<PAGE>
As filed with the Securities and Exchange Commission on March 24, 2000
Registration No. 333-94233
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT NO. 4
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. 20004
(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
Amount Proposed Maximum
Title of Securities to to be Maximum Price Aggregate Amount of
be Registered Registered(1) Per Share(2) Offering Price(2) Registration Fee(3)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par
value................. 5,175,000 $14.00 $72,450,000 $19,127
</TABLE>
(1) Includes 675,000 shares subject to the underwriters' over-allotment option.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(a) under the Securities Act.
(3) Previously paid.
--------------
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 March 24, 2000
[LOGO OF ONESOFT]
- --------------------------------------------------------------------------------
4,500,000 Shares
Common Stock
- --------------------------------------------------------------------------------
This is the initial public offering of OneSoft Corporation and we are
offering 4,500,000 shares of our common stock. We anticipate that the initial
public offering price will be between $12.00 and $14.00 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 4.
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>
Price Underwriting Proceeds to
to Discounts and OneSoft
Public Commissions Corporation
<S> <C> <C> <C>
Per Share $ $ $
Total $ $ $
</TABLE>
We and the selling stockholders listed on page 66 of the prospectus have
granted the underwriters a 30-day option to purchase up to additional 675,000
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
Wit SoundView
The date of this Prospectus is , 2000.
<PAGE>
[INSIDE FRONT COVER GRAPHIC]
Top Text: THE INTERNET COMMERCE REVENUE ENGINE
Side Text: B2B2C - pointing to top of graphic
OneCommerce enables customers to interact with businesses directly or
through electronic marketplaces.
XML--pointing to second fifth of graphic
OneCommerce builds on the XML standard letting businesses extend selling to
Internet channels
Interaction--pointing to third fifth of graphic
OneCommerce enables personalized interaction with customers to deliver the right
experience at the right time.
Transaction--pointing to fourth fifth of graphic
OneCommerce converts customer interaction to transactional revenue.
Integration--pointing to bottom of graphic
OneCommerce integrates with existing IT systems to enable real time transactions
and exchange of information
Picture: A vertical picture of layers of interaction describing the OneCommerce
platform and the customers it serves.
From top to bottom: Label--Edge Devices, Customers, Business, eMarkets, etc.
picture of Palm Pilot, wireless phone, laptop and telephone touchpad
Arrow up to Edge Devices from center reading XML
Middle picture: Personalized Interactions & Businesses Processes
Arrow down from middle reading XML
Center picture: OneCommerce Scales on Microsoft Platform Run by Application
Service Providers Arrow up from bottom reading XML
Arrow down to bottom reading XML
Enterprise Application & Supply Chain Integration
Arrow down reading XML
Bottom picture: Inventory, Supplies, Distributors, Accounting, Payments, etc.
<PAGE>
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. This summary may not contain all of the information that you should
consider before investing in our common stock.
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 on an outsourced basis, 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
commerce 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
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 MarchFirst (formerly known as 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 application software 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.
1
<PAGE>
The Offering
<TABLE>
<CAPTION>
Common stock offered by OneSoft...................... 4,500,000 shares
<C> <S>
Common stock to be outstanding after this offering.. 20,966,148 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 February 29, 2000 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
4,000,325 shares issuable upon exercise of subject options at a weighted-
average exercise price of $4.97 per share and 60,651 warrants at an exercise
price of $6.59 per share and additional shares available for issuance under our
stock plans as of February 29, 2000.
Summary Consolidated Financial Data
(in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Revenues:
Application services........ $ -- $ 240 $ 171 $ 561 $ 2,023
Professional services....... -- 1,834 1,834 995 6,928
-------- -------- -------- -------- --------
Total revenues............ -- 2,074 2,005 1,556 8,951
Gross profit................. -- 616 605 495 1,554
(Loss) income from
operations.................. (8) 48 (614) (3,764) (26,708)
Net (loss) income............ (8) 49 (601) (3,590) (26,370)
Net (loss) income
attributable to common
shareholders................ (8) 49 (601) (3,608) (29,431)
Basic and diluted net loss
per share................... $ (0.00) $ 0.02 $ (0.10) $ (0.60) $ (4.85)
Weighted average common
shares-basic and diluted.... 3,000 3,000 5,832 5,969 6,066
Pro forma basic and diluted
net loss per share.......... $ (1.87)
Pro forma weighted average
common shares-basic and
diluted..................... 14,123
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
------------------------------
Pro Forma
Actual Pro Forma As Adjusted
------- --------- -----------
<S> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term
investments .................................. $16,361 $16,361 $69,466
Working capital................................ 11,598 11,598 64,703
Total assets................................... 28,399 28,399 81,504
Long term debt and capital lease obligations... 63 63 63
Redeemable preferred stock..................... 48,747 -- --
Stockholders' (deficit) equity ................ (30,736) 18,011 71,116
</TABLE>
The unaudited pro forma balance sheet data above reflects the conversion of
all classes of preferred stock into common stock as of December 31, 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 4,500,000 shares of common stock in this offering at an
assumed initial public offering price of $13.00 per share, after deducting
estimated underwriting discounts and commissions and estimated offering
expenses.
2
<PAGE>
In this prospectus, "OneSoft", "we", "us", and "our" refer to OneSoft
Corporation. 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.
"OneSoft," "OneCommerce," our logo and other trademarks and service marks of
OneSoft Corporation mentioned in this prospectus are the property of OneSoft
Corporation. All other trademarks or trade names referred to in this prospectus
are the property of their respective owners.
----------------
Unless otherwise indicated, all information in this prospectus assumes:
. that the underwriters have not exercised their option to purchase
additional shares;
. conversion of all shares of preferred stock into shares of common stock
upon completion of this offering; and
. the filing of an amended and restated certificate of incorporation upon
completion of this offering.
3
<PAGE>
RISK FACTORS
Any investment in our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with the other information contained in this prospectus, before you decide
whether to buy our 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 $601,000, $3.6 million, and $26.4 million for the years ended
December 31, 1997, 1998, and 1999, respectively. Our losses have resulted in an
accumulated deficit of approximately $33.8 million as of December 31, 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 and the
price of our common stock could fall if quarterly results are lower than
expectations
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.
We have over 40 clients but currently only 14 clients have licensed our
application software, and our Internet commerce solution may never achieve
broad market acceptance, reducing potential for revenue growth
We first introduced the XML-based version of OneCommerce in April 1999 and
delivered a second major release in November 1999. Of our 40 clients, only 14
clients have licensed OneCommerce and of those, only three are operational on
the most recent version. Therefore, we have not demonstrated
4
<PAGE>
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 five clients and a
loss of one or more of these clients could cause our results of operations to
suffer
Five of our clients accounted for 71% of our revenues for the year ended
December 31, 1998. Four clients accounted for 20.2%, 18.3%, 12.8%, and 12.2%
each, respectively. Five of our clients accounted for an aggregate of 57% of
our revenues for the year ended December 31, 1999. Three of those clients
accounted for 18.5%, 12.7%, and 11.7% each, respectively. 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. In addition, many of our
clients are Internet start-up companies with limited resources. Accordingly,
the non-payment of amounts due to us from a significant client could cause us
to incur a bad debt expense which could cause our financial condition to
suffer. For the year ended December 31, 1999, our bad debt expense was
approximately $1.1 million. We may experience higher levels of bad debt expense
in the future.
All of our revenues are directly related to a single family of relatively new
applications with few clients to date, and our revenue growth will be limited
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. We have over 40 clients, for
both application services and professional services. If our current limited
offerings are not commercially successful, our revenues will not increase as
anticipated. 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, we may not be able to conduct our
business as planned
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;
. develop new products or services; or
. respond to competitive pressures.
5
<PAGE>
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.
Growth in our operation has strained and will continue to strain our resources;
our failure to manage growth effectively could negatively impact our revenue
growth
From January 1, 1999 to February 29, 2000, we grew from 72 to 300 employees
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, which could disrupt our operations and result in reduced
revenues
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, John L. Wyatt, our
president and chief operating officer, Frederick C. Hawkins, III, our chief
strategy officer and acting chief financial officer, and Thomas E. Young, our
senior vice president of marketing and sales. Shortly after this offering, we
will be launching an active search for a permanent chief financial officer. 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 average sales cycle is four months, which 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 average sales process frequently takes four months 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.
6
<PAGE>
The Internet commerce market for our application software and services is new
and rapidly developing and may fail to mature into a sustainable market, which
would limit our ability to grow
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 eXtensible Markup Language does not develop, our
revenue growth could be negatively affected
OneCommerce is currently based in large part on eXtensible Markup Language,
or 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.
Market acceptance of OneCommerce is 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 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 Microsoft operating systems and Internet
technologies, we will be forced to develop products that run on other operating
systems or Internet servers. Development of a new product line would require
significant expenditures of time and money. Moreover, any change to 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 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;
7
<PAGE>
. vendors of complementary Internet commerce software; and
. application service providers.
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 or enter into new 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, which
would limit our revenue growth
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 and limit our growth.
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 may not be able to compete
successfully against current or future competitors. 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, and 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 causing internal distractions from the development of our business
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. For example, our president and chief operating officer joined
us on March 15, 2000. 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
8
<PAGE>
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, it could have a negative effect on our ability to grow.
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 and
claims against us
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 if we are not successful in defending those claims
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
9
<PAGE>
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 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 a portion of the 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 this 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 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
10
<PAGE>
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, therefore, we may not be successful and
such failures could have an adverse effect on our revenues
We intend to expand our international sales efforts in the future. We have
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, which is not
certain
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, which may not develop
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 related 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.
11
<PAGE>
Breaches of security on the Internet may slow the growth of Internet commerce,
limit our growth, and expose us to liability
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.
Increasing governmental regulation and legal uncertainties surrounding 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
12
<PAGE>
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 by impairing the ability of businesses to
obtain information about customers using the features of OneCommerce
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 which imposes 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.
Risks Related to This Offering
Internet-related stock prices are especially volatile and this volatility may
depress our stock price and negatively impact your investment
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 a group of existing stockholders owns 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, their affiliates, and entities owning 5.0% or more of our
outstanding shares of common stock will beneficially own or control 13,769,865
shares of our common stock, or approximately 64.0% 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,
13
<PAGE>
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 and Selling 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 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" for more information about how we plan to use our proceeds
from this offering.
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 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 15,392,480 shares of common stock and options for
an aggregate of 1,750,500 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 stockholders. Our amended and
restated certificate of incorporation provides that our board of directors may
issue preferred stock without shareholder approval. In addition, our amended
and 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 $9.58 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.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of the forward-
looking statements.
This prospectus contains estimates of market growth related to the Internet
and e-commerce. 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. These estimates have been produced by
industry analysts based on trends to date, their knowledge of technologies and
markets, and customer research, but these are forecasts only and are subject to
inherent uncertainty. There can be no assurance that, even if these assumptions
are correct, we will experience similar growth or market acceptance.
15
<PAGE>
USE OF PROCEEDS
Our net proceeds from the sale of the 4,500,000 shares of common stock we
are offering, at an assumed initial offering price of $13.00 per share, are
estimated to be approximately $53.1 million after deducting underwriting
discounts and commissions and estimated offering expenses payable by us. If the
over-allotment option is exercised in full, we estimate that the net proceeds
will be approximately $56,572,000. In the event that the underwriters exercise
their over-allotment option, we will not receive any proceeds from the sale of
shares of common stock by the selling shareholders listed on page 66.
We intend to use the net proceeds we receive from this offering for working
capital and general corporate purposes, including:
. approximately $30 million to expand our sales and marketing
activities;
. approximately $17 million to expand our research and development; and
. the remainder for 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. 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.
16
<PAGE>
CAPITALIZATION
The following table shows:
. our actual capitalization as of December 31, 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 December 31,
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 4,500,000 shares of common stock offered
by us at the assumed initial public offering price of $13.00 per share
and after deducting underwriting discounts and commissions and estimated
offering expenses.
<TABLE>
<CAPTION>
December 31, 1999
--------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Lease obligations, long-term portion........... $ 63 $ 63 $ 63
Redeemable convertible preferred stock (non-
cumulative), par value $0.001 per share;
10,107,640 shares authorized; 10,107,640
shares issued and outstanding, actual; no
shares issued and outstanding, pro forma and
pro forma as adjusted......................... 48,747 -- --
Stockholders' equity:
Common stock, par value $0.001 per share;
20,242,969 shares authorized; 6,206,850
shares issued and outstanding, actual;
16,314,490 shares issued and outstanding pro
forma and 20,814,490 shares issued and
outstanding pro forma as adjusted............ 6 16 21
Additional paid-in capital..................... 5,451 54,188 107,287
Loan to officer................................ (412) (412) (412)
Unearned stock compensation.................... (2,020) (2,020) (2,020)
Accumulated deficit............................ (33,760) (33,760) (33,760)
-------- -------- --------
Total stockholders' (deficit) equity......... (30,735) 18,012 71,116
-------- -------- --------
Total capitalization....................... $ 18,075 $ 18,075 $ 71,179
======== ======== ========
</TABLE>
The outstanding share information shown in the table excludes the following
shares:
. 3,685,483 shares of common stock issuable upon the exercise of
outstanding stock options granted as of December 31, 1999 with a
weighted average exercise price of $3.26 per share;
. 1,082,767 additional shares of common stock available for future grant
under our Second Amended and Restated 1997 Employee, Director and
Consultant Stock Option Plan, as of December 31, 1999; and
. 60,651 additional shares of common stock issuable upon the exercise of
warrants outstanding as of December 31, 1999, at an exercise price of
$6.59 per share.
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<PAGE>
DILUTION
Our pro forma net tangible book value as of December 31, 1999, was $18.0
million, or $1.10 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
December 31, 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 4,500,000 shares of our common stock offered in this
offering at an assumed initial public offering price of $13.00 per share, and
after deducting underwriting discounts and commissions, and the estimated
offering expenses, our pro forma as adjusted net tangible book value as of
December 31, 1999 would have been $71.1 million, or $3.42 per share of common
stock. This represents an immediate increase in pro forma net tangible book
value of $2.32 per share to our existing stockholders and an immediate dilution
of $9.58 per share to new investors at the assumed initial public offering
price. The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share......... $ 13.00
Pro forma net tangible book value per share as of
December 31, 1999..................................... $ 1.10
Increase per share attributable to new investors....... 2.32
---------
Pro forma net tangible book value per share after the
offering 3.42
---------
Pro forma net tangible book value dilution per share to
new investors.......................................... $ 9.58
=========
</TABLE>
The following table summarizes, as of December 31, 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......... 16,314,490 78% $ 47,589,826 45% $ 2.92
New public investors.......... 4,500,000 22 58,500,000 55 13.00
---------- --- ------------ --- ------
Total....................... 20,814,490 100% $106,089,826 100% $ 5.10
========== === ============ === ======
</TABLE>
The foregoing discussion and tables assume no exercise of any outstanding
stock options or warrants as of December 31, 1999. As of December 31, 1999,
there were options and warrants outstanding to purchase a total of 3,746,134
shares of our common stock with a weighted-average exercise price of $3.31 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 75% 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 5,175,000 shares, or 25% of the total number of shares of
common stock to be outstanding immediately after this offering. See
"Principal and Selling Stockholders."
18
<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, 1999 and our consolidated balance sheet data as of December 31,
1998 and 1999 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. Historical results are not
necessarily indicative of future results. The pro forma consolidated balance
sheet data as of December 31, 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
4,500,000 shares of common stock offered by OneSoft at an assumed initial
public offering price of $13.00 per share after deducting the estimated
underwriting discounts and commissions and offering expenses.
19
<PAGE>
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------
1995 1996 1997 1998 1999
---------- ---------- ---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenues:
Application services... $ -- $ 240 $ 171 $ 561 $ 2,023
Professional services.. -- 1,834 1,834 995 6,928
---------- ---------- ---------- ---------- ----------
Total revenues........ -- 2,074 2,005 1,556 8,951
Cost of revenues........ -- 1,458 1,400 1,061 7,397
---------- ---------- ---------- ---------- ----------
Gross profit............ -- 616 605 495 1,554
Operating expenses:
Sales and marketing
expenses.............. -- -- -- 1,190 12,184
Research and
development costs..... -- -- 254 1,044 4,490
General and
administrative
expenses.............. 8 568 955 2,012 8,433
Non-cash stock based
compensation expense.. -- -- 10 12 3,155
---------- ---------- ---------- ---------- ----------
Total operating
expenses............. 8 568 1,219 4,258 28,262
Income (loss) from
operations............. (8) 48 (614) (3,763) (26,708)
Interest income........ -- -- 17 169 613
Interest expense....... -- -- (18) (14) (48)
Minority interest...... -- 1 14 18 (227)
---------- ---------- ---------- ---------- ----------
Net income (loss)....... (8) 49 (601) (3,590) (26,370)
========== ========== ========== ========== ==========
Accretion of preferred
stock.................. -- -- -- 18 3,061
---------- ---------- ---------- ---------- ----------
Net income (loss)
attributable to
shareholders........... $ (8) $ 49 $ (601) $ (3,608) $ (29,431)
========== ========== ========== ========== ==========
Basic and diluted net
income (loss) per share
attributable to
shareholders........... $ (0.00) $ 0.02 $ (0.10) $ (0.60) $ (4.85)
========== ========== ========== ========== ==========
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 6,066,009
Pro forma basic and
diluted net loss per
share attributable to
shareholders........... $ (1.87)
==========
Weighted average shares
used in computing pro
forma basic and diluted
net loss per share..... 14,122,682
</TABLE>
<TABLE>
<CAPTION>
December 31, December 31, 1999
--------------------------------- ------------------------------
Pro Forma
1995 1996 1997 1998 Actual Pro Forma As Adjusted
------- ------- ------- ------- ------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Balance
Sheet Data:
Cash.................... $ 13 $ 9 $ 733 $ 2,556 $16,361 $16,361 $69,466
Working capital......... (7) 1 494 2,535 11,598 11,598 64,703
Total assets............ 13 358 1,391 3,682 28,399 28,399 81,504
Long-term debt and
capital lease
obligations............ -- -- 31 33 63 63 63
Redeemable convertible
preferred stock........ -- -- 1,750 7,604 48,747 -- --
Stockholders' (deficit)
equity................. (7) 44 (766) (4,773) (30,736) 18,011 71,116
</TABLE>
20
<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. Please refer to "Special Note Regarding
Forward-Looking Statements and Industry Data" for additional information.
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 as of
December 31, 1997, to 300 full-time employees as of February 29, 2000, 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 have 12 clients with perpetual licenses and two with term licenses,
which have an average term of 24 months. 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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<PAGE>
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 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, and did not comprise a significant portion of our costs
in 1999. While not material in 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 60
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.
Non-cash stock based 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 $397,238 during
the years ended December 31, 1997, 1998, and 1999, respectively, 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 year ended December 31, 1999, we recorded $2.8 million of expense
related to the fair value of the options issued to non-employees. Approximately
$145,000 of this amount related to services performed during 1999 by non-
employees. The remaining $2.6 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 options vest upon
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<PAGE>
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 December 31, 1999. Effective February 15, 2000, these 250,000
options were cancelled and we entered into an agreement with the individual to
grant 25,000 options, which were immediately vested. He has exercised those
options in full.
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. We
experienced bad debt expense of approximately $1.1 million in 1999. Many of our
clients are Internet startup companies with limited resources. We may
experience higher levels of bad debt expense in the future. As of December 31,
1999, we had an accumulated deficit of approximately $33.8 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>
Year Ended December 31,
-----------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Percentage of Total Revenues:
Revenues:
Application services................... 8.5 % 36.1 % 22.6 %
Professional services.................. 91.5 63.9 77.4
--------- --------- ---------
Total revenues..................... 100.0 100.0 100.0
Cost of revenues....................... 69.8 68.2 82.6
--------- --------- ---------
Gross profit........................... 30.2 31.8 17.4
Operating expenses:
Sales and marketing................... 0.0 76.5 136.1
Research and development.............. 12.6 67.1 50.1
General and administrative............ 47.6 129.3 94.2
Non-cash stock based compensation..... 0.4 0.7 35.2
--------- --------- ---------
Total operating expense............... 60.6 273.6 315.6
Loss from operations................... (30.6) (242.0) (298.4)
Other income, net...................... 0.0 10.0 3.7
Net loss............................... (29.9)% (230.8)% (294.6)%
</TABLE>
Year Ended December 31, 1998 Compared to 1999
Application services revenues. Application services revenues increased
256.5% from $561,000 in the year ended December 31, 1998 to $2.0 million in the
year ended December 31, 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 year ended December 31, 1998, application services revenues
comprised 36.1% of our total revenues, while application services revenues
comprised 22.6% of total revenues for the comparable period in 1999. For the
year ended December 31, 1998, substantially all of our sales were initial sales
to new customers, compared with 65.0% of application services revenues from
sales to new clients and 35.0% of our application services revenues derived
from ongoing sales or upgrades to existing clients for the comparable period.
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<PAGE>
Professional services revenues. Professional services revenues increased
593.4% from $995,000 in the year ended December 31, 1998 to $6.9 million in the
comparable period of 1999. This expansion reflects the increased number of
deployments of our OneCommerce application software and services.
Cost of revenues. Cost of revenues increased 572.7% from $1.1 million during
the year ended December 31, 1998 to $7.4 million in the year ended December 31,
1999. This increase reflects an increase of $5.6 million in salary and benefits
associated with the addition of new employees to staff our Internet Solution
Center and network operations center, as well as an increase of $770,000 in
investments in infrastructure to support the greater demand for our
applications services and professional services. Cost of revenues for
application services were $1.6 million during the year ended December 31, 1999,
which represents 21.6% of our total cost of revenues. 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 and the Company to experience minimal or negative margins
during the next several quarters.
Sales and marketing expenses. Sales and marketing expenses increased 916.7%
from $1.2 million during the year ended December 31, 1998 to $12.2 million
during the year ended December 31, 1999. The increase in sales and marketing
expenses resulted primarily from promotional costs of $3.4 million, and $3.7
million due to an increase in sales and marketing personnel. Full time sales
and marketing personnel grew from nine employees as of December 31, 1998, to
54 employees as of December 31, 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.
Research and development expenses. Research and development expenses
increased 350.0% from $1.0 million during the year ended December 31, 1998 to
$4.5 million during the year ended December 31, 1999. The increase in research
and development expenses was due mainly to $2.4 million related to the hiring
of additional personnel and to $1.0 million related 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 11
employees as of December 31, 1998 to 38 employees as of December 31, 1999. We
plan to continue expanding our research and development organization and expect
to increase the dollar amount of expenses in this area.
General and administrative expenses. General and administrative expenses
increased 320.0% from $2.0 million in the year ended December 31, 1998 to $8.4
million in the year ended December 31, 1999. The increases in general and
administrative expenses were primarily due to increases in the personnel
required to support our expanded operations and larger number of customer
related transactions. Our full-time general and administrative personnel grew
from 11 employees as of December 31, 1998 to 57 employees as of December 31,
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.
Non-cash stock based compensation expenses. We recorded stock option related
compensation expenses of $12,000 and $3.2 million in the year ended December
31, 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
24
<PAGE>
$2.8 million of expense during the year ended December 31, 1999 whereas there
were no significant issuance of options to non-employees during the year ended
December 31, 1998.
Other income. Other income increased from $156,000 in the year ended
December 31, 1998 to $338,000 in the comparable period in 1999. This change
reflects increased interest income due to the greater cash balances held by us
during 1999 which were partially offset by a $227,000 loss on the disposition
of the Sports Warehouse subsidiary.
Year Ended December 31, 1997 Compared to 1998
Application services revenues. Application services revenues increased 228%
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 services offerings. For the 1997 fiscal year, application
services revenues comprised 8.5% of our total revenues, while application
services revenues comprised 36.1% of total revenues during 1998. Substantially
all of our sales in 1997 and 1998 were initial sales to new clients.
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 version 1.0 of our OneCommerce product.
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.
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 primarily to the hiring of additional
personnel for the development efforts associated with version 2.0 of our
OneCommerce software application, which began during the second half of 1998.
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.
Non-cash stock based 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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<PAGE>
Quarterly Results of Operations
The following table sets forth consolidated statement of operations data for
each of the eight quarters beginning with the quarter ended March 31, 1998
through the quarter ended December 31, 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, Sept. 30, Dec. 31, March 31, June 30, Sept. 30, Dec. 31,
1998 1998 1998 1998 1999 1999 1999 1999
--------- -------- --------- -------- --------- -------- --------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Application services... $ 158 $ 222 $ 82 $ 99 $ 116 $ 353 $ 602 $ 952
Professional services.. 220 172 436 167 917 1,025 1,634 3,352
----- ----- ------ ------- ------- ------- ------- --------
Total revenues......... 378 394 518 266 1,033 1,378 2,236 4,304
Cost of revenues........ 124 178 324 435 512 819 1,783 4,283
----- ----- ------ ------- ------- ------- ------- --------
Gross profit............ 254 216 194 (169) 521 559 453 21
Operating expenses:
Sales and marketing.... 76 69 289 756 1,256 1,937 4,356 4,635
Research and
development........... 163 191 310 380 412 898 1,504 1,676
General and
administrative........ 291 567 507 647 1,000 1,316 2,428 3,689
Non-cash stock based
compensation.......... 3 3 3 3 1,195 460 891 609
----- ----- ------ ------- ------- ------- ------- --------
Total operating
expenses.............. 533 830 1,109 1,786 3,863 4,611 9,179 10,609
----- ----- ------ ------- ------- ------- ------- --------
Loss from operations.... (279) (614) (915) (1,955) (3,342) (4,052) (8,726) (10,588)
Interest income........ 25 19 69 56 50 57 183 323
Interest expense....... -- (7) (2) (5) -- -- -- (48)
Other.................. -- 8 1 9 1 1 1 (230)
----- ----- ------ ------- ------- ------- ------- --------
Net loss................ $(254) $(594) $ (847) $(1,895) $(3,291) $(3,994) $(8,542) $(10,543)
===== ===== ====== ======= ======= ======= ======= ========
</TABLE>
The increase in application services revenues from the year ended December
31, 1998 through the year ended December 31, 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 December 31, 1999 was primarily due to the
expansion of our services organization and the support and training provided to
channel partners that deploy our software. We anticipate this trend to continue
for the next several quarters. The increase in sales and marketing expenses
from the three months ended June 30, 1998 through the three months ended
December 31, 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 year ended December 31, 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 31, 1999, we raised
$47.6 million from the private sale of common and preferred stock.
We used $18.1 million of cash in operating activities during the year ended
December 31, 1999. Cash operating losses during the year resulted primarily
from discretionary
26
<PAGE>
expenditures, including $12.2 million related to sales and marketing expenses,
and $4.5 million related to research and development expenses. Changes in
working capital items consisted primarily of cash provided by accounts payable,
accrued expenses and other current liabilities offset by increases in accounts
receivable, and other current assets. We anticipate that these discretionary
expenses will increase in absolute dollar terms, and that the mix of
discretionary expenses will remain consistant through the period.
Our investing activities used cash of $6.1 million in 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.
For the year ended December 31, 1999, we estimate that our accounts
receivable turnover was 82 days. During the middle of 1999, we provided
professional services on which we experienced a high level of bad debts. This
increase in bad debts resulted from a substantial increase in sales and
specific allowances for two problem receivables. These two problem receivables,
totaling approximately $460,000, resulted from either collection problems due
to internal changes in our client's management, which we believe are non-
recurring in nature, or disputed contract terms. We have implemented, and
continue to implement, infrastructure and policies, including enhancement of
our credit policy and contracting procedures, which we believe will help
mitigate the risk of experiencing significant write-offs in the future,
however, we cannot guarantee that these systems and policies will be completely
effective.
Our cash totaled $16.4 million at December 31, 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. During that period, we anticipate continued cash operating losses;
and 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 15.3% to 27.3%.
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
27
<PAGE>
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 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
28
<PAGE>
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.
29
<PAGE>
BUSINESS
Overview
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
using eXtensible Markup Language, or XML, an emerging technology standard that
was 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 Background
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 build, grow, and extend 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 the Shop.org
study conducted by The Boston Consulting Group, 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, provide clients the functionality
they require, together with agreed-upon levels of reliability and scalability
through an established, sophisticated technical infrastructure and staff.
Application service providers 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 application service provider, 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 worldwide spending on
high-end outsourced applications will grow from $150.4 million in 1999 to $2
billion by 2003, a compound annual growth rate of 91%.
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 application
service providers. 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 solutions on an
outsourced basis to reduce their initial expenditure and to take advantage of
the expertise and facilities of application service providers. 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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The OneSoft 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 application service providers
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 our expertise and facilities as well as those
of our channel partners 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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The OneSoft 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, MarchFirst (formerly known as 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 MarchFirst, 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
application service providers, 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 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.
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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, or 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,
MarchFirst (formerly known as 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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<PAGE>
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 and . Present up-sell and cross-sell promotions to customers
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 visitors 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.
. Input and process customer payment information in real-
Sales and time to complete a sales order.
Order Processing . 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.
- --------------------------------------------------------------------------------
. Enable 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 Management and profile maintenance.
. 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 site 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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<PAGE>
Business Systems Integration. OneCommerce incorporates a flexible framework
of XML-based application programming interfaces. 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 connectors to integrate with leading business application systems
and services. These can include:
. business applications like enterprise resource planning;
. 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,
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 supports distribution, deployment, and
operation of our software. The Internet Solution Center 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 Internet
Solution Center 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 Internet
Solution Center 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 Internet Solution Center 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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<PAGE>
. 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 application service provider 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. Our Internet Solution Center 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, 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, which 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 February 29, 2000, 168 partner associates have completed initial
training.
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Sales and Marketing
Sales Strategy
We market and sell our application services through both direct and indirect
sales channels. As of February 29, 2000, our sales organization was comprised
of 46 individuals all of whom were based in North America, including 12
business development directors and 25 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 takes an average of four months 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 February 29, 2000, we had 14 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, application
service providers, 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 February 29, 2000 there were nine individuals
recruiting, qualifying, and supporting the OneSoft alliance partners.
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<PAGE>
Strategic Alliances
In April 1999, we formed a partnership with Microsoft Corporation creating
the OneSoft Commerce Partner program for Microsoft Certified Solution
Providers. We created this program to enable a limited number of the over
15,000 Microsoft Certified Solution Providers 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 OneSoft Commerce Partners 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 MarchFirst
(formerly known as USWeb/CKS), the world's leading Internet professional
services firm. Our alliance enables MarchFirst 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
MarchFirst brand recognition and market share in the industry.
OneCommerce is optimized to operate on the Compaq Distributed Internet
Server Array 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 application service providers and Internet hosting providers
such as MarchFirst and Exodus Communications to support the industry trend
toward delivering software as a service. Our Internet Solution Center provides
partners with training, deployment tools, and support. These application
service providers 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 OneSoft Commerce Partner 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
Proxicom, Inc.
Sierra Systems
SoftNet Systems Corporation
Surebridge
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<PAGE>
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
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
Our 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 is a representative list of clients as of February 29, 2000 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 & Manufacturing &
Distribution Media & Entertainment Services Business Services
- ------------------ --------------------- ---------------- -----------------
<S> <C> <C> <C>
Alloy Online Eruptor Entertainment Maytag Ehomes
Allpets.com Phillips Publishing ETRAV FoolMart, LLC
ePhones.com SmartCruiser.com
Espanol.com
Mark Group
SpaConcepts
WeightWatchers.com
</TABLE>
A small group of clients has accounted for a large portion of our revenues
in both 1998 and 1999. The following table lists our clients representing 10
percent or more of our revenues in 1998 and 1999:
<TABLE>
<CAPTION>
Year ended
December 31,
1998
-------------
Client % of Revenues
------ -------------
<S> <C>
Alloy Online, Inc. ............................................ 20.2%
W.K. Kellogg Foundation........................................ 18.3%
Spirit Channel................................................. 12.8%
KPMG........................................................... 12.2%
<CAPTION>
Year ended
December 31,
1999
-------------
Client % of Revenues
------ -------------
<S> <C>
ePhones........................................................ 18.5%
The Mark Group................................................. 12.7%
espanol.com.................................................... 11.7%
</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
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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.
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.com. 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.
Our principal competitive advantages include:
. an innovative use of XML;
. software designed for delivery on an outsourced basis;
. software designed to leverage Microsoft Internet technologies; and
. a comprehensive sell-side e-commerce solution.
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.
OneCommerce components communicate using our own version of eXtensible
Markup Language, or XML, 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, and can reference existing files written in any number of
other program languages. The eXtensible Stylesheet Language 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 database compliant with the Open DataBase
Connectivity standard, again simplifying the process if integration with
alternative external databases is required.
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<PAGE>
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 Distributed Internet Server Array 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.
Compaq's Distributed Internet Server Array 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.
This system also limits the risk of losing data or service if any one server
has technical problems and enables Internet commerce businesses to quickly and
easily scale for increasing customer demand by adding servers. For example, a
small system using Compaq's hardware architecture 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 some third-party technologies and products into
OneCommerce through licensing agreements. We believe that all third-party
technology that is licensed or integrated into our products can be replaced
easily and readily by technology available on commercially reasonable terms
from other vendors. 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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<PAGE>
As of February 29, 2000, there were 45 employees and 41 contractors in our
product development organization. Our development team is located at our
headquarters in McLean, Virginia.
We had $254,000 of research and development expenses in the year ended
December 31, 1997, $1.0 million in the year ended December 31, 1998, and $4.5
million in the year ended December 31, 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 converted our provisional patent application with the United States
Patent and Trademark Office into three non-provisional patent applications
claiming priority to the provisional application. The provisional patent
application and the three non-provisional patent applications are directed to
the following aspects of our Internet commerce application software that
enables others to create and operate e-commerce Web sites:
. a highly flexible and adaptable modular architecture for creating e-
commerce Web sites;
. a method of profiling and targeting customers of an e-commerce Web site;
and
. a method of collecting data and reporting, in real time, the financial
performance of an e-commerce Web site.
We have applied for trademark and service mark registration for over 95 marks,
including "OneSoft" and "OneCommerce".
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 these rights, we may face
increased competition."
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We have received correspondence from attorneys representing our former chief
technology officer, asserting that he invented a portion of the 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 can be costly and result in the loss of significant rights if we are not
successful in defending those claims."
Employees
As of February 29, 2000, we had a total of 300 employees. Of our employees,
45 were in research and development, 60 in sales and marketing, 139 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 September 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, Santa Monica, California,
and Redwood Shores, 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 and Chief
....................... Executive Officer
John L. Wyatt........... 48 President, Chief Operating Officer and Director
Frederick C. Hawkins, 35
III.................... Chief Strategy Officer and Acting Chief Financial Officer
Thomas E. Young......... 34 Senior Vice President, World Wide Sales and Marketing
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........ 36 Vice President of Operations
Henry D. Barratt, Jr. 48
(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 chief
executive officer since our inception in 1995. Mr. MacIntyre has served as our
chairman of the board since January 1996. Mr. MacIntyre, IV also served as our
president from inception until March 2000. 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.
John L. Wyatt has served as our president, chief operating officer and a
member of our board of directors since March 2000. From February 1999 to March
2000, Mr. Wyatt was president of MicroStrategy, Inc.'s Commercial Intelligence
business unit. From 1991 to 1998, Mr. Wyatt was the chief executive officer of
James Martin & Co., a worldwide systems consulting firm. From 1988 to 1990, Mr.
Wyatt was president, North America, of James Martin Associates. Since 1988, Mr.
Wyatt has been a member of the board of directors of James Martin Associates
and subsequently, James Martin & Co. His early consulting experience included
positions with Arthur Andersen & Co. and Touche Ross & Co. Mr. Wyatt holds a
B.Ec. from the University of New England, in New South Wales, Australia.
Frederick C. Hawkins, III has served as our chief strategy officer and
acting chief financial officer since March 2000. From November 1997 to March
2000, Mr. Hawkins served as our chief financial officer and senior vice
president of finance. 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
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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, world wide sales
and marketing since March 2000. From October 1999 to March 2000, Mr. Young
served as our senior vice president of marketing and sales, and 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 July 1993 to 1995, Mr. Young was the manager of business
development at Manugistics. Prior to this, Mr. Young worked at Andersen
Consulting 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.
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A. Douglas Peabody has served as a member of OneSoft's board of directors
since April 1998. Currently, Mr. Peabody is the president and chief executive
officer of Weider Publications, Inc., a magazine publishing company. From
January 1993 to January 2000, Mr. Peabody 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 1993, 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 LLC, the U.S. 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 nine 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, Cisneros, and Wyatt serve on our board of directors pursuant to
these rights. 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.
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Currently, our 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 amended and restated certificate of
incorporation and amended 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
. the class III directors will be Messrs. Cisneros, MacIntyre, IV, and
Wyatt, 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 Second 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.
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In January 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, 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............................. 125,769 118,325 100,000
Former Senior Vice President of World Wide
Sales (2)
Frederick C. Hawkins, III...................... 150,756 87,250 --
Chief Strategy Officer and Acting 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, World Wide Sales and
Marketing
</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.
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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 Second 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 Fair Value
Options Employees In Price at Dates Expiration
Name Granted 1999(1) Per Share (2) of Grant Date 0% 5% 10%
---- ---------- ------------ ------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James W. MacIntyre, IV.. -- -- -- -- -- -- -- --
Richard Borenstein...... 250,000(4) 8.7% $0.552 $1.45 3/30/00 $3,112,000 $5,155,908 $8,291,663
Frederick C. Hawkins,
III.................... -- -- -- -- -- -- -- --
Jeffrey M. MacIntyre.... -- -- -- -- -- -- -- --
Randall V. Pevin........ -- -- -- -- -- -- -- --
Thomas E. Young......... 200,000(5) 6.9 0.552 4.00 9/17/09 2,489,600 4,124,726 6,114,582
20,000(6) 0.7 11.00 11.00 12/30/09 40,000 203,513 454,373
</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 Second Amended and Restated 1997 Employee, Director
and Consultant Stock Option Plan during 1999.
(2) The exercise price may be paid in cash valued at fair market value on the
exercise date.
(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 potential
realizable values at 0%, 5%, and 10% appreciation are calculated by:
multiplying the number of shares of common stock underlying the option by
the assumed initial public offering price of $13.00 per share, assuming
that the aggregate stock value derived from that calculation compounds at
the annual 0%, 5% or 10% rate shown in the table until the expiration of
the option, and subtracting from that result the aggregate option exercise
price. 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.
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
$13.00 per share, the assumed 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
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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 Unexercised Value of 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 $ 482,394 $ 290,620
Richard Borenstein......... 100,000 -- 1,244,800 --
Frederick C. Hawkins, III.. 200,000 100,000 2,489,600 1,244,800
Jeffrey M. MacIntyre....... 34,670 17,330 1,229,240 797,080
Randall V. Pevin........... 98,750 66,250 431,572 215,724
Thomas E. Young............ -- 220,000 -- 2,529,600
</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
Second Amended and Restated 1997 Employee, Director and Consultant Stock
Option Plan. The following description of OneSoft's Second 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 maximum number of shares that
can be issued as incentive stock options shall be 7,500,000.
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 March 2000. A total of 7,500,000 shares are
reserved for issuance under the plan as of March 2000. As of February 29, 2000,
383,408 shares had been issued as the result of the exercise of options,
4,000,325 shares were subject to outstanding options, and 3,116,267 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:
. 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
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<PAGE>
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.
2000 Employee Stock Purchase Plan. In March 2000 the board of directors and
the stockholders adopted the 2000 Employee Stock Purchase Plan. The 2000
Employee Stock Purchase Plan authorizes the issuance, to participating
employees through the grant of nontransferable options, of a maximum of 200,000
shares of common stock, plus an annual increase beginning January 1, 2001 and
ending on January 1, 2009, equal to the lesser of (i) 1% of the outstanding
common stock, on a fully diluted basis, and (ii) such lesser number of shares
as determined by the board. The aggregate maximum number of shares available
under the plan over the life of the plan is 2,000,000 shares.
The 2000 Employee Stock Purchase Plan is administered by the board's
compensation committee. All employees working 20 hours or more per week, who
have been continuously employed by OneSoft for at least three months as of the
offering date are eligible to participate. Any employee who would own more than
5% of OneSoft's stock, immediately after the grant under the plan, may not
participate in the 2000 Employee Stock Purchase Plan. To participate in the
2000 Employee Stock Purchase Plan, an employee authorizes a deduction from his
or her pay, not to exceed $21,250 per year, beginning on the first day of a
designated six month offering period. On the first day of each offering period,
each outstanding option granted under the 2000 Employee Stock Purchase Plan is
automatically exercised using funds withheld from each employee's compensation
as of that date. A participating employee may withdraw from the 2000 Employee
Stock Purchase Plan at any time prior to the exercise date of the offering
period.
Employment Agreements
We have entered into employment agreements with James W. MacIntyre, IV, John
L. Wyatt, 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 $300,000 for James W. MacIntyre, IV, $300,000
for John L. Wyatt, $175,000 for Frederick C. Hawkins, III, and $150,000 for
Jeffrey M. MacIntyre. Our agreement with James W. MacIntyre, IV is effective
until December 31, 2003, and may be renewed, upon written agreement of the
parties, for additional periods of no more than three years. Our agreement with
Mr. Wyatt continues through March 14, 2004, and may be renewed, upon written
agreement of the parties, for additional periods of no more than two years. Our
agreements with Frederick C. Hawkins, III and Jeffrey M. MacIntyre
automatically renew annually unless either we, or they, provide written notice
of intention not to renew an agreement. Pursuant to his agreement, we granted
John L. Wyatt a non-qualified stock option to purchase 400,000 shares of our
common stock under our Second Amended and Restated 1997 Employee, Director and
Consultant Stock
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<PAGE>
Option Plan at an exercise price of $4.00 per share. These options vest over a
period of four years. Pursuant to his agreement, we granted Mr. Hawkins an
incentive stock option to purchase 300,000 shares of our common stock under our
Second 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 Second Amended and Restated 1997
Employee, Director and Consultant Stock Option Plan. These options vest
annually over a period of three years.
Our employment agreements with James W. MacIntyre, IV, and John L. Wyatt
provide that if we terminate their employment without "cause" or by a
"constructive termination," both of which events are defined in the agreements,
or if we fail to renew their agreements, they will be entitled to severance pay
equal to 100% of their base salary, plus 100% of his annual bonus in the case
of James W. MacIntyre, IV, or a pro rata portion of his bonus in the case of
John L. Wyatt, paid in a lump-sum payment no later than 30 days after
termination, plus fringe benefits for 12 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. If the termination of Mr. Wyatt is voluntary or by OneSoft for
cause, we have no obligation to pay severance. If the termination of Mr. Wyatt
is a result of death or disability, we have no obligation to pay severance
other than salary and benefits accrued but unpaid as of 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. On March 13, 2000, Mr. Borenstein exercised
this option in full.
Indemnification of Directors and Executive Officers and Limitation of Liability
Our amended and 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:
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<PAGE>
. 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 amended and 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 amended and restated certificate of
incorporation and amended and restated bylaws also permit us to grant such
rights to indemnification to our employees and agents. Our amended and 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 required or permitted to indemnify. We have obtained liability insurance
for our officers and directors.
The limitation of liability and indemnification provisions in our amended
and restated certificate of incorporation and amended 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.
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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 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
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
strategy officer and acting chief financial officer, 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 is secured by a
pledge of 100,000 shares of Mr. Hawkins' OneSoft common stock. The loan may be
prepaid in whole or in part, at any time, with recourse to Mr. Hawkins,
decreasing upon prepayment, dollar for dollar, accrues interest at the rate of
6.02% per annum and provides for personal recourse to Mr. Hawkins to 50% of the
aggregate outstanding balance as of February 24, 2000. The loan 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 at February 29,
2000 was $472,554.
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In August 1999, we lent $500,000 to James W. MacIntyre, IV, our 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 at February 29, 2000 was $514,700.
Directors and Executive Officers
On April 12, 1998, our Board of Directors voted to appoint A. Douglas
Peabody as a Director of OneSoft. In January 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 Second
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 Second 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, an incentive stock
option to purchase 52,000 shares of our common stock under our Second 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. These options have exercise prices of $0.062 per share, $0.552
per share, and $0.552 per share, respectively. The first two options vest
annually 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 annually over a three year period. The
second option vests annually over a four year period.
On March 8, 1999, September 17, 1999, November 15, 1999, and December 15,
1999, we granted Eric D. Waller, incentive stock options to purchase 5,000,
25,000, 10,000 and 35,000 shares, respectively. These options have exercise
prices of $0.552 per share, $6.00 per share, $10.00 per share, and $11.00 per
share, respectively. These options vest annually over a four year period.
On May 13, 1999 we granted Peter M. Jones, an incentive stock option to
purchase 300,000 shares of our common stock under our Second 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.
On February 22, 2000, we granted John L. Wyatt a non-qualified stock option
to purchase 400,000 shares of our common stock under our Second Amended and
Restated 1997 Employee, Director and Consultant Stock Option Plan at a price of
$4.00 per share. These options vest over four years.
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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 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 LLC, 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 March 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 LLC, 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 $6.58 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 February 29, 2000, 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.
<TABLE>
<CAPTION>
Percentage of
Outstanding
Shares
Beneficially
Number Owned (2)
of Shares -----------------
Beneficially Before After
Name of Beneficial Owner Owned (1) Offering Offering
- ------------------------ ------------ -------- --------
<S> <C> <C> <C>
Blue Water Strategic Fund I, L.L.C. (3)........ 1,896,130 11.5% 9.0%
8300 Greensboro Drive, Suite 1210
McLean, VA 22102
SGC Partners II LLC (4)........................ 3,125,382 19.0 14.9
1221 Avenue of the Americas
New York, NY 10020
Rader Reinfrank Holdings No. 2 (5)............. 1,815,096 11.0 8.7
9465 Wilshire Blvd., Suite 950
Beverly Hills, CA 90212
QuestMark Partners, L.P. (6)................... 1,517,451 9.2 7.2
One South Street, Suite 800
Baltimore, MD 21202
James W. MacIntyre, IV (7)..................... 3,300,916 20.0 15.7
Richard Borenstein (8)......................... 100,000 * *
Frederick C. Hawkins, III (9).................. 962,700 5.8 4.5
Thomas E. Young................................ -- * *
Randall V. Pevin(10)........................... 123,750 * *
Jeffrey M. MacIntyre (11)...................... 463,340 2.8 2.2
Henry D. Barratt, Jr. (3)...................... 1,896,130 11.5 9.0
A. Douglas Peabody............................. 100,000 * *
Justin Hall-Tipping (4)........................ 3,125,382 19.0 14.9
Stephen P. Rader (5)........................... 1,815,096 11.0 8.7
Thomas R. Hitchner (6)......................... 1,517,451 9.2 7.2
Carlos E. Cisneros (12)........................ 365,100 2.2 1.7
Bakersville Holdings Limited
1900 Avenue of the Stars, Suite 2100
Los Angeles, CA 90067
All directors and executive officers as a group
(12 persons) (13)............................. 13,769,865 80.8 64.0
</TABLE>
- --------
* Represents beneficial ownership of less than 1%.
(1) 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,
64
<PAGE>
shares of common stock issuable upon the exercise of options that are
currently exercisable or exercisable within 60 days of February 29, 2000
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, 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.
(2) Assumes no exercise of the underwriters' over-allotment option. Percentage
of ownership is based on 16,466,148 shares of common stock outstanding as
of February 29, 2000, assuming conversion of all outstanding preferred
stock into common stock, and 20,966,148 shares of common stock outstanding
after completion of the offering.
(3) 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.
(4) 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 LLC, the managing member of SGC Partners II LLC. SG Capital
Partners LLC 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.
(5) 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. SG Investment Corporation, an affiliate of SG Capital Partners
LLC, holds a 15.4% passive limited partnership interest in Rader Reinfrank
Investors, L.P. SG Capital Partners LLC expressly disclaims beneficial
ownership of these shares.
(6) 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.
(7) Consists of shares held of record by Mr. MacIntyre, IV. Includes 48,340
shares subject to currently exercisable options. Does not include shares
of common stock over which Mr. MacIntyre, IV has voting control pursuant
to an irrevocable proxy that terminates upon the completion of this
offering. Includes 250,000 shares held in The James W. MacIntyre, IV
Grantor Retained Annuity Trust, of which Mr. MacIntyre, IV is the
beneficiary.
(8) 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.
(9) Includes 225,000 shares subject to currently exercisable options. Includes
175,000 shares held in The Frederick C. Hawkins III Grantor Retained
Annuity Trust, of which Mr. Hawkins is a beneficiary.
(10) Consists of 123,750 shares subject to currently exercisable options.
(11) Includes 43,340 shares subject to currently exercisable options. Includes
41,667 shares held in The Jeffrey M. MacIntyre Grantor Retained Annuity
Trust, of which Mr. MacIntyre is the beneficiary.
(12) 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.
(13) Includes 565,430 shares subject to currently exercisable options. See
footnotes (3) through (11) above.
65
<PAGE>
In the event that the underwriters' over-allotment option is exercised in
full, the beneficial ownership of the stockholders listed below will change as
follows:
<TABLE>
<CAPTION>
Shares
Beneficially
Number of Owned After the
Shares Offered Offering
in the Over- -----------------
allotment Number Percent
-------------- --------- -------
<S> <C> <C> <C>
James W. MacIntyre, IV (1)..................... 150,000 3,150,916 14.5%
Bakersville Holdings Limited (2)............... 50,000 315,100 1.5
Eugene Choi (3)................................ 20,000 358,857 1.7
Frederick C. Hawkins, III (4).................. 50,000 912,700 4.2
Jeffrey M. MacIntyre (5)....................... 100,000 363,340 1.7
South Street LLC (6)........................... 7,500 30,436 *
Andrew Wright (7).............................. 10,714 65,159 *
</TABLE>
- --------
* Less than 1%
(1) See footnote (7) above.
(2) See footnote (12) above.
(3) Prior to this offering, Eugene Choi, an employee of ours, owned 378,857
shares of our common stock. This number includes 27,750 shares subject to
currently exercisable options.
(4) See footnote (9) above.
(5) See footnote (11) above.
(6) Prior to this offering, South Street LLC, owned 37,936 shares of Series C
preferred stock, which converted into 37,936 shares of our common stock
upon this offering.
(7) Prior to this offering, Andrew Wright, owned 75,873 shares of Series C
preferred stock, which converted into 75,873 shares of our common stock
upon this offering.
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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 20,966,148
shares of common stock and no shares of preferred stock outstanding. As of
February 29, 2000, 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 16,465,648 shares of common stock held of
record by 108 stockholders. In addition, as of February 29, 2000 there were
outstanding options to purchase 4,000,325 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 Amended and Restated Certificate of Incorporation and Amended
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 April 27, 2004. The number of
shares for which the warrant described above is exercisable is subject to
adjustment upon changes in our capital structure,
67
<PAGE>
including stock splits, combinations or dividends, and reclassifications,
exchanges or substitutions. The warrant carries specified 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 13,435,640 shares of common stock or their transferees
will have rights to cause us to register these shares under the Securities Act
of 1933. We may be required to effect up to two demand registrations, at our
expense. We will not be required to effect a demand 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 demand 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 demand registrations. We
will not be required to effect a demand 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 16,584,799 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 customary conditions and limitations, including the right of the
underwriters of an offering to limit the number of shares included in any such
registration.
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 registration pursuant to the warrant.
Anti-Takeover Effects of Various Provisions of Delaware Law and OneSoft's
Amended and Restated Certificate of Incorporation and Amended 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
68
<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 amended and restated certificate of incorporation and
amended 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 amended and 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 amended and 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 amended and
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 American Stock
Transfer and Trust Company, New York, New York.
69
<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 20,966,148 shares
of common stock, based on shares outstanding at February 29, 2000, 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 and Selling Stockholders" as well as our other
executive officers and directors.
The remaining 16,466,148 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,
15,392,480 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........ 4,620,000 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................. 227,908 Additional shares saleable under Rules 144 and
701 that are not subject to the 180-day lock-up
180 days................ 15,392,480 The 180-day lock-up is released and these
additional shares are saleable under Rule 701,
Rule 144 (subject, in some cases, to volume
limitations), or Rule 144(k)
More than 180 days...... 725,760 Restricted shares that are held for less than
one year, are not subject to the 180-day lock-
up, and are not yet saleable under Rule 144
</TABLE>
70
<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 209,661 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,
155,500 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 16,466,148 shares of our common stock and 118,651 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 Second 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 February 29, 2000, this registration statement
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<PAGE>
would cover approximately 5,620,000 shares. The registration statement will
automatically become effective upon filing. Accordingly, subject to Rule 144
volume limitations applicable to our affiliates, approximately 500,000 shares
registered under the registration statement will be available for sale in the
open market immediately, and approximately an additional 1,070,000 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 February 29, 2000 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 assumed 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.............................................................. 4,500,000
=========
</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 to be sold in this offering, 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 the assumed initial 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 assumed initial 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 terms.
We, and the selling stockholders, have granted the underwriters an option,
to purchase up to 675,000 additional shares of common stock, at the assumed
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 to be sold in this offering. 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 to be sold in
this offering. 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 4,500,000 shares are being offered.
The underwriting fee is equal to the assumed initial 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 % of the assumed 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.......... $0.91 $4,095,000 $4,709,250
</TABLE>
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<PAGE>
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 some 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. In the event
that the underwriters' over-allotment option is exercised in full, some of our
officers and other stockholders will be selling their common stock in the
offering. See "Principal and Selling Stockholders" for additional information.
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.
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.
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 405,000 shares or 9%, of our common stock being
sold in this offering for our vendors, employees, family members of employees,
customers, and other third parties. 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 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.
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
74
<PAGE>
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 a warrant for the purchase of 60,651 shares of our common stock.
A prospectus in electronic format is being made available on an Internet
site maintained by Wit SoundView's affiliate, Wit Capital Corporation. In
addition, other dealers purchasing shares from Wit SoundView in this offering
have agreed to make a prospectus in electronic format available on Web sites
maintained by each of these dealers. Other than the prospectus in electronic
format, the information on our affiliate's Web site and any information
contained on any Web site maintained by Wit Capital is not part of the
registration statement of which this prospectus forms a part, has not been
approved or endorsed by us or any underwriter in its capacity as underwriter,
and should not be relied on by investors.
fbr.com, a division of FBR Investment Services, Inc., is an affiliate of
Friedman, Billings, Ramsey & Co., Inc., a representative. Friedman, Billings,
Ramsey & Co., Inc. has agreed to allocate a certain number of shares to fbr.com
for sale to its online brokerage account holders. An electronic prospectus is
available on the Web site maintained by fbr.com. Other than the prospectus in
electronic format, the information on the fbr.com Web site relating to this
offering is not a part of the prospectus and should not be relied upon by
prospective investors.
Pricing of this Offering
Prior to this offering, there has been no public market for our common
stock. Consequently, the assumed 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
assumed initial 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.
75
<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 some of
its members have options to purchase a total of 156,000 shares of our common
stock. Some 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, 1998 and 1999, and for each of the three years in
the period ended December 31, 1999, 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. We have included
information from the Shop.org study on page 30 of this prospectus with the
permission of Shop.org and the Boston Consulting Group.
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 those offices 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.
76
<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, 1999 and 1998, and the related consolidated
statements of operations, stockholders' deficit and cash flows for each of the
three years ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of OneSoft Corporation at
December 31, 1999 and 1998 and the results of its operations and its cash flows
for each of the three years ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
February 4, 2000
McLean, VA
F-2
<PAGE>
ONESOFT CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
As of
December 31, Pro Forma
------------------------- December 31,
1998 1999 1999
----------- ------------ ------------
<S> <C> <C> <C>
Assets
Current assets:
Cash ................................ $ 2,555,843 $ 16,361,236 $ 16,361,236
Accounts receivable, net of
allowance........................... 392,193 3,707,506 3,707,506
Other receivables.................... 221,960 792,312 792,312
Other current assets................. 161,317 1,061,794 1,061,794
----------- ------------ ------------
Total current assets............... 3,331,313 21,922,848 21,922,848
Notes receivable--related party....... -- 510,084 510,084
Other non-current assets.............. -- 256,388 256,388
Restricted cash....................... -- 1,437,070 1,437,070
Property and equipment, net........... 350,826 4,272,580 4,272,580
----------- ------------ ------------
Total assets....................... $ 3,682,139 $ 28,398,970 $ 28,398,970
=========== ============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable..................... $ 306,515 $ 4,438,130 $ 4,438,130
Accrued payroll...................... 415,527 1,952,203 1,952,203
Other current liabilities............ 34,033 2,467,457 2,467,457
Deferred revenue..................... -- 1,340,887 1,340,887
Capital lease obligations--current... 40,231 126,153 126,153
Notes payable--related party......... -- -- --
----------- ------------ ------------
Total current liabilities.......... 796,306 10,324,830 10,324,830
Capital lease obligations--
noncurrent........................... 33,489 63,163 63,163
Minority interest..................... 20,911 -- --
Redeemable convertible preferred
stock; $0.001 par value,
10,107,640 shares authorized,
3,192,530, 10,107,640 and 0 issued
and outstanding...................... 7,604,034 48,746,754 --
Stockholders' (deficit) equity:
Common stock; $0.001 par value,
20,242,969 shares authorized,
5,977,570, 6,206,850 and 16,314,490
shares issued and outstanding....... 5,978 6,207 16,315
Additional capital................... 1,644 5,451,190 54,187,836
Loan to officer...................... (412,333) (412,333) (412,333)
Unearned stock option compensation... (38,567) (2,020,819) (2,020,819)
Accumulated deficit.................. (4,329,323) (33,760,022) (33,760,022)
----------- ------------ ------------
Total stockholders' (deficit)
equity............................ (4,772,601) (30,735,777) 18,010,977
----------- ------------ ------------
Total liabilities and stockholders'
(deficit) equity.................. $ 3,682,139 $ 28,398,970 $ 28,398,970
=========== ============ ============
</TABLE>
F-3
<PAGE>
ONESOFT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1997 1998 1999
---------- ----------- -------------
<S> <C> <C> <C>
Revenues:
Application services.................. $ 170,891 $ 560,890 $ 2,022,504
Professional services................. 1,834,509 994,668 6,928,473
---------- ----------- -------------
Total revenues...................... 2,005,400 1,555,558 8,950,977
Cost of revenues (exclusive of non-cash
compensation expense) of approximately
$30,000 in 1999....................... 1,399,554 1,061,011 7,397,061
---------- ----------- -------------
Gross profit........................... 605,846 494,547 1,553,916
Operating expenses:
Sales and marketing expenses
(exclusive of non-cash
compensation expense of approximately
$2,904,000 in 1999).................. -- 1,190,009 12,184,461
Research and development costs
(exclusive of non-cash
compensation expense of approximately
$9,622, $12,047 and $69,000 in 1997,
1998 and 1999, respectively)......... 254,456 1,044,358 4,490,407
General and administrative expense
(exclusive of non-cash
compensation expense of approximately
$152,000)............................ 955,454 2,011,916 8,432,646
Non-cash stock based compensation
expense.............................. 9,622 12,047 3,154,508
---------- ----------- -------------
Total operating expense............. 1,219,532 4,258,330 28,262,022
---------- ----------- -------------
Loss from operations................... (613,686) (3,763,783) (26,708,106)
Other income (expenses):
Interest income...................... 16,902 169,128 612,666
Interest expense..................... (17,615) (13,514) (47,938)
Disposal of Sports Warehouse......... -- -- (226,788)
---------- ----------- -------------
(713) 155,614 337,940
Net loss before taxes and minority
interest.............................. (614,399) (3,608,169) (26,370,166)
Provision for income taxes............. -- -- --
Minority interest in consolidated
subsidiaries.......................... 13,893 17,967 --
---------- ----------- -------------
Net loss............................... $ (600,506) $(3,590,202) $ (26,370,166)
========== =========== =============
Accretion of preferred stock........... -- 18,034 3,060,533
---------- ----------- -------------
Net loss attributable to shareholders.. $ (600,506) $(3,608,236) $ (29,430,699)
========== =========== =============
Net loss per share attributable to
shareholders, basic and diluted....... $ (0.10) $ (0.60) $ (4.85)
========== =========== =============
Weighted average shares used in
calculation
of basic and diluted loss per share... 5,832,278 5,968,736 6,066,009
Pro forma loss per share attributable
to shareholders, basic and diluted.... $ (1.87)
=============
Weighted average shared used in
calculation
of pro forma loss per share........... 14,122,682
</TABLE>
F-4
<PAGE>
ONESOFT CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Unearned Total
----------------- Stock Loan to Additional Accumulated Stockholders'
Shares Amount Compensation Officer Capital Deficit Equity (Deficit)
--------- ------ ------------ --------- ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
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)
Loan to officer........ -- -- -- (412,333) -- -- (412,333)
Net loss............... -- -- -- -- -- (600,506) (600,506)
--------- ------ ----------- --------- ---------- ------------ ------------
Balance, December 31,
1997................... 5,950,620 5,951 (50,614) (412,333) -- (721,087) (1,178,083)
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) (412,333) 1,644 (4,329,323) (4,772,601)
Exercise of stock
options............... 204,800 205 -- -- 68,010 -- 68,215
Issuance of stock
options............... -- -- (2,379,490) -- 5,136,760 -- 2,757,270
Amortization of
unearned stock
compensation.......... -- -- 397,238 -- -- -- 397,238
Disposal of Sports
Warehouse............. 24,480 24 -- -- 244,776 -- 244,800
Issuance of warrants
(Note 6).............. -- -- -- -- -- -- --
Accretion of preferred
stock................. -- -- -- -- -- (3,060,533) (3,060,533)
Net loss............... -- -- -- -- -- (26,370,166) (26,370,166)
--------- ------ ----------- --------- ---------- ------------ ------------
Balance at December 31,
1999................... 6,206,850 $6,207 $(2,020,819) $(412,333) $5,451,190 $(33,760,022) $(30,735,777)
========= ====== =========== ========= ========== ============ ============
</TABLE>
F-5
<PAGE>
ONESOFT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1997 1998 1999
---------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss............................... $ (600,506) $(3,590,202) $(26,370,166)
Adjustments to reconcile net income
loss to net cash used in operating
activities:
Depreciation........................... 27,395 118,543 503,110
Non-cash compensation.................. 9,622 12,047 3,154,508
Minority interest...................... (13,893) (17,967) --
Disposal of Sports Warehouse........... -- -- 226,788
Changes in operating assets and
liabilities:
Accounts receivable................... 223,233 (309,704) (3,315,313)
Other receivables..................... -- (193,257) (543,527)
Other assets.......................... (11,463) (149,427) (1,156,866)
Accounts payable...................... (28,438) 146,096 4,131,615
Accrued payroll....................... 26,696 332,101 1,536,676
Other current liabilities............. 7,293 13,238 2,433,424
Deferred revenues..................... -- -- 1,340,887
---------- ----------- ------------
Net cash used in operating activities.. (360,061) (3,638,532) (18,058,864)
Cash flows from investing activities
Acquisition of property and equipment.. (48,474) (260,887) (4,126,385)
Minority interest contribution to
Sports Warehouse, Inc. ............... 50,000 -- --
Restricted cash........................ -- -- (1,437,070)
Notes receivable--related party........ (412,750) (46,286) (536,908)
---------- ----------- ------------
(411,224) (307,173) (6,100,363)
Cash flows from financing activities
Repurchase of common stock............. (414,000) -- --
Exercise of stock options.............. -- 1,671 68,215
Sale of common stock................... 200,000 -- --
Sale of redeemable preferred stock, net
of offering costs..................... 1,750,000 5,817,966 38,082,187
Payments of capital lease obligations.. (34,230) (27,455) (185,782)
Repayment of notes payable--related
party................................. (30,000) (24,000) --
Borrowings under notes payable--related
party................................. 24,000 -- --
---------- ----------- ------------
Net cash provided by financing
activities............................ 1,495,770 5,768,182 37,964,620
---------- ----------- ------------
Net increase in cash................... 724,485 1,822,477 13,805,393
Cash at beginning of year.............. 8,881 733,366 2,555,843
---------- ----------- ------------
Cash at end of year.................... $ 733,366 $ 2,555,843 $ 16,361,236
========== =========== ============
</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.
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.
Principles of Consolidation
All significant intercompany accounts and transactions have been eliminated
in consolidation. The Company held a 70% equity interest in Sports Warehouse,
Inc. which it has consolidated for financial statement purposes. On November
23, the Company acquired the remaining 30% of Sports Warehouse and
subsequently, disposed of the subsidiary (see Note 6).
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.
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.
F-7
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Organization and Significant Accounting Policies (continued)
Revenue Recognition (continued)
The Company's products do not require significant customization. The Company
provides start up services, professional services and managed services, which
may be sold in conjunction with its software. These services are not essential
to the functioning of the Company's software.
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. Set up services, consist
primarily of professional services to configure hardware and install the
Company's software, and are recognized as the services are provided. The
Company has established vendor specific objective evidence ("VSOE") for its
professional fees, including set up services, as these services are regularly
sold on a time and materials basis in the absence of the Company's licenses.
Managed services, consist primarily of application outsourcing, technical
support and transaction services and are recognized ratably over the life of
the managed services agreement. The Company has not established VSOE on its
managed services. Accordingly, when licenses are sold in conjunction with
managed services the license revenue is recognized over the term of the managed
services. The deferred revenues at December 31, 1999 result primarily from
deferred software licenses revenue on contracts that contain managed services.
The Company provides non-specified upgrades of its product only on a when
and if available basis. Historically, the Company has not offered significant
discounts on its software or other services.
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, 1998
and 1999.
F-8
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Organization and Significant Accounting Policies (continued)
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.
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, 1998 and 1999, five customers accounted for approximately
88% and 53%, respectively of the total accounts receivable balance. During the
years ended December 31, 1998 and 1999, five customers accounted for 71% and
57%, respectively, of the Company's revenues.
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 Costs
Software development costs are expensed as incurred until technological
feasibility has been established, at which time such costs are capitalized to
the extent that the capitalizable costs exceed the realizable value of such
costs, until the product is available for general release to customers. The
Company defines the establishment of technological feasibility as the
completion of all planning, designing, coding, and testing activities that are
necessary to establish products that meet design specifications including
functions, features, and technical performance requirements. Under the
Company's definition, establishing technological feasibility is considered
complete only after the majority of customer testing and customer feedback has
been incorporated into product functionality. To date, the period between
technological feasibility and general availability has been short. Management
has determined that all costs to date which qualify for capitalization were
expensed as the result of these amounts being in excess of the net realizable
value of such cost in the period which the costs were incurred.
F-9
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
Reclassification
Certain prior year balances have been reclassified to conform with the 1999
presentation.
Restricted Cash
The Company utilizes CD's for security deposits on rental properties.
2. Accounts Receivable & Other Receivables
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
December 31,
----------------------
1998 1999
---------- ----------
<S> <C> <C>
Billed receivables................................... $ 369,447 $3,803,881
Unbilled receivables................................. 103,280 800,100
Allowance for possible losses........................ (80,534) (896,475)
---------- ----------
Total................................................ $ 392,193 $3,707,506
========== ==========
</TABLE>
Other receivables consist of amounts reimbursable to the Company primarily
as the result of equipment leases.
Valuation Accounts
A summary of the Company's allowance for bad debts is as follows:
<TABLE>
<S> <C>
Balance at December 31, 1997 $ 33,981
Additions charged to expense 53,250
Accounts receivable written-off (6,697)
----------
Balance at December 31, 1998 $ 80,534
Additions charged to expense 1,119,727
Accounts receivable written off (303,786)
----------
Balance at December 31, 1999 $ 896,475
==========
</TABLE>
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 $28,703. At December 31, 1999, the
outstanding loan is $467,860 consisting of principal of $412,333 and accrued
interest of $55,527. The Company has disclosed the loan as an offset to the
Company's equity.
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 December 31, 1999 the
outstanding loan is $510,084 consisting of principal of $500,000 and accrued
interest of $10,084.
F-10
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
4.Property and Equipment
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
----------------------
1998 1999
---------- ----------
<S> <C> <C>
Equipment........................................... $ 216,075 $1,888,541
Furniture........................................... 101,304 348,107
Leasehold improvements.............................. 36,502 1,247,703
Software............................................ 153,573 1,447,967
---------- ----------
507,454 4,932,318
Less accumulated depreciation and amortization...... (156,628) (659,738)
---------- ----------
Total............................................... 350,826 4,272,580
========== ==========
</TABLE>
5.Notes Payable
The Company paid interest of approximately $7,615, $13,500 and $47,983
related to all of its notes payable and capital leases for the years ended
December 31, 1997, 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.
In conjunction with the announcement of the Company's initial public
offering the minority owner of Sports Warehouse exercised a right to exchange
their investment in Sports Warehouse for 24,480 shares of OneSoft common
stock. Subsequent to the transaction the Company disposed of Sports Warehouse
resulting in a loss of $226,788.
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.
F-11
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
6.Stockholders Equity and Redeemable Convertible Preferred Stock (continued)
On August 13, 1999 the Company sold 4,464,771 shares of Series C Redeemable
Convertible Preferred Stock for net proceeds of approximately $29.4 million.
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.
All classes of the Company's 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 years ended December 31, 1998 and 1999 was $18,034 and $3,060,533
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,
if 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 5,000,000. 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, 1998 and 1999 the Company had 1,324,560 and 1,082,767 options available for
grant under the plan.
The Company recorded expense of $9,622, $12,047 and $397,238 during the
years ended December 31, 1997, 1998 and 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.
During 1999 the Company recorded an additional $2,757,270 of expense related
to the fair value of the options issued to non-employees. Of this amount
$145,270 related to services performed during 1999 by non-employees and
$2,612,000 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,
F-12
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Stockholders Equity and Redeemable Covertible Preferred Stock (continued)
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 December 31, 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 $1.88 and $2.05 per share,
respectively.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1997 1998 1999
---------- ------------ -------------
<S> <C> <C> <C>
Pro forma net loss................... $(609,822) $(3,653,083) $(30,612,017)
Pro forma basic and diluted net loss
per share(1)........................ $(0.10) $(0.61) $(2.17)
</TABLE>
- --------
(1) The pro forma net loss reflects the pro forma weighted outstanding shares
for the year ended December 31, 1999. See note 11.
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............................................... 2,869,710 4.15
Exercised............................................. (204,800) 0.33
Canceled/Forfeited.................................... (627,917) 1.18
--------- -----
Outstanding at December 31, 1999....................... 3,685,483 $3.26
========= =====
Exercisable at December 31, 1999...................... 944,548 $0.49
========= =====
</TABLE>
F-13
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Stockholders Equity and Redeemable Covertible Preferred Stock (continued)
The following table summarizes information about stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
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.................. 2,254,983 $0.49 944,548 $0.49
$1.00 to $4.00................... 337,500 3.97 -- --
$4.01 to $8.00................... 411,000 5.59 -- --
$8.01 to $12.00.................. 682,000 10.39 -- --
--------- -------
3,685,483 944,548
========= =======
</TABLE>
The average remaining contractual lives for options outstanding at December
31, 1998 and December 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 $24.7 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.
Net deferred tax assets at December 31, consist of:
<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Net operating loss carryforward.................... $ 1,507,510 $ 9,744,307
Allowance for bad debts............................ 32,214 354,108
Unbilled receivable................................ -- 529,650
Deferred revenue................................... -- 143,452
Other.............................................. 25,558 143,452
Valuation allowance................................ (1,565,282) (10,914,969)
----------- -----------
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.
F-14
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
7. Income Taxes (continued)
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 1999
--------- ----------- -----------
<S> <C> <C> <C>
Tax expense (benefit) at statutory
Federal rate........................ $(208,896) $(1,226,777) $(8,968,916)
Effect of:
State income tax, net.............. (36,864) (216,490) (1,582,750)
Stock issuance costs............... -- 55,164 --
Stock based........................ -- -- 1,102,579
Other.............................. 18,827 49,755 492,587
Increase in valuation allowance.... 226,933 1,338,348 8,956,500
--------- ----------- -----------
Income tax expense (benefit)......... $ -- $ -- --
========= =========== ===========
</TABLE>
The Company paid no income taxes during the years ended December 31, 1997,
1998 and 1999, respectively.
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, 1999 are as follow:
<TABLE>
<CAPTION>
Fiscal Year
-----------
<S> <C>
2000............................................................. $ 1,789,640
2001............................................................. 1,988,588
2002............................................................. 2,032,990
2003............................................................. 2,077,812
2004............................................................. 2,125,153
Thereafter....................................................... 3,459,545
-----------
Total............................................................ $13,473,728
===========
</TABLE>
Rent expense for the years ended December 31, 1997, 1998 and 1999 was
approximately $67,000, $122,000 and $154,000, respectively.
F-15
<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, 1999 are as follow:
<TABLE>
<CAPTION>
Fiscal Year
-----------
<S> <C>
2000............................................................... $149,497
2001............................................................... 66,624
2002............................................................... --
2003............................................................... --
2004............................................................... --
Thereafter......................................................... --
--------
Total minimum lease payments....................................... 216,121
Less amount representing interest.................................. 26,805
--------
Present value of minimum lease payments............................ 189,316
Less current portion of capital lease obligation................... 126,153
--------
Non-current portion of capital lease obligation.................... $ 63,163
========
</TABLE>
For the years ended December 31, 1997, 1998, and 1999, the Company had
capital assets of $0, $69,500, and $341,411.
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 Directors. The Company contributed
$4,777, $0 and $0 to the plan for the years ended December 31, 1997, 1998,
1999, respectively.
10.Earnings Per Share
The following table sets forth the computation of historical basic and
diluted earnings per share:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1996 1997 1998
---------- ----------- ------------
<S> <C> <C> <C>
Numerator:
Net income (loss)..................... $ (600,506) $(3,590,202) $(26,370,166)
Accretion on preferred shares......... -- (18,034) (3,060,533)
---------- ----------- ------------
Net income available to shareholders.. $ (600,506) $(3,608,236) $(29,430,699)
========== =========== ============
Denominator:
Weighted average common shares........ 5,832,278 5,968,736 6,066,089
Effect of dilutive securities:
Warrants............................ -- -- --
Stock option........................ -- -- --
Preferred stock..................... -- -- --
---------- ----------- ------------
Weighted average common shares basic
and diluted.......................... 5,832,278 5,968,736 6,066,009
========== =========== ============
</TABLE>
The effect of the exercise of options or preferred stock would be dilutive
for years ended December 31, 1997, 1998 and 1999.
F-16
<PAGE>
ONESOFT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
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 December 31, 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 as of December 31, 1999:
<TABLE>
<S> <C>
Numerator:
Net income
(loss)... $(26,370,166)
============
Denominator:
Weighted
average
common
shares... 6,066,089
Conversion
of
preferred
shares... 8,056,593
------------
Pro forma
weighted
average
common
shares
basic and
diluted.. 14,122,682
============
</TABLE>
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 an initial 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.
The Company has entered into a marketing agreement with another entity. The
total amount the Company has committed to pay approximates $1,000,000 over the
next two years.
F-17
<PAGE>
[BACK COVER GRAPHIC]
TOP BANNER: THE ONESOFT DISTRIBUTION MODEL
Concentric circles representing the various layers of OneCommerce and how the
product is distributed through sales channels to the marketplace.
Outside circle: Marketplace
Next inside circle: Internet Solution Center
Next inside circle: Integration Partners - OneSoft Partners - Independent
Solution Providers - Application Service Providers - Strategic Alliances
Next inside circle: Internet Solution Center - Application Software Outsourcing
Services - Transaction Services - Professional and Support Services
Inside of graphic: OneCommerce
<PAGE>
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide 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.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 4
Special Note Regarding Forward-Looking Statements and Industry Data...... 15
Use of Proceeds.......................................................... 16
Dividend Policy.......................................................... 16
Capitalization........................................................... 17
Dilution................................................................. 18
Selected Consolidated Financial Data..................................... 19
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 21
Business................................................................. 30
Management............................................................... 51
Certain Relationships and Related Transactions........................... 61
Principal and Selling Stockholders....................................... 64
Description of Capital Stock............................................. 67
Shares Eligible for Future Sale.......................................... 70
Underwriting............................................................. 73
Legal Matters............................................................ 76
Experts.................................................................. 76
Where You Can Find Additional Information................................ 76
Index to Consolidated Financial Statements............................... F-1
</TABLE>
Until , 2000 (25 days after the date of this prospectus), all dealers that
buy, sell or trade in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. Dealers are also obligated
to deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
[LOGO OF ONESOFT]
4,500,000 Shares
Common Stock
Deutsche Banc Alex. Brown
SG Cowen
Friedman Billings Ramsey
Wit SoundView
Prospectus
, 2000
<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............................................. $ 19,127
Nasdaq National Market Listing Fee............................... 1,000
NASD Fee......................................................... 7,500
Printing and engraving expenses.................................. 400,000
Legal fees and expenses.......................................... 450,000
Accounting fees and expenses..................................... 350,000
Transfer agent and registrar fees................................ 4,600
Miscellaneous.................................................... 67,773
----------
$1,300,000
==========
</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 upon 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 Second 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 March 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
4,813,900 shares of common stock have been granted, 896,667 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(a) Amendment One to Warrant to purchase 60,651 shares of common stock
of OnceSoft Corporation, issued to Deustsche Bank Securities Inc.
**4.3 Warrant to Purchase 60,651 shares of common stock of OneSoft
Corporation issued to Deutsche Bank Securities Inc.
5.1 Form of Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C. with respect to the legality of securities being registered
10.1 Second 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 Amended and Restated 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
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
**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
**+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
**10.32 2000 Employee Stock Purchase Plan of the Registrant
**10.33 Employment Agreement between John L. Wyatt and the Registrant
**10.34 Regus Business Centre Service Agreement by and between the Registrant
and Regus Business Centre for four offices in Redwood Shores,
California
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see
Exhibit 5.1)
23.3 Consent of Shop.org and the Boston Consulting Group
**24.1 Powers of Attorney (See Signature Page)
**27.1 Financial Data Schedule
</TABLE>
- --------
** Previously filed with the SEC.
+ Portions of the exhibit have been omitted pursuant to a request for
confidential treatment.
(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.4 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 24th day of March, 2000.
OneSoft Corporation
/s/ James W. MacIntyre, IV
By: _________________________________
James W. MacIntyre, IV
Chairman of the Board of
Directors,
and Chief Executive Officer
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 March 24, 2000
______________________________________ Officer, and Treasurer
James W. MacIntyre, IV (principal executive
officer)
/s/ John L. Wyatt President, Chief Operating March 24, 2000
______________________________________ Officer and Director
John L. Wyatt
/s/ Frederick C. Hawkins, III Acting Chief Financial March 24, 2000
______________________________________ Officer (principal
Frederick C. Hawkins, III financial and accounting
officer)
* Director
______________________________________
Jeffrey M. MacIntyre
* Director
______________________________________
Henry D. Barratt, Jr.
* Director
______________________________________
Justin Hall-Tipping
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director
______________________________________
A. Douglas Peabody
* Director
______________________________________
Stephen P. Rader
* Director
______________________________________
Thomas R. Hitchner
* Director
______________________________________
</TABLE> Carlos E. Cisneros
*By: /s/ James W. MacIntyre, IV
----------------------------- March 24, 2000
James W. MacIntyre, IV
Attorney-In-Fact
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.
**4.3(a) Amendment One to 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 Second 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 Amended and Restated 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 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, Annandale, Virginia
**10.13 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 1,860 square feet, Annandale, Virginia
**10.14 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 3,720 square feet, Annandale, Virginia
**10.15 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 1,476 square feet, Annandale, 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
**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
**+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
**10.32 2000 Employee Stock Purchase Plan of the Registrant
**10.33 Employment Agreement between John L. Wyatt and the Registrant
**10.34 Regus Business Centre Service Agreement by and between the Registrant
and Regus Business Centre for four offices in Redwood Shores,
California
23.1 Consent of Ernst & Young LLP
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see
Exhibit 5.1)
23.3 Consent of the Boston Consulting Group and Shop.Org
**24.1 Powers of Attorney (See Signature Page)
**27.1 Financial Data Schedule
</TABLE>
- --------
** Previously filed with the SEC.
+ Portions of the exhibit have been omitted pursuant to a request for
confidential treatment.
<PAGE>
[LETTERHEAD OF MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.]
Exhibit 5.1
March 24, 2000
OneSoft Corporation
1105 Farm Credit Drive
McLean, Virginia
Ladies and Gentlemen:
We have acted as counsel to OneSoft Corporation, a Delaware corporation
(the "Company"), in connection with the preparation and filing with the
Securities and Exchange Commission (the "Commission") of a Registration
Statement on Form S-1, Registration No. 333-94233, as amended (the "Registration
Statement"), pursuant to which the Company is registering under the Securities
Act of 1933 (the "Securities Act"), as amended, an aggregate of $50,000,000
worth of shares (the "Shares") of its common stock, $.01 par value per share
(the "Common Stock"). The Shares are to be sold to a group of underwriters (the
"Underwriters") who are parties to an Underwriting Agreement with the Company,
the form of which Agreement will be filed as an exhibit to the Registration
Statement. All of shares being registered pursuant to the Registration Statement
are being registered for sale to the Underwriters. This opinion is being
rendered in connection with the filing of the Registration Statement. All
capitalized terms used herein and not otherwise defined shall have the
respective meanings given to them in the Registration Statement.
In connection with this opinion, we have examined the Company's Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws; the
minutes of all pertinent meetings of stockholders and directors of the Company
relating to the Registration Statement and the transactions contemplated
thereby; such other records of the corporate proceedings of the Company and
certificates of the Company's officers as we deemed relevant; and the
Registration Statement and the exhibits thereto filed with the Commission.
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such copies.
<PAGE>
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
OneSoft Corporation
March 24, 2000
Page 2
Based upon the foregoing, and subject to the limitations set forth below,
we are of the opinion that the Shares, when issued by the Company and delivered
by the Company and the against payment therefor as contemplated by the
Underwriting Agreement, will be duly and validly issued, fully paid and
non-assessable shares of the Common Stock.
Our opinion is limited to the General Corporation Law of the State of
Delaware, including the applicable provisions of the Constitution of the State
of Delaware and reported judicial decisions interpreting those laws, and we
express no opinion with respect to the laws of any other jurisdiction. No
opinion is expressed herein with respect to the qualification of the Shares
under the securities or blue sky laws of any state or any foreign jurisdiction.
We understand that you wish to file this opinion as an exhibit to the
Registration Statement, and we hereby consent thereto. We hereby further consent
to the reference to us under the caption "Legal Matters" in the prospectus
included in the Registration Statement and in any abbreviated registration
statement pursuant to Rule 462(b) under the Securities Act.
Very truly yours,
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
<PAGE>
Exhibit 10.1
ONESOFT CORPORATION
SECOND AMENDED AND RESTATED
1997 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
1. DEFINITIONS.
-----------
Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this OneSoft Corporation Second Amended and
Restated 1997 Employee, Director and Consultant Stock Option Plan, have the
following meanings:
Administrator means the Board of Directors, unless it has delegated
-------------
power to act on its behalf to the Committee, in which case the
Administrator means the Committee.
Affiliate means a corporation which, for purposes of Section 424 of
---------
the Code, is a parent or subsidiary of the Company, direct or
indirect.
Annual Meeting means the annual meeting of the stockholders of the
--------------
Company.
Board of Directors means the Board of Directors of the Company.
------------------
Code means the United States Internal Revenue Code of 1986, as
----
amended.
Committee means the committee of the Board of Directors to which the
---------
Board of Directors has delegated power to act under or pursuant to
the provisions of the Plan.
Common Stock means shares of the Company's common stock, $.001 par
------------
value per share.
Company means OneSoft Corporation, a Delaware corporation.
-------
Disability or Disabled means permanent and total disability as
---------- --------
defined in Section 22(e)(3) of the Code.
Fair Market Value of a Share of Common Stock means:
-----------------
(1) If the Common Stock is listed on a national securities exchange
or traded in the over-the-counter market and sales prices are
regularly reported for the Common Stock, the closing or last price of
the Common Stock on the Composite Tape or other comparable reporting
system for the trading day immediately preceding the applicable date;
<PAGE>
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales
prices are not regularly reported for the Common Stock for the
trading day referred to in clause (1), and if bid and asked prices
for the Common Stock are regularly reported, the mean between the bid
and the asked price for the Common Stock at the close of trading in
the over-the-counter market for the trading day on which Common Stock
was traded immediately preceding the applicable date; and
(3) If the Common Stock is neither listed on a national securities
exchange nor traded in the over-the-counter market, such value as the
Administrator, in good faith, shall determine.
ISO means an option meant to qualify as an incentive stock option
---
under Section 422 of the Code.
Key Employee means an employee of the Company or of an Affiliate
------------
(including, without limitation, an employee who is also serving as an
officer or director of the Company or of an Affiliate), designated by
the Administrator to be eligible to be granted one or more Options
under the Plan.
Non-Qualified Option means an option which is not intended to qualify
--------------------
as an ISO.
Option means an ISO or Non-Qualified Option granted under the Plan.
------
Option Agreement means an agreement between the Company and a
----------------
Participant delivered pursuant to the Plan, in such form as the
Administrator shall approve.
Participant means a Key Employee, director or consultant to whom one
-----------
or more Options are granted under the Plan. As used herein,
"Participant" shall include "Participant's Survivors" where the
context requires.
Plan means this OneSoft Corporation Second Amended and Restated 1997
----
Employee, Director and Consultant Stock Option Plan.
Shares means shares of the Common Stock as to which Options have been
------
or may be granted under the Plan or any shares of capital stock into
which the Shares are changed or for which they are exchanged within
the provisions of Paragraph 3 of the Plan. The Shares issued upon
exercise of Options granted under the Plan may be authorized and
unissued shares or shares held by the Company in its treasury, or
both.
Survivors means a deceased Participant's legal representatives and/or
---------
any person or persons who acquired the Participant's rights to an
Option by will or by the laws of descent and distribution.
2
<PAGE>
2. PURPOSES OF THE PLAN.
--------------------
The Plan is intended to encourage ownership of Shares by Key Employees and
directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs and Non-
Qualified Options.
3. SHARES SUBJECT TO THE PLAN.
--------------------------
(a) The number of Shares which may be issued from time to time pursuant to
this Plan shall be 7,500,000 or the equivalent of such number of Shares after
the Administrator, in its sole discretion, has interpreted the effect of any
stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 16 of the Plan.
(b) The maximum number of Shares that may be issued as ISOs pursuant to
this Plan shall be 7,500,000 Shares or the equivalent of such number of Shares
after the Administrator, in its sole discretion, has interpreted the effect of
any stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 16 of the Plan.
(c) If an Option ceases to be "outstanding", in whole or in part, the
Shares which were subject to such Option shall be available for the granting of
other Options under the Plan. Any Option shall be treated as "outstanding" until
such Option is exercised in full, or terminates or expires under the provisions
of the Plan, or by agreement of the parties to the pertinent Option Agreement.
4. ADMINISTRATION OF THE PLAN.
--------------------------
The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to the Committee, in which
case the Committee shall be the Administrator. Subject to the provisions of the
Plan, the Administrator is authorized to:
a. Interpret the provisions of the Plan or of any Option or Option
Agreement and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
b. Determine which employees of the Company or of an Affiliate shall be
designated as Key Employees and which of the Key Employees, directors
and consultants shall be granted Options;
c. Determine the number of Shares for which an Option or Options shall
be granted, provided, however, that in no event shall Options to
purchase more than 500,000 Shares be granted to any Participant in
any fiscal year; and
d. Specify the terms and conditions upon which an Option or Options may
be granted;
3
<PAGE>
provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under it
shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is the Committee.
5. ELIGIBILITY FOR PARTICIPATION.
-----------------------------
The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding any of the foregoing provisions, the Administrator
may authorize the grant of an Option to a person not then an employee, director
or consultant of the Company or of an Affiliate provided however, that the
actual grant of such Option shall be conditioned upon such person becoming
eligible to become a Participant at or prior to the time of the delivery of the
Option Agreement evidencing such Option. ISOs may be granted only to Key
Employees. Non-Qualified Options may be granted to any Key Employee, director or
consultant of the Company or an Affiliate. The granting of any Option to any
individual shall neither entitle that individual to, nor disqualify him or her
from, participation in any other grant of Options.
6. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions consistent with the terms and
conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto.
A. Non-Qualified Options: Each Option intended to be a Non-Qualified
---------------------
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best interest of
the Company, subject to the following minimum standards for any such
Non-Qualified Option:
a. Option Price: Each Option Agreement shall state the option price
(per share) of the Shares covered by each Option, which option
price shall be determined by the Administrator but shall not be
less than the par value per share of Common Stock.
b. Each Option Agreement shall state the number of Shares to which
it pertains;
c. Each Option Agreement shall state the date or dates on which it
first is exercisable and the date after which it may no longer be
exercised, and may provide that the Option rights accrue or
become exercisable in
4
<PAGE>
installments over a period of months or years, or upon the
occurrence of certain conditions or the attainment of stated
goals or events; and
d. Exercise of any Option may be conditioned upon the Participant's
execution of a Share purchase agreement in form satisfactory to
the Administrator providing for certain protections for the
Company and its other shareholders, including requirements that:
i. The Participant's or the Participant's Survivors' right to
sell or transfer the Shares may be restricted; and
ii. The Participant or the Participant's Survivors may be
required to execute letters of investment intent and must
also acknowledge that the Shares will bear legends noting
any applicable restrictions.
B. ISOs: Each Option intended to be an ISO shall be issued only to a Key
---- Employee and be subject to at least the following terms and
conditions, with such additional restrictions or changes as the
Administrator determines are appropriate but not in conflict
with Section 422 of the Code and relevant regulations and
rulings of the Internal Revenue Service:
a. Minimum standards: The ISO shall meet the minimum standards
required of Non-Qualified Options, as described in Paragraph
6(A) above, except clause (a) thereunder.
b. Option Price: Immediately before the Option is granted, if the
Participant owns, directly or by reason of the applicable
attribution rules in Section 424(d) of the Code:
i. Ten percent (10%) or less of the total combined voting
-------
power of all classes of share capital of the Company or an
Affiliate, the Option price per share of the Shares covered
by each Option shall not be less than one hundred percent
(100%) of the Fair Market Value per share of the Shares on
the date of the grant of the Option.
ii. More than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or an
Affiliate, the Option price per share of the Shares covered
by each Option shall not be less than one hundred ten
percent (110%) of the said Fair Market Value on the date of
grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) or less of the total combined voting
-------
power of all classes of share capital of the Company or an
Affiliate, each Option shall terminate not more than ten
(10) years from the date
5
<PAGE>
of the grant or at such earlier time as the Option
Agreement may provide.
ii. More than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or an
Affiliate, each Option shall terminate not more than five
(5) years from the date of the grant or at such earlier
time as the Option Agreement may provide.
d. Limitation on Yearly Exercise: The Option Agreements shall
restrict the amount of Options which may be exercisable in any
calendar year (under this or any other ISO plan of the Company
or an Affiliate) so that the aggregate Fair Market Value
(determined at the time each ISO is granted) of the stock with
respect to which ISOs are exercisable for the first time by the
Participant in any calendar year does not exceed one hundred
thousand dollars ($100,000), provided that this subparagraph (d)
shall have no force or effect if its inclusion in the Plan is
not necessary for Options issued as ISOs to qualify as ISOs
pursuant to Section 422(d) of the Code.
7. EXERCISE OF OPTIONS AND ISSUE OF SHARES.
---------------------------------------
An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal executive office address,
together with provision for payment of the full purchase price in accordance
with this Paragraph for the Shares as to which the Option is being exercised,
and upon compliance with any other condition(s) set forth in the Option
Agreement. Such written notice shall be signed by the person exercising the
Option, shall state the number of Shares with respect to which the Option is
being exercised and shall contain any representation required by the Plan or the
Option Agreement. Payment of the purchase price for the Shares as to which such
Option is being exercised shall be made (a) in United States dollars in cash or
by check, or (b) at the discretion of the Administrator, through delivery of
shares of Common Stock having a Fair Market Value equal as of the date of the
exercise to the cash exercise price of the Option, or (c) at the discretion of
the Administrator, by delivery of the grantee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the applicable
Federal rate, as defined in Section 1274(d) of the Code, or (d) at the
discretion of the Administrator, in accordance with a cashless exercise program
established with a securities brokerage firm, and approved by the Administrator,
or (e) at the discretion of the Administrator, by any combination of (a), (b),
(c) and (d) above. Notwithstanding the foregoing, the Administrator shall accept
only such payment on exercise of an ISO as is permitted by Section 422 of the
Code.
The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the delivery of the Shares may be delayed by the
Company in order to comply with any law or regulation (including, without
limitation, state securities or "blue sky" laws) which requires the Company to
take any action with respect to the Shares prior to their issuance. The Shares
shall, upon
6
<PAGE>
delivery, be evidenced by an appropriate certificate or certificates for fully
paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to any Key
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 19) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.
The Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is permitted
by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Option was granted, or in the event of the death of the
Participant, the Participant's Survivors, if the amendment is adverse to the
Participant, and (iii) any such amendment of any ISO shall be made only after
the Administrator, after consulting the counsel for the Company, determines
whether such amendment would constitute a "modification" of any Option which is
an ISO (as that term is defined in Section 424(h) of the Code) or would cause
any adverse tax consequences for the holder of such ISO.
7
<PAGE>
8. RIGHTS AS A SHAREHOLDER.
-----------------------
No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.
9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
--------------------------------------------
By its terms, an Option granted to a Participant shall not be transferable
by the Participant other than (i) by will or by the laws of descent and
distribution, or (ii) as otherwise determined by the Administrator and set forth
in the applicable Option Agreement. The designation of a beneficiary of an
Option by a Participant shall not be deemed a transfer prohibited by this
Paragraph. Except as provided above, an Option shall be exercisable, during the
Participant's lifetime, only by such Participant (or by his or her legal
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 any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon an Option, shall be null and void.
10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR DEATH OR
-------------------------------------------------------------------
DISABILITY.
----------
Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised all Options, the following rules apply:
a. A Participant who ceases to be an employee, director or consultant of
the Company or of an Affiliate (for any reason other than termination
"for cause", Disability, or death for which events there are special
rules in Paragraphs 11, 12, and 13, respectively), may exercise any
Option granted to him or her to the extent that the Option is
exercisable on the date of such termination of service, but only
within such term as the Administrator has designated in the pertinent
Option Agreement.
b. Except as provided in Subparagraph (c) below, or Paragraph 12 or 13,
in no event may an Option Agreement provide, if the Option is
intended to be an ISO, that the time for exercise be later than three
(3) months after the Participant's termination of employment.
c. The provisions of this Paragraph, and not the provisions of Paragraph
12 or 13, shall apply to a Participant who subsequently becomes
Disabled or dies after the termination of employment, director status
or consultancy, provided, however, in the case of a Participant's
Disability or death within three (3) months after the
8
<PAGE>
termination of employment, director status 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, but in no event after the date of expiration of the
term of the Option.
d. Notwithstanding anything herein to the contrary, if subsequent to a
Participant's termination of employment, termination of director
status or termination of consultancy, but prior to the exercise of an
Option, the Board of Directors determines that, either prior or
subsequent to the Participant's termination, the Participant engaged
in conduct which would constitute "cause", then such Participant
shall forthwith cease to have any right to exercise any Option.
e. A Participant to whom an Option has been granted under the Plan who
is absent from work with the Company or with an Affiliate because of
temporary disability (any disability other than a permanent and total
Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such
absence, be deemed, by virtue of such absence alone, to have
terminated such Participant's employment, director status or
consultancy with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.
f. Except as required by law or as set forth in the pertinent Option
Agreement, Options granted under the Plan shall not be affected by
any change of a Participant's status within or among the Company and
any Affiliates, so long as the Participant continues to be an
employee, director or consultant of the Company or any Affiliate.
11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
--------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the time the
Participant is notified his or her service is terminated "for cause"
will immediately be forfeited.
b. For purposes of this Plan, "cause" shall include (and is not limited
to) dishonesty with respect to the Company or any Affiliate,
insubordination, substantial malfeasance or non-feasance of duty,
unauthorized disclosure of confidential information, and conduct
substantially prejudicial to the business of the Company or any
Affiliate. The determination of the Administrator as to the existence
of "cause" will be conclusive on the Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of
9
<PAGE>
"cause" occur prior to termination. If the Administrator determines,
subsequent to a Participant's termination of service but prior to the
exercise of an Option, that either prior or subsequent to the
Participant's termination the Participant engaged in conduct which
would constitute "cause," then the right to exercise any Option is
forfeited.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition of
"cause" for termination and which is in effect at the time of such
termination, shall supersede the definition in this Plan with respect
to such Participant.
12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
-----------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
a. To the extent exercisable but not exercised on 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 as would
have accrued had the Participant not become Disabled prior to the end
of the accrual period which next ends following the date of
Disability. The proration shall be based upon the number of days of
such accrual period prior to the date of Disability.
A Disabled Participant may exercise such rights only within the period
ending one (1) year after the date of the Participant's termination of
employment, directorship or consultancy, as the case may be, notwithstanding
that the Participant might have been able to exercise the Option as to some or
all of the Shares on a later date if the Participant had not become disabled and
had continued to be an employee, director or consultant or, if earlier, within
the originally prescribed term of the Option.
The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.
13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
---------------------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant's Survivors:
a. To the extent exercisable but not exercised on the date of death; and
10
<PAGE>
b. In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion of any additional rights which 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 proration
shall be based upon the number of days of such accrual period prior to
the Participant's death.
If the Participant's Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one (1) year after the date of
death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
14. PURCHASE FOR INVESTMENT.
-----------------------
Unless the offering and sale of the Shares to be issued upon the particular
exercise of an 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(s) such Option shall warrant to the
Company, prior to the receipt of such Shares, 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 their Shares issued pursuant to such exercise or such
grant:
"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by
any person, including a pledgee, unless (1) either (a) a
Registration Statement with respect to such shares shall be
effective under the Securities Act of 1933, as amended, or (b)
the Company shall have received an opinion of counsel
satisfactory to it that an exemption from registration under such
Act is then available, and (2) there shall have been compliance
with all applicable state securities laws."
b. At the discretion of the Administrator, 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.
15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
-----------------------------------------
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not
11
<PAGE>
otherwise terminated and expired, the Participant or the Participant's Survivors
will have the right immediately prior to such dissolution or liquidation to
exercise any Option to the extent that the Option is exercisable as of the date
immediately prior to such dissolution or liquidation.
16. ADJUSTMENTS.
-----------
Upon the occurrence of any of the following events, a Participant's rights
with respect to any Option granted to him or her hereunder which has not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the pertinent Option Agreement:
A. Stock Dividends and Stock Splits. If (i) the shares of Common Stock
--------------------------------
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are distributed with
respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise of such Option may be appropriately increased or
decreased proportionately, and appropriate adjustments may be made in the
purchase price per share to reflect such events.
The number of Shares subject to the limitation in Paragraphs 3(c) and 4(c)
shall also be adjusted proportionately upon the occurrence of such events.
B. Consolidations or Mergers. If the Company is to be consolidated with or
-------------------------
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets or otherwise (an "Acquisition"), the Administrator or the board
of directors of any entity assuming the obligations of the Company hereunder
(the "Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph), within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the shares subject to such Options (either to the extent
then exercisable or, at the discretion of the Administrator, all Options being
made fully exercisable for purposes of this Subparagraph) over the exercise
price thereof.
C. Recapitalization or Reorganization. In the event of a recapitalization
----------------------------------
or reorganization of the Company (other than a transaction described in
Subparagraph B above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock, a
Participant upon exercising an Option shall be entitled to receive for the
purchase price paid upon such exercise the securities which would have been
received if such Option had been exercised prior to such recapitalization or
reorganization.
12
<PAGE>
D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
--------------------
made pursuant to Subparagraph A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.
17. ISSUANCES OF SECURITIES.
-----------------------
Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company.
18. FRACTIONAL SHARES.
-----------------
No fractional shares shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional shares equal to the Fair Market Value thereof.
19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.
------------------------------------------------------------------
The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such conversion,
the Administrator (with the consent of the Participant) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.
13
<PAGE>
20. WITHHOLDING.
-----------
In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise of an Option or a Disqualifying Disposition (as defined in
Paragraph 21), the Company may withhold from the Participant's compensation, if
any, or may require that the Participant advance in cash to the Company, or to
any Affiliate of the Company which employs or employed the Participant, the
amount of such withholdings unless a different withholding arrangement,
including the use of shares of the Company's Common Stock or a promissory note,
is authorized by the Administrator (and permitted by law). For purposes hereof,
the fair market value of the shares withheld for purposes of payroll withholding
shall be determined in the manner provided in Paragraph 1 above, as of the most
recent practicable date prior to the date of exercise. If the fair market value
of the shares withheld is less than the amount of payroll withholdings required,
the Participant may be required to advance the difference in cash to the Company
or the Affiliate employer. The Administrator in its discretion may condition the
exercise of an Option for less than the then Fair Market Value on the
Participant's payment of such additional withholding.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
----------------------------------------------
Each Key Employee who receives an ISO must agree to notify the Company in
writing immediately after the Key Employee makes a Disqualifying Disposition of
any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired Shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
22. TERMINATION OF THE PLAN.
-----------------------
The Plan will terminate on March 17, 2007, the date which is ten (10) years
from the earlier of the date of its adoption and the date of its approval by the
shareholders of the Company. The Plan may be terminated at an earlier date by
vote of the shareholders of the Company; provided, however, that any such
earlier termination shall not affect any Option Agreements executed prior to the
effective date of such termination.
23. AMENDMENT OF THE PLAN AND AGREEMENTS.
------------------------------------
The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, and to the extent
necessary to qualify the shares issuable upon exercise of any outstanding
Options granted, or Options to be granted, under the Plan for listing on any
national securities exchange or quotation in any national automated quotation
system of securities dealers. Any amendment approved by the Administrator which
the Administrator determines is of a scope that requires shareholder
14
<PAGE>
approval shall be subject to obtaining such shareholder approval. Any
modification or amendment of the Plan shall not, without the consent of a
Participant, adversely affect his or her rights under an Option previously
granted to him or her. With the consent of the Participant affected, the
Administrator may amend outstanding Option Agreements in a manner which may be
adverse to the Participant but which is not inconsistent with the Plan. In the
discretion of the Administrator, outstanding Option Agreements may be amended by
the Administrator in a manner which is not adverse to the Participant.
24. EMPLOYMENT OR OTHER RELATIONSHIP.
--------------------------------
Nothing in this Plan or any Option Agreement shall be deemed to prevent the
Company or an Affiliate from terminating the employment, consultancy or director
status of a Participant, nor to prevent a Participant from terminating his or
her own employment, consultancy or director status or to give any Participant a
right to be retained in employment or other service by the Company or any
Affiliate for any period of time.
25. GOVERNING LAW.
-------------
This Plan shall be construed and enforced in accordance with the law of the
State of Delaware
15
<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
thirty (30) 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 30-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 twenty
four (24) 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 ninety (90) 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)),
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unless terminated in accordance with the provisions of this Agreement, in full
force and effect for a period of twenty four (24) 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 ninety (90) 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 twelve (12) months 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
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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
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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
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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
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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
--------------------------- ---------------------------
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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
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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
-----------------
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OneSoft Corporation SmartCruiser, LLC
SCHEDULE A
PRODUCT LISTING AND PRICING
**************
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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 agrees to indemnify
for the other for third party claims that may arise in connection with the
other Party's web site and/or material contained thereon. 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 terminate this Agreement upon
30 days' notice if USWeb/CKS's managed services business offers an E-commerce
managed service to its customers that includes any products 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 right to
withdraw such offering within such notice period in which event such notice
shall be deemed withdrawn.
(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 Indemnitor believes it is
likely to infringe or be enjoined, 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 (i), (ii) and (iii) are not commercially
reasonable for Indemnitor then (iv) terminate the applicable License and refund
the License fee therefor, as amortized on a 5 year straight line basis for the
time since the affected item was delivered to the other Party.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)
Allaire Spectra 19
Broadvision One-To-One Enterprise
Intershop Effinity
Intershop Enterprise
Intershop ePages
Intershop Hosting
Intershop Merchant
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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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CONFIDENTIAL -- DO NOT DUPLICATE
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
---------------------------- ----------------------------
33
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CONFIDENTIAL -- DO NOT DUPLICATE
Schedule 15(b)
PARTICIPATING SUBSIDIARIES
USWeb/CKS
(none)
OneSoft
(none)
34
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CONFIDENTIAL -- DO NOT DUPLICATE
Schedule 15(j)
AUTHORIZED PERSONS
PART 1
Alex Hawkinson
PART 2
James W. MacIntyre, IV
Thomas Young
35
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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
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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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OneSoft Corporation The Mark Group, Inc.
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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OneSoft Corporation The Mark Group, Inc.
(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 custom application developed under an attached Scope of Work or Change
Order, and other work product identified and originated or prepared by ONESOFT
as a custom deliverable pursuant to a specific Scope of Work or Change Order
shall be delivered to CLIENT and CLIENT is hereby granted a perpetual fully paid
up license to use such 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. ONESOFT agrees that any custom-created templates or bitmap graphics
developed under this Agreement ("Work Product") has been specially ordered or
commissioned by CLIENT to be included in a collective work and/or a compilation.
All work product is and shall remain the property of CLIENT and all rights,
title and interest therein shall vest in CLIENT and shall be deemed to be a
"work for hire" and made in the course of the services rendered under this
Agreement. To the extent that title to the Work Product does not by operation of
law vest in CLIENT or the Work Product is not considered work made for hire, all
right, title and interest therein is irrevocably assigned to CLIENT. ONESOFT
agrees to give CLIENT at CLIENT's expense any reasonable assistance required to
perfect the rights granted herein.
(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
Confidential Information 5
<PAGE>
OneSoft Corporation The Mark Group, Inc.
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 twenty (20)
days of having received written notice of such breach.
Confidential Information 6
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OneSoft Corporation The Mark Group, Inc.
(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 twenty (20) 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. Extensions of the approximate two-week period may be effectuated
with a change order signed by Company. However, it is expected that a
comprehensive contract will be executed between the parties no later than
December 30, 1999.
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 thirty (30) 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 twelve (12) 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
ninety (90) days 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
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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
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(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 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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2. This Services Agreement will be for a period of one (1) year 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
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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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Name: Jeff MacIntyre Name: Matt Diamond
--------------------------- --------------------------
Title: VP IOC Title: CEO
--------------------------- --------------------------
Date: 2/1//99 Date: 2/15/99
--------------------------- --------------------------
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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.
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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
thirty (30) 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 30-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
twenty four (24) 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 ninety (90) 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)), unless terminated in accordance with the provisions of
this Agreement, in full force and effect for a period of twenty four (24)
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 ninety (90) 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 twelve (12) months 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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OneSoft Corporation Totally Wireless
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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OneSoft Corporation Totally Wireless
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 custom applications and/or code and other work product orginated or
prepared by ONESOFT as a deliverable pursuant to this Agreement ("Work
Product"); but not including ONESOFT's administrative communications,
records, files and working papers relating to this Agreement, shall be
delivered to and become the property of CLIENT and copyright therein shall
be vested in CLIENT. ONESOFT agrees that it will not offer such Work
Product to any other ONESOFT CLIENT 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 Work Product, such pre-existing and/or copyrighted work shall
remain the property of ONESOFT and ONESOFT grants to CLIENT 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.
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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>
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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
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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 thirty (30) 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
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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)
- --------------------------------
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- ------------------------------------ --------------------------
- ------------------------------------ --------------------------
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
---------------------------- --------------------------------
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TRADOCS:1287035.1(RL2Z01!.DOC)
OneSoft Confidential Information 7
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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
thirty (30) 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 ***** (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
thirty (30) 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 thirty (30) 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>
Product Addendum #1
[ONESOFT LOGO] License # ******
Effective Date: 3/18/99
Summary Total of Cost Categories: License Fees
- --------------------------------------------------------------------------------
Total OneCommerce (TM) Software Product
Licenses Fees Paid to Date: $ ***
<TABLE>
<CAPTION>
==========================================================================================================================
License Ext. License
Unit of Unit Price + Ext.
Software Product Name License Type Quantity Measure Price Maintenance
- ---------------------------------------------------------------------------------------------------------------------------
Cost estimate includes perpetual use software licenses as defineda in OneSoft Managed Applications and Services Agreement
<S> <C> <C> <C> <C> <C>
OneCommerce Enterprise Edition Perpetual 8 Processor $ *** $ ***
Database Perpetual 2 Processor $ *** $ ***
OneCommerce Workstation Components Perpetual 1 Seat $ *** $ ***
OneCommerce Connector Components Perpetual 1 Connection $ *** $ ***
OneChat Perpetual 6 Processor $ *** $ ***
Shipment Connector Perpetual 1 Connection $ *** $ ***
Tax Connector Perpetual 1 Connection $ *** $ ***
Order Connector Perpetual 1 Connection $ *** $ ***
Inventory Connector Perpetual 1 Connection $ *** $ ***
Total OneCommerce(TM) Software Product Licenses Fees Paid to Date:
---------
$ ***
---------
Acknowledged and Accepted for Espanol.com By:
/s/ Kyle McNamara
--------------------------------
Signature
/s/ Kyle McNamara
---------------------------------
Print Name
CEO
---------------------------------
Title
3/18/99
----------------------------------
Date
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
February 4, 2000 in the fourth amendment to the Registration Statement (Form S-1
No. 333-94233) and related Prospectus of OneSoft Corporation for the
registration of 5,175,000 shares of its common stock.
/s/ Ernst & Young LLP
McLean, Virginia
March 24, 2000
<PAGE>
EXHIBIT 23.3
CONSENT OF THE BOSTON
CONSULTING GROUP AND SHOP.ORG
THE BOSTON CONSULTING GROUP AND SHOP.ORG HEREBY CONSENT TO THE USE OF OUR
NAMES AND THE DATA PRESENTED IN THE "BUSINESS" SECTION OF THE PROSPECTUS OF THE
ONE SOFT CORPORATION, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(REGISTRATION NO. 333-94233).
/S/ ROBERT L. SMITH, JR.
EXECUTIVE DIRECTOR
DATE: MARCH 24, 2000 SHOP.ORG
/S/ JULIE BREEN
E-COMMERCE RESEARCH
SPECIALIST
THE BOSTON CONSULTING GROUP
