's current published specifications for the Software Product(s) that
interferes with the usability of the Software Product(s). ONESOFT is not
obligated to fix errors that are not material. If applicable to a perpetual
license, and upon request, CLIENT shall provide ONESOFT remote access to
CLIENT's Server for the purpose of remote diagnostics.]
If applicable to a perpetual license, CLIENT will install the equipment and
software as required by ONESOFT to permit any of the Software Maintenance and
Support Services to be delivered electronically.
CLIENT shall pay ONESOFT at ONESOFT's then current time and material rates for
work of ONESOFT spent investigating an error or malfunction that ONESOFT
reasonably determines to have been caused by a modification to the Software
Product(s) not made nor authorized in writing by ONESOFT.
ONESOFT shall provide a 24/7 toll free support number monitored by a ONESOFT
employee, and, during the hours of 8:00 a.m. to 5:00 p.m. in ONESOFT's home
office time zone on weekdays (exclusive of holidays), shall make reasonable
trained telephone support available to CLIENT's Point of Contact identified in
the Agreement, a Scope of Work, and/or this Product Addendum, and other
personnel of CLIENT who have been trained by ONESOFT in the use of the Software
Product(s). ONESOFT reserves the right to require CLIENT to reimburse ONESOFT
for long distance telephone charges incurred by ONESOFT in the provision of
telephone support.
IN WITNESS WHEREOF, the parties have executed this Product Addendum effective as
of the date first written above.
ONESOFT CORPORATION SKYWAY COMMUNICATIONS (D.B.A. TOTALLY WIRELESS)
By: /s/ Richard Borenstein By: /s/ Michael Merrill
______________________ ___________________
Name: Richard Borenstein Name: Michael Merrill
______________________ ___________________
Title: VP, Worldwide Sales Title: CEO
______________________ ___________________
<PAGE>
OneSoft Corporation has omitted from this Exhibit 10.30 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
EXHIBIT 10.30
ONESOFT LICENSE AGREEMENT
Number: **********
This License Agreement (this "License Agreement") is entered into as of
, 1999 by and between OneSoft Corporation, a Delaware corporation
- ---------------
having an office at 1505 Farm Credit Drive, McLean, VA 22102 ("ONESOFT"), and
Espanol.com, having an office at 28 Princess Street, Wakefield, MA 01880
("CUSTOMER").
In the event of a conflict between provisions of this License Agreement (or a
Services Schedule) and those of a Product Schedule (as defined), the provisions
of this License Agreement shall govern. In the event of a conflict between
provisions of this License Agreement and those of a Services Schedule (as
defined), the provisions of this License Agreement shall govern. The provisions
of a Services Schedule shall not affect interpretation of the provisions of a
Product Schedule and the provisions of a Product Schedule shall not affect
interpretation of the provisions of a Services Schedule.
The parties hereby agree as follows:
- --------------------------------------------------------------------------------
1. DEFINITIONS
(a) "Agreement" means this License Agreement together with each Product
Schedule and each Services Schedule, attached to this License Agreement and
executed by both parties' duly authorized representatives.
(b) "Product Schedule" means a document attached to this License Agreement
that specifies software products licensed under the Agreement and any additional
terms and conditions applicable to such license(s).
(c) "Services Schedule" means a Software Maintenance Services Schedule
attached to this License Agreement that specifies software maintenance services
to be provided by ONESOFT under this License Agreement and any additional terms
and conditions applicable to such services.
2. FEES AND GENERAL PAYMENT TERMS
(a) During the term of this License Agreement ONESOFT shall provide
services ("Services") in accordance with Services Schedules and shall license
software products in accordance with Product Schedules.
(b) Except as otherwise provided in a Product Schedule or Services
Schedule, CUSTOMER shall pay ONESOFT its then-current published rates for
Services provided under each Services Schedule and for licenses granted under
each Product Schedule, as such rates may be adjusted from time to time. ********
to ********** of ********* at ****** to its *******.
(c) All ONESOFT rates are exclusive of any applicable sales, use,
value-added, or other federal, state or local taxes, or any import duties or
tariffs imposed on the subject matter or transactions under this Agreement, and
CUSTOMER shall be responsible for all such taxes, duties and tariffs, except
that ONESOFT shall be responsible for any corporate franchise taxes imposed on
ONESOFT by law and for any taxes based on its net income or gross receipts.
(d) Except as otherwise provided in a Product Schedule, CUSTOMER shall pay
fees due under a Product Schedule upon execution of the Product Schedule. Except
as otherwise provided in a Product Schedule or Services Schedule, ONESOFT shall
invoice CUSTOMER for payments due under the Agreement on a monthly basis. Each
ONESOFT invoice shall be due ******** days from the date of invoice; provided,
however, that payments due with respect to Services Schedules will be invoiced
separately from payment due with respect to Product Schedules. CUSTOMER
acknowledges and agrees that under the terms of the Agreement, no CUSTOMER
purchase order ("PO") is required for the payment of ONESOFT invoices by
CUSTOMER. In the event that a PO is required by CUSTOMER for its internal
processes, (i) CUSTOMER shall issue such PO in a timely manner such that ONESOFT
invoices may be issued and paid in accordance with the provisions of the
Agreement and any failure by CUSTOMER to do so shall not excuse CUSTOMER from
its obligations under the Agreement; and (ii) any terms stated on a PO shall not
apply for purposes of the Agreement and the PO shall be deemed merely to
indicate CUSTOMER's authorization for payment in accordance solely with the
provisions of the Agreement.
(e) CUSTOMER shall pay in full all customary and reasonable travel expenses
incurred by ONESOFT that result from providing services to CUSTOMER under the
Agreement in geographic locations other than a ONESOFT facility, subject to
CUSTOMER's approval, which shall not be unreasonably withheld or delayed.
(f) CUSTOMER shall notify ONESOFT of any dispute regarding an invoice
within ******* days of the receipt of invoice. If CUSTOMER fails to notify
ONESOFT of any dispute with respect to an invoice within ******* days of
receipt, CUSTOMER shall be deemed to have accepted the invoice in its
OneSoft Confidential Information 1
<PAGE>
entirety. CUSTOMER shall have ********* days following the payment due date to
resolve the dispute or make payment in full of all amounts so disputed. ONESOFT
shall work with CUSTOMER in good faith to resolve CUSTOMER's dispute in a timely
manner. CUSTOMER shall not have any right to withhold or setoff any amounts due
ONESOFT.
(g) Notwithstanding any other provision of the Agreement, if CUSTOMER fails
to pay any ONESOFT invoice in full by the due date, ONESOFT may, in its sole
discretion, suspend all or any part of its Services to CUSTOMER under this
Agreement until payment is received or, if such failure remains uncured fifteen
(15)days after written notice to CUSTOMER, terminate such Services. ONESOFT
shall incur no liability, due to ONESOFT's suspension or termination of its
Services pursuant to this paragraph (g). ONESOFT also reserves the right to
charge interest at the maximum rate allowed by law on all amounts past due, and
to assert appropriate liens to ensure payment.
(h) In the event that ONESOFT is substantially the prevailing party in an
action to collect any sum due under the Agreement, ONESOFT shall be entitled to
recover its related costs and expenses (including without limitation reasonable
attorneys' fees and court costs) from CUSTOMER.
3. CONFIDENTIAL INFORMATION
(a) Each party acknowledges that it may be the recipient of confidential
information ("Confidential Information") of the other party including, without
limitation, software, computer programs, object code, source code, database
schemas, specifications, flow charts, marketing plans, financial information,
business plans and procedures, the terms of the Agreement, ONESOFT's Client
Guide, employee information, and other information that the receiving party may
reasonably understand, from legends, the nature of such information or the
circumstances of its disclosure, to be confidential. Confidential Information
does not include (i) information independently developed by the recipient
without reference to the other party's Confidential Information; (ii)
information in the public domain through no wrongful act of the recipient, or
(iii) information received by the recipient from a third party who was
rightfully in possession of such information and had no obligation to refrain
from disclosing it. As such, ONESOFT has no right to any customer, order and
product data generated by the CUSTOMER's site and acknowledges that this is
property of the CUSTOMER.
(b) Except as expressly authorized in the Agreement, or as required by law,
the party that is the recipient of Confidential Information of the other party
agrees that during the term hereof, and at all times thereafter, it shall not
use, commercialize or disclose such Confidential Information to any person or
entity, except to its own employees having a need to know and to such other
recipients as the other party may approve in writing. Each party shall use at
least the same degree of care in safeguarding the other party's Confidential
Information as it uses in safeguarding its own Confidential Information, but in
no event shall less than reasonable care be exercised.
(c) All Confidential Information of ONESOFT disclosed to CUSTOMER shall
remain the exclusive property of ONESOFT. All Confidential Information of
CUSTOMER disclosed to ONESOFT shall remain the exclusive property of CUSTOMER.
(d) Each party agrees that it will not remove any proprietary, trademark,
copyright, confidentiality, patent or other intellectual property notice or
marking from an original or any copy of any software, documentation, display,
media or other materials or Confidential Information, delivered or disclosed to
such party by the other party or under the Agreement.
(e) CUSTOMER agrees that is shall not (nor shall it permit anyone else to)
reverse engineer decompile, disassemble, or modify any software delivered or
disclosed to CUSTOMER by ONESOFT or separate any such software into components
or its component files, or recreate, or attempt to determine the makeup of any
such software. CUSTOMER agrees that all information discovered through any
failure to comply with the next preceding sentence is and shall at all times
remain the exclusive property and Confidential Information of ONESOFT.
(f) In the event that a party is required by law or judicial or
administrative process to disclose Confidential Information of the other party,
such party shall use all reasonable efforts to promptly notify the other party
and allow the party a reasonable opportunity to oppose disclosure. In addition,
a party shall furnish only the portion of the Confidential Information that it
is legally required to disclose and shall use all reasonable efforts to obtain
reliable assurances that confidential treatment will be accorded the
Confidential Information.
4. INTELLECTUAL PROPERTY
(a) Except as expressly set forth in a Product Schedule, nothing in the
Agreement shall be deemed to authorize the CUSTOMER to use any copyright, name,
trademark, service mark, or patent or other intellectual property right of
ONESOFT.
(b) CUSTOMER acknowledges that any underlying technology, techniques,
algorithms, methods or know-how, or process used in the design, development,
programming, or coding of ONESOFT's software products, tools, or objects, is
exclusively the intellectual property of ONESOFT(unless such technology,
techniques, algorithms, methods or know-how are in the public domain), and
certain of the same are protected by patents or patents pending.
5. PUBLIC RELATIONS
(a) (a) ONESOFT may disclose its relationship with CUSTOMER in ONESOFT's
promotional, advertising, and marketing materials and may use CUSTOMER's
standard graphics, logos, imagery, and its name and URL in ONESOFT's
promotional, advertising and marketing materials with prior CUSTOMER consent,
such consent not to be unreasonably withheld given the circumstances. At its
discretion, CUSTOMER may agree to serve as a reference for potential press,
analysts and prospective customers when requested by ONESOFT.
(b) Subject to the approval of CUSTOMER, such approval not to be
unreasonably withheld given the circumstances, ONESOFT may provide CUSTOMER with
ownership graphics and any associated hypertext links, to be placed on the web
pages (collectively, the "Web Site") that include functionality of a ONESOFT
software product.
(c) ONESOFT may from time to time submit or otherwise identify to third
parties the Web Site so that the Web Site may be
OneSoft Confidential Information 2
<PAGE>
considered for and become eligible to receive awards and other similar forms of
recognition.
6. LIMITATIONS ON LIABILITY
(a) UNDER NO CIRCUMSTANCES SHALL ONESOFT BE LIABLE FOR ANY SPECIAL,
INCIDENTAL, INDIRECT, STATUTORY, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES,
OF ANY KIND WHATSOEVER, OR FOR ANY LOST PROFITS, BUSINESS OR REVENUE, LOSS OF
USE OR GOODWILL, OR OTHER LOST ECONOMIC ADVANTAGE, ARISING OUT OF OR RELATED TO
THE AGREEMENT OR THE BREACH HEREOF, WHETHER SUCH CLAIMS ARE BASED ON BREACH OF
CONTRACT, STRICT LIABILITY, TORT, ANY FEDERAL OR STATE STATUTORY CLAIM, OR ANY
OTHER LEGAL THEORY, EVEN IF ONESOFT KNEW, SHOULD HAVE KNOWN, OR HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING LIMITATION SHALL SURVIVE AND
APPLY EVEN IF ANY LIMITED REMEDY SPECIFIED IN THE AGREEMENT IS DETERMINED TO
HAVE FAILED OF ITS ESSENTIAL PURPOSE.
(b) EXCEPT FOR ONESOFT'S LIABILITY FOR INFRINGEMENT CLAIMS UNDER SECTION
8(a)(iv) OR FOR THE BREACH OF ITS OBLIGATIONS UNDER SECTION 3, THE TOTAL
AGGREGATE LIABILITY OF ONESOFT FOR DAMAGES UNDER THE AGREEMENT SHALL BE LIMITED
TO *************** UNDER THE AGREEMENT; PROVIDED HOWEVER THAT, IN ANY EVENT
ONESOFT'S LIABILITY FOR DAMAGES RELATING TO ANY ONESOFT ********** SHALL BE
*********** FOR THE ************ TO THE ******* AND ONESOFT'S LIABILITY FOR
DAMAGES RELATING TO ONESOFT ******** SHALL BE LIMITED TO THE ****** OF: THE
************* FOR *******THE ********* THE **********, OR THE ************ FROM
********* FOR ********WITH RESPECT TO THE ************ UNDER WHICH THE
CUSTOMER'S CLAIM AROSE, DURING THE ************** THE TIME CUSTOMER'S CLAIM
AROSE.
7. AUDIT
(a) CUSTOMER agrees to maintain complete and accurate records containing
all data reasonably required for verification of its compliance with the terms
of the Agreement.
(b) ONESOFT agrees to maintain complete and accurate records and
documentation containing all data reasonably required for verification of its
compliance with the terms of the Agreement.
(c) CUSTOMER also agrees that ONESOFT may conduct remote license auditing
of CUSTOMER's web site to verify CUSTOMER's compliance with the terms of the
Agreement and the licenses granted under the Agreement.
8. INDEMNIFICATION
(a) Except to the extent ONESOFT has acted at CUSTOMER's direction or in
accordance with CUSTOMER's specifications, ONESOFT will indemnify, defend and
hold harmless CUSTOMER from all costs and expenses (including reasonable
attorneys' fees and court costs) arising from a third party claim against
CUSTOMER based on an actual or alleged:
(i) Breach of ONESOFT's representations and warranties;
(ii) Acts or omissions constituting gross negligence or willful
misconduct, committed by ONESOFT;
(iii) Failure by ONESOFT to comply with applicable governmental laws
and regulations; or
(iv) Subject to Section 8(c), infringement by ONESOFT of any United
States patent, United States copyright, United States trademark,
United States trade secret or other United States intellectual
property right.
This Section 8(a) shall not apply to claims arising as a result of CUSTOMER's
improper use of ONESOFT's products or services.
(b) CUSTOMER will indemnify, defend and hold harmless ONESOFT from all
costs and expenses (including reasonable attorneys' fees and court costs)
arising from a third party claim against ONESOFT based on an actual or alleged:
(i) Failure by CUSTOMER to perform its obligations under the
Agreement;
(ii) Breach of CUSTOMER's representations and warranties;
(iii) Act or omission constituting negligence or willful misconduct,
committed by CUSTOMER;
(iv) Failure by CUSTOMER to comply with applicable governmental laws
and regulations; or
(v) Infringement by CUSTOMER (or any property or data provided by
CUSTOMER) of any patent, copyright, trademark, trade secret or other
intellectual property right.
(c) If a claim covered under this Section 8 appears likely or is made, the
party against whom the claim is made will promptly provide the other party with
notice of such claim.
9. INJUNCTIVE RELIEF
The parties acknowledge that monetary damages will not be an adequate
remedy if a party breaches its obligations under Sections 3 or 4 or 7 or 10(b)
of this License Agreement, or Sections 2 or 4 or 6 of any Product Schedule, and
such breach will result in irreparable harm. The parties therefore agree that,
in the event of any such breach, the non-breaching party shall be entitled to
appropriate mandatory or prohibitory injunctive relief against the breaching
party, in addition to any other remedies at law, in equity or under the
Agreement. A party substantially prevailing in an action for injunctive relief
under this Section 9 shall be entitled to recover its costs and expenses for
obtaining such relief (including without limitation reasonable attorneys' fees
and court costs) from the other party.
10. TERMINATION
(a) Except as otherwise provided in the Agreement, either party may
terminate the Agreement or any Product Schedule or Services Schedule, and/or any
related licenses granted hereunder or thereunder, by giving the other party
written notice to that effect, effective on the date of receipt of such notice,
if:
(i) The other party enters into liquidation, whether or not
voluntarily, or a receiver is appointed to all or any material part of
its assets, or the other party
OneSoft Confidential Information 3
<PAGE>
becomes bankrupt or insolvent or enters into any arrangement with its
creditors, or takes or suffers any similar action in consequence of
debt or becomes unable to pay its debts as they become due; or
(ii) The other party materially breaches the Agreement and fails to
cure such breach within ********** days of delivery to the breaching
party of written notice of such breach.
(b) If a license granted by ONESOFT to CUSTOMER is terminated for any
reason, CUSTOMER shall after a reasonable transition period given the
circumstances of the termination, cease using any and all of the subject matter
of the license and CUSTOMER shall promptly deliver to ONESOFT all originals and
all copies of any and all of such subject matter and any related documentation.
11. FORCE MAJEURE
A party shall be relieved from an obligation (other than the obligation to
make payments or an obligation under Section 3 or 10(b)) while a cause, outside
of its reasonable control, and that it cannot reasonably circumvent, prevents
the performance of such obligation.
12. RELATIONSHIP OF THE PARTIES; CONTENT
(a) Nothing in the Agreement shall be construed as making either party an
agent of the other party, and neither party shall have the power to bind the
other party or to contract in the name of, or create a liability against, the
other party. Neither party shall be responsible for the acts or defaults of the
other party or any of the other party's employees or agents. The parties are
independent contractors with respect to all matters arising under the Agreement.
Nothing in the Agreement shall be deemed to establish a partnership, joint
venture, association or employment relationship between the parties. With
respect to its employees, a party shall remain responsible, and shall indemnify
and hold harmless the other party, for the withholding and payment of all
federal, state and local personal income, wage, earnings, occupation, social
security, worker's compensation, unemployment, sickness and disability insurance
taxes, payroll levies, or employee benefit obligations.
(b) The parties acknowledge that the Internet is neither owned nor
controlled by any one entity and that one or more third parties may gain access
to ONESOFT software. Electronic mail and other transmissions passing through
ONESOFT systems or over the Internet are not secure, and ONESOFT cannot
guarantee the security or privacy of any of the information or communications
passing through ONESOFT software. IN NO EVENT HOWEVER, WILL ONESOFT BE LIABLE
FOR ANY LOSS OR DAMAGE CAUSED BY A BREACH OF SECURITY, UNLESS SUCH BREACH IS
DIRECTLY CAUSED BY ONESOFT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN NO EVENT
WILL ONESOFT BE LIABLE FOR ANY LOSS OR DAMAGE CAUSED BY A USER'S RELIANCE ON ANY
DATA OR OTHER CONTENT OBTAINED THROUGH ONESOFT SOFTWARE.
13. FURTHER ASSURANCES
The parties agree to do all such things and to execute such further
documents as may reasonably be required to give full effect to the Agreement.
14. WAIVER
No waiver of any part of the Agreement shall be effective unless made in
writing by the waiving party. No waiver of any breach of the Agreement shall
constitute a waiver of any other breach of the same, or any other provision, of
the Agreement.
15. ENTIRE AGREEMENT AND CONSTRUCTION
The Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all POs (whether or not
prior) and all prior oral and written understandings, arrangements and
agreements between the parties relating to such subject matter. The parties
agree that there are no other representations or warranties relating to the
subject matter of the Agreement. Headings are included in the Agreement for
convenience only and shall not affect the meaning or construction of the
Agreement's provisions.
16. AMENDMENT
The Agreement may be modified or amended only by means of a writing
executed by both parties (but not by means of a PO).
17. ASSIGNIBILITY AND RESALE
Rights under the Agreement shall not be assigned, sublicensed, encumbered
by security interest, or otherwise transferred or resold by CUSTOMER (whether by
operation of law or otherwise) without the prior written consent of ONESOFT, and
any purported assignment, sublicense, encumbrance or other transfer of such
rights, in violation of the Agreement, shall be void. An amalgamation,
acquisition, or merger of CUSTOMER by or with any person or entity who is not a
party to the Agreement shall be treated as an assignment of the Agreement that
is subject to the provisions of the preceding sentence if ONESOFT determines in
its sole discretion, that such person or entity (a) is a competitor of ONESOFT
or (b) has a financial condition that is materially inferior to CUSTOMER's.
18. COMPLIANCE WITH LAWS
CUSTOMER shall carry out the obligations contemplated by the Agreement and
shall otherwise deal with the subject matter hereof in compliance with all
applicable laws, rules and regulations, of all governmental authorities,
including, without limitation, any applicable legal restrictions on exports, and
shall, at its own expense, obtain all permits and licenses required in
connection with the subject matter hereof. Without limiting the foregoing,
CUSTOMER agrees that it shall comply fully with all applicable export and import
laws, rules and regulations of the United States and other jurisdictions so that
nothing provided by ONESOFT under the Agreement is either (a) exported or
imported, whether directly or indirectly, in violation of such laws, rules or
regulations; or (b) used for any illegal purpose, including without limitation
the proliferation of nuclear, chemical or biological weapons.
19. SUCCESSORS AND ASSIGNS
The Agreement shall inure to the benefit of, and be binding upon the
parties, their successors and permitted assigns.
20. SEVERABILITY
OneSoft Confidential Information 4
<PAGE>
If any provision of the Agreement is held to be unenforceable, all
remaining provisions shall remain in full force and effect.
21. GENERAL PROVISIONS
(a) A party shall not directly or indirectly solicit or offer employment
to, or directly or indirectly accept services, by an employee of the other
party, during the term of the Agreement and for one (1) year thereafter, without
the prior written consent of the other party. For purposes of the Agreement, use
of general employment advertising and independent employment agencies, if not
directed at one or more of the other party's employees, shall not constitute
solicitation.
(b) Each party (i) agrees to inform the other party of any information made
available to the other party that is classified or restricted data, (ii) if
given such information and so informed, agrees to comply with the security
requirements imposed by any state or local government, or by the United States
Government, and (iii) if given such information and so informed, agrees return
all copies of such information upon request.
(c) Each party warrants and represents that its entering into and
performing its obligations under the Agreement does not conflict with any
contractual or other obligation of such party or create any conflict of interest
prohibited by the U.S. Government or any other governmental authority, and that
it shall promptly notify the other party if any such conflict arises during the
term of the Agreement.
(d) Each party shall maintain commercially reasonable and adequate
insurance protection covering its respective activities hereunder, including
coverage for statutory workers' compensation, comprehensive general liability
for bodily injury and tangible property damage, as well as adequate coverage for
vehicles. Each party shall indemnify and hold the other harmless from and
against any and all liability for bodily injury, death and tangible property
damage resulting from the acts or omissions of the indemnifying party (or its
officers, agents, employees or representatives acting within the scope of their
work).
(e) Sections 2(b) through (h), 3, 4, and 6 through 23 shall survive the
expiration or termination of the Agreement.
22. ENFORCEMENT
(a) The Agreement shall be governed by and construed in accordance with the
law of the Commonwealth of Virginia, applied without regard to its law of
conflicts.
(b) Subject to Section 22(c), any controversy or claim arising out of or
relating to the Agreement for which the value of the claim at issue is
***********, shall be resolved by arbitration on accordance with the Commercial
Arbitration Rules and supplementary procedures for international commerce
arbitrations of the American Arbitration Association, except that (i) the
parties shall be entitled to reasonable document and deposition discovery from
each other limited to the matters in dispute and (ii) the arbitrator shall
prepare a statement of findings of fact and conclusions of law and deliver the
statement to the Parties with respect to which the Parties shall be bound by the
findings of fact, but a Party may appeal issues of law (or application of law to
the facts) to any court of competent jurisdiction. Otherwise, judgment upon the
award rendered by the arbitrator may be entered in any court of competent
jurisdiction. The arbitration panel shall consist of three arbitrators. CUSTOMER
may name one arbitrator and ONESOFT shall name one arbitrator; each such
arbitrator shall be named within ten (10) days after the date of the date of
notification of the need for arbitration. The two arbitrators named by CUSTOMER
and ONESOFT may have prior relationships with the such naming party, which in a
judicial setting would be considered a conflict of interest. The third
arbitrator, selected by the first two, should be a neutral participant, with no
prior working relationship with any party. If the two arbitrators are unable to
select a third arbitrator within five (5) days, a third neutral arbitrator will
be appointed by the AAA from the panel of commercial arbitrators of any of the
AAA Large and Complex Resolution Programs. If a vacancy in the arbitration panel
occurs after the hearings have commenced the remaining arbitrator or arbitrators
may not continue with the hearing and determination of the controversy, unless
the parties agree otherwise. The arbitration shall be held in the Washington,
D.C. metropolitan area.
(c) Either party may seek from any court of competent jurisdiction,
injunctive and other equitable relief as appropriate.
23. NOTICES
(a) Any notice or other communication to the parties shall be sent to the
contact points identified below or at such other places as they may from time to
time specify by notice in writing to the other party. Any such notice or other
communication shall be in writing and shall be given by delivery to the
designated party of the addressee by pre-paid courier or facsimile with
confirmation. Any such notice or other communication shall be deemed to have
been given when the designated party of the addressee receives such notice.
(b) Point of Contact addresses are as follows:
For ONESOFT: (Technical)
Jeffrey M. MacIntyre
OneSoft Corporation
1505 Farm Credit Drive
McLean, VA 22102
Telephone: (703) 821-9190
For ONESOFT: (Contractual and Admin.)
Paul D. Economon, Esq.
OneSoft Corporation
1505 Farm Credit Drive
McLean, VA 22102
Telephone: (703) 821-9190
For CUSTOMER: (Technical)
- --------------------------------
OneSoft Confidential Information 5
<PAGE>
- ------------------------------------ --------------------------
- ------------------------------------ --------------------------
For CUSTOMER: (Contractual and Admin.) --------------------------
IN WITNESS WHEREOF, the parties have caused this License Agreement to be
executed by their duly authorized representatives as of the date first written
above.
OneSoft Corporation Espanol.com
By: /s/ Paul Economon By: /s/ Jose Manuel Pariente
-------------------------------- -----------------------------------
Name: Paul Economon Name: Jose Manuel Pariente
------------------------------ ---------------------------------
Title: Corporate Counsel Title: Vice President Operations
---------------------------- --------------------------------
OneSoft Confidential Information 6
<PAGE>
TRADOCS:1287035.1(RL2Z01!.DOC)
OneSoft Confidential Information 7
<PAGE>
OneSoft Corporation has omitted from this Exhibit 10.30 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
EXHIBIT 10.30
ONESOFT SOFTWARE MAINTENANCE SCHEDULE #1
UNDER
LICENSE AGREEMENT
Number: *********
THIS SOFTWARE MAINTENANCE SCHEDULE is entered into as of __________ ___,
1999 under License Agreement Number ******* (the "License Agreement") by and
between OneSoft Corporation, a Delaware corporation having an office at 1505
Farm Credit Drive, McLean, VA 22102 ("ONESOFT"), and Espanol.com, having an
office at 28 Princess Street, Wakefield, MA 01880 ("CUSTOMER").
This Software Maintenance Schedule describes the maintenance to be supplied for
the Software Products (as defined) at the fees described in the Software
Maintenance Addendum #1 attached hereto ("Maintenance Addendum"), which is
hereby incorporated by reference as if fully set forth herein, subject to the
provisions of this Software Maintenance Schedule and the License Agreement. In
the event of a conflict between provisions of the License Agreement and those of
this Software Maintenance Schedule, the provisions of the License Agreement
shall govern.
1.1 Subject to the terms and conditions herein and those of the Agreement,
ONESOFT will provide Software Maintenance Services ("Services") to the CUSTOMER
for the Software Product(s) licensed under the Agreement. "Services," for the
purpose of the Software Product(s) licensed under the Agreement shall include
the provision of Error fixes and Point Releases as generally released by ONESOFT
for a Software Product, as well as Version Releases if new functionality is not
required. These Services shall also include knowledge base and software issue
reporting as defined is Section 1.2 below.
1.1.1. ONESOFT will provide an 800 number for support with a 7x24x365
system to assist CUSTOMER. OneSoft agrees to maintain a log of all
calls from the CUSTOMER to this 1-800 number and provide the
CUSTOMER a monthly copy of said log with appropriate time stamps and
resolution statuses. ONESOFT shall respond to CUSTOMER's calls for
telephone support within two (2) hours, shall classify the severity
level of the incident report and provide the following support:
1.1.2 Critical Severity Level. An incident report is critical if
CUSTOMER'S system is unable to process data through the Software
Product as a result of a catastrophicmajor event in the system
database or Software, or a major application failure in a critical
processing period. In such situations, ONESOFT will use reasonable
commercial efforts to provide a resolution plan or workaround within
********.
1.1.3 High Severity Level. An incident report is high if there is a
serious disruption of a business function that limits CUSTOMER's
ability to conduct some portion of production business. In such
situations, ONESOFT will use reasonable commercial efforts to
provide a resolution plan or workaround within *********.
1.1.4 Low Severity Level. An incident report is low if there is a minor
application issue, including but not limited to inquiries and
requests for information on use or implementation of the Software.
In such situations, ONESOFT will respond to CUSTOMER within
**********.
OneSoft Confidential Information 1
<PAGE>
1.2 Notwithstanding the foregoing, ONESOFT shall provide support to
Software point releases for ********* or ********, whichever is longer.
ONESOFT shall not be responsible for repairing defects in a version of the
Software Product that is no longer being supported. As a result, CUSTOMER
may be required to upgrade the Software Product in order to have a software
defect repaired. ONESOFT will notify CUSTOMER prior to the end of the
support period for the Software so that CUSTOMER has an opportunity to
upgrade the Software Product in a timely manner. In the event a CUSTOMER
chooses not to upgrade the Software to a supported Software Product,
ONESOFT may, in its sole discretion, provide the requisite support at such
additional fees as may be mutually agreed upon by the parties.
1.3 ONESOFT, upon receipt of a written request from CUSTOMER, may
provide on-site support at a mutually agreed upon time. CUSTOMER agrees to
pay ONESOFT at it's standard Professional Services rates, as well as all
costs associated with the provision of on-site support, including
reasonable charges for ONESOFT's personnel, travel, lodging and
miscellaneous charges.
1.4 Fees. Upon execution of this Software Maintenance Schedule, CUSTOMER
shall remit payment to ONESOFT for the Software Maintenance Services Fee
equal to ******** (***%) of the fees for the perpetual licenses purchased
by the CUSTOMER for each Software Product, such fees are listed on
Maintenance Addendum attached hereto. Such Maintenance Fee shall cover
Services extended for ************ from the date of execution of this
Maintenance Schedule. The Maintenance Fee shall be automatically renewed at
the then current fee for successive one-year periods unless terminated by
CUSTOMER in writing within thirty (30) days prior to the renewal date.
Notwithstanding the forgoing, CUSTOMER will be afforded a thirty (30) day
period after the renewal date to cancel the automatic renewal and be
refunded any Maintenance Fees paid toward the coming one-year period for
Maintenance Services. In the event CUSTOMER does not renew the Maintenance
Services and then desires to do so in the future, CUSTOMER shall remit to
ONESOFT the ********** of ********** which ********* had it ********* a
********* to ****** percent (**%) of the *********.
1.5 OneSoft warrants that the Services to be provided hereunder will be
provided in a workmanlike manner, consistent with industry standards.
IN WITNESS WHEREOF, the parties have caused this Software
Maintenance Schedule to be executed by their duly authorized representatives as
of the date first written above.
OneSoft Corporation Espanol.com
By: /s/ Paul Economon By: /s/ Jose Manuel Pariente
------------------------------- -------------------------
Name: Paul Economon Name: Jose Manuel Pariente
------------------------------- -------------------------
Title: Corporate Counsel Title: Vice President Operations
------------------------------- -------------------------
OneSoft Confidential Information 2
<PAGE>
OneSoft Confidential Information 3
<PAGE>
OneSoft Corporation has omitted from this Exhibit 10.30 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
1.
EXHIBIT 10.30
ONESOFT PRODUCT SCHEDULE #1
UNDER
LICENSE AGREEMENT
Number: ********
THIS PRODUCT SCHEDULE is entered into as of __________ ___, 1999 under
License Agreement Number ********* (the "License Agreement") by and between
OneSoft Corporation, a Delaware corporation having an office at 1505 Farm Credit
Drive, McLean, VA 22102 ("ONESOFT"), and Espanol.com, having an office at 28
Princess Street, Wakefield, MA 01880 ("CUSTOMER").
This Product Schedule licenses the Software Products (as defined) identified in
the attached Product Addendum #1 (the "Product Addendum"), which is hereby
incorporated by reference as if fully set forth herein, subject to the
provisions of this Product Schedule and the License Agreement. In the event of a
conflict between provisions of the License Agreement and those of this Product
Schedule, the provisions of the License Agreement shall govern.
- --------------------------------------------------------------------------------
1. DEFINITIONS
Capitalized terms used but not otherwise defined in this Product Schedule shall
have the meanings given to them in the License Agreement.
(a) "Error" means any malfunction in a Software Product that prevents it
from performing substantially in accordance with its specifications.
(b) "Processor" means one (1) Intel standard processor installed in a
Server that operates a Software Product.
(c) "Point Release" means a modification to a Software Product identified
by the numeral(s) one or more places to the right of the first decimal point
from the left of the designation for such Release, with the newer Release having
the larger numeric value (e.g. X.1 to X.2).
(d) "Server" means a server that meets the requirements set forth in
technical documentation for the Software Product.
(e) "Site" means a World Wide Web site with one or multiple domain name(s)
mapped to one Internet Protocol address and supported by a single instance of a
database schema.
(f) "Software Product" means a ONESOFT software product that is identified
in the Product Addendum #1, attached hereto.
(g) "User" means a single named individual accessing or using the Software
Product.
(h) "Version Release" means a new version of a Software Product that is
identified by the numeral(s) to the left of the first decimal point from the
left in the designation, with the newer Version having the larger numeric value
(e.g. 1.X to 2.0).
2. LICENSE GRANT
(a) Subject to: (i) the terms, conditions, restrictions, limitations and
other provisions of the Agreement and (ii) the terms, conditions, restrictions,
limitations and other provisions of this Product Schedule and (iii) the terms,
conditions, restrictions, limitations and other provisions of the Product
Addendum #1. ONESOFT grants to CUSTOMER, and CUSTOMER accepts, a non-exclusive,
limited, nontransferable, license to use for its internal purposes, on one or
more Servers located in the United States only, or offshore if in compliance
with Section 18 of the License Agreement, each Software Product.
(b) CUSTOMER acknowledges receiving, and agrees to comply with, all the
terms and conditions, restrictions, limitations and other provisions, which are
hereby incorporated by reference as if fully set forth herein, of the third
party software sublicenses attached hereto, that apply to CUSTOMER's use of
ONESOFT's Software Products.
(c) Licenses under this Product Schedule do not include any right to, and
CUSTOMER agrees that it shall not (nor shall it permit anyone else to):
(i) Copy any Software Product for any purpose other than for
archival or emergency restart purposes or program error verification;
OneSoft Confidential Information 1
Espanol.com Version 1.0
<PAGE>
(ii) Sublicense, rent or otherwise make a Software Product available
to any third party, for a fee or otherwise, whether in a service
bureau environment or as an application service provider or otherwise;
or
(iii) Reverse engineer, replicate, decompile, disassemble, or modify
any software delivered or disclosed to CUSTOMER by ONESOFT or separate
any such software into components or its component files, or recreate
the source code of, or attempt to determine the makeup of any such
software. CUSTOMER agrees that all information discovered through any
failure to comply with this paragraph (iii) is and shall at all times
remain the exclusive property and Confidential Information of ONESOFT.
3. DELIVERY
ONESOFT shall deliver to CUSTOMER a copy of each Software Product and
released current versions that is to be run on a non-ONESOFT server. Delivery
shall be made in an electronic medium or by direct loading onto a designated
Server over the Internet.
4. LICENSE TERM; TERMINATION
(a) Each license for a Software Product granted under this Product Schedule
shall continue in full force and effect for its term as specified in Product
Addendum #1 for the licensed Software Product, unless such license is earlier
terminated in accordance with the Agreement.
(b) Either party may terminate this Product Schedule (including all of the
licenses granted hereunder) or any or all of the license(s) granted hereunder,
if the other party materially breaches this Product Schedule and/or the Product
Addendum #1 and/or the Agreement, and fails to cure such material breach within
********** days after receipt of written notice specifying the material breach.
(c) Upon termination of a license, CUSTOMER shall (i) cease using the
applicable Software Product(s) and related documentation, materials and
Confidential Information of ONESOFT, and (ii) certify to ONESOFT within
************after termination that CUSTOMER has destroyed, or has returned to
ONESOFT, such Software Products and related documentation, materials and
Confidential Information of ONESOFT, and all copies thereof, whether or not
modified or included in other materials.
(d) Sections 4(b) through (d), 6, 7 and 8 shall survive the termination of
the Agreement and/or this Product Schedule.
5. SOFTWARE PRODUCT MAINTENANCE
Subject to the terms and conditions of the Agreement, ONESOFT will provide
Software Maintenance Services to CUSTOMER in accordance with the provisions of
Software Maintenance Services Schedule, if any, attached to the License
Agreement.
6. RESERVATION OF RIGHTS
CUSTOMER acknowledges and agrees that the Software Products, and related
documentation, manuals and/or instructional materials provided by ONESOFT under
this Product Schedule, are the exclusive property of ONESOFT, and that CUSTOMER
obtains no rights in such Software Productsor related documentation, manuals
and/or instructional materials except the rights expressly granted in this
Product Schedule.
7. LIMITED WARRANTY, LIMITATIONS ON WARRANTIES AND LIMITATIONS ON LIABILITY
Limitations on warranties and liability in this Product Schedule shall apply in
addition to (and shall further limit) the limitations on warranties and
liability in the License Agreement.
(a) ONESOFT warrants only that each Software Product, at the time of
initial deployment on the internet and for *********** days thereafter, when
used in conjunction with hardware and software recommended by ONESOFT, is
capable of performing substantially in accordance with its specifications;
provided, however, that (i) each Software Product is otherwise accepted by
CUSTOMER "as is" and (ii) ONESOFT does not warrant that the operation of any
Software Product will be uninterrupted or error free. If CUSTOMER notifies
ONESOFT in writing, within such ******** day period of an Error in a Software
Product, ONESOFT shall use reasonable efforts to promptly correct such Error.
(b) ONESOFT warrants that each Software Product shall not, at the time of
execution of this Product Schedule, infringe any valid United States Copyright,
United States Patent or United States Trademark. In the event such warranty is
breached, ONESOFT agrees to defend any and all actions alleging any such
infringement that may be brought against CUSTOMER during the term of this
Product Schedule, and to pay all damages and costs finally awarded against
CUSTOMER in such actions or suits on account of such infringement provided that:
(i) ONESOFT shall have received from CUSTOMER prompt notice of the
commencement of any such action;
(ii) CUSTOMER, CUSTOMER's employees, CUSTOMER's agents, CUSTOMER's
subcontractors, and where applicable, those for whom CUSTOMER is in law
responsible, all shall have cooperated fully with ONESOFT in defense of the
action;
(iii) The action shall not have resulted from the use of any Software
Product for purposes other than those for which it was authorized and designed,
or the use of any Software Product in combination with software or other
products not supplied by ONESOFT, or where the infringement would have been
avoided by use of the then current Version of any of the Software Products; and
(iv) ONESOFT in its sole discretion instead of defending such action
may procure for CUSTOMER the right to continue the use of a Software Products
subject to such action, or it may replace or modify such Software Products
(provided that such modification is functionally equivalent to the original
software product functionality) so to become non-infringing or it may refund a
portion of the license fees for such Software Products based ***** (A) *********
to *******, the ****** of ********* to the ******** of the ********, or
(B) ******** to ********, a ********* of *******.
(c) A medium on which a Software Product is furnished (if any) is warranted
to be free of defects in materials and workmanship under normal use for a period
of thirty (30) days
OneSoft Confidential Information 2
<PAGE>
from the date of delivery of the Software Product and if such medium is or
becomes defective during such period then ONESOFT will provide replacement
media.
(d) ONESOFT warrants that each Software Product is designed to be used in
connection with dates in the range of *******through ******** [the 20th and 21st
centuries] and that the Software Product will operate without an Error arising
solely from use of date data within such range; provided, however, that this
warranty does not apply to a Software Product used in combination with software,
or other products, not supplied by ONESOFT. In the event that such an Error
occurs within ninety (90) days of the date a Software Product is initially
deployed on the Internet, ONESOFT shall use reasonable efforts to promptly
correct such Error.
(e) EXCLUSIVE REMEDIES:
THE REMEDIES IN THIS SECTION 7, ARE CUSTOMER'S SOLE AND EXCLUSIVE REMEDIES FOR
ANY BREACH OF ANY EXPRESS OR IMPLIED WARRANTIES RELATED TO ANY SOFTWARE PRODUCT.
THE WARRANTIES SET FORTH IN THIS SECTION 7 CONSTITUTE THE ONLY WARRANTIES OF
ONESOFT WITH RESPECT TO ANY SOFTWARE PRODUCT. SUCH WARRANTIES ARE IN LIEU OF,
AND ONESOFT HEREBY DISCLAIMS, ALL OTHER WARRANTIES, STATUTORY OR OTHERWISE,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE REMEDIES OF CUSTOMER
WITH RESPECT TO SOFTWARE PRODUCTS SHALL BE LIMITED TO THOSE PROVIDED IN THIS
SECTION 7 TO THE EXCLUSION OF ANY AND ALL OTHER REMEDIES OF ANY KIND WHATSOEVER.
8. AUDIT
In addition to the audit rights available to it under the License
Agreement, ONESOFT, or its authorized representative, shall have the right,
during normal business hours, and upon at least ******** days prior notice, to
physically inspect any Server upon which any Software Product is installed, and
to audit and analyze the relevant records of the CUSTOMER, in order to verify
compliance with the terms of this Product Schedule.
o0o
---
IN WITNESS WHEREOF, the parties have caused this Product Schedule to be
executed by their duly authorized representatives as of the date first written
above.
OneSoft Corporation Customer
By: /s/ Paul Economon By: /s/ Jose Manuel Pariente
---------------------------- -------------------------
Name: Paul Economon Name: Jose Manuel Pariente
---------------------------- -------------------------
Title: Corporate Counsel Title: Vice President Operations
---------------------------- -------------------------
OneSoft Confidential Information 3
<PAGE>
OneSoft Confidential Information 4
<PAGE>
OneSoft Corporation has omitted from this Exhibit 10.30 portions of this
Agreement for which OneSoft Corporation has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment have been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.
1.
EXHIBIT 10.30
ONESOFT PRODUCT SCHEDULE #2
UNDER
LICENSE AGREEMENT
Number: ********
THIS PRODUCT SCHEDULE is entered into as of __________ ___, 1999 under
License Agreement Number ******* (the "License Agreement") by and between
OneSoft Corporation, a Delaware corporation having an office at 1505 Farm Credit
Drive, McLean, VA 22102 ("ONESOFT"), and Espanol.com, having an office at 28
Princess Street, Wakefield, MA 01880 ("CUSTOMER").
This Product Schedule licenses the Software Products (as defined) identified in
the attached Product Addendum #2 (the "Product Addendum"), which is hereby
incorporated by reference as if fully set forth herein, subject to the
provisions of this Product Schedule and the License Agreement. In the event of a
conflict between provisions of the License Agreement and those of this Product
Schedule, the provisions of the License Agreement shall govern.
- --------------------------------------------------------------------------------
1. DEFINITIONS
Capitalized terms used but not otherwise defined in this Product Schedule shall
have the meanings given to them in the License Agreement.
(a) "Error" means any malfunction in a Software Product that prevents it
from performing substantially in accordance with its specifications.
(b) "Processor" means one (1) Intel standard processor installed in a
Server that operates a Software Product.
(c) "Point Release" means a modification to a Software Product identified
by the numeral(s) one or more places to the right of the first decimal point
from the left of the designation for such Release, with the newer Release having
the larger numeric value (e.g. X.1 to X.2).
(d) "Server" means a server that meets the requirements set forth in
technical documentation for the Software Product.
(e) "Site" means a World Wide Web site with one or multiple domain name(s)
mapped to one Internet Protocol address and supported by a single instance of a
database schema.
(f) "Software Product" means a ONESOFT software product that is identified
in the Product Addendum #1, attached hereto.
(g) "User" means a single named individual accessing or using the Software
Product.
(h) "Version Release" means a new version of a Software Product that is
identified by the numeral(s) to the left of the first decimal point from the
left in the designation, with the newer Version having the larger numeric value
(e.g. 1.X to 2.0).
2. LICENSE GRANT
(a) Subject to: (i) the terms, conditions, restrictions, limitations and
other provisions of the Agreement and (ii) the terms, conditions, restrictions,
limitations and other provisions of this Product Schedule and (iii) the terms,
conditions, restrictions, limitations and other provisions of the Product
Addendum #1. ONESOFT grants to CUSTOMER, and CUSTOMER accepts, a non-exclusive,
limited, nontransferable, license to use for its internal purposes, on one or
more Servers located in the United States only, or offshore if in compliance
with Section 18 of the License Agreement, each Software Product.
(b) CUSTOMER acknowledges receiving, and agrees to comply with, all the
terms and conditions, restrictions, limitations and other provisions, which are
hereby incorporated by reference as if fully set forth herein, of the third
party software sublicenses attached hereto, that apply to CUSTOMER's use of
ONESOFT's Software Products.
(c) Licenses under this Product Schedule do not include any right to, and
CUSTOMER agrees that it shall not (nor shall it permit anyone else to):
(i) Copy any Software Product for any purpose other than for
archival or emergency restart purposes or program error verification;
OneSoft Confidential Information 1
<PAGE>
(ii) Sublicense, rent or otherwise make a Software Product available
to any third party, for a fee or otherwise, whether in a service
bureau environment or as an application service provider or otherwise;
or
(iii) Reverse engineer, replicate, decompile, disassemble, or modify
any software delivered or disclosed to CUSTOMER by ONESOFT or separate
any such software into components or its component files, or recreate
the source code of, or attempt to determine the makeup of any such
software. CUSTOMER agrees that all information discovered through any
failure to comply with this paragraph (iii) is and shall at all times
remain the exclusive property and Confidential Information of ONESOFT.
3. DELIVERY
ONESOFT shall deliver to CUSTOMER a copy of each Software Product and
released current versions that is to be run on a non-ONESOFT server. Delivery
shall be made in an electronic medium or by direct loading onto a designated
Server over the Internet.
4. LICENSE TERM; TERMINATION
(a) Each license for a Software Product granted under this Product Schedule
shall continue in full force and effect for its term as specified in Product
Addendum #1 for the licensed Software Product, unless such license is earlier
terminated in accordance with the Agreement.
(b) Either party may terminate this Product Schedule (including all of the
licenses granted hereunder) or any or all of the license(s) granted hereunder,
if the other party materially breaches this Product Schedule and/or the Product
Addendum #2 and/or the Agreement., and fails to cure such material breach within
******* days after receipt of written notice specifying the material breach.
(c) Upon termination of a license, CUSTOMER shall (i) cease using the
applicable Software Product(s) and related documentation, materials and
Confidential Information of ONESOFT, and (ii) certify to ONESOFT within thirty
(30) days after termination that CUSTOMER has destroyed, or has returned to
ONESOFT, such Software Products and related documentation, materials and
Confidential Information of ONESOFT, and all copies thereof, whether or not
modified or included in other materials.
(d) Sections 4(b) through (d), 6, 7 and 8 shall survive the termination of
the Agreement and/or this Product Schedule.
5. SOFTWARE PRODUCT MAINTENANCE
Subject to the terms and conditions of the Agreement, ONESOFT will provide
Software Maintenance Services to CUSTOMER in accordance with the provisions of
Software Maintenance Services Schedule, if any, attached to the License
Agreement.
6. RESERVATION OF RIGHTS
CUSTOMER acknowledges and agrees that the Software Products, and related
documentation, manuals and/or instructional materials provided by ONESOFT under
this Product Schedule, are the exclusive property of ONESOFT, and that CUSTOMER
obtains no rights in such Software Productsor related documentation, manuals
and/or instructional materials except the rights expressly granted in this
Product Schedule.
7. LIMITED WARRANTY, LIMITATIONS ON WARRANTIES AND LIMITATIONS ON LIABILITY
Limitations on warranties and liability in this Product Schedule shall apply in
addition to (and shall further limit) the limitations on warranties and
liability in the License Agreement.
(a) ONESOFT warrants only that each Software Product, at the time of
initial deployment on the internet and for ******** days thereafter, when used
in conjunction with hardware and software recommended by ONESOFT, is capable of
performing substantially in accordance with its specifications; provided,
however, that (i) each Software Product is otherwise accepted by CUSTOMER "as
is" and (ii) ONESOFT does not warrant that the operation of any Software Product
will be uninterrupted or error free. If CUSTOMER notifies ONESOFT in writing,
within such ******* day period of an Error in a Software Product, ONESOFT shall
use reasonable efforts to promptly correct such Error.
(b) ONESOFT warrants that each Software Product shall not, at the time of
execution of this Product Schedule, infringe any valid United States Copyright,
United States Patent or United States Trademark. In the event such warranty is
breached, ONESOFT agrees to defend any and all actions alleging any such
infringement that may be brought against CUSTOMER during the term of this
Product Schedule, and to pay all damages and costs finally awarded against
CUSTOMER in such actions or suits on account of such infringement provided that:
(i) ONESOFT shall have received from CUSTOMER prompt notice of the
commencement of any such action;
(ii) CUSTOMER, CUSTOMER's employees, CUSTOMER's agents, CUSTOMER's
subcontractors, and where applicable, those for whom CUSTOMER is in law
responsible, all shall have cooperated fully with ONESOFT in defense of the
action;
(iii) The action shall not have resulted from the use of any Software
Product for purposes other than those for which it was authorized and designed,
or the use of any Software Product in combination with software or other
products not supplied by ONESOFT, or where the infringement would have been
avoided by use of the then current Version of any of the Software Products; and
(iv) ONESOFT in its sole discretion instead of defending such action
may procure for CUSTOMER the right to continue the use of a Software Products
subject to such action, or it may replace or modify such Software Products
(provided that such modification is functionally equivalent to the original
software product functionality) so to become non-infringing or it may refund a
portion of the license fees for such Software Products based upon (A) **********
to ********, the ************** to the ********** of the **************, or
(B) ******** to ***********, a ***************.
(c) A medium on which a Software Product is furnished (if any) is warranted
to be free of defects in materials and workmanship under normal use for a period
of ********* days
OneSoft Confidential Information 2
<PAGE>
from the date of delivery of the Software Product and if such medium is or
becomes defective during such period then ONESOFT will provide replacement
media.
(d) ONESOFT warrants that each Software Product is designed to be used in
connection with dates in the range of **** through ****** [the 20th and 21st
centuries] and that the Software Product will operate without an Error arising
solely from use of date data within such range; provided, however, that this
warranty does not apply to a Software Product used in combination with software,
or other products, not supplied by ONESOFT. In the event that such an Error
occurs within ********** days of the date a Software Product is initially
deployed on the Internet, ONESOFT shall use reasonable efforts to promptly
correct such Error.
(e) EXCLUSIVE REMEDIES:
THE REMEDIES IN THIS SECTION 7, ARE CUSTOMER'S SOLE AND EXCLUSIVE REMEDIES FOR
ANY BREACH OF ANY EXPRESS OR IMPLIED WARRANTIES RELATED TO ANY SOFTWARE PRODUCT.
THE WARRANTIES SET FORTH IN THIS SECTION 7 CONSTITUTE THE ONLY WARRANTIES OF
ONESOFT WITH RESPECT TO ANY SOFTWARE PRODUCT. SUCH WARRANTIES ARE IN LIEU OF,
AND ONESOFT HEREBY DISCLAIMS, ALL OTHER WARRANTIES, STATUTORY OR OTHERWISE,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE REMEDIES OF CUSTOMER
WITH RESPECT TO SOFTWARE PRODUCTS SHALL BE LIMITED TO THOSE PROVIDED IN THIS
SECTION 7 TO THE EXCLUSION OF ANY AND ALL OTHER REMEDIES OF ANY KIND WHATSOEVER.
8. AUDIT
In addition to the audit rights available to it under the License
Agreement, ONESOFT, or its authorized representative, shall have the right,
during normal business hours, and upon at least **** business days prior
notice, to physically inspect any Server upon which any Software Product is
installed, and to audit and analyze the relevant records of the CUSTOMER, in
order to verify compliance with the terms of this Product Schedule.
o0o
---
IN WITNESS WHEREOF, the parties have caused this Product Schedule to be
executed by their duly authorized representatives as of the date first written
above.
OneSoft Corporation Customer
By: /s/ Paul Economon By: /s/ Jose Manuel Pariente
---------------------------- -------------------------
Name: Paul Economon Name: Jose Manuel Pariente
---------------------------- -------------------------
Title: Corporate Counsel Title: Vice President Operations
---------------------------- -------------------------
OneSoft Confidential Information 3
<PAGE>
OneSoft Confidential Information 4
<PAGE>
Exhibit 10.31
November 1, 1999
Mr. Phillipe Amouyal
The Invus Group
135 E. 57th Street
New York, NY 10022
OneSoft Engagement Letter, (ID#: ************)
Dear Phillipe,
Thank you for taking the time to come to our offices so that we could introduce
you to OneSoft's WeightWatchers.com account team. The information exchange was
very helpful to the team in better understanding your vision and plans for the
future of WeightWatchers.com.. On behalf of the team at OneSoft, we are looking
forward to working with you and your team over the coming years. We want to
leverage our expertise, services, software products and partner relationships to
help you succeed. We believe you have a great opportunity in front of you.
This letter serves to confirm engagement by WeightWatchers.com (or the
"Company") of OneSoft to commence execution of a triage and enhancement plan for
its current web site and preparing for a next generation site infrastructure and
consumer service to be launched in 2000. Our understandings of the terms of this
engagement are listed below.
Summary of Engagement
- ---------------------
WeightWatchers.com engages OneSoft to provide a team of an estimated ***********
personnel comprised of combination of Project Managers, System Engineers,
Strategy Consultants, Application Developers and Interface Engineers as well as
("OneSoft Team"), for a two-week period starting on ************** ("Engagement
Period") for the purpose of commencing the project definition, enhancement
strategy, and migration plan for Phase I of the project. Phase I of the project,
as proposed, shall be to ************* and ******* the current
WeightWatchers.com site. OneSoft will also begin to ************* the
Weightwatcher.com team members on the ***************(Phase II). Please refer to
attachment 1 for general information regarding the tasks of Phase I and II. It
includes the specific deliverables for this initial two week period.
<PAGE>
Project Schedule and Fees
- -------------------------
Company agrees to compensate OneSoft for each team member at the hourly rates
specified in Attachment 2 - Unit Rate Schedule. The estimated cost for the
dedicated team for the ********** is $********. The team will be provided on a
time and materials basis, and Company acknowledges that the estimate is subject
to actual time and material used. Extensions of the two-week period may be
effectuated with a change order signed by Company. However, it is expected that
a *************** will be executed between the parties by or before **********.
In addition, the Company agrees it will be responsible for reimbursing OneSoft's
reasonable out of pocket expenses related to this engagement incurred on behalf
of your Company.
We charge for the following types of services: Long distance telephone, telex,
telecopying, messenger, postage and other communication costs; duplication and
laser printer use, staff overtime, computer research and other costs incurred on
your behalf. We sometimes refer to these costs as "disbursements", although some
of these disbursements are not direct reimbursements of out of pocket costs we
pay to third parties, but rather are amounts we believe reasonable and
appropriate which we charge our clients for certain services involved.
General Terms
- -------------
OneSoft invoices on a biweekly basis. Invoices are payable upon receipt.
Invoices that remain unpaid more than thirty days are subject to late fees (***%
******** or the maximum permissible by law whichever is less). OneSoft makes no
warranty express or implied, with respect to the services rendered hereunder or
the results obtained from OneSoft's work, including without limitation, any
implied warranties of merchantability or fitness for a particular purpose. In no
event shall OneSoft or its suppliers be liable for: (a) any indirect, special,
incidental or consequential damages, even if advised of the possibility thereof,
and regardless of whether any claim is based upon any agreement, negligence,
warranty, strict liability or other legal or equitable theory; or (b) direct
damages in excess of the aggregate amount of fees received by OneSoft from the
Company hereunder, notwithstanding any failure of essential purposes of any
limited remedy.
Confirmation
- ------------
Please sign this letter below in the space provided to confirm our understanding
of this engagement and to indicate the Company's acceptance of the terms of the
engagement as set forth in this letter. OneSoft is prepared to commence this
project immediately upon receipt of a signed copy of this letter.
Sincerely,
/s/ Stuart Claggett
- -------------------------
Contract 1999-404-304 Page - 2 of 3
<PAGE>
James W. MacIntyre IV
Stuart Claggett
VP Contracts
Acknowledged, Accepted and Agreed by:
WeightWatchers.com, by
/s/ Phillipe Amouyal
- -------------------------------
Phillipe Amouyal
Official Agent
Contractual Document Attachments
Attachment 1- *********
Attachment 2- **********
Contract 1999-404-304 Page - 3 of 3
