<PAGE>
As filed with the Securities and Exchange Commission on June 28, 1999
Registration No. 333-77223
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
under
The Securities Act of 1933
-------------------------
SHOWCASE CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 7372 41-1628214
(State or other (Primary Standard (I.R.S. Employer
jurisdiction Industrial Identification Number)
of incorporation or Classification Code
organization) Number)
4115 Highway 52 North, Suite 300
Rochester, Minnesota 55901-0144
(507) 288-5922
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Kenneth H. Holec
ShowCase Corporation
4115 Highway 52 North, Suite 300
Rochester, Minnesota 55901-0144
(507) 288-5922
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
-------------------------
Copies to:
Kenneth L. Cutler David K. Michaels
Thad C. Johnson Robert A. Freedman
Philip E. Bauer Cynthia E. Garabedian
Dorsey & Whitney LLP Fenwick & West LLP
220 South Sixth Street Two Palo Alto Square
Minneapolis, Minnesota 55402-1498 Palo Alto, California 94306
(612) 340-2600 (650) 494-0600
-------------------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
-------------------------
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of 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 earliest effective registration statement
for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earliest effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [_]
-------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated June 28, 1999
PROSPECTUS
3,000,000 Shares
Common Stock
-----------
This is ShowCase Corporation's initial public offering of common stock.
We expect the public offering price to be between $9.00 and $11.00 per
share. Currently, no public market exists for the shares. After pricing of this
offering, we expect that the common stock will trade on the Nasdaq National
Market under the symbol "SHWC."
Investing in the common stock involves risks which are described in the
"Risk Factors" section beginning on page 4 of this prospectus.
-----------
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public Offering Price........................... $ $
Underwriting Discount........................... $ $
Proceeds, before expenses, to ShowCase
Corporation.................................... $ $
</TABLE>
The underwriters may also purchase up to an additional 450,000 shares at
the public offering price, less the underwriting discount, within 30 days from
the date of this prospectus to cover over-allotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The shares of common stock will be ready for delivery in New York, New York
on or about , 1999.
-----------
Merrill Lynch & Co.
U.S. Bancorp Piper Jaffray
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated
FAC/Equities
-----------
The date of this prospectus is , 1999
<PAGE>
[INSIDE FRONT COVER]
Work Smarter . . .
Make Smarter
Business Decisions . . .
Faster. [text in italics]
ShowCase(R) Corporation is the leading provider of fully integrated,
end-to-end, business intelligence solutions for IBM AS/400 customers.
The ShowCase STRATEGY(R) product suite and related services are
designed to enable organizations to rapidly implement business
intelligence solutions that create increased value from their
operational and customer data. The sophisticated data warehousing and
management capabilities of our product suite provide our clients with
tightly integrated and highly scalable solutions. ShowCase products
enable enterprise-wide ad hoc information access, enterprise reporting
and analytics through familiar applications and Internet browsers.
Companies require business intelligence to make faster, smarter
decisions. For ten years, ShowCase has helped meet this challenge by
building and leveraging technology to deliver business intelligence
solutions.
[ShowCase(R) Corporation Logo]
<PAGE>
[INSIDE FRONT COVER GATEFOLD]
In the center of the gatefold, there appears the following title heading :
ShowCase
STRATEGY(R)
Enterprise
Business Intelligence
Below the heading is a three-dimensional rectangular box sitting on a larger
three-dimensional rectangular foundation. The left side of the rectangular
foundation is labeled WAREHOUSE MANAGEMENT and the front of the rectangular
foundation is labeled WAREHOUSE GENERATION.
The left side of the rectangular box is divided into six columns labeled as
follows from the back to the front of the box, vertical text:
CUSTOMER SPECIFIC
FINANCIAL REPORTING
SALES ANALYSIS
SUPPLY CHAIN
CRM
1-1 MARKETING
The front of the rectangular box is divided into three sections labeled as
follows, from left to right, with the center section extending across the top of
the sections to the left and right:
AD HOC
INFORMATION ENTERPRISE REPORTING ANALYTICS
ACCESS
On the left-hand side of the gatefold there are four graphics appearing
vertically which separately break out the sections of the graphic appearing in
the center of the gatefold. Each of the first three graphics represents a
section of the rectangular box described above, and the fourth graphic
represents the three-dimensional rectangular foundation.
The first graphic is a three-dimensional cube with the same six vertical columns
appearing on the left side of the rectangular box as described above and AD HOC
INFORMATION ACCESS appearing on the front of the cube. The caption below this
graphic reads "Ad hoc information access tools enable users to customize the
manner in which information is accessed and viewed."
The second graphic is a three-dimensional cube with the same six vertical
columns appearing on the left side of the rectangular box as described above and
ANALYTICS appearing on the front
<PAGE>
of the cube. The caption below this graphic reads "Analytics provide users with
speed-of- thought sophisticated data analysis."
The third graphic is a three-dimensional cube, extending to the left and right
at the very top of the cube as this section appears in the rectangular box in
the center of the page, and contains the same six vertical columns appearing on
the left side of the rectangular box as described above, with ENTERPRISE
REPORTING appearing on the front of the cube. The caption below this graphic
reads "Enterprise reporting tools enable widespread deployment of information."
The fourth graphic is a representation of the three-dimensional rectangular
foundation included in the graphic appearing in the center of the gatefold. The
caption below this graphic reads "Warehouse generation and management
capabilities enable IT to support enterprise business intelligence
implementations."
On the right-hand side of the gatefold there is the following text, superimposed
over the ShowCase compass logo:
Clients often buy and implement ShowCase STRATEGY(R) in an evolutionary way,
building upon their initial successes. Once their first business application is
implemented, many of our clients take advantage of additional STRATEGY
capabilities and extend it, or expand their use of STRATEGY for new
applications. Here are two typical examples.
Example 1 [bold text]
A company wants to enable its sales force to secure contract
information, pricing and profitability on a customer-by-customer
basis. Solution: the STRATEGY ad hoc capabilities. Based on the
success of this project, the company then applies the STRATEGY
analytic capabilities to develop an overall pricing strategy. Outcome:
the client licenses additional STRATEGY products to support the
functional expansion.
[Italic text]
Example 2 [bold text]
A company wants to analyze and manage its promotional mix. Solution: a
sales analysis data mart using the STRATEGY analytic capabilities.
Satisfied with its findings, the company expands its use of STRATEGY
for additional end user analytic applications, including store-level
profitability analysis. Outcome: the client licenses additional
STRATEGY products to support incremental users. [Italic text]
In the lower right-hand corner of the gatefold is the ShowCase STRATEGY logo
with the following caption: "Work Smarter...Faster."
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 4
Forward-Looking Statements............................................... 14
Trademarks............................................................... 14
Use of Proceeds.......................................................... 15
Dividend Policy.......................................................... 15
Capitalization........................................................... 16
Dilution................................................................. 17
Selected Consolidated Financial Data..................................... 18
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 19
Business................................................................. 28
Management............................................................... 40
Certain Transactions..................................................... 48
Principal Shareholders................................................... 49
Description of Capital Stock............................................. 51
Shares Eligible for Future Sale.......................................... 54
Underwriting............................................................. 56
Legal Matters............................................................ 58
Experts.................................................................. 58
Where You Can Find More Information...................................... 59
Index to Consolidated Financial Statements .............................. F-1
</TABLE>
INFORMATION IN PROSPECTUS
Unless specifically stated, the information in this prospectus has been
adjusted to reflect the automatic conversion of all outstanding shares of our
preferred stock into shares of common stock, but does not take into account the
possible sale of additional shares of common stock to the underwriters to cover
over-allotments.
You should rely only on the information contained in this prospectus. We
and the underwriters have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We and the underwriters are not making
an offer to sell these securities in any jurisdiction where the offer or sale
is not permitted. You should assume that the information appearing in this
prospectus is accurate as of the date on the front cover of this prospectus
only. Our business, financial condition, results of operations and prospects
may have changed since that date.
i
<PAGE>
PROSPECTUS SUMMARY
This summary is not complete and does not contain all of the information
that may be important to you. You should read the entire prospectus carefully,
including the consolidated financial statements and related notes, before
making an investment decision.
ShowCase Corporation
We are the leading provider of fully integrated, end-to-end, business
intelligence solutions--solutions designed to work closely and efficiently
together to provide all the functionality required for the delivery of business
intelligence to end users--for IBM AS/400 customers. Our ShowCase STRATEGY
product suite and related services are designed to enable organizations to
rapidly implement business intelligence solutions that create increased value
from their operational and customer data. The sophisticated data warehousing--
that is, the organization and storage of data into specified formats that
enable easy searches and analyses--and management capabilities of our product
suite provide our clients with solutions that are highly scalable--that is,
capable of increasing in deployment size from a limited number of end users to
a larger number of end users, and tightly integrated--that is, consisting of
components that are designed to work closely and efficiently together. Our
products enable enterprise-wide distribution of information and allow end-user
access and analysis through familiar applications and Internet browsers. We
have eight years of experience delivering business intelligence solutions to
our clients. Our ShowCase STRATEGY product suite, introduced in 1996, supports
ad hoc information access--the ability to look for information in an
unstructured manner, enterprise reporting--the ability to generate and
distribute pre-defined reports and query and analysis results, and analytics--
the ability to analyze large volumes of data through Internet browsers and
personal computers. Based on industry analyst reports and published revenues of
our competitors, we are the leading provider of fully integrated, end-to-end
business intelligence solutions for IBM AS/400 customers.
The rapid growth of the Internet and the emergence of e-business are
transforming the way organizations conduct business, communicate and share
information. This transformation is driving broad and immediate demand for
better intelligence and information dissemination. Companies require business
intelligence to interpret and create value from the vast amounts of available
data to better tailor products and services, identify business opportunities
and improve operational efficiencies. A critical foundation technology for
business intelligence solutions is a scalable and reliable server platform. The
AS/400 is a leading server platform deployed in the mid-market for enterprise
resource applications, e-business and business intelligence and is particularly
popular with mid-market companies because of its reliability, scalability, ease
of deployment and low cost of operation.
Companies are often unable to realize the full potential of business
intelligence because of the difficulty of integrating components from multiple
vendors, adapting solutions to evolving end-user needs, scaling across the
enterprise and extending business intelligence through the Internet. Our
ShowCase STRATEGY product suite combines an intuitive user interface and
Internet capabilities with powerful functionality that allows end users to
easily access, customize and analyze information and reports with minimal IT
assistance. It consists of data warehouse generation and management, reporting,
relational analysis--that is, analysis including two variables--and
multidimensional analysis--that is, analysis including more than two
variables--components. In addition, we also offer Deployment Accelerators,
which provide adaptable applications for targeted business functions and allow
some of our clients to realize benefits of business intelligence within days of
deployment.
We sell our products and services in the U.S. and internationally through
our direct sales force, software application vendors, distributors and
resellers. These distribution partners include Dimension Data Systems, Fiserv,
IBM, Infinium Software, Lawson Software, Silverlake, TSG and Walker
Interactive. As of March 31, 1999, we had over 2,000 active clients including
Abbott Laboratories, Burmah Castrol Trading, Cartier International, Interface,
Land O'Lakes, Sara Lee Casualwear, Skytel Communications, Tiffany & Company and
Toys "R" Us International.
Our principal offices are located at 4115 Highway 52 North, Suite 300,
Rochester, Minnesota 55901, and our telephone number is (507) 288-5922.
1
<PAGE>
The Offering
<TABLE>
<C> <S>
Common stock offered.................... 3,000,000 shares
Common stock outstanding after 10,273,393 shares. The number of
this offering.......................... shares that will be outstanding after
the offering is based on the actual
number outstanding as of June 1,
1999. It excludes options to purchase
1,606,507 shares of common stock
outstanding as of June 1, 1999 at a
weighted average exercise price of
$2.58 per share, and 13,580 shares of
common stock issuable upon exercise
of an outstanding warrant at an
exercise price of $4.00 per share.
For more information regarding our
equity benefit plans, see
"Management--Benefit Plans" and notes
9 and 13 of notes to consolidated
financial statements.
Use of proceeds......................... The principal purposes of this
offering are to increase our working
capital, create a public market for
our stock and facilitate future
access by us to the public equity
markets. We intend to use the net
proceeds of this offering for general
corporate purposes, including
expansion of our direct sales force,
product development and working
capital.
Risk Factors............................ See "Risk Factors" for a discussion
of factors you should carefully
consider before deciding to invest in
shares of our common stock.
Proposed Nasdaq National Market symbol.. SHWC
</TABLE>
2
<PAGE>
Summary Consolidated Financial Data
The summary consolidated financial data below should be read together
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the consolidated financial statements and the related notes
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Operations
Data:
Total revenues...................... $10,018 $13,278 $18,027 $23,755 $35,519
Operating income (loss)............. 558 826 36 (3,602) (559)
Net income (loss)................... 397 814 50 (3,234) (616)
======= ======= ======= ======= =======
Net income (loss) per share:
Basic............................. $ 0.10 $ 0.21 $ 0.01 $ (0.82) $ (0.14)
Diluted........................... $ 0.06 $ 0.13 $ 0.01 $ (0.82) $ (0.14)
Shares used in computing basic net
income (loss) per share............ 3,908 3,850 3,847 3,928 4,384
Shares used in computing diluted net
income (loss) per share............ 6,339 6,457 6,445 3,928 4,384
</TABLE>
<TABLE>
<CAPTION>
As of March 31, 1999
-----------------------
Actual As Adjusted
---------- ------------
(in thousands)
<S> <C> <C>
Consolidated Balance Sheet Data:
Cash and marketable securities........................ $ 9,039 $36,339
Working capital....................................... 151 27,451
Total assets.......................................... 19,926 47,226
Long-term debt and capital lease obligations, less
current portion...................................... 87 87
Total stockholders' equity............................ 2,272 29,572
</TABLE>
For an explanation of the determination of the number of shares used in
computing basic and diluted net income per share, see note 10 of notes to
consolidated financial statements.
The consolidated balance sheet data as of March 31, 1999, as adjusted,
reflects our sale of 3,000,000 shares of common stock offered by this
prospectus at an assumed initial public offering price of $10.00 per share,
after deducting the estimated underwriting discount and offering expenses that
we will pay. See "Use of Proceeds" and "Capitalization."
3
<PAGE>
RISK FACTORS
Before investing in our common stock, you should be aware that there are
various risks, including those described below. As a ShowCase shareholder, you
will be subject to risks inherent in our business. The value of your investment
may increase or decline and could result in a loss. You should carefully
consider the following factors as well as other information contained in this
prospectus before deciding to invest in shares of our common stock.
We have a history of losses and we may not be able to achieve profitability
We incurred operating losses of approximately $3.6 million for the fiscal
year ended March 31, 1998 and $559,000 for the fiscal year ended March 31,
1999. We have also incurred operating losses in each quarter beginning with the
quarter ended June 30, 1997 through the quarter ended September 30, 1998. As of
March 31, 1999, we had an accumulated deficit of approximately $3.8 million. We
expect to continue to incur significant sales and marketing, product
development and general and administrative expenses. In particular, we intend
to substantially increase our direct field sales force, and accordingly
increase our sales and marketing expenses. As a result, we may continue to
experience losses and negative cash flows. If we do achieve profitability, we
may not sustain or increase profitability on a quarterly or annual basis in the
future.
Our future operating results may not follow past trends due to many factors
The relatively recent introduction of a substantial portion of our
current product suite and our history of losses make prediction of future
operating results difficult. In the past, our revenues and operating results
have varied significantly, and we expect these fluctuations to continue.
Although our revenues have grown significantly in recent periods, you should
not rely on past performance as any indication of future growth rates or
operating results. Future operating results will depend on many factors,
including:
. demand for the IBM AS/400 platform;
. growth of the market for business intelligence solutions;
. demand for and acceptance of our products, product enhancements
and services;
. maintenance and development of our strategic relationships with
application vendors, resellers and distributors;
. the introduction, timing and competitive pricing of products and
services by us and our competitors;
. expansion and rate of success of our direct sales force and
indirect distribution channels both domestically and
internationally; and
. attraction and retention of key personnel.
Our quarterly operating results fluctuate significantly and are difficult to
predict
Quarterly operating results. Our operating results have varied and in the
future are likely to vary significantly from quarter to quarter for a number of
reasons, including:
. the size and timing of significant orders;
. the length of our sales cycles and the sales cycles of our
distribution partners;
. the mix of products and services that we sell and the mix between
direct and indirect sales of our products;
. our ability to control costs;
. our ability to introduce new products and enhancements in a timely
manner;
4
<PAGE>
. the rate of success of our international expansion and the effect
of foreign currency exchange rate fluctuations;
. the discovery of software defects; and
. general economic conditions as well as those specific to our
customers and markets.
Revenues. We cannot predict our quarterly revenues with any significant
degree of accuracy for several reasons. We have historically operated with a
low software order backlog because we generally ship our software products
shortly after we receive orders. Accordingly, our product license revenues for
any quarter depend significantly on orders booked and shipped during that
quarter. In recent periods, we have experienced an increase in the average size
of our licenses, and we expect this trend to continue. This focus on larger
licenses will result in greater sales volatility from quarter to quarter.
Moreover, we often recognize a substantial portion of our quarterly product
license revenues in the last few weeks of a quarter. As a result, delays in
booking client orders could adversely affect our reported revenues for a
particular quarter. Finally, a significant percentage of our sales are through
indirect channels that are less predictable than sales through our direct sales
force.
We have often realized a greater percentage of our license revenue and
operating income in our third fiscal quarter than in other quarters due to
customer purchasing patterns. In addition, due to seasonal factors, our sales
often tend to slow during the summer months. We expect these trends to
continue.
Product license revenues also vary because the market for our products is
evolving rapidly and because sales cycles, which may last many months, vary
widely from client to client. Sales cycles are affected by many factors,
including:
. our clients' budgetary constraints;
. the timing of our clients' budget cycles;
. our clients' decisions as to whether, and on what scale, to adopt
business intelligence solutions;
. our clients' concerns about the introduction of new products by us
or our competitors; and
. potential downturns in the economy, which may reduce demand for
our products.
Maintenance and support fees depend largely on revenues from our existing
clients and vary with their maintenance and support needs. Professional service
revenues are often unpredictable because they depend in part on the scope of
the services we provide and whether our clients utilize those services.
Expenses. Because we plan to expand our business, we anticipate
substantial increases in operating costs and expenses, including
administration, consulting and training, maintenance and technical support,
product development and sales and marketing expenses. In general, we base our
operating expense budgets on anticipated revenue trends, and we may not be able
to reduce these expenses in the short term. Because our expenses are relatively
fixed in the near term, any shortfall from anticipated revenues or any delay in
recognition of revenues could result in significant variations in our quarterly
operating results.
For the foregoing reasons, we believe that quarter-to-quarter comparisons
of our operating results are not a good indication of our future performance.
It is likely that in one or more future quarters, our operating results may not
meet the expectations of analysts and investors. In this event, the price of
our common stock may fall.
The growth of our business depends on the growth of the market for business
intelligence software
All of our revenues to date have been attributable to the sale of
business intelligence software and related maintenance, support, consulting and
professional services. Business intelligence software enables
5
<PAGE>
organizations to transform data from disparate sources into accessible,
understandable and useful information. We expect such software and services to
continue to account for substantially all of our revenues for the foreseeable
future. Although demand for business intelligence software has grown in recent
years, we cannot assure that the market will continue to grow or that, even if
the market does grow, businesses will adopt our products. If such growth does
not materialize, our business and operating results would be seriously harmed.
We believe that future growth in the market for business intelligence
software will depend in large part on growth in e-business--business-to-
business, business-to-employee and business-to-customer communications and
transactions over the Internet, corporate intranets--internal computer networks
based on the Internet protocol--and extranets--networks that have connectivity
beyond corporate intranets. E-business has only recently emerged, and may not
continue to grow. Continued growth in e-business depends on a number of
factors, including the Internet's ability to efficiently handle increased
activity and to operate as a fast, reliable and secure network. Critical issues
concerning the commercial use of the Internet, including data corruption,
security, bandwidth availability and quality of service, remain and may
negatively affect the growth of e-business, and accordingly, the demand for
business intelligence software.
If the current levels of use of the IBM AS/400 and IBM's support of the AS/400
do not continue, we may not be able to increase our sales
The server components of our products currently operate only on the IBM
AS/400. To date, virtually all of our revenues have been derived from the
AS/400 customer base. Therefore, our ability to increase sales of our products
will depend on the continued use of the AS/400 and the continued support of the
AS/400 by IBM. Instead of using the AS/400, many businesses have implemented
client/server computer systems based on UNIX or Windows NT platforms. The
current levels of use by AS/400 customers and support of the AS/400 by IBM may
not continue and the use of the AS/400 may not increase in the future. To
develop products that operate on platforms other than the AS/400 would require
us to commit a substantial investment of resources, and we may not successfully
introduce these products on a timely or cost-effective basis or at all.
We may lose existing clients or be unable to attract new clients if we do not
develop new products and enhance our current products
We compete in markets where technology changes rapidly, competitors make
frequent new product introductions and enhancements, products have uncertain
life cycles and customer demands change unexpectedly. Our future success
depends on our ability to satisfy diverse and evolving customer requirements
and achieve market acceptance. It will also depend on our ability to improve
and expand our product line to keep pace with our competitors' product
introductions and technological developments. We cannot be certain that we will
be successful in developing and marketing product enhancements or new products
on a timely or cost-effective basis, or that these products, if developed, will
achieve market acceptance.
As a result of the complexities of business intelligence software, major
new products and product enhancements can require long development and testing
periods. In addition, customers may delay their purchasing decisions in
anticipation of the general availability of new or enhanced versions of the
Company's products and products of competitors. We have experienced delays in
releasing new products and product enhancements and may experience similar
delays in the future. Delays or problems in releasing our new products, or
significant problems in the installation or implementation of our products, may
cause clients to delay or cancel purchases or to purchase products from our
competitors, which would seriously harm our business and operating results.
If our relationships with distribution partners are not successful and if we
cannot recruit additional distribution partners we may not be able to expand
our sales
In addition to our direct sales force, we rely on distribution partners
including application vendors, resellers and distributors to license and
support our products in the United States and internationally. Our ability to
expand the sales of our products and our future success will depend in part
upon recruiting distribution partners and maintaining successful relationships
with these partners. Our distribution partners may
6
<PAGE>
offer products from several different companies, including, in some cases,
products that compete with our products. In addition, in the future our
distribution partners may develop products that compete with our products. Our
existing and potential distribution partners may be influenced to scale back or
end their relationships with us by our competitors who may have significantly
greater resources and market clout than we do. These distribution partners may
not devote adequate resources to selling our products. If we are unable to
retain our existing distribution partners or enter into additional
relationships, we may have to devote substantially more resources to the
distribution, sale and marketing of our products and services.
Sales through distribution partners are typically at lower margins for us
than those through direct sales. Therefore, if we are successful in increasing
the amount of sales through our distribution partners our operating margins
could decrease.
Our relationships with Hyperion Solutions Corporation and IBM are important to
our revenue, which would be harmed by a deterioration in these relationships
Maintaining our strategic relationships with Hyperion Solutions
Corporation and IBM is important to our continued success, and a deterioration
or termination of these relationships could seriously harm our business and
operating results. We have a contractual relationship with Hyperion Solutions
that grants us the exclusive right to distribute its analytical online
processing product, Essbase, as ported by us to the AS/400, subject to limited
distribution rights retained by Hyperion Solutions. License fees for this
product, Essbase/400, were 39.5% of our total license fees for fiscal 1998 and
41.0% for fiscal 1999. Hyperion Solutions has retained the right, upon twelve
months notice, to terminate the exclusivity of our distribution rights.
Further, we must pay Hyperion Solutions minimum royalty payments, which
increase over the term of our license agreement, to maintain our distribution
rights to Essbase/400. The loss of our right to distribute Essbase/400 would
seriously harm our business and operating results. Finally, our Analyzer and
Analyzer for the Web products are based on technology licensed from Hyperion
Solutions under a non-exclusive 1996 license agreement that expires in January
2001. In order to continue to offer products with the capabilities provided by
our Analyzer and Analyzer for the Web products after January 2001, we would
need to develop the necessary technology internally, extend or replace our
license agreement with Hyperion Solutions or license technology from a third
party. If we are unable to do so, the capabilities of our product suite would
be significantly reduced, which would seriously harm our business and operating
results. For more information regarding our relationship with Hyperion
Solutions, see "Business--Strategic Relationships--Hyperion Solutions."
In December 1998, we entered into a new agreement with IBM, which has
been a reseller of some of our products for several years. Under this new
agreement, our products are marketed and sold as IBM products by IBM's software
data management group sales force. This agreement has an initial term of seven
years, and expands the scope of our reseller relationship with IBM. Also, we
have engaged in joint marketing campaigns and research and development projects
with IBM since our inception. Under the December 1998 license agreement with
IBM, the Company has agreed to perform several development enhancements to its
Essbase/400 software. Previously, the Company had not been a party to any
funded software development arrangements. In addition, because various matters
with regard to certain enhancements have not been finalized by IBM, the Company
has not begun any work on this project as of the date of this prospectus and
has therefore not incurred any related costs. We believe our relationship with
IBM has been a significant factor in our success to date, and any deterioration
or termination of this relationship would seriously harm our business and
operating results. For more information regarding our relationship with IBM,
see "Business--Strategic Relationships--IBM."
We need to increase the size of our direct sales force, which has a limited
operating history, to grow our sales
We intend to increase sales of our products by growing our direct sales
force. Because it has only existed since September 1996, our direct field sales
force has had a limited operating history and may be
7
<PAGE>
unsuccessful in implementing our strategy of focusing sales efforts on
potential clients that will deploy our product suite on a large scale.
Typically, our salespeople have taken approximately six months from their
hiring date to become productive selling our products. Furthermore, we believe
that there is significant competition for direct sales personnel with the
advanced sales skills and technical knowledge we need. Our inability to hire
competent sales personnel, or our failure to retain them, would seriously harm
our business and operating results.
Our markets are highly competitive which may lead to lower prices, reduced
gross margins and loss of market share
The markets for our products are intensely competitive and subject to
rapidly changing technology. We compete primarily against providers of decision
support software and data warehousing and data mart software. Data warehousing
is the organization and storage of data into specified formats that enable easy
searches and analyses. Data marts are simpler implementations of data
warehouses. Our competitors providing business intelligence solutions for
AS/400 customers include Silvon and Infomanager. We also compete with vendors
that provide business intelligence products implemented on Unix or Windows NT
platforms and then connected to the AS/400. These vendors include Brio
Technology, Business Objects, Cognos, Hyperion Solutions, Information
Advantage, Microsoft, MicroStrategy, Oracle, PLATINUM Technology, which has
entered into an agreement to be acquired by Computer Associates, Sagent
Technology and SAS Institute. In addition, enterprise resource planning
software vendors including Baan Company, PeopleSoft and SAP are beginning to
offer decision support and analytical modules primarily to support the analysis
of data from their own operational systems. One or more of these companies may
expand their technologies to support greater business intelligence
functionality. Finally, in the future, IBM may expand the functionality of the
operating system for the AS/400, or of its database products, to provide some
of the functions provided by our products.
Many of our competitors have longer operating histories, significantly
greater financial, technical, marketing or other resources and greater name
recognition than we do. In addition, they may be able to respond more quickly
to new or emerging technologies and changes in customer requirements. Increased
competition may harm our ability to sell additional software and maintenance
and support renewals on terms favorable to us and lead to price cuts, reduced
gross margins and loss of market share, which may seriously harm our business
and operating results.
Our competitors may make strategic acquisitions or establish cooperative
relationships among themselves or other parties that may increase their
abilities to meet the needs of our current and potential clients. The business
intelligence software industry has recently experienced consolidation and many
industry analysts expect this trend to continue. This consolidation may provide
our competitors with expanded sales, distribution and marketing capabilities
and broader product offerings. In addition, our current or future distribution
partners may establish cooperative relationships with our competitors, which
may limit our ability to sell our products through various distribution
channels.
Our lengthy sales cycles can result in uncertainty and delays with regard to
our product licenses and expected revenues
Our clients often take an extended period of time evaluating our products
before licensing them. The period of time between initial client contact and a
purchase order may span from one month to over twelve months. During this
period, clients may decide not to purchase or may scale down their orders for
our products for various reasons, including:
. reductions in demand for business intelligence solutions;
. new products introduced or announced by competitors;
. price competition;
8
<PAGE>
. decisions to use hardware platforms other than the AS/400 for
their business intelligence solutions;
. changes in our clients' budgets and purchasing priorities; and
. diversion of clients' resources and management's attention to
other information technology issues, including Year 2000
compliance issues.
In addition, we often must provide a significant level of education to
our prospective clients regarding the use and benefit of our products, which
may cause additional delays during the evaluation and acceptance process. These
and other factors make it difficult for us to forecast the timing and
recognition of revenues from sales of our products and services. In recent
periods, we have experienced an increase in the average size of our licenses,
and we expect this trend to continue. This focus on larger licenses will
lengthen our average sales cycle.
We need to expand our management systems and controls to support our
anticipated growth
Our operations are growing rapidly and we expect this expansion to
continue as we execute our business strategy. Our total number of employees
grew from 125 on March 31, 1996 to 240 on March 31, 1999, and we anticipate
further increases in the number of employees. Sustaining our growth has placed
significant demands on management and our administrative, operational,
personnel and financial resources.
We may not be able to successfully manage our growth which could lead to
customer dissatisfaction. Therefore, the inability to sustain or manage our
growth could seriously harm our business and operating results.
Difficulties presented by international economic, political, legal and business
factors could negatively affect our business in international markets
Sales to clients outside North America represented 34.4% of our total
revenues for each of fiscal 1997 and 1998 and 38.2% of our total revenues for
fiscal 1999. We currently have wholly-owned subsidiaries in Belgium, Germany,
France and the United Kingdom. We plan to expand our existing international
operations and enter into additional international markets, which will require
significant management attention and financial resources. In order to expand
our international operations successfully, we will have to hire additional
personnel and recruit additional international resellers and distributors. Our
failure to do so in a timely manner may limit the growth of our international
operations. We may not be able to maintain or increase international market
demand for our products. In addition, our products must be localized--
customized to meet user needs--in order to be sold in particular foreign
countries. Our localized products may not be accepted in the targeted
countries.
Our international operations are subject to other inherent risks,
including:
. the impact of recessions in economies outside the United States;
. greater difficulty in collecting accounts receivable and longer
collection periods;
. unexpected changes in regulatory requirements, tariffs or other
trade barriers;
. difficulties in and costs of staffing and managing foreign
operations;
. weaker intellectual property right protection in some countries;
. potentially adverse tax consequences;
. political and economic instability;
. costs of localizing products for foreign countries;
9
<PAGE>
. the effect of foreign currency exchange rate fluctuations; and
. the burden of complying with a wide variety of foreign laws.
Any of these risks could seriously harm our future international sales
and therefore our business.
Our international revenues and expenses are subject to fluctuations in foreign
currency exchange rates which may result in reduced operating margins
Our international revenues and expenses are denominated in foreign
currencies. The functional currency of each of our foreign subsidiaries is its
local currency. We currently do not engage in foreign exchange hedging
activities. Therefore, our international revenues and expenses are subject to
foreign currency fluctuations. Our foreign currency translation gains and
losses have so far been immaterial. However, future fluctuations in exchange
rates between the U.S. dollar and foreign currencies may seriously harm our
business, particularly our operating margins.
We are currently unable to predict the possible consequences of euro
conversion on our business and operating results
On January 1, 1999, eleven of the fifteen member countries of the
European Union set fixed conversion rates between their existing sovereign
currencies and the euro, the only currency that will be used in European Union
countries starting July 1, 2002, and adopted the euro as their legal currency.
Currently, we are assessing the impact of these events on our company. In
addition to tax and accounting issues, we are considering:
. the technical challenges of adapting our systems to accommodate
euro-denominated transactions;
. the impact on currency exchange costs and currency exchange rate
risk; and
. the impact on existing contracts.
At this early stage, we cannot yet predict the consequences of euro
conversion on our business and operating results.
Our executive officers and key personnel are critical to our business and
these officers and key personnel may not remain with us in the future
Our future success depends on our ability to hire, train, assimilate and
retain highly qualified employees. Competition for these individuals is
intense, and we may not be able to attract, assimilate or retain additional
highly qualified personnel in the future. Because our executive offices are
located in Rochester, Minnesota, with a population of approximately 80,000, we
must frequently recruit qualified employees from outside the vicinity of our
headquarters, which may put us at a competitive disadvantage.
Our success is highly dependent upon the continued service and skills of
key management, technical, sales and marketing personnel, none of whom, except
Patrick Dauga and Kenneth H. Holec, are bound by formal employment agreements.
If we lose the services of any of these key personnel, it may have a negative
impact on our business. Mr. Holec's employment agreement is a year-to-year
agreement which either party may elect not to renew by giving the other party
notice at least 30 days before the termination of any one-year term. Mr. Dauga
may terminate his employment agreement at any time by giving us notice at
least three months before this termination. We do not maintain life insurance
policies covering any of our employees.
We may face increased competition if we are unable to protect our intellectual
property rights, and we may be subject to intellectual property infringement
claims
Our success and ability to compete depend substantially upon our
internally developed technology. We attempt to protect our software,
documentation and other written materials primarily through a combination of
10
<PAGE>
trade secret, trademark and copyright laws, confidentiality procedures and
contractual provisions, which afford only limited protection. We have one
patent issued and one patent application pending in the United States with
respect to aspects of our software. The pending patent application may not be
issued, or, if issued, it and our previously issued patent may not survive a
legal challenge to their validity or provide us significant protection.
Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy aspects of our products or otherwise obtain and use
our products and technology. Policing unauthorized use of our products is
difficult, particularly in foreign countries where the laws may not protect our
proprietary rights as fully as in the United States. Our means of protecting
our intellectual property rights may not be adequate or our competitors may
independently develop similar technology.
We anticipate that software product developers will increasingly be
subject to infringement claims as the number of products and competitors in our
industry segment grows and the functionality of products in different industry
segments overlaps. As a result, we may become involved in these claims from
time to time. Any of these claims, with or without merit, could result in
costly litigation, divert our management's time, attention and resources, delay
our product shipments, or require us to enter into royalty or licensing
agreements. A third party may not be willing to enter into a royalty or
licensing agreement on acceptable terms or at all. If a claim of product
infringement against us is successful and we fail to obtain a license or to
develop or license non-infringing technology, our business and operating
results could be seriously harmed.
If we discover software defects, we may have product-related liabilities and
marketing difficulties that may lead to a loss of revenue or delay in market
acceptance for our products
Our software products are complex and may contain errors, defects or
failures, especially when first introduced or when new versions are released.
In the past, we have discovered software errors in some of our products after
their introduction. Despite extensive testing, we may not be able to detect and
correct errors in products or releases before commencing commercial shipments,
which may result in harm to our reputation and loss of revenue or delay in
market acceptance.
Our license agreements with clients typically contain provisions designed
to limit our exposure to potential product liability claims. Various domestic
and international jurisdictions may not enforce these limitations. Although we
have not experienced any product liability claims to date, we may encounter
these claims in the future. Product liability claims, whether or not
successful, brought against us could have a material adverse effect on our
business. Defending a suit, with or without merit, could entail substantial
expense and require the time and attention of key management personnel.
Our products, systems and sales may be subject to Year 2000 problems
Many currently installed computer systems and software products store
dates using only the last two digits of the calendar year. As a result, these
systems may not be able to distinguish whether "00" means 1900 or 2000, which
may cause system failures or erroneous results. We believe our current products
are Year 2000 compliant. However, our products operate in complex network
environments and directly or indirectly interact with a number of other
hardware and software systems. Despite preliminary testing, we cannot predict
all the possible Year 2000 issues arising from the interaction of our products
with older hardware and software systems. Known or unknown errors associated
with this interaction could result in a delay or loss of revenue, interruption
of service, cancellation of client contracts, diversion of development
resources, damage to our reputation, increased service and warranty costs and
litigation. Any of these outcomes could seriously harm our business and
operating results. For a further discussion of this issue, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Year
2000."
We currently cannot predict the extent to which the Year 2000 problem
will affect our clients, strategic partners or suppliers, or the extent to
which we would be vulnerable to any failure by our clients, strategic partners
or suppliers to remediate any Year 2000 issue on a timely basis. The failure of
our major
11
<PAGE>
clients, partners or suppliers to convert their systems on a timely basis or to
implement a conversion that is compatible with our systems would seriously harm
our business. Furthermore, we may lose potential sales of our products as
companies divert information technology resources to solve their Year 2000
problems.
We are currently reviewing our information technology and other
technology systems to assess and remediate any Year 2000 problems. While the
amount of remediation work required to address Year 2000 problems is not
expected to be extensive, we will be required to modify some of our existing
hardware and software for our internal computer systems to function properly in
the year 2000 and thereafter.
Concentration of ownership of our company may give some shareholders
substantial influence and may prevent or delay a change in control
We anticipate that our executive officers and directors, together with
their affiliates, will, in the aggregate, own approximately 43.8% of our
outstanding common stock following the completion of this offering. These
shareholders may be able to exercise substantial influence over all matters
requiring shareholder approval, including the election of directors and
approval of significant corporate transactions. This concentration of ownership
may also have the effect of delaying or preventing a change in control of
ShowCase.
Our shareholders may be adversely affected by provisions of our charter
documents and Minnesota law that may discourage an acquisition of our company
Provisions of our articles of incorporation, bylaws and Minnesota law
could make it more difficult for a third party to acquire us, even if doing so
would be beneficial to our shareholders. For instance, our bylaws provide for a
classified board of directors with each class of directors subject to re-
election every three years. This will make it more difficult for third parties
to insert their representatives on our board of directors and gain control of
our company. These provisions could also discourage proxy contests and make it
more difficult for shareholders to elect directors and take other corporate
actions. See "Description of Capital Stock" for a discussion of these
provisions.
Management could spend or invest the proceeds of this offering in ways with
which the shareholders may not agree
Our management can spend or invest the proceeds from this offering in
ways with which the shareholders may not agree. The investment of these
proceeds may not yield a favorable return. See "Use of Proceeds."
The price of our common stock could be highly volatile due to a number of
variables
An active trading market for our common stock may not develop or be
sustained after completion of this offering. The initial public offering price
of our common stock may not be indicative of the prices that will prevail in
the public market after the offering, and the market price of our common stock
could fall below the initial public offering price. For a further discussion,
see "Underwriting."
The trading price of our common stock may fluctuate widely as a result of
a number of factors, including:
. quarterly variations in our operating results;
. technological innovations or new products;
. market perception and customer acceptance of business intelligence
software;
. increased competition;
12
<PAGE>
. disputes concerning intellectual property rights;
. demand for the IBM AS/400 platform;
. general conditions in the software industry; and
. changes in earnings estimates by analysts.
In addition, the stock market has experienced extreme price and volume
fluctuations, which have particularly affected the market prices of many
computer software companies and which have often been unrelated to the
operating performance of these companies.
Future sales of our common stock in the public market after the offering could
cause our stock price to decline
If our shareholders sell substantial amounts of our common stock in the
public market following this offering, the market price of our common stock
could decline. Upon completion of the offering, we will have 10,273,393 shares
of common stock outstanding, assuming no exercise of the underwriters' over-
allotment option and no exercise of outstanding options or warrants after June
1, 1999. Other than the shares sold in this offering, 22,440 shares will be
freely tradeable as of the date of this prospectus, an additional 39,920 shares
will be freely tradeable 90 days after the date of this prospectus and the
remaining shares will be subject to 180 day lockup agreements between our
existing shareholders and the underwriters. The remaining outstanding shares
will become freely tradeable at varying dates beginning 180 days after the date
of this prospectus. For more information, see "Shares Eligible for Future
Sale."
If the holders of our common stock that have registration rights require us to
register a large number of their shares for sale into the public market, the
market price of our common stock and our ability to raise needed capital could
be adversely affected
After the offering, the holders of 2,759,226 shares of our common stock,
which represent approximately 26.9% of our common stock outstanding after this
offering, can require that we register their shares for sale under the
Securities Act of 1933. If these holders require that we register a large
number of securities to be sold into the public market, these sales could cause
the market price for our common stock to decline. In addition, if we are
required to include shares held by these holders in a company-initiated
registration, these sales may have an adverse effect on our ability to raise
needed capital.
You will incur immediate and substantial dilution
If you purchase shares of our common stock, you will incur immediate and
substantial dilution in pro forma net tangible book value. If the holders of
outstanding options or warrants exercise those options or warrants, you will
experience further dilution. See "Dilution."
We do not intend to pay dividends
We have never declared or paid any cash dividends on our capital stock.
We currently intend to retain any future earnings for funding the development
and growth of our business and, therefore, do not expect to pay any dividends
in the foreseeable future. See "Dividend Policy."
13
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions about us, including:
. uncertainty of our future operating results;
. our ability to introduce new products;
. delays or losses of sales due to long sales and implementation
cycles for our products;
. the possibility of lower prices, reduced gross margins and loss of
market share due to increased competition; and
. increased demands on our resources due to anticipated growth.
In light of these risks, uncertainties and assumptions, the forward-
looking events discussed in this prospectus might not occur. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information or future events.
TRADEMARKS
Each trademark, trade name or service mark appearing in this prospectus
belongs to its respective holder. ShowCase(R) and ShowCase STRATEGY(R) are
registered trademarks of ShowCase Corporation.
14
<PAGE>
USE OF PROCEEDS
We estimate our net proceeds from the sale of the 3,000,000 shares of our
common stock offered in this offering to be approximately $27.3 million, or
approximately $31.5 million if the underwriters' over-allotment option is
exercised in full, based on an assumed initial public offering price of $10.00
per share and after deducting the estimated underwriting discount and offering
expenses.
The principal purposes of this offering are to:
. increase our working capital;
. create a public market for our stock; and
. facilitate future access by us to public equity markets.
We intend to use the net proceeds from this offering for general
corporate purposes, including expansion of our direct sales force, product
development and working capital. In addition, we may acquire businesses,
products and technologies that are complementary to ours, and a portion of the
net proceeds may be used for these acquisitions. We have no agreements with
respect to any material acquisitions as of the date of this prospectus.
Pending these uses, we intend to invest the net proceeds from this
offering in short-term, investment-grade, interest-bearing securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock
and do not anticipate paying any cash dividends in the foreseeable future. We
plan to retain any earnings to fund the development and growth of our business.
15
<PAGE>
CAPITALIZATION
The following table summarizes our capitalization as of March 31, 1999 as
follows:
. on an actual basis;
. on a pro forma basis to give effect to the conversion of all
outstanding shares of our preferred stock into common stock; and
. on a pro forma, as adjusted basis to reflect the application of
the net proceeds from our initial public offering and the
conversion of all outstanding shares of our preferred stock into
common stock.
<TABLE>
<CAPTION>
As of March 31, 1999
-----------------------------
Pro Forma
Actual Pro Forma As Adjusted
------ --------- -----------
(in thousands)
<S> <C> <C> <C> <C>
Long-term debt and capital lease obligations,
less current portion........................ $ 87 $ 87 $ 87
------ ------ -------
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000,000
shares authorized, 1,348,757 shares
outstanding, actual; no shares outstanding,
pro forma and pro forma as adjusted........ 14 -- --
Common stock, $0.01 par value, 10,000,000
shares authorized,
4,502,867 shares outstanding, actual;
50,000,000 shares authorized, 7,262,093
shares outstanding, pro forma; 50,000,000
shares authorized, 10,262,093 shares
outstanding, pro forma as adjusted (1)..... 45 73 103
Additional paid-in capital.................. 6,452 6,438 33,708
Accumulated deficit......................... (3,783) (3,783) (3,783)
Unrealized holding gain (loss) on
securities................................. (181) (181) (181)
Deferred compensation....................... (322) (322) (322)
Foreign currency translation adjustment..... 47 47 47
------ ------ -------
Total stockholders' equity................. 2,272 2,272 29,572
------ ------ -------
Total capitalization..................... $2,359 $2,359 $29,659
====== ====== =======
</TABLE>
- --------
(1) The number of shares outstanding is based on the actual number of shares
outstanding as of March 31, 1999. It excludes:
. options to purchase 1,545,807 shares outstanding as of March 31,
1999 at a weighted average exercise price of $2.32 per share; and
. 13,580 shares of common stock issuable upon exercise of an
outstanding warrant at an exercise price of $4.00 per share.
For more information regarding our equity benefit plans, see
"Management--Benefit Plans" and notes 9 and 13 of notes to consolidated
financial statements.
16
<PAGE>
DILUTION
If you invest in our common stock, your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma net tangible book value per share of our common
stock after this offering. Pro forma net tangible book value dilution per share
represents the difference between the amount per share paid by purchasers of
shares of common stock in this offering and the pro forma net tangible book
value per share of common stock immediately after completion of this offering.
Our pro forma net tangible book value as of March 31, 1999, after giving
effect to the conversion of our outstanding preferred stock into common stock
in connection with this offering, was approximately $2.2 million or $0.30 per
share of common stock. Pro forma net tangible book value per share is equal to
our total tangible assets less total liabilities, divided by the number of
outstanding shares of common stock after giving effect to the conversion of our
outstanding preferred stock into common stock in connection with this offering.
After giving effect to our sale of the 3,000,000 shares of common stock offered
by this prospectus at an assumed initial public offering price of $10.00 per
share and after deducting the estimated underwriting discount and offering
expenses, our as adjusted pro forma net tangible book value as of March 31,
1999 would have been approximately $29.5 million or $2.87 per share of common
stock. This represents an immediate increase in net tangible book value to
existing shareholders of $2.57 per share and an immediate dilution to new
investors of $7.13 per share. The following table illustrates the per share
dilution to new investors:
<TABLE>
<S> <C> <C> <C>
Assumed initial public offering price per share $10.00
Net tangible book value per share as of March 31, 1999 $ 0.48
Decrease in net tangible book value per share
attributable to conversion of preferred stock (0.18)
Pro forma net tangible book value per share as of March
31, 1999 $0.30
Increase per share attributable to this offering 2.57
Pro forma net tangible book value per share after the
offering 2.87
------
Dilution per share to new investors in this offering $ 7.13
======
</TABLE>
The following table sets forth, on a pro forma basis as of March 31,
1999, after giving effect to the conversion of all outstanding shares of our
preferred stock into shares of our common stock in connection with this
offering, the difference between 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 shareholders and new investors:
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------ ------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 7,262,093 70.8% $ 6,155,248 17.0% $ 0.85
New public investors 3,000,000 29.2 30,000,000 83.0 $10.00
---------- ----- ----------- -----
Total 10,262,093 100.0% $36,155,248 100.0%
========== ===== =========== =====
</TABLE>
If the underwriters' over-allotment option is exercised in full, the
number of shares held by new investors will increase to 3,450,000, or 32.2%, of
the total shares of common stock outstanding after this offering.
The foregoing discussion and tables assume no exercise of any stock
options outstanding as of March 31, 1999. They exclude:
. options to purchase 1,545,807 shares outstanding as of March 31,
1999 at a weighted average exercise price of $2.32 per share; and
. 13,580 shares of common stock issuable upon exercise of an
outstanding warrant at an exercise price of $4.00 per share.
To the extent that any of these shares are issued, there will be further
dilution to new investors. For more information regarding our equity benefit
plans, see "Management--Benefit Plans" and notes 9 and 13 of notes to
consolidated financial statements.
17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated statement of operations data shown below for
the years ended March 31, 1997, 1998 and 1999 and the consolidated balance
sheet data as of March 31, 1998 and 1999 are derived from our audited
consolidated financial statements included elsewhere in this prospectus. The
selected consolidated statement of operations data shown below for the years
ended March 31, 1995 and 1996 and the consolidated balance sheet data as of
March 31, 1995, 1996 and 1997 are derived from audited financial statements not
included elsewhere in this prospectus. Please read the consolidated financial
statements and related notes included elsewhere in this prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Historical results are not necessarily indicative of future
results.
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------------------------
1995 1996 1997 1998 1999
------ ------ ------- ------- -------
Consolidated Statement of
Operations Data: (in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License fees................... $8,131 $9,451 $11,639 $14,279 $21,021
Maintenance and support........ 1,469 2,707 4,888 6,651 10,390
Professional service fees...... 418 1,120 1,500 2,825 4,108
------ ------ ------- ------- -------
Total revenues................ 10,018 13,278 18,027 23,755 35,519
------ ------ ------- ------- -------
Cost of revenues:
License fees................... 1,145 1,145 1,365 2,645 3,809
Maintenance and support........ 511 520 990 1,572 2,646
Professional service fees...... 602 676 1,172 2,005 2,990
------ ------ ------- ------- -------
Total cost of revenues........ 2,258 2,341 3,527 6,222 9,445
------ ------ ------- ------- -------
Gross margin.................... 7,760 10,937 14,500 17,533 26,074
Operating expenses:
Sales and marketing............ 4,152 6,661 9,940 15,494 19,050
Product development............ 1,821 2,070 2,553 3,051 4,371
General and administrative..... 1,229 1,380 1,971 2,590 3,212
------ ------ ------- ------- -------
Total operating expenses...... 7,202 10,111 14,464 21,135 26,633
------ ------ ------- ------- -------
Operating income (loss)......... 558 826 36 (3,602) (559)
Other income (expense), net..... 9 138 14 543 143
------ ------ ------- ------- -------
Net income (loss) before income
taxes.......................... 567 964 50 (3,059) (416)
Income taxes.................... 170 150 -- 175 200
------ ------ ------- ------- -------
Net income (loss)............... $ 397 $ 814 $ 50 $(3,234) $ (616)
====== ====== ======= ======= =======
Net income (loss) per share
Basic.......................... $ 0.10 $ 0.21 $ 0.01 $ (0.82) $ (0.14)
Diluted........................ $ 0.06 $ 0.13 $ 0.01 $ (0.82) $ (0.14)
Shares used in computing basic
net income (loss) per
share(1)....................... 3,908 3,850 3,847 3,928 4,384
Shares used in computing diluted
net income (loss) per share.... 6,339 6,457 6,445 3,928 4,384
<CAPTION>
As of March 31,
--------------------------------------
1995 1996 1997 1998 1999
------ ------ ------- ------- -------
Consolidated Balance Sheet Data: (in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and marketable securities.. $1,326 $2,587 $ 2,989 $ 5,847 $ 9,039
Working capital................. 1,106 1,165 1,060 1,579 151
Total assets.................... 5,344 6,666 11,400 16,315 19,926
Long-term debt and capital lease
obligations, less current
portion........................ 570 446 682 1,157 87
Total stockholders' equity...... 1,725 2,519 2,602 3,105 2,272
</TABLE>
- --------
(1) For an explanation of the determination of the number of shares used in
computing net income per share, see note 10 of notes to consolidated
financial statements.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ substantially from
those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Risk Factors" and elsewhere in this
prospectus. The following discussion should be read together with our
consolidated financial statements and related notes thereto included elsewhere
in this prospectus.
Overview
We are the leading provider of fully integrated, end-to-end, business
intelligence solutions for IBM AS/400 customers. Our ShowCase STRATEGY product
suite and related services are designed to enable organizations to rapidly
implement business intelligence solutions that create increased value from
their operational and customer data. The sophisticated data warehousing and
management capabilities of our product suite provide our clients with highly
scalable and tightly integrated solutions. Our products enable enterprise-wide
distribution of information and allow end-user access and analysis through
familiar applications and Internet browsers. We have eight years of experience
delivering business intelligence solutions to our clients. Our ShowCase
STRATEGY product suite, introduced in 1996, supports ad hoc information access,
enterprise reporting and analytics.
We were incorporated in 1988, and in 1991, we introduced the first
Windows-based query tool for the IBM AS/400, ShowCase VISTA. During the next
four years, we continued to broaden our family of data access products, expand
our comprehensive service and support programs, grow our telesales and indirect
sales channels and invest in marketing and administrative functions. In 1996,
we introduced ShowCase STRATEGY, our fully integrated, end-to-end business
intelligence solution for the AS/400. To support our introduction of ShowCase
STRATEGY, we created a direct field sales force and increased our global
distribution presence, which resulted in a significant increase in our
operating expenses. Our headcount increased from 20 employees at April 1, 1991
to 240 employees at March 31, 1999. Our revenues increased from $18.0 million
in fiscal 1997 to $23.8 million in fiscal 1998 and to $35.5 million in fiscal
1999. Although our revenues have increased significantly during these periods,
this growth may not continue. We had a net income of $50,000 in fiscal 1997, a
net loss of $3.2 million in fiscal 1998 and a net loss of $616,000 in fiscal
1999 as a result of increased cost of sales and operating expenses. We intend
to continue to invest significant resources in the development of our product
suite, sales and marketing and general and administrative functions. See "Risk
Factors--We have a history of losses and we may not be able to achieve
profitability."
Our revenues come from three principal sources: license fees, maintenance
and support and professional service fees. We adopted the provisions of
Statement of Position ("SOP") No. 97-2, Software Revenue Recognition, as
amended by SOP No. 98-4, Deferral of the Effective Date of Certain Provisions
of SOP No. 97-2, effective April 1, 1998. Under SOP No. 97-2, we recognize
license revenue when the software product has been delivered, if a signed
contract exists, the fee is fixed and determinable, collection of resulting
receivables is probable and product returns are reasonably estimable. License
fee revenues that are contingent upon sale to an end user by distributors and
other distribution partners are recognized upon receipt of a report of delivery
to the end user. Maintenance and support fees committed as part of new product
license sales and maintenance resulting from renewed maintenance contracts are
deferred and recognized ratably over the contract period. Professional service
revenue is recognized when services are performed. The adoption of SOP No. 97-2
did not have a material effect on our operating results.
We sell our products through our direct sales force and through indirect
distribution channels. Direct sales are made by our telesales organization and
direct field sales force in North America and by our wholly-owned subsidiaries
in Germany, France, the United Kingdom and Belgium, including its branch office
in the Netherlands. Our distribution partners include IBM, software application
vendors, resellers and distributors
19
<PAGE>
located in the United States, Italy, Switzerland, Mexico, Japan, Australia,
Singapore, Hong Kong, Thailand and South Korea. Sales through our indirect
distribution channels accounted for approximately 40% of license fee revenues
for fiscal 1997, 20% for fiscal 1998 and 21% for fiscal 1999. If sales through
our indirect distribution channels increase, our profit margins could decrease.
In particular, expansion of sales through IBM under our recent agreement with
IBM could result in decreased profit margins.
Revenues from clients outside North America represented 34.4% of our
total revenue for each of fiscal 1997 and 1998 and 38.2% of our total revenue
for fiscal 1999. A majority of these sales was derived from European sales. We
intend to continue to expand our international operations and have committed,
and will continue to commit, significant management time and financial
resources to developing our direct and indirect international sales channels.
Results of Operations
The following table indicates the percentage of total revenues
represented by items reflected in our consolidated statements of operations.
<TABLE>
<CAPTION>
Year Ended March
31,
--------------------
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
As a Percentage of Total Revenues:
Revenues:
License fees........................................... 64.6% 60.1% 59.2%
Maintenance and support................................ 27.1 28.0 29.3
Professional service fees.............................. 8.3 11.9 11.6
----- ----- -----
Total revenues....................................... 100.0 100.0 100.0
Cost of revenues:
License fees........................................... 7.6 11.1 10.7
Maintenance and support................................ 5.5 6.6 7.5
Professional service fees.............................. 6.5 8.4 8.4
----- ----- -----
Total cost of revenues............................... 19.6 26.2 26.6
----- ----- -----
Gross margin............................................. 80.4 73.8 73.4
Operating expenses:
Sales and marketing.................................... 55.1 65.2 53.6
Product development.................................... 14.2 12.8 12.3
General and administrative............................. 10.9 10.9 9.0
----- ----- -----
Total operating expenses............................. 80.2 89.0 75.0
----- ----- -----
Operating income (loss).................................. 0.2 (15.2) (1.6)
Other income (expense), net.............................. 0.1 2.3 0.4
----- ----- -----
Net income (loss) before income taxes.................... 0.3 (12.9) (1.2)
Income taxes............................................. -- 0.7 0.6
----- ----- -----
Net income (loss)........................................ 0.3% (13.6)% (1.7)%
===== ===== =====
</TABLE>
Revenues
Total revenues. Revenues increased from $18.0 million in fiscal 1997 to
$23.8 million in fiscal 1998 and to $35.5 million in fiscal 1999, representing
increases of 31.8% in fiscal 1998 and 49.5% in fiscal 1999.
License fees. License fee revenues increased from $11.6 million in fiscal
1997 to $14.3 million in fiscal 1998 and to $21.0 million in fiscal 1999,
representing increases of 22.7% in fiscal 1998 and 47.2% in fiscal 1999.
License fee revenues as a percentage of total revenues were 64.6% for fiscal
1997, 60.1% for fiscal
20
<PAGE>
1998 and 59.2% for fiscal 1999. These increases in total license fee revenues
are largely attributable to increases in the number of licenses sold,
reflecting the results of an expanded direct field sales force and the
introduction of new products and product enhancements, as well as increases in
average transaction size. The average transaction size in North America for new
product licenses for additional components of our product suite to existing
clients increased from $11,000 in fiscal 1997 to $18,000 in fiscal 1998 to
$28,000 in fiscal 1999. Beginning in fiscal 1997, revenues from Essbase/400
licenses became a significant percentage of total license fee revenues. We also
introduced Warehouse Builder to the market in fiscal 1998 and Analyzer for the
Web and Deployment Accelerators in fiscal 1999.
Maintenance and support. Maintenance and support revenues increased from
$4.9 million in fiscal 1997 to $6.7 million in fiscal 1998 and to $10.4 million
in fiscal 1999, representing increases of 36.1% in fiscal 1998 and 56.2% in
fiscal 1999. Maintenance and support revenues as a percentage of total revenues
were 27.1% for fiscal 1997, 28.0% for fiscal 1998 and 29.3% for fiscal 1999.
These increases in maintenance and support revenues were largely a result of
the renewal of maintenance and support contracts as our installed base
continued to grow, as well as new maintenance and support contracts associated
with new product licenses.
Professional service fees. Professional service fee revenues increased
from $1.5 million in fiscal 1997 to $2.8 million in fiscal 1998 and to $4.1
million in fiscal 1999, representing increases of 88.3% in fiscal 1998 and
45.4% in fiscal 1999. Professional service fee revenues as a percentage of
total revenues were 8.3% for fiscal 1997, 11.9% for fiscal 1998 and 11.6% for
fiscal 1999. These increases in professional service fee revenues were largely
a result of the service revenues associated with the sale of new product
licenses.
Costs of Revenues
Cost of license fees. Cost of license fees consists primarily of the
costs of product manuals, media, packaging, shipping and royalties paid to
third parties. Cost of license fees increased from to $1.4 million in fiscal
1997 to $2.6 million in fiscal 1998 and to $3.8 million in fiscal 1999,
representing 11.7% of license fee revenues in fiscal 1997, 18.5% in fiscal 1998
and 18.1% in fiscal 1999. The increase in cost of license fees was primarily
attributable to the increase in the percentage of our revenues from our
Essbase/400 product, which requires us to pay royalties. Revenues from
Essbase/400 represented 21.5% of our total license fee revenues in fiscal 1997,
39.5% in fiscal 1998 and 41.0% in fiscal 1999. In fiscal 1999, the cost of
license fees due to Essbase/400 was $3.1 million. To maintain our exclusive
Essbase/400 distribution rights, we must make minimum yearly royalty payments,
which increase over the term of our agreement with Hyperion Solutions to $5.6
million in fiscal 2003. We anticipate that cost of license fees will increase
in dollar amount in future periods as license fee revenues increase. Cost of
license fees as a percentage of license fee revenues may increase if we license
additional technologies or products or if sales of Essbase/400 or other
products which carry a royalty obligation increase as a percentage of license
fee revenues.
Cost of maintenance and support. Cost of maintenance and support consists
primarily of personnel costs associated with providing maintenance and support
services and payments to third parties to provide maintenance and support,
primarily with respect to our Essbase/400 product. Cost of maintenance and
support increased from $1.0 million in fiscal 1997 to $1.6 million in fiscal
1998 and to $2.6 million in fiscal 1999, representing 20.3% of total
maintenance and support revenues in fiscal 1997, 23.6% in fiscal 1998 and 25.5%
in fiscal 1999. The increase in cost of maintenance and support from fiscal
1997 to 1998 was primarily due to costs of $522,000 incurred in connection with
the opening of our regional maintenance support center in Brussels, Belgium.
The increase from fiscal 1998 to 1999 was primarily attributable to increasing
our maintenance and support staff from 25 to 35 people, the increase in the
payment of maintenance and support fees with respect to Essbase/400 from
$19,000 in fiscal 1998 to $235,000 in fiscal 1999 and costs of $252,000
incurred in implementing a new client management system. We anticipate that
cost of maintenance and support will increase in dollar amount in future
periods as maintenance and support revenues increase.
Cost of professional service fees. Cost of professional service fees
consists primarily of the costs of providing training and consulting services.
Cost of professional service fees increased from $1.2 million in
21
<PAGE>
fiscal 1997 to $2.0 million in fiscal 1998 and to $3.0 million in fiscal 1999,
representing 78.1% of professional service fee revenues in fiscal 1997, 71.0%
in fiscal 1998 and 72.8% in fiscal 1999. The dollar increase in cost of
professional service fees from fiscal 1997 to 1998 was primarily attributable
to a $285,000 increase in the costs of using third party service providers to
deliver professional services. The increase from fiscal 1998 to 1999 was
primarily due to the expansion of our professional services staff from 14 to 21
people. Cost of professional service fees as a percentage of professional
service fee revenues decreased from 1997 to 1998 as a result of increased
efficiency from increases in scale and utilization of our staff. We anticipate
that cost of professional service fees will increase in dollar amount in future
periods as professional service fee revenues increase.
Operating Expenses
Sales and marketing. Sales and marketing expenses consist primarily of
salaries, benefits, bonuses, commissions and travel and promotional expenses.
Sales and marketing expenses have increased from $9.9 million in fiscal 1997 to
$15.5 million in fiscal 1998 and to $19.0 million in fiscal 1999, representing
55.1% of total revenues in fiscal 1997, 65.2% in fiscal 1998 and 53.6% in
fiscal 1999. This increase in dollar amount primarily reflected the
establishment of a direct field sales force and the hiring of additional sales
and marketing personnel and, to a lesser extent, reflects the expansion of
promotional activities. Our sales and marketing staff grew from 78 people in
fiscal 1997 to 91 in fiscal 1998 and to 107 in fiscal 1999. We anticipate that
sales and marketing expenses will increase in dollar amount in future periods.
Product development. Product development expenses consist primarily of
development personnel compensation and related costs associated with the
development of new products, the enhancement of existing products, quality
assurance and testing. Product development expenses increased from $2.6 million
in fiscal 1997 to $3.1 million in fiscal 1998 and to $4.4 million in fiscal
1999, representing 14.2% of total revenues in fiscal 1997, 12.8% in fiscal 1998
and 12.3% in fiscal 1999. This increase in dollar amount was due to expenses
associated with the development of new products and the hiring of additional
personnel. Our product development staff grew from 33 people in fiscal 1997 to
41 in fiscal 1998 and to 49 in fiscal 1999. Product development expenses
decreased as a percentage of total revenues in fiscal 1998 and fiscal 1999
primarily due to faster revenue growth. We anticipate that we will continue to
devote significant resources to our product development efforts and that
product development expenses will increase in dollar amount in future periods.
To date, all product development costs have been expensed as incurred.
General and administrative. General and administrative expenses consist
primarily of salaries of executive, financial, human resource and information
services personnel as well as outside professional fees. General and
administrative expenses increased from $2.0 million in fiscal 1997 to $2.6
million in fiscal 1998 and to $3.2 million in fiscal 1999, representing 10.9%
of total revenues in each of fiscal 1997 and 1998 and 9.0% in fiscal 1999.
These increases in dollar amounts were primarily due to increased staffing and
related expenses necessary to manage and support the expansion of our
operations. Our general and administrative staff grew from 17 people in fiscal
1997 to 23 in fiscal 1998 and to 28 in fiscal 1999. General and administrative
expenses decreased as a percentage of total revenues primarily due to faster
revenue growth. We anticipate that our general and administrative expenses will
increase in dollar amount in the future as a result of increased personnel and
infrastructure costs necessary to support the expansion of our operations as
well as the additional expenses associated with being a public company.
Other Income
Other income consists primarily of earnings from investments and sales of
securities, equity in net income of unconsolidated affiliates and gains or
losses from disposal of fixed assets, net of any interest expense. Other income
increased from $14,000 in fiscal 1997 to $543,000 in fiscal 1998 and decreased
to $143,000 in fiscal 1999. The increase in other income in fiscal 1998 and the
decrease in fiscal 1999 was primarily due to the gain on the sale of a security
of a third party in fiscal 1998.
22
<PAGE>
Provision (Benefit) for Income Taxes
Income taxes increased from no income taxes in fiscal 1997 to $175,000 in
fiscal 1998 and to $200,000 in fiscal 1999, primarily due to foreign income
taxes paid which could not be realized as tax credits in the United States due
to our consolidated losses from operations.
We have recorded deferred tax assets for temporary differences of $1.8
million as of March 31, 1998 and $2.7 million as of March 31, 1999, primarily
related to deferred revenue on which taxes have been paid. See note 8 to the
consolidated financial statements. We periodically evaluate the need for a
valuation allowance against these deferred tax assets. Due to uncertainty
regarding future taxable income in 1997, and our operating losses in each of
fiscal 1998 and 1999, we have determined that it is more likely than not that
only a portion of the deferred tax assets will be realized and accordingly,
there is a corresponding valuation allowance of $1.5 million as of March 31,
1998 and $2.2 million as of March 31, 1999. The amount recognized approximates
the amount of cash refundable that could be generated if we were to continue
our operating loss position.
23
<PAGE>
Selected Quarterly Operating Results
The following table shows unaudited consolidated financial information
for each of the four quarters in our fiscal years ended March 31, 1998 and
1999. In management's opinion, this unaudited quarterly information has been
prepared on the same basis as the audited consolidated financial statements and
related notes and includes all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the information for the
quarters presented in accordance with generally accepted accounting principles.
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------------------
June 30, Sept 30, Dec 31, Mar 31, June 30, Sept 30, Dec 31, Mar 31,
1997 1997 1997 1998 1998 1998 1998 1999
-------- -------- ------- ------- -------- -------- ------- -------
Consolidated Statements of
Operations Data: (in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License fees............ $2,346 $3,301 $4,429 $4,203 $4,224 $5,019 $5,834 $ 5,944
Maintenance and
support................. 1,398 1,692 1,675 1,886 2,161 2,365 2,776 3,088
Professional service
fees.................... 621 575 712 917 913 1,037 933 1,225
------- ------ ------ ------ ------ ------ ------ -------
Total revenues........ 4,365 5,568 6,816 7,006 7,298 8,421 9,543 10,257
Cost of revenues:
License fees............ 389 475 844 937 817 1,000 1,077 915
Maintenance and
support................. 367 373 382 450 565 605 658 818
Professional service
fees.................... 437 411 494 663 613 577 805 995
------- ------ ------ ------ ------ ------ ------ -------
Total cost of
revenues............. 1,193 1,259 1,720 2,050 1,995 2,182 2,540 2,728
------- ------ ------ ------ ------ ------ ------ -------
Gross margin.............. 3,172 4,309 5,096 4,956 5,303 6,239 7,003 7,529
Operating expenses:
Sales and marketing..... 3,418 3,412 4,322 4,342 4,387 4,378 4,958 5,327
Product development..... 686 742 776 847 979 1,219 1,038 1,135
General and
administrative.......... 559 614 668 749 736 748 855 873
------- ------ ------ ------ ------ ------ ------ -------
Total operating
expenses............. 4,663 4,768 5,766 5,938 6,102 6,345 6,851 7,335
------- ------ ------ ------ ------ ------ ------ -------
Operating income (loss)... (1,491) (459) (670) (982) (799) (106) 152 194
Other income (expense),
net...................... (3) 2 508 36 6 25 23 89
------- ------ ------ ------ ------ ------ ------ -------
Net income (loss) before
income taxes............. (1,494) (457) (162) (946) (793) (81) 175 283
Income taxes.............. 50 25 50 50 40 45 50 65
------- ------ ------ ------ ------ ------ ------ -------
Net income (loss)......... $(1,544) $ (482) $ (212) $ (996) $ (833) $ (126) $ 125 $ 218
======= ====== ====== ====== ====== ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------------------------------------
June 30, Sept 30, Dec 31, Mar 31, June 30, Sept 30, Dec 31, Mar 31,
1997 1997 1997 1998 1998 1998 1998 1999
Percent of Total Revenues: -------- -------- ------- ------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License fees............ 53.7% 59.3% 65.0% 60.0% 57.9% 59.6% 61.1% 58.0%
Maintenance and
support................. 32.0 30.4 24.6 26.9 29.6 28.1 29.1 30.1
Professional service
fees.................... 14.2 10.3 10.4 13.1 12.5 12.3 9.8 11.9
----- ----- ----- ----- ----- ----- ----- -----
Total revenues........ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenues:
License fees............ 8.9 8.5 12.4 13.4 11.2 11.9 11.3 8.9
Maintenance and
support................. 8.4 6.7 5.6 6.4 7.7 7.2 6.9 8.0
Professional service
fees.................... 10.0 7.4 7.2 9.5 8.4 6.9 8.4 9.7
----- ----- ----- ----- ----- ----- ----- -----
Total cost of
revenues............. 27.3 22.6 25.2 29.3 27.3 25.9 26.6 26.6
----- ----- ----- ----- ----- ----- ----- -----
Gross margin.............. 72.7 77.4 74.8 70.7 72.7 74.1 73.4 73.4
Operating expenses:
Sales and marketing..... 78.3 61.3 63.4 62.0 60.1 52.0 52.0 51.9
Product development..... 15.7 13.3 11.4 12.1 13.4 14.5 10.9 11.1
General and
administrative.......... 12.8 11.0 9.8 10.7 10.1 8.9 9.0 8.5
----- ----- ----- ----- ----- ----- ----- -----
Total operating
expenses............. 106.8 85.6 84.6 84.8 83.6 75.3 71.8 71.5
----- ----- ----- ----- ----- ----- ----- -----
Operating income (loss)... (34.2) (8.2) (9.8) (14.0) (10.9) (1.3) 1.6 1.9
Other income (expense),
net...................... (0.1) -- 7.5 0.5 0.1 0.3 0.2 0.9
----- ----- ----- ----- ----- ----- ----- -----
Net income (loss) before
income taxes............. (34.2) (8.2) (2.4) (13.5) (10.9) (1.0) 1.8 2.8
Income taxes.............. 1.1 0.4 0.7 0.7 0.5 0.5 0.5 0.6
----- ----- ----- ----- ----- ----- ----- -----
Net income (loss)......... (35.4)% (8.7)% (3.1)% (14.2)% (11.4)% (1.5)% 1.3% 2.1%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
24
<PAGE>
Our operating results have varied and may in the future vary
significantly from quarter to quarter. For example, our cost of license fees
declined in the fourth quarter of fiscal 1999 due to a decrease in the
percentage of our license fee revenues from products that require us to pay
royalties to third parties. These fluctuations may result in volatility in the
price of our common stock. We believe that quarter-to-quarter comparisons of
our financial results are not necessarily meaningful and should not be relied
upon as an indication of future performance.
In general, we base our operating expense budgets on anticipated revenue
trends, and we may not be able to reduce these expenses in the short-term.
Because our expenses are relatively fixed in the near term, any shortfall from
anticipated revenues or any delay in recognition of revenues could result in
significant variations in our quarterly operating results. In the future, our
operating results may fluctuate for this reason or as a result of a number of
other factors, including increased expenses, timing of product releases,
increased competition, variations in the mix of sales, announcements of new
products by our competitors and capital spending patterns of our clients.
Because we have experienced and may continue to experience seasonality, we may
not be able to maintain profitability on a quarterly basis. We have often
realized a greater percentage of our license revenue and operating income in
our third fiscal quarter than in other quarters due to customer purchasing
patterns. In addition, due to seasonal factors, our sales often tend to slow
during the summer months. We expect these trends to continue. See "Risk
Factors--Our quarterly operating results may fluctuate significantly and are
difficult to predict."
Liquidity and Capital Resources
Historically, we have funded operations primarily through cash provided
by operations, the sale of equity securities and bank borrowings. Our operating
activities provided cash of $1.2 million in fiscal 1997, used cash of $817,000
in fiscal 1998 and provided cash of $5.3 million in fiscal 1999. The decrease
in cash from operations for fiscal 1998 was due primarily to our net loss in
that year, offset in part by $2.7 million increase in deferred revenue and a
$1.4 million increase in accrued liabilities. The increase in cash from
operations for fiscal 1999 was due primarily to improved results of operations
and increased deferred revenue, offset in part by an increase in accounts
receivable. In each period, the increase in deferred revenue consisted
primarily of prepayment of clients' maintenance fees.
Our investing activities used cash of $1.1 million in fiscal 1997,
$566,000 in fiscal 1998 and $487,000 in fiscal 1999. In all of these periods,
the principal use of cash in investing activities was for capital expenditures
related to the expansion of our operations.
Our financing activities provided cash of $290,000 in fiscal 1997 and
$3.8 million in fiscal 1998, and used cash of $1.4 million in fiscal 1999. For
fiscal 1997, financing activities provided cash primarily from issuance of
long-term debt, offset in part by long-term debt repayment and payments under
capital lease obligations. For fiscal 1998, financing activities provided cash
primarily from proceeds received from the issuance of preferred stock, offset
in part by long-term debt repayment and payments under capital lease
obligations. For fiscal 1999, cash used by financing activities consisted
primarily of long-term debt repayment and payments under capital lease
obligations.
Our sources of liquidity as of March 31, 1999 consisted principally of
cash and marketable securities of $9.0 million. We believe that cash generated
from operations, existing cash and marketable securities, and cash generated
from this offering will be sufficient to fund operations for at least the next
twelve months. Thereafter, we may need to raise additional funds through public
or private financing. Additional funds may not be available or, if available,
we may not be able to obtain them on terms favorable to us and our
shareholders.
Quantitative and Qualitative Disclosure About Market Risks
We are exposed to market risk from changes in interest rates on
borrowings under our revolving line of credit that bear interest from time to
time at a variable rate based on a prime rate. In addition, our Belgian
subsidiary maintains a small line of credit with a variable interest rate and
maximum available borrowings which we do not believe are material. As of June
1, 1999, we had no borrowings outstanding under either of
25
<PAGE>
these lines of credit. Because we have no borrowings outstanding under our
lines of credit, we believe that the effect, if any, of reasonably possible
near-term changes in interest rates on our financial position would not be
material.
We have no derivative financial instruments in our cash and cash
equivalents and investments. We invest our cash and cash equivalents in
investment grade, highly liquid investments, consisting of money market
instruments, bank certificates of deposit and overnight investments in
commercial paper. 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. See "Use of Proceeds."
We are exposed to market risk from fluctuations in foreign currency
exchange rates. We manage exposure to variability in foreign currency exchange
rates primarily through the use of natural hedges, whereby funding obligations
and assets are both managed in the local currency. However, different durations
in our funding obligations and assets may expose us to the risk of foreign
exchange rate fluctuations. We have not entered into any derivative
transactions to manage this risk. Based on our overall foreign currency rate
exposure at March 31, 1999, we do not believe that a hypothetical 10% change in
foreign currency rates would materially adversely affect our financial
position.
Year 2000
Many currently installed computer systems and software products store
dates using two digits of the calendar year. These date code fields will need
to accept four-digit entries to distinguish 21st century dates from 20th
century dates. This problem could result in system failures or miscalculations
causing disruptions of business operations, including a temporary inability to
process transactions, send invoices or engage in other similar business
activities. As a result, many companies' computer systems and software will
need to be upgraded or replaced in order to comply with Year 2000 requirements.
The potential global impact of the Year 2000 problem is not known. If Year 2000
problems are not corrected in a timely manner, they could affect us and the
U.S. and world economy generally.
Even though our current products are Year 2000 compliant, we may lose
potential sales because companies may be diverting resources to assess and fix
their internal systems that may not be Year 2000 compliant.
We have formed a project team to address internal Year 2000 issues. Our
internal financial and other computer systems are being reviewed to assess and
remediate Year 2000 problems. Our assessment of internal systems includes our
information technology, or IT, systems as well as other systems which include
embedded technology in equipment containing microprocessors or other similar
circuitry. Our Year 2000 compliance program includes the following phases:
. identifying systems that need to be modified or replaced;
. carrying out remediation work to modify existing systems or
convert to new systems; and
. conducting validation testing of systems and applications to
ensure compliance.
The amount of remediation work required to address internal Year 2000
problems is not expected to be extensive. We have replaced some of our
operational systems and most of our personal computers in the last several
years. We believe that new equipment and software, including new accounting
software to be installed in 1999, substantially addresses Year 2000 issues.
However, we will be required to modify some of our existing hardware and
software in order for our computer systems to function properly in the year
2000 and thereafter. We estimate that we will complete our Year 2000 compliance
program for all of our significant internal systems no later than September 30,
1999, at an estimated cost of $50,000. There can be no assurance that the
estimates are correct or that actual costs will not be materially greater than
anticipated.
26
<PAGE>
In addition, we plan to survey our major suppliers and evaluate their
plans to address potential Year 2000 issues. We anticipate that this evaluation
will be completed by September 30, 1999. We will rely primarily on the
suppliers' commitments to accomplish this task but have no contractual
commitments from the suppliers regarding Year 2000 issues. It is impossible to
fully assess the potential consequences in the event interruptions from
suppliers occur or in the event that there are disruptions in infrastructure
areas as utilities, communications, transportation, banking or government.
Although we have not surveyed our current clients regarding Year 2000
compliance, we are unaware of any reason why a Year 2000 problem experienced by
these clients would have a significant adverse effect on our operating results.
Based on our assessments to date, we believe we will not experience any
material disruptions as a result of Year 2000 problems in internal processes,
information processing, interfaces with major clients or with processing orders
and billing. However, if suppliers or other third-party providers, such as
those providing electricity, water or telephone services, experience
difficulties in providing products or services to us because of their Year 2000
problems, we believe the most reasonably likely worst case scenario would be
that our ability to timely ship products to our clients would be disrupted.
This could result in the loss of current or potential clients which could
seriously harm our business and results of operations. In addition, if our IT
systems are not Year 2000 compliant, we would have to devote significant
resources to correct such problems and we may be unable to process client
orders, which could lead to shipment delays. We have not yet developed a
contingency plan to address these potential issues, but we will assess the need
to develop such a plan based on the outcome of our Year 2000 review. Assuming
no major disruption in service from suppliers or other third-parties, we
believe that we will be able to manage our total Year 2000 transition without
any substantial harm to our business and operating results.
New Accounting Pronouncements
The American Institute of Certified Public Accountants ("AICPA") issued
SOP No. 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use in March 1998, and SOP No. 98-5, Reporting on the
Costs of Start-Up Activities in April 1998. SOP No. 98-1 requires that entities
capitalize certain costs related to internal-use software once certain criteria
have been met. SOP No. 98-5 requires that all start-up costs related to new
operations must be expensed as incurred. In addition, all start-up costs that
were capitalized in the past must be written off when SOP No. 98-5 is adopted.
Although we will be required to adopt SOP Nos. 98-1 and 98-5 for the fiscal
year ending March 31, 2000, we do not expect them to have a material impact on
our financial position, results of operations or cash flows.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 established methods of
accounting for derivative financial instruments and hedging activities related
to those instruments as well as other hedging activities. SFAS No. 133 will be
effective for us in April 2001. We are currently reviewing the potential impact
of this accounting standard.
In December 1998, the AICPA issued SOP No. 98-9, Modification of SOP 97-
2, Software Revenue Recognition, with Respect to Certain Transactions. SOP No.
98-9 requires recognition of revenue using the "residual method" in a multiple-
element software arrangement when fair value does not exist for one or more of
the delivered elements in the arrangement. Under the "residual method," the
total fair value of the undelivered elements is deferred and recognized in
accordance with SOP No. 97-2. We will be required to implement SOP No. 98-9 for
the fiscal year ending March 31, 2000. SOP No. 98-9 also extends the deferral
of the application of SOP No. 97-2 to certain other multiple element software
arrangements until SOP 98-9 becomes effective. We do not expect a material
change in our accounting for revenues as a result of the provisions of SOP 98-
9.
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BUSINESS
Overview
We are the leading provider of fully integrated, end-to-end, business
intelligence solutions for IBM AS/400 customers. Our ShowCase STRATEGY product
suite and related services are designed to enable organizations to rapidly
implement business intelligence solutions that create increased value from
their operational and customer data. The sophisticated data warehousing and
management capabilities of our product suite provide our clients with highly
scalable and tightly integrated solutions. Our products enable enterprise-wide
distribution of information and allow end-user access and analysis through
familiar applications and Internet browsers. We have eight years of experience
delivering business intelligence solutions to our clients. Our ShowCase
STRATEGY product suite, introduced in 1996, supports ad hoc information access,
enterprise reporting and analytics.
Industry Background
The rapid growth of the Internet and the emergence of e-business are
transforming the way organizations conduct business, communicate and share
information. This transformation is driving broad and immediate demand for
better intelligence and information dissemination. In recent years, the
deployment of enterprise resource planning applications, the integration of
supply chains and the emergence of e-business have increased the amount of data
available to companies. Nevertheless, many companies have failed to organize,
manage and disseminate this data in an accessible, intuitive manner. Companies
require business intelligence to interpret and create value from the vast
amounts of available data by better tailoring products and services,
identifying business opportunities and improving operational efficiencies. In
addition, as organizations have become more closely linked with suppliers and
customers, there is an increasing need to extend business intelligence beyond
organizational boundaries.
Business Intelligence. Employees, customers and suppliers require
business intelligence to make faster, smarter business decisions. Business
intelligence software enables organizations to transform data from disparate
sources into accessible, understandable and useful information. It is also the
foundation of an enterprise information portal, a centralized location where
users can access necessary corporate information. Business intelligence
solutions provide employees, customers and suppliers with useful information
through ad hoc information access, enterprise reporting and analytics. Ad hoc
information access enables users to customize the manner in which information
is viewed and analyzed. Enterprise reporting delivers timely analysis and
drill-down capabilities on a structured basis to broad user populations.
Finally, analytic applications provide management insight by enabling users to
analyze transactional data to identify operational trends and variances.
Examples of analytic applications include fraud detection, credit scoring and
budgeting applications. To support these functional uses, robust business
intelligence solutions require a strong infrastructure of data warehouse
generation and management.
Business intelligence is deployed in many ways to increase revenues and
operating efficiencies. For instance, in e-commerce, companies can use business
intelligence to better manage customer relationships by analyzing past
purchases, service history, product utilization and demographics. Consumer
product companies and retailers use business intelligence to deploy management
applications to determine which products to promote in specific markets and
channels. Companies engaged in supply chain management use business
intelligence to more efficiently manage product and material order flow among
distribution facilities, multiple plants and suppliers. Companies from all
industries can use business intelligence to benchmark performance against goals
and best business practices.
The demand for business intelligence solutions and the deployment of
enterprise information portals is driven by increased competitive pressures,
the emergence of e-business and the availability of large amounts of
operational data. A June 1998 Information Week survey of 250 information
technology executives indicated that data warehousing, a core element of
business intelligence, is their top post-millennium technology priority.
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Dataquest estimates that the business intelligence software market will grow
from approximately $1.9 billion in 1998 to approximately $6.9 billion in 2002,
a compound annual growth rate of approximately 38%.
Business intelligence solutions are data intensive and draw on a broad
range of data sources. A critical foundation technology for business
intelligence solutions is a scalable and reliable server platform capable of
supporting a broad array of users and environments.
The IBM AS/400. The AS/400 is a leading server platform used by mid-
market companies to deploy enterprise resource planning, e-business and
business intelligence applications. The Gartner Group estimated the AS/400
installed base to be approximately 500,000 units in 1998 and growing to
approximately 650,000 units by 2001. The large number of applications developed
for the AS/400 include business management systems, inventory and demand
planning applications. Leading application vendors include Fiserv, Infinium
Software, J.D. Edwards, Lawson Software, Lotus, PeopleSoft, SAP and System
Software Associates.
The popularity of the AS/400 as an application and e-business server is a
function of its ease of use, reliability, security, scalability and ability to
deploy Java and Windows NT business applications. Expanded interoperability
with other systems facilitate the use of the AS/400 as a server in
heterogeneous computing environments. New models of the AS/400 provide strong
price performance and include an expanded multi-processor architecture and
networking capabilities and software products for Internet delivery of
applications and e-business. The AS/400's integrated hardware, operating
system, database, middleware and software applications provide organizations
with the performance and tools to implement a robust business intelligence
solution.
Problems faced by traditional approaches to business intelligence.
Companies have spent extensive time and resources collecting, organizing and
delivering operational data through various applications. Nevertheless, many of
these companies have been unable to implement and realize the benefits of a
business intelligence solution because they lack the necessary technical
expertise. This problem is especially prevalent for AS/400 customers because
they typically have limited IT staff and resources. Traditionally, companies
have implemented business intelligence solutions through the purchase and
integration of many software products from multiple vendors. However, these
companies are often unable to realize the full potential of business
intelligence because of the following challenges:
Integrating components from multiple vendors. As a result of the
fragmented business intelligence market, implementing a business
intelligence solution has traditionally required the evaluation, selection,
purchase and integration of many different software products from multiple
vendors. Integrating these products requires extensive use of an
organization's IT staff and resources and often limits the overall
capability of the implemented solution. Furthermore, because these
components are supplied by multiple vendors, and use many different
interfaces, the solution is often difficult to use.
Adapting solutions to evolving end-user needs. The initial
implementation of a traditional business intelligence solution frequently
provides a limited set of functionality. As organizations realize the
benefits of business intelligence, they frequently wish to add more
business functionality to their solutions. Integrating this increased
functionality may not be possible with an organization's existing tools, or
may be extremely costly or laborious. Furthermore, the resulting solution
is often of limited overall effectiveness. As a result, end users
frequently require sustained IT staff involvement to perform the customized
reporting and follow-on analysis necessary to derive increased value from
corporate data.
Scaling across the enterprise. When implementing traditional business
intelligence solutions, organizations frequently do not recognize the
importance of strong data warehouse generation and management capabilities.
As a result, the data warehouse generation and management infrastructure of
a business intelligence solution is often unable to meet the demands placed
on it as the diversity and size of the end-user population grows. Without
this infrastructure, companies frequently experience significant data
integrity and performance problems when they attempt to scale their
business intelligence solutions to serve broader user populations.
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Extending business intelligence through the Internet. Extending business
intelligence through the Internet exacerbates the limitations of
traditional business intelligence solutions. As companies implement
enterprise information portals in an e-business environment, business
intelligence solutions must be easy to use and provide a high degree of
scalability and adaptability to deliver business intelligence to a growing
population of employees, customers and suppliers with diverse needs. To
support this large-scale deployment, business intelligence solutions must
also have sufficient management, security, intuitive user interfaces and
Internet browser-based capabilities.
We believe that the demand for business intelligence, the limitations of
traditional approaches and the large and growing AS/400 installed base provide
a significant opportunity for fully integrated, end-to-end business solutions
for AS/400 customers.
The ShowCase Solution
We are the leading provider of business intelligence solutions for AS/400
customers. Our ShowCase STRATEGY product suite and related services are
designed to enable organizations to rapidly implement and deploy business
intelligence solutions that create increased value from their operational and
customer data. We believe our solution provides the following key benefits:
Full integration and end-to-end business intelligence functionality. Our
product suite and professional services are designed to provide our clients
with a complete, fully integrated, end-to-end business intelligence solution.
Our products can be easily integrated with industry leading enterprise software
applications provided by vendors such as Fiserv, Infinium Software, J. D.
Edwards, Lawson Software, Lotus and SSA. Our end-to-end solution provides each
of the three functional business intelligence uses--ad hoc information access,
enterprise reporting and analytics. Our business intelligence solutions
incorporate a strong infrastructure of data warehouse generation and
management. This end-to-end approach eliminates the need for AS/400 customers
to evaluate, select, purchase and integrate components from different vendors
to realize the benefits of business intelligence.
Easy deployment and expansion. Our comprehensive product suite and
accompanying professional services enable our clients to quickly and easily
deploy a manageable business intelligence solution that minimizes the burden on
their IT departments. Our clients can deploy our modular business intelligence
solution in stages as their business intelligence needs grow. Companies can
start with any one of the three functional business intelligence uses and
extend their solutions to include the other two as end users realize the
benefits of and discover other uses for business intelligence. We also offer
Deployment Accelerators, which provide adaptable applications for targeted
business functions and allow some of our clients to realize benefits of
business intelligence within days of deployment.
Robust scalability for enterprise-wide deployment. Our product suite
addresses the challenges faced by IT departments as business intelligence
solutions expand in functionality and in the number of applications and end
users supported. Our data warehouse generation and management capabilities and
our hub-and-spoke architecture enable modular expansion of data warehouses and
data marts, which are simpler implementations of data warehouses, to support
additional applications and end users. Further, our product suite supports
enterprise performance capabilities and scalability through its tight
integration with and leverage of the AS/400 platform.
Ease of use and Internet accessibility. Our product suite combines a
consistent and intuitive user interface with powerful functionality that allows
end users to easily access, customize and analyze information and reports with
minimal IT assistance. Because users can realize the benefits of our solution
through familiar applications, such as Microsoft Excel, Lotus 1-2-3 and
Microsoft Word, organizations are able to leverage existing software
applications and user skills. These capabilities are enhanced by our easy-to-
use Internet browser-based capabilities, including query and user-defined
calculations, powerful graphics and drag-and-drop features.
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ShowCase Strategy
Our objective is to extend our position as the leading provider of fully
integrated, end-to-end business intelligence solutions for AS/400 customers.
The following are key elements of our strategy:
Expand product functionality and technology leadership. We intend to
continue expending significant resources to expand our product functionality
and technology leadership. One of our initiatives is to strengthen our product
suite's enterprise reporting capabilities to publish specified business
intelligence to defined users on a regularly scheduled basis. We also intend to
further leverage Internet browser technologies to enable companies to
disseminate information and business intelligence through a portal framework
that will enable growing user populations both within and outside the
organization to more easily search and receive information through the
Internet. Furthermore, we plan to increase our product suite's ability to
access additional data sources to ensure that a broader range of information is
available to end users.
Offer additional application Deployment Accelerators. We believe that
there is a large market for adaptive applications that utilize the underlying
capabilities of our product suite and offer out-of-the-box functionality in
targeted markets. Our Deployment Accelerators are designed to serve as
architectural models for our clients' business intelligence solutions. In 1998,
we introduced Deployment Accelerators for sales and financial analysis. We
believe these adaptive applications allow our clients to quickly realize
benefits from our products and will extend their use for additional
applications. Consequently, we plan to tightly integrate leading enterprise
resource planning applications with our Deployment Accelerators, which will
also incorporate future technological advancements. We also intend to leverage
the knowledge gained from our experience with client implementations to develop
additional Deployment Accelerators for areas such as inventory and customer
relationship management.
Increase our direct sales efforts. We intend to expand our direct sales
force to extend market penetration to new clients and expand penetration of our
product suite within existing clients. We believe a strong direct sales force
is necessary to educate potential clients about the benefits of and uses for
the relatively new area of business intelligence. A strong direct sales force
is particularly important for AS/400 customers, which typically have relatively
small IT staffs. An expanded direct sales force presence will also provide
increased front-line insight into the business intelligence needs of AS/400
customers. A unit of our direct sales force has been specifically designed to
build upon our existing client relationships. We believe there is a significant
opportunity to sell additional components of our product suite to these clients
as they decide to increase the functionality of their business intelligence
solutions and make them available to a greater number of end users.
Expand our distribution channels. We have recently expanded our
relationship with IBM to allow us to leverage the distribution capabilities
provided by IBM's large software data management group sales force. In the
future, we intend to expand the number of distribution channels available for
our products by increasing the number of enterprise resource planning
applications with which our products are integrated. Some of our products are
currently integrated with applications provided by vendors such as Dimension
Data Systems, Fiserve, IBM, Infinium Software, Lawson Software, Silverlake, TSG
and Walker Interactive. In addition, we are targeting the expansion of our
marketing relationships to increase market awareness of our product suite and
customer referrals for our direct sales force. We currently have marketing
relationships with several companies, including CMDS, Data Systems
International and J.D. Edwards.
Provide high quality services and support to our clients. We provide
comprehensive implementation, training and support services to our clients to
aid them in quickly implementing and realizing the benefits of our solutions.
Our focus on high quality service and support is critical to success in the
AS/400 market because many of our clients do not have the internal resources
necessary to implement and maintain business intelligence solutions. We
currently anticipate expanding our support and professional service
capabilities and our service partnerships to support the deployment of our
product suite.
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Products
The ShowCase STRATEGY product suite includes all of the elements of a
complete business intelligence solution. Typical configurations of business
intelligence solutions include the following components of our product suite:
<TABLE>
<CAPTION>
Analyzer
Report for the Warehouse Warehouse
Query Writer Essbase/400 Analyzer Web Builder Manager
----- ------ ----------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ad hoc information
access................. X X X
Enterprise reporting.... X X X X
Analytics............... X X X X
</TABLE>
Our Deployment Accelerators provide our clients with both enterprise
reporting and analytic capabilities and currently provide sales and financial
analysis functionality.
[GRAPHIC]
[The graphic consists of three rectangular boxes with symbolic representations
as described below.
Box on the extreme left: On the extreme left is a rectangular box with two
symbolic representations of data sources. The first one bears the words "Any
DB2 Data Source." Above this representation are the words "Sales, Marketing,
Financial, Human Resources, and e-Business Data." The second one bears the
words "NT and Unix Data Sources." Below this representation are the words
"Oracle, SQL Server, Sybase and Informix-based Data External Data."
Box in the center: In the center is a rectangular box with several symbolic
representations. An arrow points to the right from the symbolic representation
of the DB2 Data Source in the rectangular box on the extreme left to a box in
the center rectangular box bearing the words "STRATEGY Warehouse Builder." An
arrow points to the right from the symbolic representation of the NT and Unix
Data Sources in the rectangular box on the extreme left to a box in the center
rectangular box bearing the words "IBM and Third Party ETL." Two arrows point
to the right from this rectangular box to a symbolic representation of a data
warehouse. Above this representation are the words "AS/400 Data Warehouse." An
arrow points to the right from this symbolic representation to a box in the
middle of the center rectangular box bearing the words "STRATEGY Warehouse
Builder." Two arrows point to the right from this middle box. The upper arrow
points to a symbolic representation of a multidimensional data mart. Above this
symbolic representation are the words "STRATEGY ESSBASE/400 Multidimensional
Data Mart." The lower arrow points to a symbolic representation of a relational
data mart. Below this symbolic representation are the words "DB2/400 Relational
Data Mart." An arrow points between the symbolic representations of the
multidimensional data mart and the relational data mart. To the right of these
symbolic representations is a rectangular box bearing the words "STRATEGY
Warehouse Manager."
Box on the extreme right: On the extreme right is a rectangular box with five
symbolic representations of desk-top computers. To the right of these symbolic
representations are the words "STRATEGY Query," "STRATEGY Report Writer,"
"STRATEGY Excel & 1-2-3," "STRATEGY Analyzer," and "STRATEGY Analyzer for the
Web."]
Below the entire graphic an arrow points to the right with the words "STRATEGY
Deployment Accelerator" appearing within the arrow.]
Ad hoc information access, enterprise reporting and analytics
Query. Query provides end users high-performance access to relational
data on the AS/400 for ad hoc querying and results-oriented data analysis.
Users may access data warehouses and operational data through the product's
interface on their desktop computer, or through familiar applications, such as
Microsoft Excel, Lotus 1-2-3 and Microsoft Word. Query also provides scheduling
and sophisticated search functions for the advanced end user.
Report Writer. Report Writer enables end users to create fast,
specialized reports for data analysis. Report Writer also combines drag-and-
drop features, graphics and calculation capabilities that make report design
easy and intuitive.
Analyzer. Analyzer enables end users to analyze relational data--data
with two variables--and/or multidimensional data--data with more than two
variables--through desktop computers. End users can display data as charts,
spreadsheets or custom report forms. The end user can drill down to the
underlying data and sort, rank, filter, calculate and graph this data for more
in-depth analysis.
Analyzer for the Web. Analyzer for the Web is a "thin" version of
Analyzer that allows end users to conduct basic data analysis tasks over a
company's intranet or extranet. Analyzer for the Web is Java-based and
accessible through Internet browsers, such as Microsoft Explorer and Netscape
Navigator.
Essbase/400. Essbase/400 is a 64-bit implementation of Hyperion
Solutions' online analytical processing product, Essbase, on the AS/400.
Essbase/400 allows end users to perform multidimensional analysis on AS/400
data. It consists of a multidimensional database server, a desktop-based tool
for creating
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and maintaining the database and Microsoft Excel and Lotus 1-2-3 add-ins that
provide end-user access. Essbase/400 can also be used with our Analyzer and
Analyzer for the Web products, as well as the many third-party applications
developed for use with Hyperion's Essbase product. Essbase/400 is easy to use
and deploy rapidly, has robust calculation capabilities, provides rapid
responses to end-user requests and incorporates user-generated scenario data.
Data warehouse generation and management
Warehouse Builder. For clients desiring enterprise-wide business
intelligence solutions, Warehouse Builder automates the process of building a
centralized data warehouse. Warehouse Builder transforms online transaction
processing data from any AS/400 data source into data marts or data warehouses.
Warehouse Builder enables clients to create multidimensional data marts or data
warehouses by moving data from IBM's DB2 database for the AS/400 to
Essbase/400.
Warehouse Manager. Warehouse Manager provides the tools to manage data
warehouses and data marts on a day-to-day basis by integrating data
simplification, warehouse security, resource allocation and user access.
Warehouse Manager also enables administrators to allow users easier access to
data in complicated databases and to create a simplified view of any AS/400
database, whether it is used for transaction processing or analysis. In
addition, Warehouse Manager provides capabilities to interact with most AS/400
data types and with many third-party database extensions, such as the J.D.
Edwards interactive data dictionary and Infinium's security system.
Deployment Accelerators
Sales and Financial Analysis Deployment Accelerators. ShowCase STRATEGY
Deployment Accelerators are pre-configured functional data models or templates
that may be used to quickly implement and adapt sales and/or financial analysis
applications. These adaptive applications are designed to serve as
architectural models for our clients' business intelligence solutions. Sales
Analysis Deployment Accelerators provide order and performance/variance
analysis, sales, customer and shipping tracking, sales history and forecasting
and impact analysis. Financial Analysis Deployment Accelerators provide
accounting and financial reporting, profit and loss analysis, budgeting,
forecasting and overhead calculation, variance and unit cost analysis and
business segmentation.
Services
Customer Support. Our support team provides comprehensive support
services to our clients, including the following services:
. unlimited technical support via telephone, facsimile, the Internet
and e-mail;
. program temporary fixes;
. technical documents on demand; and
. product upgrades.
As of March 31, 1999, we had over 2,000 clients on our annual maintenance
plan. We offer maintenance support through our regional support centers in
North America, Europe, Malaysia and a partnership in Japan. Currently, our
regional support offices have access to an integrated customer database that
provides each office with real-time information regarding our clients and their
installed product base. A client that has a maintenance problem after hours and
is unable to contact its regional support office may contact any one of our
other regional support offices and obtain maintenance support.
Professional Services. Because they often have limited IT staff and
resources, our clients require a high level of service and support. To address
this need, we offer a full range of educational, consulting and support
services. We work with clients to design customized service plans that will
enable them to rapidly
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implement and realize the benefits of business intelligence solutions that can
evolve with end-user needs. As an example of this approach, we recently
introduced service offerings that allow clients to leverage our Deployment
Accelerators to quickly implement pilot applications. For existing clients, we
offer services designed to assist them in expanding their use of our product
suite and using our product suite in more sophisticated applications. To
increase the ability of end users to realize the functionality provided by our
product suite, our educational services provide comprehensive, hands-on
training through both public and on-site sessions. In addition to our own
professional services personnel, we have service partners in North America,
Europe and Asia Pacific that provide training and consulting for our clients.
We recently entered into service partner relationships with Pinnacle and
Austin/400 to provide our clients with a range of additional implementation and
training options.
Product Development
We have ten years experience delivering business intelligence solutions
to our clients. During this time, we have focused on delivering rapid return on
investment and enterprise-wide deployment capabilities for our clients. Our
core technology competence lies in extracting and transforming raw data from
IBM's DB/2 database and other unique AS/400 data structures into business
intelligence. We extend the AS/400 operating system to support business
intelligence with features such as data simplification, enhanced security and
resource management. We also tightly integrate these database management and
infrastructure technologies with end user query and reporting products and
multidimensional analytical technology.
Since our inception, we have made substantial investments in product
development. During fiscal 1997, product development expenses were $2.6
million, during fiscal 1998 they were $3.1 million and during fiscal 1999 they
were $4.4 million. Our product development group consists of product managers,
software engineers, quality assurance engineers, technical documentation
specialists and integration specialists and is organized by small teams. As of
March 31, 1999, we had 49 employees engaged in product development. Our product
development process is intended to be repeatable yet flexible thereby allowing
us to reuse both source code and the processes used to develop source code. To
better serve client needs and incorporate those needs into new releases, we
actively solicit product enhancement requests from employees, clients, industry
analysts, partners and IBM.
Our product development efforts currently focus on continued
compatibility with and leverage of new developments in the AS/400. We intend to
develop many of our future products in Java, which will enable us to deliver
our products to additional platforms as the opportunity arises. One of our
initiatives is to strengthen our product suite's enterprise reporting
capabilities to publish specified business intelligence to defined users on a
regularly scheduled basis. We also intend to further leverage Internet browser
technologies to enable companies to disseminate information and business
intelligence through a portal framework that will enable growing user
populations both within and outside the organization to more easily search and
receive information through the Internet. Furthermore, we plan to increase our
product suite's ability to access additional data sources to ensure that a
broader range of information is available to end users. Although we expect that
certain of our new products will be developed internally, we may, based on
timing and cost considerations, acquire technology or products from third
parties. See "Risk Factors--We may lose existing clients or be unable to
attract new clients if we do not develop new products and enhance our current
products."
Sales and Marketing
Sales. We sell our products and services through our direct sales force
and distribution partners including IBM, software application vendors,
distributors and resellers. Our direct sales force operates in North America,
Belgium, France, Germany, the Netherlands and the United Kingdom. Our North
American direct sales force is divided into three units. Each salesperson in
the new accounts unit focuses on specific potential accounts. The existing
accounts unit targets existing clients. Because many of our clients initially
deploy our products on a departmental basis, we believe that our existing
clients represent a significant sales opportunity as
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<PAGE>
they discover the potential of business intelligence and look to leverage its
benefits enterprise-wide to increase operational efficiency and profitability.
Our internal telesales unit focuses primarily on smaller transactions, and
generally sells individual components of our product suite to new accounts,
additional components of our product suite to existing clients and maintenance
services. Our overseas direct sales force consists of a direct sales unit and a
telesales unit that target both new clients and existing accounts. See "Risk
Factors--We need to increase the size of our direct sales force, which has a
limited operating history, to grow our sales."
Our software application vendor distribution partners include vendors
that integrate our products within their own applications and sell the
integrated products to their customers, such as Dimension Data Systems,
Fiserve, IBM, Infinium Software, Lawson Software, Silverlake, TSG and Walker
Interactive; and vendors with which we have joint marketing and sales
arrangements, such as Data Systems International and J.D. Edwards. We also sell
our products through IBM's software data management group sales force and
distributors located in countries not served by our direct sales force,
including Eastern European, African and Asian countries.
Marketing. We are focused on building market awareness and acceptance of
our product suite as the leading provider of business intelligence solutions
for the AS/400 customer. Our marketing organization provides a wide-range of
programs, materials and events that support our sales force. These include
extensive public relations activities, user group meetings, conference and
trade show appearances, as well as programs to work closely with analysts and
other influential third parties. We use our Internet site to augment our market
presence, promote our products and services and generate sales leads.
Furthermore, we have invested in building a partner and channel marketing
function to help recruit, train, support and conduct cooperative marketing with
strategic partners, resellers and certified service providers.
Strategic Relationships
IBM
We have maintained a strategic relationship with IBM in sales and
marketing and research and development. Our close relationship with IBM's
Rochester, Minnesota facility, which has developed the AS/400, has enabled us
to quickly leverage new AS/400 capabilities and influence the future direction
of the AS/400 for the benefit of our clients. This association with IBM has
resulted in our products being recognized as a standard business intelligence
technology on the AS/400. For example, our ShowCase STRATEGY product suite is
used by IBM in new database release quality control efforts. We also
participate in several formal and informal programs with IBM which we believe
afford us valuable experience with AS/400 products and insights into IBM's
product development and marketing plans. We are one of IBM's designated
"Premier Business Partners" and have won several awards from IBM, including,
most recently, IBM's Powered by AS/400e Award. IBM has been a reseller of
several of our products for several years. In December 1998, we entered into an
expanded agreement with IBM under which our products are marketed and sold as
IBM products by IBM's software data management group sales force. This
agreement has an initial term of seven years. Under this agreement, the Company
has agreed to perform several development enhancements to its Essbase/400
software. Previously, the Company had not been a party to any other funded
software development arrangements. In addition, because various matters with
regard to certain enhancements have not been finalized by IBM, the Company has
not begun any work on this project as of the date of this prospectus and has
therefore not incurred any related costs. For a description of some of the
risks of our relationship with IBM, see "Risk Factors--Our relationships with
Hyperion Solutions and IBM are important to our revenue, which would be harmed
by a deterioration in these relationships."
Hyperion Solutions
Our relationship with Hyperion Solutions began in late 1995 when we
searched the marketplace for a high performance multidimensional database
server and selected its online analytical processing product, Essbase. We
expended significant resources in 1995 and 1996 porting Essbase to and
optimizing its
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performance on the AS/400. We have the exclusive right to distribute the
resulting product, Essbase/400, subject to limited distribution rights
retained by Hyperion Solutions. The addition of Essbase/400 to our product
line provides us with the ability to access a broader customer base, including
users of multidimensional analyses. Furthermore, our Essbase/400 product
provides us with additional partnering opportunities by extending Essbase to
the AS/400 platform. In addition, our Analyzer and Analyzer for the Web
products are based on technology licensed from Hyperion Solutions under a non-
exclusive license agreement that expires in January 2001. For a description of
some of the risks of our relationship with Hyperion Solutions, see "Risk
Factors--Our relationships with Hyperion Solutions and IBM are important to
our revenue, which would be harmed by a deterioration in these relationships."
Our exclusive Essbase/400 distribution rights are conditioned upon us
paying minimum royalties and are subject to a buy-back right. Hyperion
Solutions must give us notice 12 months before exercising this buy-back right.
If minimum royalty payments are not made, we have the option of paying the
remaining balance to retain our exclusive distribution rights. If we do not
retain our exclusive distribution rights, we must pay Hyperion Solutions
minimum royalty payments to retain non-exclusive distribution rights to
Essbase/400.
Clients
As of March 31, 1999, we had over 2,000 active clients. The following is
a representative list of our clients that each accounted for over $150,000 in
total revenues since March 31, 1998:
ADT Automotive Mississippi Chemical Corporation
Abbott Laboratories Old Dominion Freight Lines
AmeriServe Olympus America
Ball Foster Container Corp. One 2 One/Mercury Personal
Bass Brewers Limited Communications
Burmah Castrol Trading Limited Omron Healthcare
Cartier International Pokka Corporation Inc.
Clark Construction Group Randstad Automation Center
Distribution & Auto Services Rugby Joinery UK Limited
EMI Compact Disc (Holland) Sara Lee Casualwear Company
Groupe Point.P Skytel Communications
Interface Tiel Utrecht Verzekeringen
Johnsonville Sausage Tiffany & Company
Land O'Lakes Toys "R" Us International
Managed Health Network United Rentals
Master Halco Universal Flavors Corp.
York International
Case Studies
The following case studies illustrate how three of our clients have
utilized the ShowCase STRATEGY product suite:
Helzberg Diamonds
Helzberg Diamonds is a jewelry retailer with nearly 200 stores
throughout the United States.
Challenge. Each Helzberg store generates large amounts of point-of-sale
transaction data, which are fed nightly into the company's AS/400 host
merchandise system and J.D. Edwards financial system. This transactional
information is required to evaluate store performance and sales productivity
and is used by managers in virtually all of the company's corporate functions,
including general administration, finance, sales and merchandising. The
largely manual process of transforming this data into useful information and
delivering it to end users was time-consuming and error-prone. Furthermore,
users were often dissatisfied with the content and presentation of the
information provided to them.
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Solution. To evaluate store performance and productivity, Helzberg
installed our STRATEGY product suite. Within a week, Helzberg had used our
Financial Analysis Deployment Accelerator to develop a working financial
analysis application prototype to show managers comparative balance sheets,
profit and loss statements and store performance. Our products have enabled end
users throughout the enterprise to access business-critical information on
their own, without IT staff assistance. Managers have also become more
sophisticated in their uses of information, creating ad hoc data views and
performing speed-of-thought data analysis. Our products' ability to provide
users increased access to timely, useful information has enabled Helzberg to
make better decisions regarding such issues as where to open and close stores,
how to staff stores and how best to develop incentives for increasing sales
productivity. Because of its early successes with our products, Helzberg has
plans to develop a merchandising application that will allow greater day-to-day
inventory control, a corporate planning, budgeting and forecasting application,
and a centralized data warehouse to serve multiple data marts and the entire
enterprise. Helzberg has licensed Analyzer for the Web to enable access to this
data warehouse from Helzberg field locations.
Abbott Laboratories
Abbott Laboratories is an international health care and pharmaceutical
leader with approximately 56,000 employees worldwide.
Challenge. Managers in Abbott's UK nutritional products division were
having difficulty pricing products and services to meet corporate profit goals
because they could not quickly access necessary information. Although
operational data was available to optimize pricing, it resided on Abbott's
AS/400 system in forms that sales and marketing managers could only access with
extensive IT staff support. Abbott's end users were also interested in
accessing and analyzing additional sales, marketing and financial information
from the system's wealth of data, without being dependent on IT staff to do so.
Solution. To effectively leverage its existing operational data, Abbott
originally pieced together a solution consisting of point products available at
the time, including SQL Server and an NT server. With our 1996 introduction of
ShowCase STRATEGY, Abbott was able to implement an end-to-end business
intelligence solution. Our software enabled Abbott fast and flexible access to
its AS/400 data, providing decision support functionality for quoting and
pricing contracts. This permitted Abbott to identify profitable contracts that
it previously would not have pursued due to uncertainty. From this initial
success, Abbott has expanded its use of the ShowCase STRATEGY product suite to
include access to additional sales, marketing and financial data. Abbott's end
users now are able to create ad hoc queries, develop reports and perform
analyses fast and easily without IT staff assistance. As a result of its
success in the United Kingdom, Abbott has expanded its use of STRATEGY to
operations in the United States, Canada and Germany.
Famous Footwear
Famous Footwear is a nationwide chain of shoe stores selling branded
footwear for the entire family, with over 800 retail stores in 46 states.
Challenge. Famous Footwear tracks its target market through daily
transaction information collected from each of its retail stores. This
information includes over 600,000 daily point-of-sale transactions, which are
fed into the company's AS/400-based operational data systems. Decision-makers
relied on weekly reports generated from this data to make decisions about
pricing, inventory, promotions and other areas. Users were frequently unable to
make these decisions quickly and efficiently because they were spending up to a
few weeks searching for information they needed from these reports.
Solution. Famous Footwear chose our ShowCase STRATEGY product suite to
implement a sales analysis data mart, a store inventory analysis data mart and
an item trend analysis data mart. Currently, approximately 150 of the company's
managers use this business intelligence system. The sales analysis data mart
has enabled the company to adjust its promotional mix to meet specific campaign
goals. For example, the
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company has learned that freestanding inserts generate more sales than
traditional newspaper advertising. The company's store inventory analysis data
mart enables the company to analyze cash register activities thereby providing
the company with an early indicator of point-of-sale concerns. Famous
Footwear's item trend analysis data mart enables its merchandising department
to dynamically tailor merchandising orders to meet unexpected demand. Our
product suite has also enabled the company's IT department to redirect its
activities from preparing the weekly reports to developing additional business
applications to increase company productivity.
Competition
The markets for our products are intensely competitive and subject to
rapidly changing technology. We compete primarily against providers of decision
support software and data warehousing and data mart software. The bases of
competition in these markets include breadth of solution, functionality,
performance, scalability, ease of use, operating platform and cost. Our
competitors providing business intelligence solutions for AS/400 customers
include Silvon and Infomanager. We also compete with vendors that provide
business intelligence products implemented on Unix or Windows NT platforms and
then connected to the AS/400. These vendors include Brio Technology, Business
Objects, Cognos, Hyperion Solutions, Information Advantage, MicroStrategy,
Microsoft, Oracle, PLATINUM Technology, which has entered into an agreement to
be acquired by Computer Associates, Sagent Technology and SAS Institute. In
addition, enterprise resource planning software vendors including Baan Company,
PeopleSoft and SAP are beginning to offer decision support and analytical
modules primarily to support the analysis of data from their own operational
systems. One or more of these companies may expand their technologies to
support greater business intelligence functionality. Finally, in the future,
IBM may expand the functionality of the operating system for the AS/400, or of
its database products, to provide some of the functions provided by our
products.
Many of our competitors have longer operating histories, significantly
greater financial, technical, marketing or other resources and greater name
recognition than we do. As a result, they may be able to respond more quickly
to new or emerging technologies and changes in customer requirements. The
business intelligence software industry has recently experienced consolidation
and many industry analysts expect this trend to continue. This consolidation
may provide our competitors with expanded sales, distribution and marketing
capabilities and broader product offerings. See "Risk Factors--Our markets are
highly competitive which may lead to lower prices, reduced gross margins and
loss of market share."
Intellectual Property
We attempt to protect our software, documentation and other written
materials primarily through a combination of trade secret, trademark and
copyright laws, confidentiality procedures and contractual provisions. For
example, we license rather than sell our software and require licensees to
enter into license agreements which impose restrictions on their use of the
software. In addition, we have made efforts to avoid disclosure of our trade
secrets, including requiring those persons with access to our proprietary
information to enter into confidentiality agreements with us and restricting
access to our source code.
We have one patent issued and one patent application pending in the
United States with respect to aspects of our software. The pending patent
application may not be issued. In addition, our patents may not survive a legal
challenge to their validity or provide us significant protection. Our means of
protecting our intellectual property rights may not be adequate or our
competitors may independently develop similar technology. Policing unauthorized
use of our products is difficult, particularly in foreign countries where the
laws may not protect our proprietary rights as fully as in the United States.
We anticipate that software product developers increasingly will be
subject to infringement claims as the number of products and competitors in our
industry segment grows and the functionality of products in different industry
segments overlaps. As a result, we may become involved in these claims. Any of
these claims, with or without merit, could result in costly litigation, divert
our management's time, attention and
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resources, delay our product shipments or require us to enter into royalty or
licensing agreements. If a claim of product infringement against us is
successful, our business and operating results could be seriously harmed. See
"Risk Factors--We may face increased competition if we are unable to protect
our intellectual property rights, and we may be subject to intellectual
property infringement claims."
Employees
As of March 31, 1999, we had a total of 240 employees, including 107 in
sales and marketing, 49 in product development, 56 in professional services and
customer support and 28 in administration. Our future performance depends in
significant part on our ability to attract, train and retain highly qualified
personnel. None of our employees are represented by a labor union, and we
believe that our relations with our employees are good.
Facilities
Our principal offices currently occupy approximately 27,000 square feet
in Rochester, Minnesota under a lease which expires June 30, 2004. In addition,
we also lease offices domestically and internationally in a variety of
locations, including domestic offices in the metropolitan areas of Atlanta,
Boston, Chicago and Dallas and international offices in Belgium, France,
Germany, Malaysia, the Netherlands and the United Kingdom. We believe that our
facilities are adequate for the next 12 months and that, if required, suitable
additional or alternative space will be available on commercially reasonable
terms to accommodate expansion of our operations.
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MANAGEMENT
Executive Officers and Directors
The following table provides information as of June 1, 1999 concerning
our executive officers and directors:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Kenneth H. Holec........... 44 President, Chief Executive Officer and Director
Craig W. Allen............. 44 Chief Financial Officer
Jonathan P. Otterstatter... 39 Senior Vice President, Technology and Services
Roger E. Bottum............ 40 Vice President, Marketing
Patrick Dauga.............. 39 Vice President, International
Kevin R. Potrzeba.......... 38 Vice President, Sales
Promod Haque............... 51 Director
C. McKenzie Lewis III...... 52 Director
Jack Noonan................ 51 Director
Dennis J. Semerad.......... 58 Director
</TABLE>
Kenneth H. Holec has been our president and chief executive officer and a
member of our board of directors since November 1993. From 1985 to 1993, Mr.
Holec was president and chief executive officer of Lawson Software, a provider
of high-end financial and human resource management software solutions.
Currently, Mr. Holec is a director of IntraNet Solutions, Inc., a maker of Web-
based document management products for corporate intranets. Mr. Holec holds a
B.S. degree in business administration from the University of Minnesota.
Craig W. Allen joined us as controller in July 1993 and was promoted to
chief financial officer in March 1997. From 1982 to 1993, Mr. Allen was vice
president of operations at Metafile Information Systems, Inc., a software
development and systems integration company. Prior to 1982, Mr. Allen was audit
manager at the accounting firm McGladrey Pullen & Co. in Rochester, Minnesota.
Mr. Allen holds a B.S. degree in business from the University of Minnesota and
is a certified public accountant.
Jonathan P. Otterstatter joined us as vice president, development in May
1994 and was promoted to senior vice president, technology and services in May
1999. From 1983 to May 1994, Mr. Otterstatter was employed by IBM where his
last position was senior development manager. Mr. Otterstatter holds a B.S.
degree in computer science from the University of Wisconsin at LaCrosse and an
M.S. degree in management of technology from the Massachusetts Institute of
Technology.
Roger E. Bottum has been our vice president, marketing since August 1998.
From August 1994 to July 1998, Mr. Bottum worked at System Software Associates,
a designer of business information systems for manufacturing companies, where
his last position was general manager of product management. From 1987 to July
1994, Mr. Bottum worked at Andersen Consulting, where his last position was
associate partner and director of marketing. Mr. Bottum holds a B.S. degree in
political science from Colorado College.
Patrick Dauga joined us as vice president, European operations in June
1997 and was promoted to vice president, international in March 1998. From 1986
to 1997, Mr. Dauga worked at Comshare, Inc., a software company specializing in
decision support systems, where his last position was vice president for
southern Europe. Mr. Dauga holds a degree from Sup de Co Bordeaux, a business
school in France.
Kevin R. Potrzeba has been our vice president, sales since September
1996. From 1987 to August 1996, Mr. Potrzeba was employed by Software AG, a
software products company, where his last position was vice president of sales
for eastern operations. Mr. Potrzeba holds a B.A. degree in advertising and
marketing from Northern Illinois University.
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Promod Haque has been one of our directors since March 1992. Dr. Haque
joined Norwest Venture Partners, a venture capital firm, in November 1990 and
is currently managing general partner of the general partner of Norwest Venture
Partners VI, L.P. and a partner of the general partner of Norwest Venture
Partners VII, L.P. He is also currently a partner of Itasca Partners V, L.L.P.,
the general partner of Norwest Equity Partners V, L.P., and a partner of Itasca
Partners, the general partner of Norwest Equity Partners IV, L.P. Dr. Haque is
a director of Extreme Networks, Inc., Information Advantage, Inc., Raster
Graphics, Inc., Transaction Systems Architects, Inc. and several privately held
companies. Dr. Haque holds a Ph.D.E.E. degree and an M.S.E.E. degree from
Northwestern University, an M.M. degree from the J.L. Kellogg Graduate School
of Management, Northwestern University, and a B.S.E.E. degree from the
University of Delhi, India.
C. McKenzie Lewis III has been one of our directors since June 1994. Mr.
Lewis is president of Sherpa Partners LLC, an investment and management
company, and the managing general partner of Minnesota Management Partners,
L.P., a venture capital fund. From 1986 through 1995 he was the president and
chief executive officer of Computer Network Technology Corporation, a developer
and manufacturer of high performance extended channel networking systems. Mr.
Lewis currently is a director of Digital Biometrics, Inc. and several privately
held companies. Mr. Lewis holds a B.S.E.E. degree from Princeton University.
Jack Noonan has been one of our directors since February 1995. Mr. Noonan
has been president and chief executive officer and a director of SPSS Inc., a
statistical software products company, since January 1992. Mr. Noonan was
president and chief executive officer of Microrim Corp., a developer of
database software products, from 1990 until December 1991. From 1985 to 1990,
Mr. Noonan was vice president of the Product Group of Candle Corporation, a
developer of IBM mainframe system software. Mr. Noonan holds an engineering
degree from the Rockford School of Business and Engineering in Rockford,
Illinois.
Dennis J. Semerad was one of our initial investors and has been one of
our directors since 1989. Mr. Semerad founded Cord Cable Co., a manufacturer of
computer equipment, and was its president from 1979 to 1987.
Board Composition
Following the offering, our board of directors will consist of five
directors divided into three classes with each class serving for a term of
three years. At each annual meeting of shareholders, directors will be elected
by the holders of common stock to succeed those directors whose terms are
expiring. Mr. Semerad will be a Class I director whose term will expire in
2000, Dr. Haque and Mr. Holec will be Class II directors whose terms will
expire in 2001 and Messrs. Lewis and Noonan will be Class III directors whose
terms will expire in 2002.
Board Committees
Our board of directors has established a compensation committee and an
audit committee.
Dr. Haque and Mr. Lewis are members of our compensation committee and Mr.
Lewis is the chairman. Our compensation committee makes recommendations to the
board of directors concerning executive compensation and administers our stock
option plans.
Dr. Haque and Messrs. Lewis and Noonan are members of our audit committee
and Mr. Noonan is the chairman. Our audit committee reviews the results and
scope of the audit and other accounting related services and reviews our
accounting practices and systems of internal accounting controls.
Director Compensation
We do not currently pay any compensation to directors for serving in that
capacity, but we reimburse directors for out-of-pocket expenses incurred in
attending board meetings. Our board of directors has the discretion to grant
options to non-employee directors pursuant to our stock option plans. Each of
Messrs. Lewis and Noonan currently holds options to purchase 45,000 shares of
our common stock. See "Principal Shareholders."
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Compensation Committee Interlocks and Insider Participation
Dr. Haque and Mr. Lewis currently serve on compensation committee.
Neither of these individuals has at any time been an officer or employee of
ShowCase. Prior to the formation of our compensation committee, all decisions
regarding executive compensation were made by the full board of directors. No
interlocking relationship exists between the board of directors or the
compensation committee and the board of directors or compensation committee of
any other company, nor has any interlocking relationship existed in the past.
On March 26, 1998, we sold an aggregate of 875,000 shares of our Series B
convertible preferred stock at a purchase price of $4.00 per share, including
625,000 shares to Norwest Equity Partners V, L.P. Dr. Haque, one of our
directors and a member of our compensation committee, is a partner of Itasca
Partners V, L.L.P., a general partner of Norwest Equity Partners V, L.P.
Employment Agreements
We entered into an employment agreement with Kenneth H. Holec, our
president and chief executive officer, on November 22, 1993 that governs Mr.
Holec's employment with us. The agreement establishes Mr. Holec's compensation
level and eligibility for salary increases, bonuses, benefits and option grants
under our stock option plans. The initial employment term was one year. Mr.
Holec's employment term is automatically renewed for additional one-year terms,
unless either we or Mr. Holec provide written notice to the other party at
least 30 days before the expiration of any one-year employment term that the
employment agreement will not be renewed. We may also terminate Mr. Holec's
employment without cause if we give him written notice 30 days before this
termination. If we do not renew the agreement or terminate his employment
without cause, we must pay Mr. Holec severance equal to six months salary plus
salary for up to six additional months until he finds full-time employment.
We also entered into an employment agreement with Patrick Dauga, our vice
president, international, on March 17, 1998. The agreement establishes Mr.
Dauga's minimum compensation level and eligibility for salary increases,
bonuses, benefits and option grants. We may terminate Mr. Dauga's employment
agreement if we give him written notice twelve months before his termination.
We may terminate his employment immediately without notice if we pay to Mr.
Dauga his base salary, targeted commissions, bonus and fringe benefits. Mr.
Dauga may terminate his employment agreement if he gives us written notice
three months before his termination.
Under the terms of our offer letter dated July 31, 1998 to Mr. Bottum,
our vice president, marketing, and our offer letter dated August 23, 1996 to
Mr. Potrzeba, our vice president, sales, if we terminate either Mr. Bottum's or
Mr. Potrzeba's employment without cause, we must continue to pay his base
salary for up to six months until he has obtained permanent employment
elsewhere. In the case of Mr. Potrzeba, if after six months he has been unable
to obtain employment elsewhere and we believe he has made a good faith effort
to do so, we will continue to pay Mr. Potrzeba his base salary for up to six
months until he has obtained full-time employment elsewhere. Neither Mr. Bottum
nor Mr. Potrzeba is entitled to salary continuance if he voluntarily terminates
his employment with us for any reason other than a change in control that
results in a substantial change in the scope of his employment responsibilities
or job location.
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Executive Compensation
The following table provides information concerning compensation paid or
accrued by us to or on behalf of our chief executive officer and each of our
other four most highly compensated executive officers during the fiscal year
ended March 31, 1999. The aggregate amount of perquisites and other personal
benefits, securities or property received by each named executive officer was
less than either $50,000 or 10% of the total annual salary and bonus reported
for each respective named executive officer.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation Awards
----------------- ------------
Shares
Underlying All Other
Name and Principal Position Salary Bonus Options Compensation
- --------------------------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Kenneth H. Holec
President and Chief Executive
Officer........................ $205,000 $127,625 200,000 $ 4,245(3)
Patrick Dauga
Vice President, International.. 180,654 92,053(2) 30,000 45,275(4)
Kevin R. Potrzeba
Vice President, Sales.......... 135,000 109,476(2) 20,000 4,245(3)
Jonathan P. Otterstatter
Senior Vice President,
Technology and Services........ 126,000 40,100 60,000 4,245(3)
Roger E. Bottum
Vice President, Marketing (1).. 109,375 13,125 135,000 2,995(3)
</TABLE>
- --------
(1) Mr. Bottum joined ShowCase in August 1998. His annual salary as of March
31, 1999 is $175,000. The amount included under the all other compensation
column includes 401(k) plan matching contributions in the amount of $500.
(2) Includes sales commissions in the amount of $79,003 for Mr. Dauga and
$76,226 for Mr. Potrzeba.
(3) Includes amounts which, at the recipient's discretion, may be allocated
toward our 401(k) plan or toward medical premiums, medical expense
reimbursement or dependent care expense reimbursement on a pre-tax basis
under our flexible benefit plan.
(4) Includes amounts we pay for health insurance and retirement benefits.
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The following table provides information concerning the stock option
grants we made to each of our named executive officers during the fiscal year
ended March 31, 1999. Options to purchase an aggregate of 765,500 shares of
common stock were granted to our employees during fiscal 1999. All stock
options were granted with an exercise price equal to the fair market value of
the common stock as determined by our board of directors on the grant date. The
5% and 10% assumed annual rates of compounded stock price appreciation are
required by rules of the Securities and Exchange Commission and do not
represent our estimates or projections of our future stock prices.
Option Grants in Fiscal 1999
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
% of Total Rates of Stock
Number of Options Price
Securities Granted to Exercise Appreciation for
Underlying Employees Price Option Term
Options in Fiscal Per Expiration -----------------
Name Granted 1999 Share Date 5% 10%
- ---- ---------- ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Kenneth H. Holec........ 125,000(1) 16.3% $1.50 06/02/08 $117,918 $298,827
75,000(2) 9.8 5.35 02/12/09 252,344 639,489
Patrick Dauga........... 30,000(2) 3.9 5.35 02/12/09 100,938 255,796
Kevin R. Potrzeba....... 20,000(2) 2.6 5.35 02/12/09 67,292 170,530
Jonathan P.
Otterstatter........... 25,000(1) 3.3 1.50 06/02/08 23,584 59,765
35,000(2) 4.6 5.35 02/12/09 117,761 298,428
Roger E. Bottum......... 90,000(1) 11.8 2.00 08/17/08 113,201 286,874
45,000(3) 5.9 2.00 08/17/08 56,601 143,437
</TABLE>
- --------
(1) These options vest over a five-year period beginning on the grant date.
(2) These options vest over a five-year period beginning on the earlier of the
date of the closing of an initial public offering of our common stock or
April 1, 2000.
(3) This option vests nine years and 11 months after the grant date unless Mr.
Bottum meets objectives included in his stock option agreement, in which
case this option vests over a five-year period beginning on the grant date.
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The following table provides information concerning the exercise of
options to purchase common stock by our named executive officers during fiscal
1999 and the number and value of unexercised stock options held by these
executive officers as of March 31, 1999. The value of unexercised in-the-money
options is based on a value of $7.12 per share, the fair market value of our
common stock as of March 31, 1999, as determined by our board of directors,
less the applicable per share exercise price multiplied by the number of shares
issued on exercise of the option.
Aggregated Option Exercises in Fiscal 1999 and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year-End at Fiscal Year-End
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth H. Holec........ 450,807 $886,852 27,312 207,365 $156,486 $918,530
Patrick Dauga........... -- -- 10,000 90,000 57,000 395,100
Kevin R. Potrzeba....... -- -- 28,000 82,000 169,120 409,880
Jonathan P.
Otterstatter........... -- -- 86,667 78,333 570,766 316,984
Roger E. Bottum......... -- -- 10,500 124,500 53,760 637,440
</TABLE>
Benefit Plans
1991 Long-Term Incentive and Stock Option Plan
Our 1991 Long-Term Incentive and Stock Option Plan, as amended (the
"Stock Option Plan") provides for the grant of options to purchase shares of
common stock and other long-term incentive awards to any of our full or part-
time employees, officers, directors, consultants and independent contractors.
Options granted under the Stock Option Plan may qualify as incentive stock
options under the Internal Revenue Code of 1986, as amended, or may be options
that do not qualify as incentive stock options. Other long-term incentive
awards that may be granted under the Stock Option Plan include stock
appreciation rights, restricted stock and performance awards. We have reserved
an aggregate of 2,481,524 shares of common stock for issuance under the Stock
Option Plan of which 828,014 shares have been issued upon exercise of options
through June 1, 1999. The Stock Option Plan is administered by our compensation
committee. Our compensation committee has the discretion to select the people
to whom options are granted and to establish the terms and conditions of each
stock option, subject to the provisions of the Stock Option Plan and to any
special provisions approved by our board of directors. The exercise price of an
incentive stock option granted under the Stock Option Plan must not be less
than 100% of the fair market value of the common stock on the date the option
is granted. In the event that a proposed optionee owns more than 10% of our
common stock, any incentive stock option granted to this optionee must have an
exercise price not less than 110% of the fair market value of our common stock
on the grant date. The term of each option is determined by the compensation
committee, but in any event the term of an incentive stock option may not
exceed 10 years from the date of grant and the term of a non-qualified stock
option may not exceed 15 years from the date of grant. In the case of an
incentive option granted to an owner of more than 10% of our common stock, the
term may not exceed five years from the date of grant. The Stock Option Plan is
subject to amendment by our board of directors, except that the board may not,
without the approval of our shareholders, increase the number of shares which
may be issued under the Stock Option Plan, decrease the minimum exercise price
of options granted under the Stock Option Plan, extend the maximum option term
or extend the term of the Stock Option Plan beyond February 28, 2001.
As of June 1, 1999, options to purchase an aggregate of 1,606,507 shares
of common stock, at a weighted average exercise price of $2.58 per share, were
outstanding under the Stock Option Plan, and a total of 47,003 shares were
available for future option grants. We expect to continue to grant options
under the Stock Option Plan until no shares remain available for grant.
45
<PAGE>
1999 Stock Incentive Plan
Our 1999 Stock Incentive Plan (the "1999 Incentive Plan") was approved by
our board of directors and shareholders in April 1999. The 1999 Incentive Plan
provides for the granting of:
. stock options, including incentive stock options, as defined by the
Internal Revenue Code, and non-qualified stock options;
. stock appreciation rights;
. restricted stock and restricted stock units;
. performance awards; and
. other stock-based awards.
We have reserved 2,500,000 shares of common stock for issuance under the
1999 Incentive Plan. The 1999 Incentive Plan is administered by our
compensation committee. The compensation committee has the authority to
establish rules for the administration of the 1999 Incentive Plan, to select
the persons to whom awards are granted, to determine the types of awards to be
granted and the number of shares of common stock covered by the awards and to
set the terms and conditions of the awards. The compensation committee may also
determine whether the payment of any amounts received under any award shall be
deferred. Awards may provide that upon grant or exercise, the holder will
receive shares of common stock, cash or any combination of both, as the
compensation committee shall determine.
In order to meet the requirements of Section 162(m) of the Internal
Revenue Code, the 1999 Incentive Plan contains a limitation on the number of
options that may be granted to any single person in any one calendar year.
The exercise price per share under any incentive stock option or the
grant price of any stock appreciation right cannot be less than 100% of the
fair market value of our common stock on the date of the grant of the incentive
stock option or stock appreciation right. Options may be exercised by payment
in full of the exercise price, either in cash or, at the discretion of the
compensation committee, in whole or in part by the tendering of shares of
common stock or other consideration having a fair market value on the date the
option is exercised equal to the exercise price. Determinations of fair market
value under the 1999 Incentive Plan are made in accordance with methods and
procedures established by the compensation committee.
The holder of a stock appreciation right is entitled to receive the
excess of the fair market value (calculated as of the exercise date or, if the
compensation committee shall so determine, as of any time during a specified
period before or after the exercise date) of a specified number of shares over
the grant price of the stock appreciation right.
The holder of restricted stock may have all of the rights of a
shareholder of ShowCase, including the right to vote the shares subject to the
restricted stock award and to receive any dividends, or these rights may be
restricted. Restricted stock may not be transferred by the holder until the
restrictions established by the compensation committee lapse. Holders of
restricted stock units have the right, subject to any restrictions imposed by
the compensation committee, to receive shares of common stock (or a cash
payment equal to the fair market value of the shares) at some future date. Upon
termination of the holder's employment during the restriction period,
restricted stock and restricted stock units shall be forfeited, unless the
compensation committee determines otherwise.
If any shares of common stock subject to any award or to which an award
relates are not purchased or are forfeited, or if any award terminates without
the delivery of shares or other consideration, the shares previously used for
these awards become available for future awards under the 1999 Incentive Plan.
Except as provided under procedures adopted by the compensation committee to
avoid double counting with respect to
46
<PAGE>
awards granted together with or in substitution for other awards, all shares
relating to awards granted are counted against the aggregate number of shares
available for granting awards under the 1999 Incentive Plan.
Our board of directors may amend, alter or discontinue the 1999 Incentive
Plan at any time, however shareholder approval must be obtained for any change
that, absent shareholder approval:
. would cause Rule 16b-3 of the Securities Exchange Act or section
162(m) of the Internal Revenue Code to become unavailable with
respect to the 1999 Incentive Plan;
. would violate any rules or regulations of the National Association of
Securities Dealers, Inc., the Nasdaq National Market or any
securities exchange applicable to us; or
. would cause us to be unable under the Internal Revenue Code to grant
incentive stock options under the 1999 Incentive Plan.
Under the 1999 Incentive Plan, the compensation committee may permit
participants receiving or exercising awards, subject to the discretion of the
compensation committee and upon terms and conditions as it may impose, to
surrender shares of common stock (either shares received upon the receipt or
exercise of the award or shares previously owned by the optionee) to us to
satisfy federal and state withholding tax obligations. In addition, the
compensation committee may grant, subject to its discretion and the rules it
may adopt, a bonus to a participant in order to provide funds to pay all or a
portion of federal and state taxes due as a result of the receipt or exercise
of (or lapse of restrictions relating to) an award.
1999 Employee Stock Purchase Plan
Our 1999 Employee Stock Purchase Plan (the "Stock Purchase Plan") will
become effective upon consummation of this offering and is intended to qualify
as an employee stock purchase plan within the meaning of Section 423 of the
Code. The Stock Purchase Plan covers an aggregate of 500,000 shares of common
stock. In order to participate in the Stock Purchase Plan, employees must meet
specific eligibility requirements. Participating employees will be able to
direct the company to make payroll deductions of up to 15% of their
compensation during a purchase period for the purchase of shares of common
stock. Each purchase period, with the exception of the initial offering period,
will be six months. The Stock Purchase Plan will provide participating
employees with the right, subject to limitations, to purchase our common stock
at a price equal to 85% of the lesser of the fair market value of our common
stock on the first day or the last day of the applicable purchase period,
except that the price on the first day of the initial purchase period will be
the initial public offering price of the shares of the common stock offered by
this prospectus. The Stock Purchase Plan will terminate on the date our board
of directors may determine, or automatically as of the date on which all of the
shares of common stock reserved for purchase under the Stock Purchase Plan have
been sold.
401(k) Plan
We have established a 401(k) plan, a tax-qualified employee savings and
retirement plan, for all of our employees who satisfy eligibility requirements,
including requirements relating to age and length of service. Pursuant to the
401(k) plan, employees may elect to reduce their current compensation by up to
the lower of 15% or the statutorily prescribed limit and have the amount of
this reduction contributed to the 401(k) plan. The 401(k) plan permits us to
make additional discretionary matching contributions. The 401(k) plan is
intended to qualify under Section 401 of the Code so that contributions by
employees or by us to the 401(k) plan, and income earned on plan contributions,
are not taxable to employees until withdrawn from the 401(k) plan, and so that
our contributions, if any, will be deductible by us when made.
Indemnification Matters and Limitation of Liability
Minnesota law and our bylaws provide that we will, subject to
limitations, indemnify any person made or threatened to be made a party to a
proceeding by reason of that person's former or present official capacity with
us. We will indemnify this person against judgments, penalties, fines,
settlements and reasonable expenses,
47
<PAGE>
and, subject to limitations, we will pay or reimburse reasonable expenses
before the final disposition of the proceeding.
As permitted by Minnesota law, our articles of incorporation provide that
our directors will not be personally liable to us or our shareholders for
monetary damages for a breach of fiduciary duty as a director, subject to the
following exceptions:
. any breach of the director's duty of loyalty to us or our
shareholders;
. acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
. liability for illegal distributions under section 302A.559 of the
Minnesota Business Corporation Act or for civil liabilities for state
securities law violations under section 80A.23 of the Minnesota
statutes;
. any transaction from which the director derived an improper personal
benefit; and
. any act or omission occurring before the effective date of Article
VIII of our articles of incorporation.
Dr. Haque may be entitled to indemnification in his role as one of our
directors by Norwest Equity Partners IV, L.P., Norwest Equity Partners V, L.P.
and/or Norwest Venture Capital Management, Inc.
Presently, there is no pending litigation or proceeding involving any of
our directors, officers, employees or agents where indemnification will be
required or permitted. We are not aware of any threatened litigation or
proceeding that might result in a claim for indemnification.
CERTAIN TRANSACTIONS
On March 26, 1998, we sold an aggregate of 875,000 shares of our Series B
convertible preferred stock at a purchase price of $4.00 per share, including
625,000 shares to Norwest Equity Partners V, L.P. These shares are convertible
into 617,284 shares of our common stock. Dr. Haque, one of our directors, is a
partner of Itasca Partners V, L.L.P., a general partner of Norwest Equity
Partners V, L.P.
We believe that the shares issued in the transactions described above
were sold at the then fair market value of the shares and that the terms of the
transactions were no less favorable than we could have obtained from
unaffiliated third parties.
48
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table provides information concerning beneficial ownership
of our common stock as of June 1, 1999 by:
. each shareholder that we know owns more than 5% of our outstanding
common stock;
. each of our named executive officers;
. each of our directors; and
. all of our directors and executive officers as a group.
The following table lists the applicable percentage of beneficial
ownership based on 7,273,393 shares of common stock outstanding as of June 1,
1999. The table also lists the applicable percentage of beneficial ownership
based on 10,273,393 shares of common stock outstanding upon completion of this
offering, assuming no exercise of the underwriters' overallotment option.
Except where noted, the persons or entities named have sole voting and
investment power with respect to all shares shown as beneficially owned by
them. The principal address of each of the holders of more than 5% of our
outstanding common stock listed below is c/o ShowCase Corporation, 4131 Highway
52 North, Suite G111, Rochester, Minnesota 55901, except where another address
is listed below.
The fourth column shows separately shares which may be acquired by
exercise of stock options within sixty days after June 1, 1999 by the directors
and executive officers individually and as a group as shown. These shares are
included in the numbers included in the first column. Shares of common stock
which may be acquired by exercise of stock options are deemed outstanding for
purposes of computing the percentage beneficially owned by the persons holding
these options but are not deemed outstanding for purposes of computing the
percentage beneficially owned by any other person.
<TABLE>
<CAPTION>
Percentage of Common
Stock Owned
--------------------
Number of Shares
Shares Subject
Beneficially Before the After the to
Name and Address of Beneficial Owner Owned Offering Offering Options
- ------------------------------------ ------------ ---------- --------- -------
<S> <C> <C> <C> <C>
Promod Haque and
Norwest Equity Partners
245 Lytton Avenue, Suite 250
Palo Alto, California 94301....... 2,812,312 38.7% 27.4% --
David G. Wenz
2924 Salem Point Dr. S.W.
Rochester, Minnesota 55902........ 910,000 12.5 8.9 --
Dennis Semerad ..................... 856,960 11.8 8.3 --
Kenneth H. Holec ................... 788,761 10.8 7.6 37,954
David N. Youngers
8223 75th Avenue, N.W.
Oronoco, Minnesota 55460.......... 479,815 6.6 4.7 --
Jonathan P. Otterstatter ........... 145,667 2.0 1.4 90,667
C. McKenzie Lewis III............... 27,917 0.4 0.3 27,917
Jack Noonan ........................ 27,917 0.4 0.3 27,917
Kevin R. Potrzeba .................. 28,000 0.4 0.3 28,000
Roger E. Bottum .................... 16,500 0.2 0.2 16,500
Patrick Dauga ...................... 10,000 0.1 0.1 10,000
All directors and executive officers
as a group (10 persons) ........... 4,762,283 63.3 45.2 267,204
</TABLE>
49
<PAGE>
Dr. Haque's beneficial ownership includes 1,895,028 shares held by
Norwest Equity Partners IV, L.P. and 917,284 shares held by Norwest Equity
Partners V, L.P. Dr. Haque, one of our directors, is a general partner of
Itasca Partners, which is the general partner of Norwest Equity Partners IV,
and he is a general partner of Itasca Partners V, which is the general partner
of Norwest Equity Partners V. Dr. Haque shares voting and dispositive power of
the shares held by the Norwest funds with other general and managing partners
of the Norwest funds. Dr. Haque disclaims beneficial ownership of shares held
by Norwest Equity Partners, IV, L.P. and Norwest Equity Partners V, L.P.
Mr. Semerad's beneficial ownership includes 20,000 shares registered in
the name of Mr. Semerad's wife, Rita M. Semerad. Mr. Holec's beneficial
ownership includes 3,738 shares registered in the name of each of Mr. Holec's
three minor children. Mr. Otterstatter's beneficial ownership includes 17,000
shares registered jointly in the name of Jonathan and Pamela Otterstatter and
1,000 shares registered in the name of each of Mr. Otterstatter's three minor
children.
50
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Effective upon the filing of our amended and restated articles of
incorporation upon the closing of this offering, our authorized capital stock
will consist of 50,000,000 shares of capital stock. Unless otherwise designated
by our board of directors, all issued shares shall be deemed common stock with
equal rights and preferences.
Common Stock
As of June 1, 1999, there were 7,273,393 shares of common stock
outstanding, held by 63 shareholders of record, including 2,759,226 shares that
will be issued upon the automatic conversion of the outstanding shares of our
preferred stock into common stock upon the closing of this offering.
Holders of our common stock do not have cumulative voting rights and are
entitled to one vote for each share held of record on all matters submitted to
a vote of the shareholders, including the election of directors. Holders of our
common stock are entitled to receive ratably dividends, if any, as may be
declared by the board of directors out of funds legally available for these
dividends, subject to the prior rights of any preferred stock then outstanding.
See "Dividend Policy."
Upon a liquidation, dissolution or winding up of ShowCase, the holders of
our common stock will be entitled to share ratably in the net assets legally
available for distribution to shareholders after the payment of all debts and
other liabilities of ShowCase, subject to the prior rights of any preferred
stock then outstanding. Holders of our common stock have no preemptive or
conversion rights or other subscription rights and there are no redemption or
sinking funds provisions applicable to the common stock. All outstanding shares
of common stock are, and the common stock outstanding upon completion of this
offering will be, fully paid and nonassessable.
Preferred Stock
Effective upon the closing of this offering, our board of directors will
have the authority, without further action by the shareholders, to issue from
time to time shares of preferred stock in one or more series and to fix the
number of shares, designations and preferences, powers and relative,
participating, optional or other special rights and the qualifications or
restrictions thereof. The preferences, powers, rights and restrictions of
different series of preferred stock may differ with respect to dividend rates,
amounts payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions and purchase funds and other matters.
The issuance of preferred stock could decrease the amount of earnings and
assets available for distribution to holders of common stock or adversely
affect the rights and powers, including voting rights, of the holders of common
stock. It may also have the effect of delaying, deferring or preventing a
change in control of ShowCase.
Warrant
Effective upon the closing of this offering, the outstanding warrant to
purchase 13,750 shares of our Series B preferred stock will represent the right
to purchase 13,580 shares of our common stock. If we lease more than $1 million
in equipment from the holder of this warrant, the holder will be entitled to
purchase additional shares of our common stock equal to 5.5% of the amount
leased in excess of $1 million, divided by the exercise price of $4.00.
Registration Rights
After this offering, the holders of 2,759,226 shares of common stock will
be entitled to rights with respect to the registration of these shares under
the Securities Act as follows:
51
<PAGE>
. Demand Registration Rights: At any time, the holders of at least 51%
of these shares of common stock can request that we register all or a
portion of their shares. Upon this request, we must, subject to
restrictions and limitations, use our best efforts to cause a
registration statement covering the number of shares of common stock
that are subject to the request to become effective. The holders may
only require us to file two registration statements in response to
their demand registration rights.
. Piggyback Registration Rights: The holders of these shares can
request that we register their shares anytime we are filing a
registration statement to register securities for our own account.
These registration opportunities are unlimited but the number of
shares that can be registered may be cut back in limited situations
by the underwriters.
. S-3 Registration Rights: The holders of these shares can request that
we register their shares if we are eligible to file a registration
statement on Form S-3 and if the aggregate price of the shares
offered to the public is at least $1,000,000. The holders may only
require us to file two registration statements on Form S-3 per
calendar year.
These registration rights terminate for each holder when all of these
shares held by the holder may be sold under Rule 144 under the Securities Act
during any 90-day period.
All holders of these registration rights have waived their registration
rights to participate in this offering and have signed agreements with the
underwriters prohibiting the exercise of these registration rights for 180 days
following the date of this prospectus.
Provisions of our Restated Articles and Bylaws and State Law Provisions with
Potential Antitakeover Effects
The existence of authorized but unissued preferred stock, described
above, and provisions of Minnesota law, described below, could have an
antitakeover effect. These provisions are intended to provide management with
flexibility, to enhance the likelihood of continuity and stability in the
composition of our board of directors and the policies of our board and to
discourage an unsolicited takeover of ShowCase, if our board of directors
determines that this takeover is not in the best interests of ShowCase and our
shareholders. However, these provisions could have the effect of discouraging
attempts to acquire ShowCase, which could deprive our shareholders of
opportunities to sell their shares of common stock at prices higher than
prevailing market prices.
Upon the closing of this offering, our board of directors will be divided
into three classes serving staggered three-year terms. As a result of this
division, generally at least two shareholders' meetings will be required for
shareholders to effect a change in control of the board of directors. In
addition, our bylaws will contain provisions that establish specific procedures
for calling meetings of shareholders and appointing and removing members of the
board of directors.
Section 302A.671 of the Minnesota Business Corporation Act applies, with
exceptions, to any acquisition of our voting stock from a person other than us,
and other than in connection with certain mergers and exchanges to which we are
a party, that results in the beneficial ownership of 20% or more of the voting
stock then outstanding. Section 302A.671 requires approval of these
acquisitions by a majority vote of our shareholders before its consummation. In
general, shares acquired in the absence of this approval are denied voting
rights and are redeemable by us at their then fair market value within 30 days
after the acquiring person has failed to give a timely information statement to
us or the date the shareholders voted not to grant voting rights to the
acquiring person's shares.
52
<PAGE>
Section 302A.673 of the Minnesota Business Corporation Act generally
prohibits any business combination by us, or by any of our subsidiaries, with
any shareholder that purchases 10% or more of our voting shares within four
years following this interested shareholder's share acquisition date. The
business combination may be permitted if it is approved by a committee of all
of the disinterested members of our board of directors before the interested
shareholder's share acquisition date.
Listing
We have applied for quotation of our common stock on the Nasdaq National
Market under the symbol "SHWC."
Transfer Agent and Registrar
The transfer agent and registrar for our common stock will be Norwest
Bank Minnesota, N.A. Its address is 161 North Concord Exchange, South Saint
Paul, Minnesota 55075, and its telephone number is (651) 450-4064.
53
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon the closing of this offering, we will have 10,273,393 shares of
common stock outstanding, assuming no exercise of the underwriters' over-
allotment option and no exercise of outstanding options to purchase common
stock after June 1, 1999. All of our directors and executive officers and
substantially all of our shareholders, holding in the aggregate in excess of
95% of the outstanding shares of our common stock, have agreed that they will
not, without the prior written consent of the representatives of the
underwriters, sell or otherwise dispose of any shares of common stock or
options to acquire shares of common stock during the 180-day period following
the closing of this offering. See "Underwriting."
All of the shares of common stock being sold in this offering will be
freely tradeable without restriction or further registration under the
Securities Act, except for shares held by our "affiliates," as defined in Rule
144 under the Securities Act, which may generally only be sold in compliance
with the limitations of Rule 144, described below. The remaining 7,273,393
shares were issued and sold by us in private transactions and are deemed
restricted securities under Rule 144. These shares may be sold in the public
market only if registered under the Securities Act or if exempt from
registration under Rules 144, 144(k) or 701 under the Securities Act, which
rules are summarized below. Subject to the agreements between our shareholders
and the underwriters, described above, and the provisions of Rules 144, 144(k)
and 701, additional shares will be available for sale in the public market,
subject in the case of shares held by affiliates to compliance with volume
restrictions, as follows:
. 22,440 shares will be available for immediate sale in the public
market on the date of this prospectus;
. 39,920 shares will be available for sale beginning 90 days after the
date of this prospectus; and
. 7,211,033 shares will be available for sale under Rules 144 and 701
upon the expiration of agreements between our shareholders and the
underwriters at varying dates beginning 180 days after the date of
this prospectus.
In general, under Rule 144, beginning 90 days after the date of this
prospectus, a person or persons whose shares are aggregated, including an
affiliate, who has beneficially owned restricted shares for at least one year,
is entitled to sell within any three-month period a number of shares that does
not exceed the greater of 1% of the then outstanding shares of common stock,
approximately 102,734 shares immediately after this offering, or the average
weekly trading volume of our common stock on the Nasdaq National Market during
the four calendar weeks preceding the date of the sale. Sales under Rule 144
also are subject to requirements pertaining to the manner and notice of the
sales and the availability of current public information concerning ShowCase.
Under Rule 144(k), a person who is not deemed to have been an affiliate
of ShowCase at any time during the 90 days before a sale and who has
beneficially owned the shares proposed to be sold for at least two years would
be entitled to sell these shares without regard to the requirements described
above. To the extent that shares were acquired from an affiliate of ShowCase,
the transferee's holding period for the purpose of effecting a sale under Rule
144(k) commences on the date of transfer from the affiliate.
Rule 701 provides that, beginning 90 days after the date of this
prospectus, persons other than affiliates may sell shares of common stock
acquired from us in connection with written compensatory benefit plans,
including our stock option plans, subject only to the manner of sale provisions
of Rule 144. Beginning 90 days after the date of this prospectus, affiliates
may sell these shares of common stock subject to all provisions of Rule 144
except the one-year minimum holding period.
Shortly after the closing of this offering, we intend to file a
registration statement on Form S-8 under the Securities Act to register all
shares of common stock issuable under the Stock Option Plan, the 1999 Incentive
Plan and the Stock Purchase Plan. See "Management--Benefit Plans." This Form S-
8 registration statement is expected to become effective immediately upon
filing and shares covered by that registration statement will then be eligible
for sale in the public markets, subject to the Rule 144 limitations applicable
to affiliates.
54
<PAGE>
Prior to this offering there has been no public market for our common
stock, and no predictions can be made regarding the effect, if any, that sales
of shares in the open market or the availability of shares for sale will have
on the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of our common stock in the public market could adversely
affect the prevailing market price.
After the closing of this offering, the holders of 2,759,226 shares of
our common stock will be entitled to rights with respect to the registration of
these shares under the Securities Act. Registration of these shares under the
Securities Act would result in these shares becoming freely tradeable without
restriction under the Securities Act, except for shares purchased by
affiliates, immediately upon the effectiveness of registration. For a
discussion of these rights, see "Description of Capital Stock--Registration
Rights."
55
<PAGE>
UNDERWRITING
General
We intend to offer our common stock in the United States through a number
of underwriters. Merrill Lynch, Pierce, Fenner & Smith Incorporated, U.S.
Bancorp Piper Jaffray Inc., Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated, and FAC/Equities, a division of First Albany Corporation, are
acting as representatives of each of the underwriters named below. Subject to
the terms and conditions set forth in a purchase agreement between us and the
underwriters, we have agreed to sell to the underwriters, and each of the
underwriters severally and not jointly has agreed to purchase from us, the
number of shares of our common stock indicated opposite its name below.
<TABLE>
<CAPTION>
Number of
Underwriters Shares
------------ ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................................
U.S. Bancorp Piper Jaffray Inc. ..............................
Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated.................................................
FAC/Equities, a division of First Albany Corporation..........
---------
Total.................................................... 3,000,000
=========
</TABLE>
In the purchase agreement, the several underwriters have agreed, subject
to the terms and conditions provided in that agreement, to purchase all of the
shares of our common stock being sold under the terms of the agreement if any
of the shares of common stock are purchased. Under the purchase agreement, the
commitments of non-defaulting underwriters may be increased.
We have agreed to indemnify the underwriters against liabilities under
the Securities Act or to contribute to payments the underwriters may be
required to make in respect of those liabilities. The expenses of this
offering, exclusive of the underwriting discount, are estimated at $600,000 and
are payable by us.
The shares of common stock are being offered by the several underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of legal matters by counsel for the underwriters and other
conditions. The underwriters reserve the right to withdraw, cancel or modify
this offer and to reject orders in whole or in part.
Commissions and Discounts
The representatives have advised us that the underwriters propose
initially to offer the shares of our common stock to the public at the initial
public offering price on the cover page of this prospectus, and to dealers at
this price less a concession not in excess of $ per share of common stock.
The underwriters may allow, and the dealers may reallow, a discount not in
excess of $ per share of common stock to other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
The following table shows the per share and total public offering price,
the underwriting discount to be paid by us to the underwriters and the proceeds
before expenses to us. This information is presented assuming either no
exercise or full exercise by the underwriters of their over-allotment options.
<TABLE>
<CAPTION>
Without With
Per Share Option Option
--------- ------- ------
<S> <C> <C> <C>
Public offering price............................ $ $ $
Underwriting discount............................ $ $ $
Proceeds, before expenses, to ShowCase........... $ $ $
</TABLE>
56
<PAGE>
Over-Allotment Option
We have granted an option to the underwriters, exercisable for 30 days
after the date of this prospectus, to purchase up to an aggregate of an
additional 450,000 shares of our common stock at the initial public offering
price on the cover of this prospectus, less the underwriting discount. The
underwriters may exercise this option solely to cover over-allotments, if any,
made on the sale of our common stock offered by this prospectus. To the extent
that the underwriters exercise this option, each underwriter will be obligated
to purchase a number of additional shares of our common stock in proportion to
the underwriter's initial amount reflected in the table above.
Reserved Shares
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 150,000 of the shares offered by this prospectus
to be sold to some of our employees and directors and other persons with whom
we have relationships. The number of shares of our common stock available for
sale to the general public will be reduced to the extent that those persons
purchase the reserved shares. Any reserved shares that are not orally confirmed
for purchase within one day of the pricing of the offering will be offered by
the underwriters to the general public on the same terms as the other shares
offered by this prospectus.
No Sales of Similar Securities
We and our executive officers and directors and substantially all of our
shareholders, holding in the aggregate in excess of 95% of the outstanding
shares of our common stock, have agreed not to directly or indirectly
. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of, lend or otherwise dispose of or
transfer any shares of our common stock or securities convertible
into or exchangeable or exercisable for our common stock, whether now
owned or later acquired by the person executing the agreement or with
respect to which the person executing the agreement later acquires
the power of disposition, or file any registration statement under
the Securities Act relating to any shares of our common stock or
. enter into any swap or other agreement or any other agreement that
transfers, in whole or in part, the economic consequence of ownership
of our common stock whether this swap or transaction is to be settled
by delivery of our common stock or other securities, in cash or
otherwise
without the prior written consent of Merrill Lynch on behalf of the
underwriters for a period of 180 days after the date of the prospectus. See
"Shares Eligible for Future Sale."
Nasdaq National Market Listing
We expect our common stock to be approved for listing on the Nasdaq
National Market, subject to notice of issuance, under the symbol "SHWC."
Before this offering, there has been no market for our common stock. The
initial public offering price will be determined through negotiations between
us and the representatives of the underwriters. The factors to be considered in
determining the initial public offering price, in addition to prevailing market
conditions, include the valuation multiples of publicly traded companies that
the representatives believe to be comparable to us, some of our financial
information, the history of, and the prospects for, us and the industry in
which we compete, and an assessment of our management, its past and present
operations, the prospects for, and timing of, our future revenues, the present
state of our development, the percentage interest of ShowCase being sold as
57
<PAGE>
compared to the valuation for ShowCase and the above factors in relation to
market values and various valuation measures of other companies engaged in
activities similar to ours. There can be no assurance that an active trading
market will develop for our common stock or that our common stock will trade in
the public market subsequent to the offering at or above the initial public
offering price.
The underwriters do not expect sales of our common stock to any accounts
over which they exercise discretionary authority to exceed 5% of the number of
shares being offered under the prospectus.
Price Stabilization and Short Positions
Until the distribution of our common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and selling group members to bid for and purchase our common stock. As an
exception to these rules, the underwriters are permitted to engage in
transactions that stabilize the price of our common stock. These transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of our common stock.
If the underwriters create a short position in our common stock in
connection with the offering, that is, if they sell more shares of our common
stock than are indicated on the cover page of this prospectus, the underwriters
may reduce that short position by purchasing our common stock in the open
market. The underwriters may also elect to reduce any short position by
exercising all or part of the over-allotment option described above.
Penalty Bids
The underwriters may also impose a penalty bid on other underwriters and
selling group members. This means that if the underwriters purchase shares of
our common stock in the open market to reduce their short position or to
stabilize the price of our common stock, they may reclaim the amount of the
selling concession from the underwriters and selling group members who sold
those shares as part of the offering.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of these purchases. The imposition of a penalty
bid might also have an effect on the price of our common stock to the extent
that it discourages resales of our common stock.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither
we nor any of the underwriters make any representation that the representatives
will engage in these transactions or that these transactions, once commenced,
will not be discontinued without notice.
LEGAL MATTERS
Dorsey & Whitney LLP, Minneapolis, Minnesota, will pass upon the validity
of the issuance of shares of common stock offered by this prospectus for
ShowCase. Fenwick & West LLP, Palo Alto, California, will pass upon certain
legal matters in connection with the offering for the underwriters.
EXPERTS
The consolidated balance sheets as of March 31, 1998 and 1999 and the
related consolidated statements of operations and comprehensive income (loss),
stockholders' equity, and cash flows for each of the years in the three-year
period ended March 31, 1999 included in this prospectus have been included in
reliance on the report of KPMG Peat Marwick LLP, independent certified public
accountants, given on their authority as experts in auditing and accounting.
58
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 with respect to the common stock offered by this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information provided in the registration
statement or the exhibits and schedules which are part of the registration
statement. For further information on ShowCase and our common stock, you should
review the registration statement, including exhibits and schedules. You may
read and copy any document we file at the Commission's public reference room in
Washington, D.C. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference room. Our filings are also available to the
public from the Commission's web site at http://www.sec.gov.
Upon completion of this offering, we will be required to file periodic
reports, proxy statements and other information with the Commission. These
periodic reports, proxy statements and other information will be available for
inspection and copying at the Commission's public reference rooms and the
website of the Commission referred to above.
59
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report............................................. F-2
Consolidated Balance Sheets, March 31, 1998 and 1999..................... F-3
Consolidated Statements of Operations and Comprehensive Income (Loss),
Years ended March 31, 1997, 1998, and 1999............................ F-4
Consolidated Statements of Stockholders' Equity, Years ended March 31,
1997, 1998, and 1999.................................................... F-5
Consolidated Statements of Cash Flows, Years ended March 31, 1997, 1998,
and 1999................................................................ F-6
Notes to Consolidated Financial Statements............................... F-7
</TABLE>
F-1
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
of ShowCase Corporation:
We have audited the accompanying consolidated balance sheets of ShowCase
Corporation and subsidiaries (the Company) as of March 31, 1998 and 1999, and
the related consolidated statements of operations and comprehensive income
(loss), stockholders' equity, and cash flows for each of the years in the
three-year period ended March 31, 1999. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the accompanying consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
ShowCase Corporation and subsidiaries as of March 31, 1998 and 1999, and the
results of their operations and their cash flows for each of the years in the
three-year period ended March 31, 1999 in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 7, 1999
F-2
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
March 31,
----------------
<S> <C> <C>
<CAPTION>
1998 1999
Assets ------- -------
<S> <C> <C>
Current assets:
Cash........................................................ $ 5,404 $ 8,900
Marketable securities....................................... 443 139
Accounts receivable, net.................................... 6,162 7,070
Prepaid expenses and other current assets................... 1,032 1,059
Income taxes receivable..................................... 251 --
Deferred income taxes....................................... 340 550
------- -------
Total current assets...................................... 13,632 17,718
------- -------
Property and equipment, net................................. 2,191 2,092
Investment in affiliates.................................... 192 --
Product rights, net of accumulated amortization............. 124 --
Goodwill, net of accumulated amortization................... 176 116
------- -------
Total assets.............................................. $16,315 $19,926
======= =======
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current liabilities:
Accounts payable............................................ $ 1,094 $ 1,373
Accrued liabilities......................................... 2,885 4,121
Current portion of long-term debt........................... 397 5
Current portion of obligations under capital leases......... 135 127
Income taxes payable........................................ -- 295
Deferred revenue............................................ 7,542 11,646
------- -------
Total current liabilities................................. 12,053 17,567
------- -------
Long-term debt, less current portion........................ 944 2
Capital lease obligations, less current portion............. 213 85
------- -------
Total liabilities......................................... 13,210 17,654
------- -------
Commitments (note 12)
Stockholders' equity:
Series A convertible preferred stock; $.01 par value;
473,757 shares authorized, issued, and outstanding,
total liquidation preference of $2,400..................... 5 5
Series B convertible preferred stock; $.01 par value;
1,777,500 shares authorized, 875,000 issued and
outstanding,
total liquidation preference of $3,500..................... 9 9
Common stock, $.01 par value, 10,000,000 shares authorized,
3,988,560 and 4,502,867 shares issued and outstanding...... 40 45
Additional paid-in capital.................................. 5,988 6,452
Accumulated other comprehensive income:
Cumulative translation adjustment.......................... 107 47
Unrealized holding gain (loss) on securities............... 123 (181)
Deferred compensation....................................... -- (322)
Accumulated deficit......................................... (3,167) (3,783)
------- -------
Total stockholders' equity................................ 3,105 2,272
------- -------
Total liabilities and stockholders' equity................ $16,315 $19,926
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Years ended March 31,
-------------------------
<S> <C> <C> <C>
<CAPTION>
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Revenues:
License fees....................................... $11,639 $14,279 $21,021
Maintenance and support............................ 4,888 6,651 10,390
Professional service fees.......................... 1,500 2,825 4,108
------- ------- -------
Total revenues................................... 18,027 23,755 35,519
------- ------- -------
Cost of revenues:
License fees....................................... 1,365 2,645 3,809
Maintenance and support............................ 990 1,572 2,646
Professional service fees.......................... 1,172 2,005 2,990
------- ------- -------
Total cost of revenues........................... 3,527 6,222 9,445
------- ------- -------
Gross margin........................................ 14,500 17,533 26,074
------- ------- -------
Operating expenses:
Sales and marketing................................ 9,940 15,494 19,050
Product development................................ 2,553 3,051 4,371
General and administrative......................... 1,971 2,590 3,212
------- ------- -------
Total operating expenses......................... 14,464 21,135 26,633
------- ------- -------
Operating income (loss)............................. 36 (3,602) (559)
------- ------- -------
Other income (expense), net:
Interest expense................................... (97) (123) (164)
Interest income.................................... 156 74 277
Equity in income (losses) of unconsolidated
affiliates........................................ (33) 27 26
Gain on sales of securities........................ -- 551 32
Other income (expense), net........................ (12) 14 (28)
------- ------- -------
Total other income (expense), net................ 14 543 143
------- ------- -------
Net income (loss) before income taxes............... 50 (3,059) (416)
Income taxes........................................ -- 175 200
------- ------- -------
Net income (loss)................................... $ 50 $(3,234) $ (616)
------- ------- -------
Other comprehensive income:
Foreign currency translation adjustment............ 31 81 (60)
Unrealized holding gain (loss) on securities....... -- 123 (304)
------- ------- -------
Comprehensive income (loss)......................... $ 81 $(3,030) $ (980)
======= ======= =======
Net income (loss) per share (note 10):
Basic.............................................. $ 0.01 $ (0.82) $ (0.14)
======= ======= =======
Diluted............................................ $ 0.01 $ (0.82) $ (0.14)
======= ======= =======
Weighted average shares outstanding used in
computing basic net income (loss) per share........ 3,847 3,928 4,384
Weighted average shares outstanding used in
computing diluted net income (loss) per share...... 6,455 3,928 4,384
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
<TABLE>
<CAPTION>
Series A Series B
convertible convertible
preferred preferred
stock stock Common stock
-------------- -------------- ----------------
Accumulated
other Retained
Number Number Additional comprehensive earnings Total
of of Number of paid-in income Deferred (accumulated stockholders'
shares Amount shares Amount shares Amount capital (loss) compensation deficit) equity
------- ------ ------- ------ --------- ------ ---------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
March 31,
1996........... 473,757 $ 5 -- $-- 3,842,941 $38 $2,464 $ (5) $ -- $ 17 $2,519
Net income...... -- -- -- -- -- -- -- -- -- 50 50
Change in
foreign
currency
translation
adjustment..... -- -- -- -- -- -- -- 31 -- -- 31
Stock issued
pursuant to
stock option
plan........... -- -- -- -- 9,790 1 1 -- -- -- 2
------- --- ------- ---- --------- --- ------ ----- ----- ------- ------
Balances at
March 31,
1997........... 473,757 5 -- -- 3,852,731 39 2,465 26 -- 67 2,602
Net loss........ -- -- -- -- -- -- -- -- -- (3,234) (3,234)
Change in
foreign
currency
translation
adjustment..... -- -- -- -- -- -- -- 81 -- -- 81
Unrealized
holding gain on
marketable
securities..... -- -- -- -- -- -- -- 123 -- -- 123
Stock issued
pursuant to
stock option
plan........... -- -- -- -- 135,829 1 32 -- -- -- 33
Preferred Series
B stock
issued......... -- -- 875,000 9 -- -- 3,491 -- -- -- 3,500
------- --- ------- ---- --------- --- ------ ----- ----- ------- ------
Balances at
March 31,
1998........... 473,757 5 875,000 9 3,988,560 40 5,988 230 -- (3,167) 3,105
Net loss........ -- -- -- -- -- -- -- -- -- (616) (616)
Change in
foreign
currency
translation
adjustment..... -- -- -- -- -- -- -- (60) -- -- (60)
Unrealized
holding gain
(loss) on
marketable
securities..... -- -- -- -- -- -- -- (304) -- -- (304)
Stock issued
pursuant to
stock option
plan........... -- -- -- -- 514,307 5 109 -- -- -- 114
Deferred
compensation... -- -- -- -- -- -- 355 -- (355) -- --
Amortization of
deferred
compensation... -- -- -- -- -- -- -- -- 33 -- 33
------- --- ------- ---- --------- --- ------ ----- ----- ------- ------
Balances at
March 31,
1999........... 473,757 $ 5 875,000 $ 9 4,502,867 $45 $6,452 $(134) $(322) $(3,783) $2,272
======= === ======= ==== ========= === ====== ===== ===== ======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended March 31,
-----------------------
1997 1998 1999
------ ------- ------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................... $ 50 $(3,234) $ (616)
Adjustments to reconcile net income (loss)
to cash provided by (used in) operating activities:
Depreciation and amortization....................... 618 749 925
Provision for returns and doubtful accounts, net of
returns and write-offs............................. 50 200 305
Equity in income (losses) of unconsolidated
affiliates......................................... 32 (27) (26)
Deferred income taxes............................... (515) 300 (210)
Gain on sale of securities.......................... -- (551) (32)
Deferred compensation amortization.................. -- -- 33
Loss on disposition of property and equipment....... 13 14 35
Changes in operating assets and liabilities, net of
effect of foreign
exchange rate changes:
Accounts receivable................................ (3,049) (1,455) (1,214)
Prepaid expenses and other current assets.......... (394) (376) (27)
Income taxes receivable............................ -- (251) 251
Accounts payable................................... 314 27 279
Accrued liabilities................................ 765 1,375 1,236
Deferred revenue................................... 3,022 2,707 4,104
Income taxes payable............................... 262 (295) 295
------ ------- ------
Net cash provided by (used in) operating
activities....................................... 1,168 (817) 5,338
------ ------- ------
Cash flows from investing activities:
Purchase of property and equipment................... (804) (822) (925)
Investments in affiliates............................ (198) -- --
Proceeds from dissolution of affiliate............... -- -- 218
Proceeds from sale of securities..................... -- 256 32
Proceeds from sale of property and equipment......... -- -- 188
Purchase of product rights........................... (55) -- --
------ ------- ------
Net cash used in investing activities............. (1,057) (566) (487)
------ ------- ------
Cash flows from financing activities:
Proceeds from exercise of stock options.............. 2 33 114
Proceeds from issuance of preferred stock............ -- 3,500 --
Proceeds from issuance of long-term debt............. 722 784 --
Payments on long-term debt........................... (236) (342) (1,334)
Payments under capital lease obligations............. (198) (161) (136)
------ ------- ------
Net cash provided by (used in) financing
activities....................................... 290 3,814 (1,356)
------ ------- ------
Effect of foreign exchange rate changes on cash....... 1 (16) 1
------ ------- ------
Net increase in cash.................................. 402 2,415 3,496
Cash, beginning of year............................... 2,587 2,989 5,404
------ ------- ------
Cash, end of year..................................... $2,989 $ 5,404 $8,900
====== ======= ======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest............................................ $ 97 $ 123 $ 164
====== ======= ======
Income taxes........................................ $ 207 $ 240 $ 259
====== ======= ======
Cash received during the year from income tax
refunds............................................. $ -- $ -- $ 395
====== ======= ======
</TABLE>
Supplemental disclosure of noncash investing and financing activities:
The Company acquired property and equipment totaling $317 under capital
lease during 1998.
During 1998, the Company sold stock purchase warrants in another company
with a basis of $25 in exchange for marketable securities with a fair
market value of $320 and cash.
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
(a) Nature of Operations
ShowCase Corporation (the "Company" or "ShowCase") was incorporated in
1988, and in 1991, introduced a Windows-based query tool for the IBM
AS/400, ShowCase Vista. The Company has subsequently introduced
additional products and services to support an end-to-end business
intelligence solution for IBM AS/400 customers. The Company's product
suite is sold under the name ShowCase STRATEGY.
The Company has wholly owned subsidiaries in Germany, the United
Kingdom, Belgium, and France that distribute ShowCase products and
provide related services to clients in these countries.
During fiscal year 1999, the Company dissolved its 40% ownership
position in ShowCase Japan and received an amount equal to the carrying
value of the Company's ShowCase Japan investment. In addition, during
fiscal year 1999, the Company also dissolved its 20% ownership interest
in ShowCase Italia SpA. The Company's carrying value of its investment
in ShowCase Italia SpA was zero prior to dissolution. The Company
received no proceeds nor was it required to assume any obligations as a
result of the ShowCase Italia SpA dissolution. Prior to dissolution,
the Company used the equity method to account for its investment in
these two affiliates.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of ShowCase
Corporation and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation.
(c) Revenue Recognition
The Company adopted the provisions of Statement of Position ("SOP") No.
97-2, Software Revenue Recognition, as amended by SOP No. 98-4,
Deferral of the Effective Date of Certain Provisions of SOP No. 97-2,
effective April 1, 1998. SOP No. 97-2 supersedes SOP No. 91-1, Software
Revenue Recognition. SOP 97-2 generally requires revenue earned on
software arrangements involving multiple elements to be allocated to
each element based on its relative fair value. The fair value of the
element must be based on objective evidence that is specific to the
vendor. If the vendor does not have objective evidence of the fair
value of all elements in a multiple-element arrangement, all revenue
from the arrangement must be deferred until such evidence exists or
until all elements have been delivered.
Under SOP No. 97-2, the Company recognizes license revenue when the
software has been delivered, if a signed contract exists, the fee is
fixed and determinable, collection of resulting receivables is probable
and product returns are reasonably estimable. License fees that are
contingent upon sale to an end user by distributors and other channel
partners are recognized upon receipt of a report of delivery to the end
user. Maintenance and support fees including product upgrade rights,
when and if available, committed as part of new product licenses and
maintenance resulting from renewed maintenance contracts are deferred
and recognized ratably over the contract period. Professional service
revenue is recognized when services are performed. Revenues related to
multiple element arrangements are allocated to each element of the
arrangement based on the fair values of elements such as license fees,
maintenance and support and professional services. The determination of
fair value is based on vendor specific objective evidence. If such
evidence of fair value for each element of the arrangement does not
exist, all revenue from the arrangement is deferred until such time
that evidence of fair value does exist or until all elements of the
arrangement are delivered. Such arrangements typically do not involve
end user cancellation rights, rights of return, or significant
acceptance periods. The Company accrues license revenue through the end
of the reporting period
F-7
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
based upon reseller royalty reports or other forms of customer-specific
historical information. The adoption of SOP No. 97-2 did not have a
material effect on the Company's operating results.
Prior to the adoption of SOP No. 97-2, the Company followed the
provisions of SOP No. 91-1. Revenues derived from software licenses
were only recognized upon (a) the execution of a license agreement, (b)
delivery of the software product, (c) reasonable assurance of
customers' acceptance of the software and the probable collectibility
of the receivable, and (d) fulfillment of any other of the Company's
contract obligations. For software provided for demonstration or pilot
purposes, or where significant post-delivery obligations exist,
revenues were deferred until execution of a license agreement and the
fulfillment of all revenue recognition requirements. Revenues derived
from maintenance contracts which were bundled with the initial licenses
and all revenues from extended maintenance contracts were deferred and
recognized ratably over the term of the maintenance contract. Revenues
from professional services were recognized as the services were
preformed. License fees that were contingent upon sale to an end user
by distributors and other channel partners were recognized upon receipt
of a report of delivery to the end user.
The Company does not provide a contractual right of return. However, in
limited circumstances, and on a discretionary basis, the Company may
grant concessions to its clients. Such concessions are granted to
relatively few clients. The Company records an allowance for sales
returns to account for estimated concessions.
(d) Capitalized Software Costs
Costs associated with the planning and designing phase of software
development, including coding and testing activities necessary to
establish technological feasibility, are classified as research and
development and expensed as incurred. Once technological feasibility
has been determined, additional costs incurred in development,
including coding, testing, and product quality assurance are
capitalized. With regard to funded software development arrangements to
which the Company is a party for which technological feasibility has
been established before the arrangement was entered into, proceeds from
the funding party are (i) offset against capitalized costs, (ii) any
excess is deferred and credited against future capitalized costs, and
(iii) any remaining deferred amount is credited to income upon
completion of the related project. During 1997, 1998 and 1999, no
software development costs were capitalized.
Under its December 1998 license agreement with IBM, the Company has
agreed to perform several development enhancements to its Essbase/400
software. Prior to this agreement, the Company had not been a party to
any other funded software development arrangements. In addition, as
various matters with regard to certain enhancements have not been
finalized by IBM, the Company has not begun any work on this project as
of the date of this prospectus and has therefore not incurred any
related costs.
(e) Product Rights
The Company purchases rights to software source code used in
conjunction with certain of its products. The product rights have been
capitalized and are amortized on a straight-line basis over the life of
the product rights, which are three to five years. Unamortized product
rights are reviewed periodically to determine recoverability based upon
undiscounted forecasted cash flows. If it is determined that the asset
is impaired, the Company recognizes an impairment charge to reduce the
unamortized balance to its net realizable value. As of March 31, 1999,
no impairment charges have been recognized. Accumulated amortization
was $431,250 and $555,000 as of March 31, 1998 and 1999, respectively.
(f) Goodwill
The excess of the cost over fair value of net assets acquired is
recorded as goodwill and amortized on a straight-line basis over five
years. Unamortized goodwill balances are reviewed periodically to
determine recoverability based upon forecasted undiscounted cash flows.
If it is determined that the
F-8
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
asset is believed to be impaired, the Company recognizes an impairment
charge to reduce the unamortized balance to its net realizable value.
As of March 31, 1999, no impairment charges have been recognized.
Accumulated amortization was $124,000 and $184,000 as of March 31, 1998
and 1999, respectively.
(g) Income Taxes
Deferred taxes are provided on an asset and liability method for
temporary differences and operating loss and tax credit carryforwards.
Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it
is more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date
of enactment.
(h) Foreign Currency Translation
Exchange adjustments resulting from foreign currency transactions are
generally recognized in net income (loss), whereas adjustments
resulting from the translation of financial statements are reflected as
a separate component of accumulated other comprehensive income within
stockholders' equity. Revenues and expenses of foreign subsidiaries are
translated at the average exchange rates that prevail over the
applicable year. The functional currency of each foreign operation is
the local currency.
(i) Use of Estimates
Management of the Company has made certain estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenue and expenses
during the periods. Actual results could differ from those estimates.
(j) Stock-based Compensation
Compensation expense for stock option grants is recognized in
accordance with Accounting Principles Board ("APB") Opinion 25,
Accounting for Stock Issued to Employees. The pro forma effect on net
income (loss) is provided as if the fair value based method defined in
Statement of Financial Accounting Standards ("SFAS") No. 123,
Accounting for Stock-based Compensation, had been applied.
(k) Marketable Securities
All marketable securities are classified as available-for-sale and
available to support current operations or to take advantage of other
investment opportunities. These securities are stated at the estimated
fair value based upon market quotes with unrealized holding gains or
losses reported as a separate component of accumulated other
comprehensive income within stockholders' equity. Realized gains and
losses are included in net other income. The cost of securities sold is
based on the specific identification method.
(l) Comprehensive Income (Loss)
Comprehensive income represents the change in stockholders' equity
resulting from other than stockholder investments and distributions.
For ShowCase, comprehensive income consists of net earnings or loss
plus changes in foreign currency translation adjustment and unrealized
holding gains (losses) on marketable securities available for sale as
displayed in the accompanying consolidated statements of operations and
comprehensive income (loss). Amounts recognized in net income (loss)
which previously were reported as other comprehensive income (loss) are
reclassified to avoid duplication. The effect of deferred income taxes
on other comprehensive income (loss) is not material.
F-9
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(m) Reclassifications
Certain amounts previously reported have been reclassified to conform
to the 1999 presentation.
(n) New Accounting Pronouncements
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued SOP No. 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use, and in April 1998, the
AICPA issued SOP No. 98-5, Reporting on the Costs of Start-up
Activities. SOP No. 98-1 requires that entities capitalize certain
costs related to internal-use software once certain criteria have been
met. SOP No. 98-5 requires that all start-up costs related to new
operations must be expensed as incurred. In addition, all start-up
costs that were capitalized in the past must be written off when SOP
No. 98-5 is adopted. The Company will be required to adopt SOP Nos. 98-
1 and 98-5 for the year ending March 31, 2000. The Company expects that
SOP Nos. 98-1 and 98-5 will not have a material impact on its financial
position, results of operations or cash flows.
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS
No. 133 established methods of accounting for derivative financial
instruments and hedging activities related to those instruments, as
well as other hedging activities. SFAS No. 133 will be effective for
the Company in April 2001. The Company is currently reviewing the
potential impact of this accounting standard.
In December 1998, the AICPA issued SOP No. 98-9, Modification of SOP
97-2, Software Revenue Recognition, with Respect to Certain
Transactions. SOP No. 98-9 requires recognition of revenue using the
"residual method" in a multiple-element software arrangement when fair
value does not exist for one or more of the delivered elements in the
arrangement. Under the "residual method," the total fair value of the
undelivered elements is deferred and recognized in accordance with SOP
No. 97-2. The Company will be required to implement SOP No. 98-9 for
the year beginning April 1, 1999. SOP No. 98-9 also extends the
deferral of the application of SOP No. 97-2 to certain other multiple
element software arrangements until the date SOP 98-9 becomes
effective. The Company does not expect a material change to its
accounting for revenues as a result of the provisions of SOP 98-9.
(2) Accounts Receivable
Accounts receivable consist of the following (in thousands):
<TABLE>
<CAPTION>
March 31,
--------------
1998 1999
------ ------
<S> <C> <C>
Accounts receivable...................................... $6,662 $7,875
Less allowance for sales returns......................... (320) (520)
Less allowance for doubtful accounts..................... (180) (285)
------ ------
Accounts receivable, net................................. $6,162 $7,070
====== ======
</TABLE>
(3)Profit Sharing and Savings Plan
The Company has adopted a profit sharing plan under Section 401(k) of
the Internal Revenue Code. This plan allows employees to defer a
portion of their income through contributions to this plan. At the
Company's board of directors' discretion, the Company may match a
percentage of employees' voluntary contributions or may make additional
contributions based on profits. In fiscal 1998, the Company initiated a
Company match determined annually by the Company's board of directors.
This Company match was approximately $44,000 and $50,000 in fiscal 1998
and fiscal 1999, respectively. There were no Company contributions to
this plan in fiscal 1997.
F-10
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(4)Significant Customers
Revenues from the Company's former Japan affiliate aggregated
approximately 6% of total revenue for 1998. Accounts receivable from
the Company's former Japan affiliate aggregated approximately 6% of
total accounts receivable as of March 31, 1998. Revenues from one
unaffiliated customer aggregated approximately 21% in fiscal 1997.
(5)Marketable Securities
During 1998, the Company acquired stock in a vendor, which it
classifies as available for sale. The cost basis of this security is
$319,972. The estimated fair value of this security was $442,986 and
$139,244 as of March 31, 1998 and 1999, respectively. The change in the
related unrealized holding gain (loss) was $123,014 and $(303,742) for
the years ended March 31, 1998 and 1999, respectively. Based upon the
length of time and extent to which the market value of this security
has been less than the cost basis, the financial condition and
prospects of the issuer of the securities, and the Company's ability,
if necessary, to retain its investment for a period of time sufficient
to allow for recovery in market value, the Company believes that the
decrease in market value of this security is not an other than
temporary decline. The Company has included this security within
current assets based upon its intent to dispose of such security within
one year.
(6)Property and Equipment
Property and equipment are recorded at cost. Depreciation and
amortization are computed using the straight-line method over the
estimated useful lives of the assets. Property and equipment are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
March 31,
----------------
Estimated useful life 1998 1999
--------------------- ------- -------
<S> <C> <C> <C>
Computers and software 3 to 5 years $ 2,930 $ 3,314
Office furniture and equipment 4 to 10 years 645 610
Leasehold improvements 5 to 9 years 102 172
------- -------
3,677 4,096
Less accumulated depreciation
and amortization............... (1,486) (2,004)
------- -------
Net property and equipment...... $ 2,191 $ 2,092
======= =======
</TABLE>
(7)Long-term Debt
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
March 31,
--------------
1998 1999
------ ------
<S> <C> <C>
Note payable to bank with principal due in monthly
installments of $31, plus interest at the bank's base
rate plus 1.5% through September 2002................ $1,312 $ --
Note payable to Belgian bank with interest at 6.95%,
due in monthly installments of $3 through December
1998................................................. 18 --
Note payable to IBM, interest at 6.25%, principal and
interest payable quarterly through November 2000..... 11 7
------ ------
1,341 7
Less current portion.................................. (397) (5)
------ ------
$ 944 $ 2
====== ======
</TABLE>
F-11
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company has a $3,000,000 revolving line of credit agreement with a
bank through June 30, 2000, bearing interest at the bank's base rate
(7.75% at March 31, 1999) plus 1.5%. Borrowings are limited to 75% of
eligible accounts receivable and are payable on demand. The revolving
line of credit note is secured by substantially all of the Company's
assets and contains certain restrictive financial covenants, including
the maintenance of prescribed tangible net worth and debt to tangible
net worth ratios. No borrowings were outstanding under the line of
credit at March 31, 1999.
(8)Income Taxes
Income (loss) before income taxes was derived from the following
sources (in thousands):
<TABLE>
<CAPTION>
Year Ended March
31,
---------------------
1997 1998 1999
---- ------- ------
<S> <C> <C> <C>
Domestic.......................................... $(34) $(2,597) $ (421)
Foreign........................................... 84 (462) 5
---- ------- ------
$ 50 $(3,059) $ (416)
==== ======= ======
</TABLE>
The provision for income tax expense consists of the following (in
thousands):
<TABLE>
<CAPTION>
Year Ended March
31,
-------------------
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
Current:
Federal........................................... $ 490 $(325) $ 220
State and local................................... 25 -- 35
Foreign........................................... -- 200 155
Deferred:
Federal........................................... (492) 300 (210)
State and local................................... (23) -- --
----- ----- -----
$ -- $ 175 $ 200
===== ===== =====
</TABLE>
The significant components of deferred tax expense are as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ended March
31,
------------------
1997 1998 1999
------ ---- -----
<S> <C> <C> <C>
Deferred tax expense (exclusive of the effects of
other components listed below)................... $(515) $-- $(210)
Increase in beginning-of-the-year balance of
the valuation allowance for deferred tax assets.. -- 300 --
------ ---- -----
$(515) $300 $(210)
====== ==== =====
</TABLE>
F-12
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The provision for income taxes differs from the expected tax expense,
computed by applying the federal corporate tax rate of 34% to earnings
before income taxes, as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended March
31,
--------------------
1997 1998 1999
---- ------- -----
<S> <C> <C> <C>
Expected federal income tax expense (benefit).... $ 17 $(1,040) $(142)
State taxes, net of federal benefit.............. 2 (52) 23
Change in valuation allowance.................... -- 1,085 678
Research and experimentation credits............. (23) -- (203)
Foreign sales corporation........................ (20) -- (61)
Foreign operations and withholding taxes......... -- 152 (135)
Other............................................ 24 30 40
---- ------- -----
$-- $ 175 $ 200
==== ======= =====
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at March
31, 1998 and 1999 are presented below (in thousands):
<TABLE>
<CAPTION>
March 31,
----------------
1998 1999
------- -------
<S> <C> <C>
Deferred tax assets:
Accounts receivable allowances...................... $ 170 $ 241
Vacation and other accruals......................... 111 163
Deferred revenues................................... 1,266 2,153
Foreign net operating loss carryforwards............ 161 204
Research and experimentation credit carryforwards... 196 38
Other............................................... 46 42
------- -------
1,950 2,841
Valuation allowance................................... (1,500) (2,178)
------- -------
450 663
Deferred tax liabilities:
Depreciation........................................ (110) (113)
------- -------
Net deferred tax asset................................ $ 340 $ 550
======= =======
</TABLE>
The valuation allowance for deferred tax assets as of March 31, 1998
and 1999 was $1,500,000 and $2,178,000, respectively. In assessing the
realizability of deferred tax assets, management considers whether it
is more likely than not that some portion or all of the deferred tax
assets will be realized. The ultimate realization of the deferred tax
asset is dependent upon the ability to generate tax refunds from the
carryback of losses to prior periods and the generation of future
taxable income during the periods in which those temporary differences
become deductible. Management considers its projected taxable income
and tax planning strategies in making this assessment.
At March 31, 1999, there are foreign net operating loss carryforwards
of approximately $600,000, which will expire through 2012.
(9)Stockholders' Equity
(a) Series A Convertible Preferred Stock
In 1991, the Company issued convertible preferred stock under the terms
of an investment agreement (the Agreement). Each preferred share is
convertible at the option of the holder at any time at a rate of four
shares of common stock for each preferred share, subject to certain
adjustments. In the event
F-13
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
of a qualified public offering, the preferred stock is required to be
converted to common stock. The preferred stockholder is entitled to the
same number of votes as if the preferred stock was converted into
common shares. In addition, if the Company decides to sell additional
shares of capital stock, the Company must first offer the preferred
stockholder its pro rata share of capital stock on the same terms and
conditions.
The Series A convertible preferred stock may be converted into
1,895,028 common shares at March 31, 1999. The per share conversion
rate will be adjusted if the Company sells common stock or issues stock
options (other than those designated in the March 1991 stock option
plan as amended) or warrants at less than the conversion price in
effect, which is $1.26645 per common share at March 31, 1999.
The Agreement contains certain restrictive covenants that, among other
things, limit additional indebtedness, declaration and payment of
dividends, guarantees, and investments.
In connection with the issuance of the Company's convertible preferred
stock, the common and preferred stockholders entered into an agreement
that prohibits the common stockholders from selling shares of common
stock unless the preferred stockholder is permitted to sell a pro rata
number of preferred shares, except in the event of sales related to a
public offering or certain other events, as defined.
(b) Series B Convertible Preferred Stock
In 1998, the Company issued convertible preferred stock under the terms
of an investment agreement (the "1998 Agreement"). The outstanding
shares of Series B convertible stock are convertible into 864,198
shares of common stock as of March 31, 1999. In the event of a
qualified public offering, the preferred stock is required to be
converted to common stock. The preferred stockholder is entitled to the
same number of votes as if the preferred stock was converted into
common shares. In addition, if the Company decides to sell additional
shares of capital stock, the Company must first offer the preferred
stockholder its pro rata share of capital stock on the same terms and
conditions.
The 1998 Agreement contains certain restrictive covenants that, among
other things, limit additional indebtedness, declaration and payment of
dividends, guarantees, and investments.
(c) Undesignated Preferred Shares
As of March 31, 1999, the Company has authorized 2,748,743 undesignated
preferred shares, none of which are outstanding.
(d) Warrants Issued
In May 1998, the Company issued a warrant to purchase 13,750 shares of
Series B Convertible Preferred Stock at an exercise price of $4.00 per
share in consideration for the warrant-holder executing certain
equipment leases with the Company. The warrant is exercisable through
the earlier of May 13, 2008 or five years from the effective date of
the Company's initial public offering. The warrant had not been
exercised in whole or in part as of March 31, 1999. In addition to the
future minimum obligations under non-cancelable operating leases
included in note 12, the Company recognizes additional lease expense
equal to the aggregate fair value of the warrant, approximately $9,000,
amortized over the related lease term. The fair value of the warrant is
estimated on the date of grant using the Black-Scholes pricing model
with the following assumptions: risk-free interest rate of 6.0%,
expected dividend yield of 0%, expected volatility of 0%, and expected
life of three years.
F-14
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(e) Deferred Compensation
During the fiscal year 1999, in connection with the grant to employees
of options to purchase 527,900 shares of common stock, the Company
recorded deferred compensation of $355,000, representing the difference
between the deemed value of the common stock for accounting purposes
and the option exercise price of such options on the date of grant. The
Company recognized an expense of approximately $33,000 for the fiscal
year ended March 31, 1999 for these stock option grants based upon the
intrinsic value method in accordance with APB Opinion No. 25,
Accounting for Stock Issued to Employees, and will recognize the
remainder of the deferred compensation cost over the respective vesting
periods (five years) of the options granted. The charge to compensation
expense related to this deferred compensation will be approximately
$71,000 for fiscal years 2000 through 2003 and approximately $38,000
for fiscal year 2004.
(f) Stock Options
Options granted under the Company's stock option plan may be incentive
stock options or non-qualified stock options. Incentive stock options
may be granted to certain employees and directors at a price not less
than the fair market value of the common stock on the day the option is
granted and must be exercisable no later than ten years after the date
of grant. Nonqualified stock options may be granted for terms up to ten
years after the date of grant, at prices determined by the stock option
committee.
At March 31, 1999, the Company has 1,664,810 shares of its common stock
reserved for issuance upon the exercise of options granted under the
Company's stock option plan.
The following table summarizes the activity of the Company's incentive
stock option plan:
<TABLE>
<CAPTION>
Weighted average
Shares exercise price
--------- ----------------
<S> <C> <C>
Outstanding--March 31, 1996.................. 1,107,553 $ .37
Options granted............................ 398,650 1.08
Options exercised.......................... (9,790) .19
Options canceled........................... (123,460) .96
---------
Outstanding--March 31, 1997.................. 1,372,953 .53
Options granted............................ 181,400 1.42
Options exercised.......................... (135,829) .25
Options canceled........................... (53,740) 1.04
---------
Outstanding--March 31, 1998.................. 1,364,784 .65
Options granted............................ 820,900 3.61
Options exercised.......................... (514,307) .22
Options canceled........................... (125,570) 1.10
---------
Outstanding--March 31, 1999.................. 1,545,807 2.32
=========
</TABLE>
F-15
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following table summarizes the Company's stock options outstanding
at March 31, 1999:
<TABLE>
<CAPTION>
Options outstanding Options exercisable
-------------------------------- --------------------
Number of Weighted Number
outstanding average Weighted exercisable Weighted
at remaining average at average
March 31, contractual exercise March 31, exercise
Range of exercise price 1999 life price 1999 price
----------------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$ .07- .21.............. 95,677 4 years $.12 63,312 $.08
.35- .87.............. 173,800 6 years .47 164,357 .48
.98-1.42.............. 464,430 8 years 1.20 139,282 1.14
1.50-2.00.............. 415,600 9 years 1.66 59,600 1.59
2.72-3.23.............. 14,300 9 years 2.90 1,800 2.72
5.35-7.12.............. 382,000 10 years 5.76 -- --
--------- -------
1,545,807 428,351
========= =======
</TABLE>
The Company accounts for its Plan under APB Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations. The
following pro forma amounts, in accordance with the disclosure
requirements of Statement of Financial Accounting Standards No. 123,
Accounting for Stock-based Compensation (SFAS 123), were determined as
if the Company had accounted for its stock options using the fair value
method as described in that statement:
<TABLE>
<CAPTION>
Year Ended March
31,
-------------------
1997 1998 1999
---- ------- -----
<S> <C> <C> <C>
Net income (loss) (in thousands):
As reported....................................... $50 $(3,234) $(616)
Proforma.......................................... 34 (3,266) (677)
</TABLE>
Because the method of accounting under SFAS 123 has not been applied to
stock options granted prior to April 1, 1995, the resulting pro forma
compensation cost may not be representative of compensation cost to be
disclosed in future years.
The weighted average grant date fair value of stock options granted was
$.30, $.39 and $1.19 per option in 1997, 1998 and 1999, respectively.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes stock option pricing model with the following
average assumptions for 1997, 1998 and 1999: risk-free interest rate
ranging from 6.0% to 6.5%; expected dividend yields of 0%; expected
volatility of 0%; and weighted average expected lives of five years.
During fiscal 1999, the Company issued options to purchase 5,400 shares
of common stock to a consultant who provided market research services.
The options were granted with an exercise price of $1.50 for 3,600
shares and $2.72 for 1,800 shares. The fair value of these stock
options charged to operations was $5,800, calculated using the Black-
Scholes stock option pricing model assuming a risk free interest rate
of 6.0%; expected dividend yield of 0%; expected volatility of 0%; and
expected life of six years.
(10)Net Income (Loss) per Share
The Company calculates net income (loss) per share in accordance with
SFAS No. 128, Earnings per Share. For ShowCase, basic income (loss) per
share represents net income (loss) divided by the weighted average
number of common shares outstanding during the period. Diluted income
(loss) per share represents net income (loss) divided by the sum of the
weighted average number of common shares outstanding plus shares
derived from other potentially dilutive securities. For ShowCase,
potentially dilutive securities include "in-the-money" fixed stock
options and warrants and the amount of weighted average common shares
which would be added by the conversion of outstanding convertible
preferred stock. The number of shares added for stock options and
warrants is determined by the treasury stock method, which assumes
exercise of these options and the use of any proceeds from such
exercise to repurchase a portion of these shares at the average market
price for the period. When the results of operations are a loss, other
potentially dilutive securities are not included in the calculation of
loss per share.
F-16
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following computations reconcile net income (loss) with basic and
diluted net income (loss) per share (in thousands, except for per share
data):
<TABLE>
<CAPTION>
Year ended March
31,
--------------------
1997 1998 1999
----- ------- -----
<S> <C> <C> <C>
Basic income (loss) per share:
Net income (loss)................................. $ 50 $(3,234) $(616)
Weighted average shares........................... 3,847 3,928 4,384
----- ------- -----
Basic income (loss) per share..................... $ .01 $ (.82) (.14)
===== ======= =====
Diluted income (loss) per share:
Net income (loss)................................. $ 50 $(3,234) $(616)
Weighted average shares........................... 3,847 3,928 4,384
Effect of dilutive "in-the-money" stock options
and warrants..................................... 713 -- --
Effect of conversion of preferred stock........... 1,895 -- --
----- ------- -----
Total dilutive shares............................. 6,455 3,928 4,384
----- ------- -----
Diluted income (loss) per share................... $ .01 $ (.82) $(.14)
===== ======= =====
</TABLE>
The total number of weighted average option and warrant shares excluded
from the calculation of potentially dilutive securities either because
the exercise price exceeded the average market price or
because their inclusion in a calculation of net loss per share would
have been antidilutive was 902,469 and 792,138 for fiscal years 1998
and 1999, respectively.
For the years ended March 31, 1998 and 1999, the effect of conversion
of the Company's Series A and Series B convertible preferred stock was
excluded from the calculation of net loss per diluted share because the
resulting impact would have been antidilutive. At March 31, 1999, the
Series A and Series B convertible preferred stock were convertible into
1,895,028 and 864,198 common shares, respectively.
(11)Geographic Segment Data
The operations of the Company are primarily conducted in the United
States, the Company's country of domicile. Geographic data, determined
by references to the location of the Company's operations, as of March
31, 1998 and 1999 and for each of the years for the three-year period
ended March 31, 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
Year ended March 31,
------------------------
1997 1998 1999
-------- ------- -------
<S> <C> <C> <C>
Revenues:
U. S. operations............................... $ 14,904 $17,890 $24,894
United Kingdom................................. 945 2,751 3,695
France......................................... -- 360 3,166
Other non-U.S.operations*...................... 2,178 2,754 3,764
-------- ------- -------
$ 18,027 $23,755 $35,519
======== ======= =======
</TABLE>
*Other Non-U.S. operations include
operations in Germany and Belgium.
<TABLE>
<CAPTION>
March 31,
------------------
1998 1999
------- ------
<S> <C> <C> <C>
Tangible long-lived assets:
U. S. operations....................................... $ 1,842 $1,736
Non-U.S. operations*................................... 349 356
------- ------
$ 2,191 $2,092
======= ======
</TABLE>
*Non-U.S. operations include operations in the
United Kingdom, France, Germany and Belgium.
F-17
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(12)Commitments
(a) Capital Leases
The Company has entered into capital lease agreements for computers and
software, office furniture and equipment, vehicles and product rights.
The following is a summary of the leased property (in thousands):
<TABLE>
<CAPTION>
March 31,
-----------
1998 1999
----- ----
<S> <C> <C>
Computers and software........................................ $ 645 $645
Office furniture and equipment................................ 53 52
Product rights................................................ 325 --
----- ----
1,023 697
Less accumulated amortization................................. (609) (419)
----- ----
Net property and equipment.................................... $ 414 $278
===== ====
</TABLE>
The following is a schedule of future minimum lease payments under
capital lease with the present value of the minimum lease payments as
of March 31, 1999 (in thousands):
<TABLE>
<CAPTION>
Years ending March 31:
----------------------
<S> <C>
2000................................................................. $144
2001................................................................. 83
----
Total minimum lease payments......................................... 227
Less amount representing interest at 5% to 16%....................... (15)
----
Present value of minimum lease payments.............................. 212
Less current portion................................................. (127)
----
$ 85
====
</TABLE>
(b) Operating Leases
The Company leases certain office facilities and equipment under
operating leases. Total lease expense aggregated $1,056,102, $1,363,336
and $1,857,731 in 1997, 1998 and 1999, respectively. Minimum future
obligations as of March 31, 1999, including operating costs under non-
cancelable leases, are approximately as follows (in thousands):
<TABLE>
<CAPTION>
Years ending March 31:
----------------------
<S> <C>
2000................................................................ $1,223
2001................................................................ 1,041
2002................................................................ 722
2003................................................................ 321
2004................................................................ 305
Thereafter.......................................................... 61
------
$3,673
======
</TABLE>
F-18
<PAGE>
SHOWCASE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(c) Royalty Agreement
The Company is obligated to make royalty payments under certain
distribution and license agreements. Minimum royalties required by
these agreements in order for them to remain exclusive are $2,535,000
in 2000, increasing by 30% per year for each year from 2001 to 2004.
One of these agreements contains a buy-back clause under which the
vendor would be required to pay the Company an amount, as defined in
the agreement, to revoke the exclusive rights. This amount would be
recognized as revenue if such revocation should occur. Royalty expense
under these agreements were $828,200, $2,144,150 and $3,068,890 for
years ending March 31, 1997, 1998 and 1999, respectively.
(13)Subsequent Events
(a) Initial Public Offering
On April 28, 1999, the Company filed a registration statement with the
Securities and Exchange Commission related to an initial public
offering. Upon consummation of the offering, shares of outstanding
preferred stock will be automatically converted into shares of common
stock and outstanding warrants to purchase shares of Series B
Convertible Preferred Stock will be converted to the right to purchase
shares of common stock (see note 9). Effective upon the filing of the
Company's amended and restated articles of incorporation upon the
closing of this offering, the number of authorized shares of capital
stock will be increased to 50,000,000 shares.
(b) 1999 Stock Incentive Plan
In April 1999, the Company's board of directors and shareholders
approved the 1999 Stock Incentive Plan (the "1999 Incentive Plan"). The
1999 Incentive Plan provides for the granting of incentive and
nonqualified stock options, stock appreciation rights, restricted
stock, restricted stock units, performance awards and other stock based
awards to eligible participants. The term and vesting
requirements of the awards under the 1999 Incentive Plan are subject to
the determination of the compensation committee of the Company's board
of directors. The Company has reserved 2,500,000 shares of common stock
for issuance under the 1999 Incentive Plan.
(c) 1999 Employee Stock Purchase Plan
The Company's 1999 Employee Stock Purchase Plan (the "Stock Purchase
Plan") will become effective upon consummation of the initial public
offering discussed above and is intended to qualify as an employee
stock purchase plan within the meaning of Section 423 of the Internal
Revenue Code. The Stock Purchase Plan covers an aggregate of 500,000
shares of common stock. Eligible participants will be able to direct
the Company to make payroll deductions of up to 15% of their
compensation during a period for the purchase of shares of Company
common stock. Each purchase period, with the exception of the initial
offering period, will be six months. The Stock Purchase Plan will
provide participants with the right, subject to limitations, to
purchase the Company's common stock at a price equal to 85% of the
lesser of the fair market value of the Company's common stock on the
first day or the last day of the applicable purchase period.
(d) Deferred Compensation (unaudited)
Subsequent to March 31, 1999, the Company granted to employees options
to purchase 81,000 shares of common stock. The Company will record
deferred compensation of $233,000, representing the difference between
the deemed value of the common stock for accounting purposes and the
option exercise price of such options on the date of grant. The Company
will account for these stock option grants in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, and will
recognize the deferred compensation cost over the respective vesting
periods (five years) of the options granted. The charge to compensation
expense related to this deferred compensation will be approximately
$40,000 for fiscal year 2000, $47,000 for fiscal years 2001 through
2004 and $7,000 for fiscal year 2005.
F-19
<PAGE>
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Adaptive applications that provide: Application Areas:
[arrow] A blueprint for refining end-user requirements Financial Analysis
Sales Analysis
[arrow] An extensible base for additional applications
[arrow] Rapid implementation
[arrow] Easy integration with ERP applications
[Converging arrow pointing to the right, with upper branch bearing the words
"Application Time to Value" and lower branch bearing the words "Custom
Development Flexibility." The main branch of the arrow bears the words
"Deployment Accelerator."]
[In the lower right-hand corner is the ShowCase STRATEGY logo with the following
caption: "Work Smarter...Faster."]
<PAGE>
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Through and including , 1999 (the 25th day after the date
of this prospectus), all dealers effecting transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
3,000,000 Shares
Common Stock
-----------------
P R O S P E C T U S
-----------------
Merrill Lynch & Co.
U.S. Bancorp Piper Jaffray
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated
FAC/Equities
, 1999
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
Except as set forth below, the following fees and expenses will be paid
by ShowCase in connection with the issuance and distribution of the securities
registered hereby and do not include underwriting commissions and discounts.
All such expenses, except for the SEC registration, NASD filing and Nasdaq
listing fees, are estimated.
<TABLE>
<S> <C>
SEC registration fee............................................. $ 10,551
NASD filing fee.................................................. 4,000
Nasdaq National Market listing fee............................... 73,875
Legal fees and expenses.......................................... 175,000
Accounting fees and expenses..................................... 150,000
Transfer Agent's and Registrar's fees............................ 5,000
Printing and engraving expenses.................................. 150,000
Miscellaneous.................................................... 31,574
--------
Total............................................................ $600,000
========
</TABLE>
Item 14. Indemnification of Directors and Officers
Section 302A.521 of the Minnesota Statutes provides that a corporation
shall indemnify any person made or threatened to be made a party to a
proceeding by reason of the former or present official capacity of such person
against judgments, penalties, fines (including, without limitation, excise
taxes assessed against such person with respect to any employee benefit plan),
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person (1) has not been indemnified therefor by another
organization or employee benefit plan for the same judgments, penalties or
fines; (2) acted in good faith; (3) received no improper personal benefit and
Section 302A.255 (with respect to director conflicts of interest), if
applicable, has been satisfied; (4) in the case of a criminal proceeding, had
no reasonable cause to believe the conduct was unlawful; and (5) in the case of
acts or omissions in such person's official capacity for the corporation,
reasonably believed that the conduct was in the best interests of the
corporation, or in the case of acts or omissions in such person's official
capacity for other affiliated organizations, reasonably believed that the
conduct was not opposed to the best interests of the corporation. Section
302A.521 also requires payment by a corporation, upon written request, of
reasonable expenses in advance of final disposition of the proceeding in
certain instances. A decision as to required indemnification is made by a
disinterested majority of the Board of Directors present at a meeting at which
a disinterested quorum is present, or by a designated committee of the Board,
by special legal counsel, by the shareholders or by a court.
Provisions regarding indemnification of officers and directors of
ShowCase to the extent permitted by Section 302A.521 are contained in
ShowCase's articles of incorporation and bylaws.
The Company maintains a policy of directors' and officers' liability
insurance that insures the Company's directors and officers against the cost of
defense, settlement or payment of a judgment under certain circumstances. In
conjunction with the effectiveness of the registration statement, the Company
plans to expand its coverage to include securities law claims.
II-1
<PAGE>
Item 15. Recent Sales of Unregistered Securities
Since March 31, 1996, the Company has issued and sold the following
securities that were not registered under the Securities Act:
1. At various times during the period from March 31, 1996 through June 1,
1999, the Company has granted to employees and directors stock options under
its Stock Option Plan covering an aggregate of shares of the Company's
Common Stock, at exercise prices ranging from $1.08 to $7.12 per share.
2. On March 26, 1998, the Company sold an aggregate of 875,000 shares of
Series B Convertible Preferred Stock at a purchase price of $4.00 per share,
including 625,000 shares to Norwest Equity Partners V, L.P. and 250,000 shares
to Beacon Information Technology.
3. On May 13, 1998, the Company issued a warrant (the "Series B Warrant")
to purchase 13,750 shares of Series B Convertible Preferred Stock (at an
exercise price of $4.00 per share) to Comdisco, Inc. (the "Warrantholder") in
consideration for the Warrantholder executing and delivering certain equipment
leases (the "Leases") to the Company. Upon the closing of the offering, the
warrant will represent the right to purchase 13,580 shares of our common stock.
If the total cost of equipment leased by the Company pursuant to the Leases
exceeds $1,000,000, the Warrantholder has the right to purchase an additional
number of shares determined by multiplying the amount by which the
Warrantholder's total equipment cost exceeds $1,000,000 by 5.5% and dividing
the product thereof by the exercise price per share.
The sale and issuance of securities described above were deemed to be
exempt from registration under the Securities Act in reliance on Section 4(2)
of the Securities Act or Regulation D promulgated thereunder as transactions by
an issuer not involving a public offering, where the purchasers represented
their intention to acquire securities for investment purposes only and not with
a view to or for sale in connection with any distribution thereof, and received
or had access to adequate information about the Company, or Rule 701
promulgated thereunder in that they were offered and sold either pursuant to
written compensatory benefit plans or pursuant to a written contract relating
to compensation.
II-2
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1 Form of Purchase Agreement.
3.1* Articles of Incorporation of the Company, as currently in effect.
3.2* Amended and Restated Articles of Incorporation of the Company, adopted subject to
completion of this offering.
3.3* Amended and Restated Bylaws of the Company, as currently in effect.
3.4* Amended and Restated Bylaws of the Company, adopted subject to completion of the
offering.
4.1 Specimen of Common Stock certificate.
4.2* Warrant Agreement to purchase shares, of the Series B Preferred Stock of the
Company, issued to Comdisco, Inc.
4.3* Registration Rights Provisions, for preferred shareholders.
5.1* Opinion of Dorsey & Whitney LLP.
10.1* Amended 1991 Long-Term Incentive and Stock Option Plan.
10.2* 1999 Stock Incentive Plan.
10.3 1999 Employee Stock Purchase Plan, as amended.
10.4* Lease Agreement dated as of November 30, 1998 between Mortenson Properties, Inc.
as Landlord and the Company as Tenant.
10.5* Employment Agreement dated as of November 22, 1993, between the Company and
Kenneth H. Holec.
10.6* Service Agreement dated as of March 17, 1998, between the Company and Patrick
Dauga.
10.7* Employment offer letter to Kevin R. Potrzeba dated as of August 23, 1996.
10.8* Employment offer letter to Roger E. Bottum dated as of July 31, 1998.
10.9+ License Agreement, effective as of April 1, 1998, between the Company and Arbor
Software Corporation (the "Hyperion License Agreement").
10.10+ Amendment No. 1 to the Hyperion License Agreement, effective as of September 14,
1998, between the Company and Hyperion Solutions Corporation.
10.11+ Software License and Marketing Agreement, effective as of January 4, 1996,
between the Company and AppSource.
10.12+* Amendment to AppSource/Showcase License Agreement, effective as of March 7, 1997.
10.13+ ShowCase License Agreement, dated as of December 9, 1998, between the Company and
International Business Machines Corporation ("IBM").
10.14+ Outbound License Agreement, dated as of December 9, 1998, between the Company and
IBM.
10.15+* Marketing Relationship Agreement, dated as of May 22, 1997, between the Company
and IBM (the "Marketing Relationship Agreement").
10.16+ Amendment No. 1, dated as of October 28, 1998, to Marketing Relationship
Agreement between the Company and IBM.
10.17+ Amendment No. 2, dated as of March 15, 1999, to Marketing Relationship Agreement
between the Company and IBM.
21.1* Subsidiaries of the Company.
23.1 Consent of Independent Auditors and Report on Schedule.
23.2* Consent of Dorsey & Whitney LLP (included in Exhibit No. 5.1 to the Registration
Statement).
24.1* Powers of Attorney.
27.1* Financial Data Schedule.
</TABLE>
- --------
* Previously filed.
+ Confidential information has been omitted from these exhibits and filed
separately with the Securities and Exchange Commission accompanied by a
confidential treatment request pursuant to Rule 406 under the Securities Act
of 1933, as amended.
II-3
<PAGE>
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments
defining the rights of holders of certain long-term debt of the Company are not
filed, and in lieu thereof, the Company agrees to furnish copies thereof to the
Commission upon request.
(b) Financial Statement Schedules
II--Valuation and Qualifying Accounts
Schedules other than those listed have been omitted since they are not
required or are not applicable or the required information is shown in the
financial statements or related notes. Columns omitted from schedules filed
have been omitted since the information is not applicable.
Item 17. Undertakings
The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment No. 2 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Rochester, State of Minnesota, on June 28, 1999.
Showcase Corporation
/s/ Kenneth H. Holec
By:_________________________________
Kenneth H. Holec
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to the Registration Statement has been signed by the following
persons in the capacities indicated on June 28, 1999.
Signature Title
/s/ Kenneth H. Holec President, Chief Executive Officer
_____________________________________ and Director (principal executive
Kenneth H. Holec officer)
/s/ Craig W. Allen Chief Financial Officer (principal
_____________________________________ financial officer and principal
Craig W. Allen accounting officer)
* Director
_____________________________________
Promod Haque
* Director
_____________________________________
C. McKenzie Lewis III
* Director
_____________________________________
Jack Noonan
* Director
_____________________________________
Dennis Semerad
/s/ Craig W. Allen
*By__________________________________
Craig W. AllenAttorney-in-Fact
II-5
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Allowance for Sales Returns
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------
1997 1998 1999
------ ------ ------
<S> <C> <C> <C> <C>
Balance at beginning of year........................ $ 150 $ 175 $ 320
Additions charged to revenue........................ 241 445 319
Returns............................................. (216) (300) (119)
------ ------ ------
Balance at end of year.............................. $ 175 $ 320 $ 520
====== ====== ======
Allowance for Doubtful Accounts
<CAPTION>
Year Ended March 31,
----------------------
1997 1998 1999
------ ------ ------
<S> <C> <C> <C> <C>
Balance at beginning of year........................ $ 100 $ 125 $ 180
Additions charged to costs and expenses............. 39 55 163
Write-offs.......................................... (14) -- (58)
------ ------ ------
Balance at end of year.............................. $ 125 $ 180 $ 285
====== ====== ======
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1 Form of Purchase Agreement.
3.1* Articles of Incorporation of the Company, as currently in effect.
3.2* Amended and Restated Articles of Incorporation of the Company, adopted subject to
completion of this offering.
3.3* Amended & Restated Bylaws of the Company, as currently in effect.
3.4* Amended and Restated Bylaws of the Company, adopted subject to completion of the
offering.
4.1 Specimen of Common Stock certificate.
4.2* Warrant Agreement to purchase shares, of the Series B Preferred Stock of the
Company, issued to Comdisco, Inc.
4.3* Registration Rights Provisions, for preferred shareholders.
5.1* Opinion of Dorsey & Whitney LLP.
10.1* Amended 1991 Long-Term Incentive and Stock Option Plan.
10.2* 1999 Stock Incentive Plan.
10.3 1999 Employee Stock Purchase Plan, as amended.
10.4* Lease Agreement dated as of November 30, 1998 between Mortenson Properties, Inc.
as Landlord and the Company as Tenant.
10.5* Employment Agreement dated as of November 22, 1993, between the Company and
Kenneth H. Holec.
10.6* Service Agreement dated as of March 17, 1998, between the Company and Patrick
Dauga.
10.7* Employment offer letter to Kevin R. Potrzeba dated as of August 23, 1996.
10.8* Employment offer letter to Roger E. Bottum dated as of July 31, 1998.
10.9+ License Agreement, effective as of April 1, 1998, between the Company and Arbor
Software Corporation (the "Hyperion License Agreement").
10.10+ Amendment No. 1 to the Hyperion License Agreement, effective as of September 14,
1998, between the Company and Hyperion Solutions Corporation.
10.11+ Software License and Marketing Agreement, effective as of January 4, 1996,
between the Company and AppSource.
10.12+* Amendment to AppSource/ShowCase License Agreement effective as of March 7, 1997.
10.13+ ShowCase License Agreement, dated as of December 9, 1998, between the Company and
International Business Machines Corporation ("IBM").
10.14+ Outbound License Agreement, dated as of December 9, 1998, between the Company and
IBM.
10.15+* Marketing Relationship Agreement, dated as of May 22, 1997, between the Company
and IBM (the "Marketing Relationship Agreement").
10.16+ Amendment No. 1, dated as of October 28, 1998, to Marketing Relationship
Agreement between the Company and IBM.
10.17+ Amendment No. 2, dated as of March 15, 1999, to Marketing Relationship Agreement
between the Company and IBM.
21.1* Subsidiaries of the Registrant.
23.1 Consent of Independent Auditors and Report on Schedule.
23.2* Consent of Dorsey & Whitney LLP (included in Exhibit No. 5.1 to the Registration
Statement).
24.1* Powers of Attorney (included on signature page).
27.1* Financial Data Schedule.
</TABLE>
- --------
* Previously filed.
+ Confidential information has been omitted from the exhibits and filed
separately with the Securities and Exchange Commission accompanied by a
confidential treatment request pursuant to Rule 406 under the Securities Act
of 1933, as amended.
<PAGE>
EXHIBIT 1.1
________________________________________________________________________________
________________________________________________________________________________
SHOWCASE CORPORATION
(A Minnesota corporation)
3,000,000 Shares of Common Stock
PURCHASE AGREEMENT
------------------
Dated: [___________], 1999
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C> <C> <C>
SECTION 1. REPRESENTATIONS AND WARRANTIES............................................. 3
(a) Representations and Warranties by the Company.............................. 3
(i) Compliance with Registration Requirements...................... 3
(ii) Independent Accountants........................................ 4
(iii) Financial Statements........................................... 4
(iv) No Material Adverse Change in Business......................... 4
(v) Good Standing of the Company................................... 4
(vi) Good Standing of Subsidiaries.................................. 5
(vii) Capitalization................................................. 5
(viii) Authorization of Agreement..................................... 5
(ix) Authorization and Description of Securities.................... 5
(x) Absence of Defaults and Conflicts.............................. 6
(xi) Absence of Labor Dispute....................................... 6
(xii) Absence of Proceedings......................................... 6
(xiii) Accuracy of Exhibits........................................... 7
(xiv) Possession of Intellectual Property............................ 7
(xv) Absence of Further Requirements................................ 7
(xvi) Possession of Licenses and Permits............................. 7
(xvii) Title to Property.............................................. 8
(xviii) Compliance with Cuba Act....................................... 8
(xix) Investment Company Act......................................... 8
(xx) Environmental Laws............................................. 8
(xxi) Registration Rights............................................ 9
(xxii) Year 2000 Compliance........................................... 9
(b) Officer's Certificates..................................................... 9
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING................................. 9
(a) Initial Securities......................................................... 9
(b) Option Securities.......................................................... 9
(c) Payment.................................................................... 10
(d) Denominations; Registration................................................ 10
SECTION 3. COVENANTS OF THE COMPANY................................................... 10
(a) Compliance with Securities Regulations and Commission Requests............. 10
(b) Filing of Amendments....................................................... 11
(c) Delivery of Registration Statements........................................ 11
(d) Delivery of Prospectuses................................................... 11
(e) Continued Compliance with Securities Laws.................................. 11
(f) Blue Sky Qualifications.................................................... 12
(g) Rule 158................................................................... 12
(h) Use of Proceeds............................................................ 12
(i) Listing.................................................................... 12
(j) Restriction on Sale of Securities.......................................... 12
(k) Reporting Requirements..................................................... 13
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C> <C>
(l) Compliance with NASD Rules................................................. 13
(m) Compliance with Rule 463................................................... 13
SECTION 4. PAYMENT OF EXPENSES........................................................ 13
(a) Expenses................................................................... 14
(b) Termination of Agreement................................................... 14
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.................................... 14
(a) Effectiveness of Registration Statement.................................... 14
(b) Opinion of Counsel for Company............................................. 14
(c) Opinion of Counsel for Underwriters........................................ 15
(d) Officers' Certificate...................................................... 15
(e) Accountant's Comfort Letter................................................ 15
(f) Bring-down Comfort Letter.................................................. 15
(g) Approval of Listing........................................................ 16
(h) No Objection............................................................... 16
(i) Lock-up Agreements......................................................... 16
(j) Conditions to Purchase of Option Securities................................ 16
(i) Officers' Certificate............................................... 16
(ii) Opinion of Counsel for Company...................................... 16
(iii) Opinion of Counsel for Underwriters................................. 16
(iv) Bring-down Comfort Letter........................................... 16
(k) Additional Documents....................................................... 16
(l) Termination of Agreement................................................... 17
SECTION 6. INDEMNIFICATION............................................................ 17
(a) Indemnification of Underwriters............................................ 17
(b) Indemnification of Company, Directors and Officers......................... 18
(c) Actions against Parties; Notification...................................... 18
(d) Settlement without Consent if Failure to Reimburse......................... 19
(e) Indemnification for Reserved Securities.................................... 19
SECTION 7. CONTRIBUTION............................................................... 19
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY............. 21
SECTION 9. TERMINATION OF AGREEMENT................................................... 21
(a) Termination; General....................................................... 21
(b) Liabilities................................................................ 21
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS................................. 21
SECTION 11. NOTICES.................................................................... 22
SECTION 12. PARTIES.................................................................... 22
SECTION 13. GOVERNING LAW AND TIME..................................................... 23
SECTION 14. EFFECT OF HEADINGS......................................................... 23
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
SCHEDULES
Schedule A - List of Underwriters............................................. Sch A-1
Schedule B - Pricing Information.............................................. Sch B-1
EXHIBITS
Exhibit A- Form of Opinion of Company's Counsel............................... A-1
Exhibit B- Form of Lock-up Letter............................................ B-1
</TABLE>
iii
<PAGE>
Draft of June 8, 1999
SHOWCASE CORPORATION
(A Minnesota corporation)
3,000,000 Shares of Common Stock
(Par Value $0.01 Per Share)
PURCHASE AGREEMENT
[___________], 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
U.S. Bancorp Piper Jaffray Inc.
Dain Rauscher Wessels, a division of
Dain Rauscher Incorporated
FAC/Equities, a division of
First Albany Corporation
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
ShowCase Corporation, a Minnesota corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch, U.S. Bancorp Piper Jaffray, Inc., Dain Rauscher
Wessels, a division of Dain Rauscher Incorporated, and FAC/Equities, a division
of First Albany Corporation are acting as representatives (in such capacity, the
"Representatives"), with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $0.01 per share, of the
Company ("Common Stock") set forth in said Schedule A, and with respect to the
grant by the Company to the Underwriters, acting severally and not jointly, of
the option described in Section 2(b) hereof to purchase all or any part of
450,000 additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 3,000,000 shares of Common Stock (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the 450,000 shares of
Common Stock subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
<PAGE>
The Company and the Underwriters agree that up to 150,000 shares of the
Securities to be purchased by the Underwriters (the "Reserved Securities") shall
be reserved for sale by the Underwriters to certain eligible employees and
persons having business relationships with the Company, as part of the
distribution of the Securities by the Underwriters, subject to the terms of this
Agreement, the applicable rules, regulations and interpretations of the National
Association of Securities Dealers, Inc. and all other applicable laws, rules and
regulations. To the extent that such Reserved Securities are not orally
confirmed for purchase by such eligible employees and persons having business
relationships with the Company by the end of the first business day after the
date of this Agreement, such Reserved Securities may be offered to the public as
part of the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-77223) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b).
The information included in such prospectus or in such Term Sheet, as the case
may be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final prospectus in the form first furnished to the
Underwriters for use in connection with the offering of the Securities is herein
called the "Prospectus." If Rule 434 is relied on, the term "Prospectus" shall
refer to the preliminary prospectus dated June 4, 1999 together with the Term
Sheet and all references in this Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. For purposes of this Agreement, all references
to the Registration Statement, any preliminary prospectus, the Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").
2
<PAGE>
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Company The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the
-----------------------------------------
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and the Prospectus, any preliminary prospectus and any
supplement thereto or prospectus wrapper prepared in connection therewith,
at their respective times of issuance and at the Closing Time, complied and
will comply in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectus and such
preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the offer and sale of Reserved Securities.
Neither the Prospectus nor any amendments or supplements thereto (including
any prospectus wrapper), at the time the Prospectus or any such amendment
or supplement was issued and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
If Rule 434 is used, the Company will comply with the requirements of Rule
434 and the Prospectus shall not be "materially different", as such term is
used in Rule 434, from the prospectus included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to
3
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the Underwriters for use in connection with this offering was identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
-----------------------
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included in the
--------------------
Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules included in the Registration
Statement present fairly in accordance with GAAP the information required
to be stated therein. The selected financial data and the summary
financial information included in the Prospectus present fairly the
information shown therein and have been compiled on a basis consistent with
that of the audited financial statements included in the Registration
Statement.
(iv) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(v) Good Standing of the Company. The Company has been duly
----------------------------
organized and is validly existing as a corporation in good standing under
the laws of the State of Minnesota and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each subsidiary of the Company
-----------------------------
(each a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its
4
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incorporation or organization, as applicable, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock of
each such Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and is owned (other than directors' qualifying
shares) by the Company, directly or through Subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any Subsidiary
was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The only Subsidiaries of the Company are
the Subsidiaries listed on Exhibit 21 to the Registration Statement.
(vii) Capitalization. The authorized, issued and outstanding
--------------
capital stock of the Company is as set forth in the Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities, warrants
or options referred to in the Prospectus). The shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company was issued in violation
of the preemptive or other similar rights of any securityholder of the
Company.
(viii) Authorization of Agreement. This Agreement has been duly
--------------------------
authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The Securities
-------------------------------------------
have been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement against payment of the consideration set forth
herein, will be validly issued and fully paid and non-assessable; the
Common Stock conforms to all statements relating thereto contained in the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same; no holder of the Securities will be subject
to personal liability by reason of being such a holder; and the issuance of
the Securities is not subject to the preemptive or other similar rights of
any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor
---------------------------------
any of its Subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or
assets of the Company or any Subsidiary is subject (collectively,
"Agreements and Instruments") except for such defaults, that would not
result in a Material Adverse Effect; and the
5
<PAGE>
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated herein and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus
under the caption "Use of Proceeds") and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any Subsidiary pursuant to, the Agreements and
Instruments (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation of the provisions of
the charter or by-laws of the Company or any Subsidiary or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any Subsidiary or any of their
assets, properties or operations. As used herein, a "Repayment Event" means
any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company or any Subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the employees
------------------------
of the Company or any Subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
Subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
----------------------
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or any
Subsidiary, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder; the aggregate of
all pending legal or governmental proceedings to which the Company or any
Subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents
--------------------
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required.
6
<PAGE>
(xiv) Possession of Intellectual Property. The Company and its
-----------------------------------
Subsidiaries own or possess adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary to
carry on the business now operated by them, and neither the Company nor any
of its Subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its Subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
would result in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except (i) such as have been already
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities laws and (ii) such as have been obtained
under the laws and regulations of jurisdictions outside the United States
in which the Reserved Securities are offered.
(xvi) Possession of Licenses and Permits. The Company and its
----------------------------------
Subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them; the Company and its
Subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xvii) Title to Property. The Company and its Subsidiaries have
-----------------
good and marketable title to all real property owned by the Company and its
Subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectus or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company or any of
its Subsidiaries; and all of the leases and subleases material to the
business of the Company and its Subsidiaries, considered as one enterprise,
and under which the Company or any
7
<PAGE>
of its Subsidiaries holds properties described in the Prospectus, are in
full force and effect, and neither the Company nor any Subsidiary has any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any Subsidiary under any of the
leases or subleases mentioned above, or affecting or questioning the rights
of the Company or such Subsidiary to the continued possession of the leased
or subleased premises under any such lease or sublease.
(xviii) Compliance with Cuba Act. The Company has complied with,
------------------------
and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.
(xix) Investment Company Act. The Company is not, and upon the
----------------------
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xx) Environmental Laws. Except as described in the Registration
------------------
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its
Subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its Subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements, (C)
there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its Subsidiaries and (D)
there are no events or circumstances that might reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its Subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(xxi) Registration Rights. Except as set forth in the Registration
-------------------
Statement, there are no persons with registration rights or other similar
rights to have any securities
8
<PAGE>
registered pursuant to the Registration Statement or otherwise registered
by the Company under the 1933 Act.
(xxii) Year 2000 Compliance. Except as set forth in the
--------------------
Registration Statement, the Company has reviewed, and is continuing to
review, its operations and products and that of its Subsidiaries to
evaluate the extent to which the business or operations of the Company or
any of its Subsidiaries will be affected by the Year 2000 Problem (that is,
any significant risk that computer hardware or software applications used
by the Company and its Subsidiaries will not, in the case of dates or time
periods occurring after December 31, 1999, function at least as effectively
as in the case of dates or time periods occurring prior to January 1,
2000); as a result of such review, and except as described in the
Registration Statement, (i) the Company has no reason to believe, and does
not believe, that (A) there are any issues related to the Company's
preparedness to address the Year 2000 Problem that are of a character
required to be described or referred to in the Registration Statement or
Prospectus which have not been accurately described in the Registration
Statement or Prospectus and (B) the Year 2000 Problem will have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business or operations of the Company and its Subsidiaries, taken
as a whole, or result in any material loss or interference with the
business or operations of the Company and its Subsidiaries, taken as a
whole; and (ii) to the Company's knowledge, the suppliers, vendors,
customers or other material third parties used or served by the Company and
its Subsidiaries are addressing or will address the Year 2000 Problem in a
timely manner, except to the extent that a failure to address the Year 2000
Problem by any supplier, vendor, customer or material third party would not
have a Material Adverse Effect on the condition, financial or otherwise, or
on the earnings, business or operations of the Company and its
Subsidiaries, taken as a whole.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its Subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
Section 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share set forth in Schedule B, the number of Initial Securities
set forth in Schedule A opposite the name of such Underwriter, plus any
additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional 450,000 shares of Common Stock
at the price per share set forth in Schedule B, less an amount per share equal
to any dividends or distributions declared by the Company and payable on the
9
<PAGE>
Initial Securities but not payable on the Option Securities. The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial Securities upon notice by the Representatives to the Company setting
forth the number of Option Securities as to which the several Underwriters are
then exercising the option and the time and date of payment and delivery for
such Option Securities. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Fenwick
& West LLP, Two Palo Alto Square, Palo Alto, CA 94306 or at such other place as
shall be agreed upon by the Representatives and the Company, at 7:00 A.M.
(California time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Merrill Lynch, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and
10
<PAGE>
the Option Securities, if any, will be made available for examination and
packaging by the Representatives in The City of New York not later than 10:00
A.M. (Eastern time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.
Section 3. Covenants of the Company. The Company covenants with each
------------------------
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Representatives notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus will furnish the
Representatives with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file or
use any such document to which the Representatives or counsel for the
Underwriters shall reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representatives and counsel for the Underwriters, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies
of the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably
11
<PAGE>
requested, and the Company hereby consents to the use of such copies for
purposes permitted by the 1933 Act. The Company will furnish to each
Underwriter, without charge, during the period when the Prospectus is required
to be delivered under the 1933 Act or the Securities Exchange Act of 1934 (the
"1934 Act"), such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
12
<PAGE>
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect and maintain
the quotation of the Securities on the Nasdaq National Market and will file with
the Nasdaq National Market all documents and notices required by the Nasdaq
National Market of companies that have securities that are traded in the over-
the-counter market and quotations for which are reported by the Nasdaq National
Market.
(j) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectus, the Company will not, without the prior written
consent of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus or (C)
any shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company and the Company's
1999 Employee Stock Purchase Plan , in each case as referred to in the
Prospectus.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
(l) Compliance with NASD Rules. The Company hereby agrees that it will
ensure that the Reserved Securities will be restricted as required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD rules
from sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of this Agreement. The Underwriters will notify the
Company as to which persons will need to be so restricted. At the request of
the Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the Reserved
Securities, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
(m) Compliance with Rule 463. The Company will file with the Commission
such reports on Form 10-Q and Form 10-K as may be required pursuant to Rule 463
of the 1933 Act Regulations.
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Section 4. Payment of Expenses.
-------------------
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
the fees and expenses of any transfer agent or registrar for the Securities,
(ix) the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, the review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of
the Securities, (x) the fees and expenses incurred in connection with the
inclusion of the Securities in the Nasdaq National Market and (xi) all costs and
expenses of the Underwriters, including the fees and disbursements of counsel
for the Underwriters, in connection with matters related to the Reserved
Securities which are designated by the Company for sale to employees and others
having a business relationship with the Company.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
Section 5. Conditions of Underwriters' Obligations. The obligations of
---------------------------------------
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any Subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a
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post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been filed
with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company At Closing Time, the Representatives
shall have received the favorable opinion, dated as of Closing Time, of Dorsey &
Whitney LLP, counsel for the Company, in form and substance satisfactory to
counsel for the Underwriters, together with signed or reproduced copies of such
letter for each of the other Underwriters to the effect set forth in Exhibit A
hereto and to such further effect as counsel to the Underwriters may reasonably
request. Except that in paragraph (vii) thereof, with respect to opinions
related to Subsidiaries incorporated outside the United States, such opinions
may be given by local counsel reasonably acceptable to the Underwriters. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company and its Subsidiaries and certificates of public officials.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Fenwick & West LLP, counsel for the Underwriters, together with signed
or reproduced copies of such letter for each of the other Underwriters with
respect to the matters set forth in clauses (i), (ii), (v), (vi) (solely as to
preemptive or other similar rights arising by operation of law or under the
charter or by-laws of the Company), (viii) through (x), inclusive, (xii), (xiv)
(solely as to the information in the Prospectus under "Description of Capital
Stock--Common Stock") and the penultimate paragraph of Exhibit A hereto. In
giving such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of California and the
federal law of the United States, upon the opinions of counsel satisfactory to
the Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its Subsidiaries and certificates of
public officials.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from KPMG Peat Marwick LLP a
letter dated such date, in
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form and substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives shall
have received from KPMG Peat Marwick LLP a letter, dated as of Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (e) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.
(g) Approval of Listing. At Closing Time, the Securities shall have been
approved for inclusion in the Nasdaq National Market, subject only to official
notice of issuance.
(h) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(i) Lock-up Agreements. At the date of this Agreement, the Representatives
shall have received an agreement substantially in the form of Exhibit B hereto
signed by the persons listed on Schedule C hereto.
(j) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company or any Subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
---------------------
Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company confirming that
the certificate delivered at the Closing Time pursuant to Section 5(d)
hereof remains true and correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of
------------------------------
Dorsey & Whitney LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section 5(b)
hereof.
(iii) Opinion of Counsel for Underwriters. The favorable opinion of
-----------------------------------
Fenwick & West LLP, counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from KPMG Peat Marwick LLP,
-------------------------
in form and substance satisfactory to the Representatives and dated such
Date of Delivery,
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<PAGE>
substantially in the same form and substance as the letter furnished to the
Representatives pursuant to Section 5(f) hereof, except that the "specified
date" in the letter furnished pursuant to this paragraph shall be a date
not more than five days prior to such Date of Delivery.
(k) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(l) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
Section 6. Indemnification.
---------------
(a) Indemnification of Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) the violation of any applicable
laws or regulations of foreign jurisdictions where Reserved Securities have
been offered and (B) any untrue statement or alleged untrue statement of a
material fact included in the supplement or prospectus wrapper material
distributed in [INSERT JURISDICTIONS] in connection with the reservation
and sale of the Reserved Securities to employees and others having business
relationships with the Company or the omission or alleged omission
therefrom of a
17
<PAGE>
material fact necessary to make the statements therein, when considered in
conjunction with the Prospectus or preliminary prospectus, not misleading;
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission or in connection with any violation of
the nature referred to in Section 6(a)(ii)(A) hereof, provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the Company; and
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission or
in connection with any violation of the nature referred to in Section
6(a)(ii)(A) hereof, to the extent that any such expense is not paid under
(i), (ii) or (iii) above; provided, however, that this indemnity agreement
-------- -------
shall not apply to any loss, liability, claim, damage or expense to the
extent arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Merrill
Lynch expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information,
if applicable, or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); provided, further, the Company will not
be liable to any Underwriter with respect to any preliminary prospectus to
the extent that any such loss, liability, claim, damage or expense of such
Underwriter results from the fact that such Underwriter sold Securities to
a person as to whom it shall be established in the related proceedings that
there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus (or of the Prospectus as then amended
or supplemented if the Company shall have furnished such Underwriter with
such amendment or supplement thereto prior to the written confirmation of
such sale) if such delivery was required by the 1933 Act, and such loss,
liability, claim, damage or expense results from an untrue statement or
omission of a material fact contained in such preliminary prospectus that
was completely corrected in the Prospectus (or of the Prospectus as then
amended or supplemented if the Company shall have furnished such
Underwriter with such amendment or supplement thereto prior to the written
confirmation of such sale).
(b) Indemnification of Company, Directors and Officers. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto),
18
<PAGE>
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through Merrill Lynch expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In case any such action is brought against any indemnified party,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, that if the defendants in any such
-------- -------
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such action
on behalf of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such indemnified party
under this Section 6 for any legal fees or other expenses of counsel, other than
reasonable costs of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof, unless (i) the indemnified party
shall have employed separate counsel in accordance with the proviso to the
immediately preceding sentence (it being understood, however, that in connection
with such action the indemnifying party shall not be liable for the expenses of
more than one separate counsel (in addition to local counsel) in any one action
or separate but substantially similar actions in the same jurisdiction arising
out of the same general allegations or circumstances, designated by the
Representatives in the case of paragraph (a) of this Section 6, representing the
indemnified parties under such paragraph (a) who are parties to such action or
actions) or (ii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, and subject to
Section 6(d) hereof, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or
19
<PAGE>
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) or Section 6(a)(iii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided, that an indemnifying party shall not be
--------
liable for any such settlement effected without its consent if such indemnifying
party, prior to the date of such settlement, (i) reimburses such indemnified
party in accordance with such request for the amount of such fees and expenses
of counsel as the indemnifying party believes in good faith to be reasonable and
(ii) provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable.
(e) Indemnification for Reserved Securities. In connection with the offer
and sale of the Reserved Securities, the Company agrees, promptly upon a request
in writing, to indemnify and hold harmless the Underwriters from and against any
and all losses, liabilities, claims, damages and expenses incurred by them as a
result of the failure of eligible employees and others having a business
relationship with the Company to pay for and accept delivery of Reserved
Securities which, by the end of the first business day following the date of
this Agreement, were subject to a properly confirmed agreement to purchase.
Section 7. Contribution. If the indemnification provided for in Section 6
------------
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions, or in connection with
any violation of the nature referred to in Section 6(a)(ii)(A) hereof, which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
20
<PAGE>
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission or any violation of the nature referred to in Section 6(a)(ii)(A)
hereof.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
Section 8. Representations, Warranties and Agreements to Survive Delivery.
-------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its Subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any
21
<PAGE>
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
Section 9. Termination of Agreement
------------------------
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the Nasdaq National Market, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
Section 10. Default by One or More of the Underwriters. If one or more of
------------------------------------------
the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-
defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to
any Date of
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<PAGE>
Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Company to sell the Option Securities
to be purchased and sold on such Date of Delivery shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representatives or the Company shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
Section 11. Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at 101 California Street,
Suite 1420, San Francisco California 94111, attention of [_________]; and
notices to the Company shall be directed to it at 4115 Highway 52 North, Suite
300, Rochester, Minnesota 55901-0144, attention of Ken Holec, President and
Chief Executive Officer.
Section 12. Parties. This Agreement shall each inure to the benefit of
-------
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
23
<PAGE>
Section 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
Section 14. Effect of Headings. The Article and Section headings herein
------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
SHOWCASE CORPORATION
By
----------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
U.S. BANCORP PIPER JAFFRAY INC.
DAIN RAUSCHER WESSELS, A DIVISION OF
DAIN RAUSCHER INCORPORATED
FAC/EQUITIES, A DIVISION OF
FIRST ALBANY CORPORATION
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
--------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
24
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Name of Underwriter Initial Securities
------------------- -------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................................
U.S. Bancorp Piper Jaffray Inc.
Dain Rauscher Wessels, a division of
Dain Rauscher Incorporated.............................................
FAC/Equities, a division of
First Albany Corporation...............................................
---------
Total..................................................................... 3,000,000
=========
</TABLE>
Sch A-1
<PAGE>
SCHEDULE B
SHOWCASE CORPORATION
3,000,000 Shares of Common Stock
(Par Value $0.01 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $_______________.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $____________, being an amount equal to the
initial public offering price set forth above less $___________ per share;
provided that the purchase price per share for any Option Securities
purchased upon the exercise of the over-allotment option described in
Section 2(b) shall be reduced by an amount per share equal to any dividends
or distributions declared by the Company and payable on the Initial
Securities but not payable on the Option Securities.
Sch B-1
<PAGE>
SCHEDULE C
SHOWCASE CORPORATION
Lock-up Agreement
Sch C-1
<PAGE>
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Minnesota.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or to be in good standing would not result in a Material Adverse Effect.
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption "Capitalization"
(except for subsequent issuances, if any, pursuant to the Purchase Agreement
or pursuant to reservations, agreements or employee benefit plans referred to
in the Prospectus or pursuant to the exercise of convertible securities or
options referred to in the Prospectus); the shares of issued and outstanding
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; and none of the outstanding shares of
capital stock of the Company was issued in violation of the statutory (or, to
such counsel's knowledge, contractual), or any provisions of the Company's
articles of incorporation and bylaws related to, preemptive or other similar
rights of any securityholder of the Company.
(v) The Securities have been duly authorized for issuance and sale to
the Underwriters pursuant to the Purchase Agreement and, when issued and
delivered by the Company pursuant to the Purchase Agreement against payment
of the consideration set forth in the Purchase Agreement, will be validly
issued and fully paid and non-assessable and no holder of the Securities is
or will be subject to personal liability by reason of being such a holder.
(vi) The issuance of the Securities is not subject to statutory (or to
such counsel's knowledge, contractual), or any provisions of the Company's
articles of incorporation and bylaws related to, preemptive or other similar
rights of any securityholder of the Company.
A-1
<PAGE>
(vii) Each Subsidiary has been duly organized and is validly existing,
and where required, in good standing, under the laws of the jurisdiction of
its organization, has the requisite power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and is duly qualified as a foreign organization to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or to be in good standing would not result in a Material Adverse Effect;
except as otherwise disclosed in the Registration Statement, all of the
issued and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and, to our
knowledge, is owned (other than directors' qualifying shares) by the Company,
directly or through Subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any Subsidiary was issued in violation of the
statutory (or, to such counsel's knowledge, contractual), or any provisions
of the Subsidiary's charter and bylaws related to, preemptive or similar
rights of any shareholder of such Subsidiary.
(viii) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b); and, to the
best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or threatened by the Commission.
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectus and each amendment or supplement
to the Registration Statement and Prospectus as of their respective effective
or issue dates (other than the financial statements and supporting schedules
(and financial data derived therefrom) included therein or omitted therefrom,
as to which we need express no opinion) complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective.
(xii) The form of certificate used to evidence the Securities
complies in all material respects with all applicable requirements of the
Minnesota Business Corporation Act, with any applicable requirements of the
charter and by-laws of the Company and the requirements of the Nasdaq
National Market.
A-2
<PAGE>
(xiii) To our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company or
any Subsidiary is a party, or to which the property of the Company or any
Subsidiary is subject, before or brought by any court or governmental agency
or body, domestic or foreign, which might reasonably be expected to result in
a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in the Purchase Agreement or
the performance by the Company of its obligations thereunder.
(xiv) The information in the Prospectus under "Business--Facilities",
"Description of Capital Stock", "Management--Employment Agreements,"
"Management--Benefit Plans," "Management--Indemnification Matters and
Limitations of Liability," and "Shares Eligible for Future Sale" and in the
Registration Statement under Item 14, to the extent that it constitutes
matters of law, summaries of legal matters, the Company's articles of
incorporation and bylaws or legal proceedings, or legal conclusions, has been
reviewed by us and is correct in all material respects.
(xv) To the best of our knowledge, there are no statutes or
regulations that are required to be described in the Prospectus that are not
described as required.
(xvi) All descriptions in the Registration Statement of contracts and
other documents to which the Company or its Subsidiaries are a party are
accurate in all material respects; to our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits
thereto.
(xvii) To our knowledge, neither the Company nor any Subsidiary is in
violation of its charter or by-laws and no default by the Company or any
Subsidiary exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or
the Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(xviii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and
the 1933 Act Regulations, which have been obtained, or as may be required
under the securities or blue sky laws of the various states, as to which we
need express no opinion) is necessary or required in connection with the due
authorization, execution and delivery of the Purchase Agreement or for the
offering, issuance or sale of the Securities.
(xix) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use Of
A-3
<PAGE>
Proceeds") and compliance by the Company with its obligations under the
Purchase Agreement do not and will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(x) of the Purchase
Agreement) under or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any Subsidiary
pursuant to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or any other agreement or instrument, known to us, to
which the Company or any Subsidiary is a party or by which it or any of them
may be bound, or to which any of the property or assets of the Company or any
Subsidiary is subject (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not have a Material Adverse
Effect), nor will such action result in any violation of the provisions of
the charter or by-laws of the Company or any Subsidiary, or any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known to us,
of any government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any Subsidiary or any of their
respective properties, assets or operations.
(xx) To the best of our knowledge, except as disclosed in the
Registration Statement, there are no persons with registration rights or
other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the 1933
Act.
(xxi) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
1940 Act.
Nothing has come to our attention that would lead us to believe that
the Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which we need make no statement), at the time such
Registration Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements and schedules and other financial data
included therein or omitted therefrom, as to which we need make no
statement), at the time the Prospectus was issued, at the time any such
amended or supplemented prospectus was issued or at the Closing Time,
included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company, its Subsidiaries and
public officials. Such opinion shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any treatise, written
policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law
(1991).
A-4
<PAGE>
Exhibit B
March __, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce,
Fenner & Smith Incorporated,
U.S. Bancorp Piper Jaffray Inc.
Dain Rauscher Wessels
First Albany Corporation
as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Public Offering by ShowCase Corporation
------------------------------------------------
Dear Ladies and Gentlemen:
The undersigned, a stockholder, officer and/or director of ShowCase
Corporation, a Minnesota corporation (the "Company"), understands that Merrill
-------
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
-------
Lynch"), U.S. Bancorp Piper Jaffray Inc., Dain Rauscher Wessels and First Albany
Corporation propose to enter into a Purchase Agreement (the "Purchase
--------
Agreement") with the Company providing for the public offering of shares of the
Company's common stock, par value $0.01 per share (the "Common Stock").
------------
In recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder, officer and/or director of the Company, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned agrees with each underwriter to be named in
the Purchase Agreement that, during the period beginning on the date hereof and
continuing to and including the date 180 days after the date of the Purchase
Agreement, the undersigned will not, without the prior written consent of
Merrill Lynch, directly or indirectly, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant for the sale of, or otherwise
dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities
B-1
<PAGE>
Act of 1933, as amended, with respect to any of the foregoing or (ii) enter into
any swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise.
Very truly yours,
---------------------------------------
(Signature)
Name:
---------------------------------
Address:
------------------------------
------------------------------
B-2
<PAGE>
EXHIBIT 4.1
NUMBER SHARES
See reverse for
certain definitions
CUSIP 82539P 10 2
[LOGO]
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
THIS CERTIFIES that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK,
$.01 PAR VALUE,
SHOWCASE CORPORATION
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned by the Transfer
Agent and Registrar.
WITNESS the facsimile signatures of its duly authorized officers.
Dated:
/s/ Craig W. Allen /s/ Ken Holec
SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
THE BOARD OF THIS CORPORATION HAS THE AUTHORITY TO CREATE AND DETERMINE THE
RELATIVE RIGHTS AND PREFERENCES OF CLASSES OR SERIES OF SHARES OF CAPITAL STOCK
OTHER THAN COMMON STOCK. THIS CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON
WRITTEN REQUEST SENT TO ITS PRINCIPAL EXECUTIVE OFFICES, AND WITHOUT CHARGE, A
FULL STATEMENT OF THE BOARD'S AUTHORITY TO CREATE AND DETERMINE THE RELATIVE
RIGHTS AND PREFERENCES OF CLASSES OR SERIES OF SHARES OF CAPITAL STOCK AS WELL
AS THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES
OF EACH CLASS OR SERIES THEN OUTSTANDING OR AUTHORIZED TO BE ISSUED.
--------------------------
TEN COM --as tenants in common
TEN ENT --as tenants by the entireties
JT TEN --as joint tenants with right of
survivorship and not as tenants
in common
UTMA GIFT MIN ACT--........Custodian........
(Cust) (Minor)
under Uniform Gifts to Minors
Act............
(State)
Additional abbreviations may also be used though not in the above list.
For value received ______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- --------------------------------------- --------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
________________________________________________________________________ Shares
of capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said shares on the books of the within-named Corporation with
full power of substitution in the premises.
Dated ----------------------------------------------
----------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WIT THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
SIGNATURE GUARANTEED
-------------------------
ALL GUARANTEES MUST BE MADE BY A FINANCIAL INSTITUTION (SUCH AS A BANK OR
BROKER) WHICH IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION
PROGRAM ("STAMP"), THE NEW YORK STOCK EXCHANGE, INC. MEDALLION SIGNATURE PROGRAM
("MSP"), OR THE STOCK EXCHANGE MEDALLION PROGRAM ("SEMP") AND MUST NOT BE DATED.
GUARANTEES BY A NOTARY PUBLIC ARE NOT ACCEPTABLE.
-------------------------
<PAGE>
EXHIBIT 10.3
As amended by the Board of Directors on June 23, 1999
SHOWCASE CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I. INTRODUCTION
------------
Section 1.01 Purpose. The purpose of the ShowCase Corporation 1999
-------
Employee Stock Purchase Plan (the "Plan") is to provide employees of ShowCase
Corporation, a Minnesota corporation (the "Company"), and certain related
corporations with an opportunity to share in the ownership of the Company by
providing them with a convenient means for regular and systematic purchases of
the Company's Common Stock, par value $.01 per share, and, thus, to develop a
stronger incentive to work for the continued success of the Company.
Section 1.02 Rules of Interpretation. It is intended that the Plan
-----------------------
be an "employee stock purchase plan" as defined in Section 423(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations
promulgated thereunder. Accordingly, the Plan shall be interpreted and
administered in a manner consistent therewith if so approved. All Participants
in the Plan will have the same rights and privileges consistent with the
provisions of the Plan.
Section 1.03 Definitions. For purposes of the Plan, the following
-----------
terms will have the meanings set forth below:
(a) "Acceleration Date" means the earlier of the date of stockholder
-----------------
approval or approval by the Company's Board of Directors of (i) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Company
Common Stock would be converted into cash, securities or other property,
other than a merger of the Company in which stockholders of the Company
immediately prior to the merger have the same proportionate ownership of
stock in the surviving corporation immediately after the merger; (ii) any
sale, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company; or
(iii) any plan of liquidation or dissolution of the Company.
(b) "Affiliate" means any subsidiary corporation of the Company, as
---------
defined in Section 424(f) of the Code, whether now or hereafter acquired or
established.
(c) "Committee" means the committee described in Section 10.01.
---------
(d) "Common Stock" means the Company's Common Stock, $.01 par value,
------------
as such stock may be adjusted for changes in the stock or the Company as
contemplated by Article XI herein.
<PAGE>
(e) "Company" means ShowCase Corporation, a Minnesota corporation, and
-------
its successors by merger or consolidation as contemplated by Article XI
herein.
(f) "Current Compensation" means all regular wage, salary and
--------------------
commission payments paid by the Company to a Participant in accordance with
the terms of his or her employment, but excluding annual bonus payments and
all other forms of special compensation.
(g) "Effective Date" means the date immediately prior to the date on
--------------
which the Company's registration statement relating to its initial public
offering of Common Stock is declared effective by the Securities and
Exchange Commission.
(h) "Fair Market Value" as of a given date means such value of the
-----------------
Common Stock as reasonably determined by the Committee, but shall not be
less than (i) the closing price of the Common Stock as reported for
composite transactions if the Common Stock is then traded on a national
securities exchange, (ii) the last sale price if the Common Stock is then
quoted on the NASDAQ National Market System, or (iii) the average of the
closing representative bid and asked prices of the Common Stock as reported
on NASDAQ on the date as of which the fair market value is being
determined; provided, however, that the Fair Market Value on the Effective
Date shall be the initial public offering price set forth on the cover of
the final prospectus used in connection with the Company's initial public
offering of Common Stock. If on a given date the shares of Common Stock
are not traded on an established securities market, the Committee shall
make a good faith attempt to satisfy the requirements of this Section 1.03
and in connection therewith shall take such action as it deems necessary or
advisable.
(i) "Participant" means a Permanent Full-Time Employee who is eligible
-----------
to participate in the Plan under Section 2.01 and who has elected to
participate in the Plan.
(j) "Participating Affiliate" means an Affiliate which has been
-----------------------
designated by the Committee in advance of the Purchase Period in question
as a corporation whose eligible Permanent Full-Time Employees may
participate in the Plan.
(k) "Permanent Full-Time Employee" means an employee of the Company or
----------------------------
a Participating Affiliate as of the first day of a Purchase Period,
including an officer or director who is also an employee, but excluding an
employee whose customary employment is less than 20 hours per week.
(l) "Plan" means the ShowCase Corporation 1999 Employee Stock Purchase
----
Plan, as amended, the provisions of which are set forth herein.
(m) "Purchase Period" means any of the approximate six-month periods
---------------
beginning on the first business day in January and July, as appropriate,
and ending on the last business
-2-
<PAGE>
day in June and December, respectively; provided, however, that the initial
Purchase Period will commence on the Effective Date and will terminate on
December 31, 1999, and that the then current Purchase Period will end upon
the occurrence of an Acceleration Date.
(n) "Stock Purchase Account" means the account maintained on the books
----------------------
and records of the Company recording the amount received from each
Participant through payroll deductions made under the Plan and from the
Company through matching contributions.
ARTICLE II. ELIGIBILITY AND PARTICIPATION
-----------------------------
Section 2.01 Eligible Employees. All Permanent Full-Time Employees
------------------
shall be eligible to participate in the Plan beginning on the first day of the
first Purchase Period to commence after such person becomes a Permanent Full-
Time Employee. Subject to the provisions of Article VI, each such employee will
continue to be eligible to participate in the Plan so long as he or she remains
a Permanent Full-Time Employee.
Section 2.02 Election to Participate. An eligible Permanent Full-
-----------------------
Time Employee may elect to participate in the Plan for a given Purchase Period
by filing with the Company, in advance of that Purchase Period and in accordance
with such terms and conditions as the Committee in its sole discretion may
impose, a form provided by the Company for such purpose (which authorizes
regular payroll deductions from Current Compensation beginning with the first
payday in that Purchase Period and continuing until the employee withdraws from
the Plan or ceases to be eligible to participate in the Plan).
Section 2.03 Limits on Stock Purchase. No employee shall be granted
------------------------
any right to purchase Common Stock hereunder if such employee, immediately after
such a right to purchase is granted, would own, directly or indirectly, within
the meaning of Section 423(b)(3) and Section 424(d) of the Code, Common Stock
possessing 5% or more of the total combined voting power or value of all the
classes of the capital stock of the Company or of all Affiliates.
Section 2.04 Voluntary Participation. Participation in the Plan on
-----------------------
the part of a Participant is voluntary and such participation is not a condition
of employment nor does participation in the Plan entitle a Participant to be
retained as an employee.
ARTICLE III. PAYROLL DEDUCTIONS, COMPANY
---------------------------
CONTRIBUTIONS AND STOCK PURCHASE ACCOUNT
----------------------------------------
Section 3.01 Deduction from Pay. The form described in Section 2.02
------------------
will permit a Participant to elect payroll deductions of any multiple of 1% but
not less than 1% or more than 15% of such Participant's Current Compensation for
each pay period, subject to such other limitations as the Committee in its sole
discretion may impose. A Participant may cease making payroll deductions at any
time, subject to such limitations as the Committee in its sole discretion may
impose. In the event that during a Purchase Period the entire credit balance in
a Participant's Stock
-3-
<PAGE>
Purchase Account exceeds the product of (a) 85% of the Fair Market Value of the
Common Stock on the first business day of that Purchase Period, and (b) 5,000,
then payroll deductions for such Participant shall automatically cease, and
shall resume on the first pay period of the next Purchase Period.
Section 3.02 Company Contributions. The Company may, in the sole
---------------------
discretion of the Committee, from time to time contribute to each Participant's
Stock Purchase Account an amount equal to up to 50% of each payroll deduction
credited to such Account. No Company contributions shall be deemed to have been
made until such contributions are credited to the Participant's Stock Purchase
Account as provided in Section 3.03.
Section 3.03 Credit to Account. Payroll deductions will be credited
-----------------
to the Participant's Stock Purchase Account on each payday, and Company
contributions will be credited to the Participant's Stock Purchase Account on
the last business day of the Purchase Period at the time of and in connection
with the purchase of shares of Common Stock in accordance with Articles IV and V
hereof.
Section 3.04 Interest. No interest will be paid upon payroll
--------
deductions, Company contributions or on any amount credited to, or on deposit
in, a Participant's Stock Purchase Account.
Section 3.05 Nature of Account. The Stock Purchase Account is
-----------------
established solely for accounting purposes, and all amounts credited to the
Stock Purchase Account will remain part of the general assets of the Company or
the Participating Affiliate (as the case may be).
Section 3.06 No Additional Contributions. A Participant may not make
---------------------------
any payment into the Stock Purchase Account other than the payroll deductions
made pursuant to the Plan.
ARTICLE IV. RIGHT TO PURCHASE SHARES
------------------------
Section 4.01 Number of Shares. Each Participant will have the right
----------------
to purchase on the last business day of the Purchase Period all, but not less
than all, of the largest number of shares of Common Stock, both whole and any
fractional share, that can be purchased at the price specified in Section 4.02
with the entire credit balance in the Participant's Stock Purchase Account,
subject to the limitations that (a) no more than 5,000 shares of Common Stock
may be purchased under the Plan by any one Participant for a given Purchase
Period, (b) in accordance with Section 423(b)(8) of the Code, no more than
$25,000 in Fair Market Value (determined at the beginning of each Purchase
Period) of Common Stock and other stock may be purchased under the Plan and all
other employee stock purchase plans (if any) of the Company and the Affiliates
by any one Participant for any calendar year and (c) if the purchases for all
Participants in any Purchase Period would result in the sale of more than 50,000
shares of Common Stock in the aggregate under the Plan for such Purchase Period,
each Participant shall be allocated a pro rata portion of the 50,000 shares of
Common Stock to be sold for that Purchase Period. If the purchases for all
Participants would otherwise cause the aggregate number of shares of Common
Stock to be sold under the Plan to
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exceed the number specified in Section 10.03, each Participant shall be
allocated a pro rata portion of the Common Stock to be sold.
Section 4.02 Purchase Price. The purchase price for any Purchase
--------------
Period shall be the lesser of (a) 85% of the Fair Market Value of the Common
Stock on the first business day of that Purchase Period or (b) 85% of the Fair
Market Value of the Common Stock on the last business day of that Purchase
Period, in each case rounded up to the next higher full cent.
ARTICLE V. EXERCISE OF RIGHT
-----------------
Section 5.01 Purchase of Stock. On the last business day of a
-----------------
Purchase Period, the entire credit balance in each Participant's Stock Purchase
Account will be used to purchase the largest number of both whole and any
fractional shares of Common Stock purchasable with such amount (subject to the
limitations of Section 4.01), unless the Participant has filed with the Company,
in advance of that date and subject to such terms and conditions as the
Committee in its sole discretion may impose, a form provided by the Company
which requests the distribution of the entire credit balance in cash.
Section 5.02 Cash Distributions. Any amount remaining in a
------------------
Participant's Stock Purchase Account after the last business day of a Purchase
Period will be paid to the Participant in cash within 30 days after the end of
that Purchase Period.
Section 5.03 Notice of Acceleration Date. The Company shall use its
---------------------------
best efforts to notify each Participant in writing at least ten days prior to
any Acceleration Date that the then current Purchase Period will end on such
Acceleration Date.
ARTICLE VI. WITHDRAWAL FROM PLAN; SALE OF STOCK
-----------------------------------
Section 6.01 Voluntary Withdrawal. A Participant may, in accordance
--------------------
with such terms and conditions as the Committee in its sole discretion may
impose, withdraw from the Plan and cease making payroll deductions by filing
with the Company a form provided for this purpose. In such event, the entire
credit balance in the Participant's Stock Purchase Account will be paid to the
Participant in cash within 30 days, provided that in no event shall any
Participant be entitled to withdraw from such Account any Company contributions
credited to such Account at the end of the Purchase Period pursuant to Section
3.03. A Participant who withdraws from the Plan will not be eligible to reenter
the Plan until the beginning of the next Purchase Period following the date of
such withdrawal.
Section 6.02 Death. Subject to such terms and conditions as the
-----
Committee in its sole discretion may impose, upon the death of a Participant, no
further amounts shall be credited to the Participant's Stock Purchase Account.
Thereafter, on the last business day of the Purchase Period during which such
Participant's death occurred and in accordance with Section 5.01, the entire
credit balance in such Participant's Stock Purchase Account will be used to
purchase Common Stock,
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<PAGE>
unless such Participant's estate has filed with the Company, in advance of that
day and subject to such terms and conditions as the Committee in its sole
discretion may impose, a form provided by the Company which elects to have the
entire credit balance in such Participant's Stock Account distributed in cash
within 30 days after the end of that Purchase Period or at such earlier time as
the Committee in its sole discretion may decide, provided that in no event shall
any Participant's estate be entitled to receive from such Account any Company
contributions credited to such Account at the end of the Purchase Period
pursuant to Section 3.03. Each Participant, however, may designate one or more
beneficiaries who, upon death, are to receive the Common Stock or the amount
that otherwise would have been distributed or paid to the Participant's estate
and may change or revoke any such designation from time to time. No such
designation, change or revocation will be effective unless made by the
Participant in writing and filed with the Company during the Participant's
lifetime. Unless the Participant has otherwise specified the beneficiary
designation, the beneficiary or beneficiaries so designated will become fixed as
of the date of the death of the Participant so that, if a beneficiary survives
the Participant but dies before the receipt of the payment due such beneficiary,
the payment will be made to such beneficiary's estate.
Section 6.03 Termination of Employment. Subject to such terms and
-------------------------
conditions as the Committee in its sole discretion may impose, upon a
Participant's normal or early retirement with the consent of the Company under
any pension or retirement plan of the Company or Participating Affiliate, no
further amounts shall be credited to the Participant's Stock Purchase Account.
Thereafter, on the last business day of the Purchase Period during which such
Participant's approved retirement occurred and in accordance with Section 5.01,
the entire credit balance in such Participant's Stock Purchase Account will be
used to purchase Common Stock, unless such Participant has filed with the
Company, in advance of that day and subject to such terms and conditions as the
Committee in its sole discretion may impose, a form provided by the Company
which elects to receive the entire credit balance in such Participant's Stock
Purchase Account in cash within 30 days after the end of that Purchase Period,
provided that (i) in no event shall any Participant be entitled to receive from
such Account any Company contributions credited to such Account at the end of
the Purchase Period pursuant to Section 3.03, and (ii) such Participant shall
have no right to purchase Common Stock in the event that the last day of such a
Purchase Period occurs more than three months following the termination of such
Participant's employment with the Company by reason of such an approved
retirement. In the event of any other termination of employment (other than
death) with the Company or a Participating Affiliate, participation in the Plan
will cease on the date the Participant ceases to be a Permanent Full-Time
Employee for any reason. In such event, the entire credit balance in such
Participant's Stock Purchase Account will be paid to the Participant in cash
within 30 days, provided that in no event shall any Participant be entitled to
receive from such Account any Company contributions credited to such Account at
the end of the Purchase Period pursuant to Section 3.03. For purposes of this
Section 6.03, a transfer of employment to any Affiliate, or a leave of absence
which has been approved by the Committee, will not be deemed a termination of
employment as a Permanent Full-Time Employee.
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<PAGE>
ARTICLE VII. NONTRANSFERABILITY
------------------
Section 7.01 Nontransferable Right to Purchase. The right to
---------------------------------
purchase Common Stock hereunder may not be assigned, transferred, pledged or
hypothecated (whether by operation of law or otherwise), except as provided in
Section 6.02, and will not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition or levy of attachment or similar process upon the right to purchase
will be null and void and without effect.
Section 7.02 Nontransferable Account. Except as provided in Section
-----------------------
6.02, the amounts credited to a Stock Purchase Account may not be assigned,
transferred, pledged or hypothecated in any way, and any attempted assignment,
transfer, pledge, hypothecation or other disposition of such amounts will be
null and void and without effect.
ARTICLE VIII. STOCK CERTIFICATES
------------------
Section 8.01 Delivery. Promptly after the last day of each Purchase
--------
Period and subject to such terms and conditions as the Committee in its sole
discretion may impose, the Company will cause to be delivered to or for the
benefit of the Participant a certificate representing the Common Stock purchased
on the last business day of such Purchase Period or cause to be made a book-
entry credit representing such Common Stock for the benefit of the Participant.
Section 8.02 Securities Laws. The Company shall not be required to
---------------
issue or deliver any certificate representing Common Stock prior to registration
under the Securities Act of 1933, as amended, or registration or qualification
under any state law if such registration is required. The Company shall use its
best efforts to accomplish such registration (if and to the extent required) not
later than a reasonable time following the Purchase Period, and delivery of
certificates may be deferred until such registration is accomplished.
Section 8.03 Completion of Purchase. A Participant shall have no
----------------------
interest in the Common Stock purchased until a certificate representing the same
is issued to or for the benefit of the Participant.
Section 8.04 Form of Ownership. The certificates representing Common
-----------------
Stock issued under the Plan will be registered in the name of the Participant or
jointly in the name of the Participant and another person, as the Participant
may direct on a form provided by the Company.
ARTICLE IX. EFFECTIVE DATE, AMENDMENT AND
-----------------------------
TERMINATION OF PLAN
-------------------
Section 9.01 Effective Date. The Plan was approved by the Board of
--------------
Directors on April 9, 1999 and shall be approved by the stockholders of the
Company prior to the Effective Date.
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<PAGE>
Section 9.02 Plan Commencement. The initial Purchase Period under
-----------------
the Plan will commence on the Effective Date. Thereafter, each succeeding
Purchase Period will commence and terminate in accordance with Section 1.03(m).
Section 9.03 Powers of Board. The Board of Directors may amend or
---------------
discontinue the Plan at any time. No amendment or discontinuation of the Plan,
however, shall without stockholder approval be made that: (i) absent such
stockholder approval, would cause Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the "Act") to become unavailable with respect to the Plan,
(ii) requires stockholder approval under any rules or regulations of the
National Association of Securities Dealers, Inc. or any securities exchange that
are applicable to the Company, or (iii) permit the issuance of Common Stock
before payment therefor in full
Section 9.04 Automatic Termination. The Plan shall automatically
---------------------
terminate when all of the shares of Common Stock provided for in Section 10.03
have been sold.
ARTICLE X. ADMINISTRATION
--------------
Section 10.01 The Committee. The Plan shall be administered by a
-------------
committee (the "Committee") of two or more directors of the Company, none of
whom shall be officers or employees of the Company and all of whom shall be
"disinterested persons" with respect to the Plan within the meaning of Rule 16b-
3 under the Act. The members of the Committee shall be appointed by and serve
at the pleasure of the Board of Directors.
Section 10.02 Powers of Committee. Subject to the provisions of the
-------------------
Plan, the Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan, to establish
deadlines by which the various administrative forms must be received in order to
be effective, and to adopt such other rules and regulations for administering
the Plan as it may deem appropriate. The Committee shall have full and complete
authority to determine whether all or any part of the Common Stock acquired
pursuant to the Plan shall be subject to restrictions on the transferability
thereof or any other restrictions affecting in any manner a Participant's rights
with respect thereto but any such restrictions shall be contained in the form by
which a Participant elects to participate in the Plan pursuant to Section 2.02.
Decisions of the Committee will be final and binding on all parties who have an
interest in the Plan.
Section 10.03 Stock to be Sold. The Common Stock to be issued and
----------------
sold under the Plan may be treasury shares or authorized but unissued shares, or
the Company may purchase Common Stock in the market for sale under the Plan.
Except as provided in Section 11.01, the aggregate number of shares of Common
Stock to be sold under the Plan will not exceed 500,000 shares.
-8-
<PAGE>
Section 10.04 Notices. Notices to the Committee should be addressed
-------
as follow:
ShowCase Corporation
4115 Highway 52 North, Suite 300
Rochester, Minnesota 55901-8701
Attention: Craig W. Allen
ARTICLE XI. ADJUSTMENT FOR CHANGES
----------------------
IN STOCK OR COMPANY
-------------------
Section 11.01 Stock Dividend or Reclassification. If the outstanding
----------------------------------
shares of Common Stock are increased, decreased, changed into or exchanged for a
different number or kind of securities of the Company, or shares of a different
par value or without par value, through reorganization, recapitalization,
reclassification, stock dividend, stock split, amendment to the Company's
Certificate of Incorporation, reverse stock split or otherwise, an appropriate
adjustment shall be made in the maximum numbers and kind of securities to be
purchased under the Plan with a corresponding adjustment in the purchase price
to be paid therefor.
Section 11.02 Merger or Consolidation. If the Company is merged into
-----------------------
or consolidated with one or more corporations during the term of the Plan,
appropriate adjustments will be made to give effect thereto on an equitable
basis in terms of issuance of shares of the corporation surviving the merger or
of the consolidated corporation, as the case may be.
ARTICLE XII. APPLICABLE LAW
--------------
Rights to purchase Common Stock granted under the Plan shall be
construed and shall take effect in accordance with the laws of the State of
Minnesota.
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<PAGE>
EXHIBIT 10.9
LICENSE AGREEMENT
This License Agreement (the "Agreement") entered into effective as of April 1,
1998, by and between Arbor Software Corporation ("Arbor") and ShowCase
Corporation ("ShowCase"), and supersedes the Arbor/ShowCase License Agreement
dated December 19, 1995.
The parties hereto agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
specified below:
1.1 "Authorized Partner" is defined as (a) a software reseller with a
contractual relationship with Arbor or ShowCase which adds value by
providing its own or third party applications in addition to the
Essbase Software or the ShowCase AS/400 Port respectively, or (b) a
systems integrator (service companies such EDS and Andersen
Consulting), OEM, or other entity approved in writing by the other
party. Under no circumstance may IBM be an Arbor Authorized Partner for
the ShowCase AS/400 Port without the written approval of ShowCase,
while ShowCase retains exclusive distribution rights to the ShowCase
AS/400 Port in accordance with section 2.1.
1.2 "Essbase Software" is defined as the Essbase Server, the Essbase
Application Manager, the Spreadsheet Client, the Essbase Application
Tools existing as of the effective date of this Agreement, and any
future releases of such products developed or distributed by Arbor.
Arbor agrees to negotiate in good faith to expand the definition of
Essbase Software to include other software products not specified above
that are either developed or distributed by Arbor after the effective
date of this agreement.
1.3 "First Level Support" is defined as the service provided in
response to a customer's initial contact reporting a software problem.
1.4 "Second Level Support" is defined as the service provided to
reproduce and correct a software problem.
1.5 "Third Level Support" is defined as the service provided to isolate
a software problem at the software component level and to furnish a
correction or circumvention of the software problem.
2. SHOWCASE DISTRIBUTION RIGHTS
2.1 Grant of License to Distribute Essbase Software on AS/400 Platform.
Subject to the terms and conditions of this Agreement, Arbor grants to
ShowCase an exclusive, non-transferable, non-sublicensable license to
use certain technical information, including, without limitation, all
algorithms, ideas, structure, organization , source code and other
technical information, about the Essbase Software that are portable to
the AS/400 platform (collectively, the "Technical Information") but
only as a part of, and for the sole purpose of, permitting ShowCase to
port the Essbase Software to the IBM AS/400 platform or any direct
successor platform (such ported product to be referred to as the
"ShowCase AS/400 Port"). Arbor also grants to ShowCase a worldwide
license to distribute and sublicense through Authorized Partners and
directly to end users executable versions (and only executable
versions) of the ShowCase AS/400 Port. Except as provided in Section
3.1 below, Arbor will not distribute the ShowCase AS/400 Port or grant
any other party a license to do so, provided ShowCase fully meets all
of its minimum royalty obligations set forth in Section 5.6 below.
Notwithstanding anything to the contrary, this Agreement does not
restrict Arbor's right to use or permit others to use the Technical
Information for any purpose other than developing and distributing
Essbase Software on the IBM AS/400 platform or any direct successor
platform. The exclusive license described above shall become a
nonexclusive license (subject to Sections 2.8 and 4.2) upon the
exercise by Arbor of its Buy-Back Right described in Section 2.7 below
or by operation of the provisions of Section 5.6 or upon the expiration
of this agreement pursuant to Section 4.1.
Page 1 of 17
<PAGE>
2.2 Grant of License to Distribute Essbase Software on Non-AS/400
Platforms. Arbor hereby grants to ShowCase a non-exclusive, worldwide
license (subject to Sections 2.8 and 4.2) to distribute and sublicense
the Essbase Software (i.e., all Essbase Software not ported to the
AS/400 platform) to end users directly and through its Authorized
Partners, subject to the terms of this Agreement. However, any
distribution by systems integrators must be approved in writing in
advance by Arbor, which approval will not be unreasonably withheld. The
end user customer shall execute a software license agreement containing
terms no less restrictive than, and at least as protective of Arbor's
intellectual property rights as, those contained in Arbor's Software
License Agreement attached to this Agreement. ShowCase's right to
distribute and sublicense Essbase Software on non-AS/400 Platforms,
both directly and through its Authorized Partners, shall be subject to
the following conditions:
a. The end users must also license the ShowCase Warehouse
Manager and Warehouse Builder products or replacement versions
of such products and data must reside on or originate from an
IBM AS/400; or
b. The end users must license a ShowCase business application
built upon the Essbase Software and that adds significant
value to the Essbase Software.
2.3 Closing Responsibilities. ShowCase will be responsible for closing
sales without substantial field sales support from Arbor. ShowCase will
furnish customer contact information regarding each transaction to
Arbor within 30 days after execution of the contract with the customer.
2.4 Port Development. Arbor agrees to make available to ShowCase new
releases of the Essbase Software for the purpose of port development no
later than the earliest date on which Arbor makes such new releases
available to its beta test customers. New releases of the Essbase
Software are considered Technical Information and are subject to the
confidentiality provisions contained in Section 9. ShowCase shall use
its best efforts to develop and produce versions of the ShowCase AS/400
Essbase Server, the Essbase Application Manager and the Spreadsheet
Client which are compatible with such new releases of the Essbase
Software in a timely manner, so that the new version of the ShowCase
AS/400 Port is available for general release no later than 180 days
after the date of general release by Arbor of the new release of the
Essbase Software on all platforms currently supported by Arbor. Porting
the Essbase Application Tools and affiliated modules shall be at
ShowCase's discretion. Distribution of new versions of the ShowCase
AS/400 Port shall be subject to the same terms as are applicable to
current versions of the ShowCase AS/400 Port.
2.5 Trademark License.
a. License. Subject to the terms and conditions of this
Agreement, Arbor hereby grants to ShowCase a non-exclusive,
non-transferable license to use the name "Essbase" (the
"Trademark") but only in connection with its marketing and
distribution of the ShowCase AS/400 Port or the Essbase
Software and any derivative works thereof expressly authorized
under this Agreement. Every copy of the ShowCase AS/400 Port
shall clearly and prominently display the Trademark and shall
attribute authorship of the Technical Information to Arbor.
b. Quality Control. ShowCase shall (1) upon Arbor's request
from time to time, supply to Arbor fully documented sample
copies of the ShowCase AS/400 Port (in both source code and
object code form) and any advertising and marketing materials,
for Arbor's review and approval, which will not be
unreasonably withheld; (2) modify the ShowCase AS/400 Port and
any such advertising and marketing materials as may be
requested by Arbor to give full attribution to Arbor, ensuring
that the Arbor corporate and product names are noticeably and
prominently identified and displayed in connection with the
marketing and distribution of the ShowCase AS/400 Port.
ShowCase's failure to substantially comply with the terms of
this provision shall constitute a material default subject to
Section 4.2 below.
Page 2 of 17
<PAGE>
2.6 Internal Use. Arbor hereby grants to ShowCase a non-exclusive,
non-transferable license to use (*) ports of the ShowCase AS/400 Port
and related modules for its internal business purposes at no additional
charge or royalty. Arbor will not provide any support and maintenance
services in connection with this license.
2.7 Buy-Back Right. Arbor has the right at any time during the term of
this Agreement to buy back (the "Buy-Back Right"), upon 12 months
advance written notice, all rights to use and distribute the Technical
Information granted hereunder, and all rights, title and interest in
and to the ShowCase AS/400 Port (except for a non-exclusive,
non-transferable, royalty bearing, worldwide license to distribute the
ShowCase AS/400 Port, which shall be retained by ShowCase subject to
the terms of this Agreement), and all items (including software and
documentation) in which the Technical Information resides, or for which
the Technical Information is or was used, including, without limitation
to, all algorithms, ideas, structure, organization, source code and
executables, and compilers incorporated into the ShowCase AS/400 Port
by ShowCase. Exercise of the Buy-Back Right will not, by itself, affect
the right of an authorized end user of the ShowCase AS/400 Port to
exercise the rights properly granted such end user by ShowCase. The
terms of the buy-back shall be as follows:
a. Amount. The amount to be paid for the Buy-Back Right shall
be the greater of (1) $(*) , or (2) an amount equal to (a)(*),
plus (b) (*) . In addition, at such time each party shall
deliver to the other a report documenting gross license fees
for the preceding 12 months. At either party's request, the
other party shall permit the requesting party and its auditors
to audit and review the other party's books and records (which
shall be deemed to be Proprietary Information) to confirm the
accuracy of the report.
b. Payment. Arbor shall pay to ShowCase a first payment of
$(*) at the time it delivers its 12-month notice. ShowCase
shall make delivery of technical information, source and
object code, and documentation within 30 days of payment so
that Arbor can begin to prepare for the support and sales of
the ShowCase AS/400 Port product following the completion of
the 12 month notice period. Arbor shall pay the balance of the
Buy-Back Right price no later than 12 months after the date of
the Buy-Back notice, provided that ShowCase shall have
delivered to Arbor all technical information, source code,
object code, and documentation for the ShowCase AS/400 Port
prior thereto.
c. Technical Information. Within 30 days after receipt of
Arbor's notice of the Buy-Back Right, ShowCase will deliver to
Arbor a copy of the ShowCase AS/400 Port source code and of
the Essbase source code that ShowCase currently has in its
possession, and 12 months thereafter, ShowCase shall return to
Arbor all copies of all Technical Information. Beginning 12
months after the exercise of the Buy-Back Right, Arbor shall
assume responsibility for support of the ShowCase AS/400 Port.
2.8 Nonexclusive License and Distribution Rights
a. Minimums for Nonexclusive License. ShowCase's nonexclusive
license and distribution rights shall continue so long as the
annual royalty payments received by Arbor from ShowCase are at
least $(*) beginning as of the date the exclusive license
converts to a nonexclusive license; provided that the $(*)
shall increase at the rate of (*) percent per year (on a
compounded basis). If Arbor fails to receive its minimum
nonexclusive royalty payments specified above for any given
year, ShowCase shall have the option to pay Arbor the
remaining balance of the commitment for that year within 30
days after the end of that year, thereby meeting its
commitment and protecting its nonexclusive distribution rights
for the subsequent year. Any such payment will be treated as a
credit towards royalty payments due to Arbor from ShowCase in
the subsequent year, but shall not
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
Page 3 of 17
<PAGE>
be a credit towards meeting the next year's annual royalty
minimum. Notwithstanding the foregoing, ShowCase's
nonexclusive license and distribution rights shall in any
event terminate if this Agreement is terminated in accordance
with Section 4.2.
b. Nonexclusive License Royalty Rate. The royalty to be paid
to Arbor by ShowCase for the nonexclusive license shall be as
set forth in Section 5, except that if Arbor gives written
notice of its Buy-Back Right, the royalty shall be as set
forth in Section 5 for the 36-month period following the
notice, and the royalty shall be (*) percent of the Arbor
published list price thereafter, if applicable.
c. Maintenance Fees. During the period when ShowCase has
nonexclusive rights, ShowCase or its Authorized Partners shall
offer to their new customers two alternatives for maintenance.
First, ShowCase can pay to Arbor an annual maintenance fee
equal to (*) percent of the then-current Arbor local country
list price for the ShowCase AS/400 Port, and then Arbor will
provide First, Second and Third Level support directly to such
customers. Such maintenance fee shall be payable in advance.
After the first year of maintenance for a customer, Arbor will
handle all renewals and will extend its maintenance contract
to the customers at Arbor's then-current rates. Alternatively,
ShowCase or its Authorized Partner can provide First and
Second Level support and Arbor will provide Third Level
support, and ShowCase will pay Arbor an annual maintenance fee
equal to (*) percent of the then-current Arbor local country
list price for the initial and additional renewal years.
2.9 Development Copies. ShowCase shall have the right to provide copies
of the ShowCase AS/400 Port to its Authorized Partners at no charge and
subject to no royalty payment, provided that such copies are used by
such Authorized Partners only for purposes of application development,
customer hot-line support, and on-site demonstration. For any and all
revenue-generating use of the ShowCase AS/400 Port, such as consulting
and training, ShowCase will apply the effective royalty rate against
Arbor's established discounted pricing for such uses.
3. ARBOR DISTRIBUTION RIGHTS
3.1 Grant of License to Distribute ShowCase AS/400 Port.
Notwithstanding the grant to ShowCase of the exclusive license set
forth in Section 2.1, Arbor hereby reserves to itself the right to
distribute and sublicense the ShowCase AS/400 Port directly and through
Arbor's Authorized Partners. The end user customer shall execute a
software license agreement containing terms no less restrictive than,
and at least as protective of ShowCase's intellectual property rights
as, those contained in ShowCase's Software License Agreement attached
to this Agreement. ShowCase acknowledges that Arbor's Software License
Agreement attached to this Agreement satisfies the foregoing
requirement. ShowCase shall be responsible for the delivery of the
ShowCase AS/400 Port to such end users. For sales of full use licenses
of the ShowCase AS/400 Port by Authorized Partners, any additional
sales to that particular end user (whether to a different department
division or location of the end user) shall be made by the Authorized
Partner or ShowCase, and not Arbor or its Authorized Partners. Arbor's
right to distribute and sublicense the ShowCase AS/400 Port in a given
transaction through its own direct field sales force shall be subject
to the following conditions (which conditions shall not apply to
Authorized Partners):
a. Limited to end user sales in countries where Arbor has
direct sales; and
b. Arbor's total revenue from the transaction must exceed $(*)
and at least (*) percent of the established gross revenue
before royalties and discounts of the Essbase Software must be
on platforms other than the AS/400 or its direct successor; or
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
Page 4 of 17
<PAGE>
c. The end user must be an Arbor substantial customer. An
Arbor substantial customer is an existing Arbor customer who
has purchased software licenses and services from Arbor
totaling at least $(*) during the 12 months immediately
preceding the transaction in question; or
d. ShowCase declines to participate in the transaction after
being notified of it in writing.
3.2 Closing Responsibilities. Arbor will be responsible for closing
sales without substantial field sales support from ShowCase. Arbor will
furnish customer contact information regarding each transaction to
ShowCase within 30 days after execution of the contract with the
customer.
3.3 Trademark License.
a. License. Subject to the terms and conditions of this
Agreement, ShowCase hereby grants to Arbor a non-exclusive,
non-transferable license to use the name "ShowCase" (the
"Trademark"), but only in connection with its marketing and
distribution of ShowCase AS/400 Port. Every copy of the
ShowCase AS/400 Port shall clearly and prominently display the
Trademark.
b. Quality Control. Arbor shall promptly: (1) upon ShowCase's
request from time to time, supply to ShowCase fully documented
sample copies of any advertising and marketing materials
relating to the ShowCase AS/400 Port, for ShowCase's review
and approval, which will not be unreasonably withheld; (2)
modify any such advertising and marketing materials as may be
requested by ShowCase. Arbor agrees to give full attribution
to ShowCase, ensuring that ShowCase corporate and product
names are noticeably and prominently identified and displayed
in connection with the marketing and distribution of the
ShowCase AS/400 Port. Arbor's failure to substantially comply
with the terms of this provision shall constitute a material
default subject to Section 4.3 below.
4. TERM AND TERMINATION
4.1 Term. The term of this Agreement shall commence on the Effective
Date and shall continue unless terminated in accordance with the
provisions of this Agreement.
4.2. Termination by Arbor. This Agreement may be terminated by Arbor
upon any one of the following events:
a. If ShowCase materially breaches any material provision of
this Agreement and fails to fully cure such breach within 30
days of written notice describing the breach.
b. If ShowCase shall seek protection under any bankruptcy,
receivership, trust deed, creditor arrangement, composition or
comparable proceeding, or if any such proceeding is instituted
against ShowCase and not dismissed within 120 days.
c. If there is a "change of control" in the ownership of
ShowCase (whether through acquisition, merger, consolidation,
or reorganization) unless Arbor elects to waive such
condition, which waiver shall not be unreasonably withheld. By
way of clarification, ShowCase acknowledges that it shall not
be unreasonable for Arbor to withhold such waiver if Arbor in
good faith determines that the acquiring or surviving entity
(1) is not financially sound, (2) is a significant competitor,
(3) does not or is not likely to possess the technical
know-how and expertise properly to maintain and support the
ShowCase AS/400 Port, (4) does not or is not likely to
allocate sufficient resources to the maintenance and support
of the ShowCase AS/400
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
Page 5 of 17
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Port, or (5) is not able or willing to provide the necessary
security for the protection of the Technical Information, the
Arbor trademarks, or the Arbor Proprietary Information. For
purposes of this Section 4.2.c, Arbor agrees that it will
waive this condition if ShowCase is acquired by or merges with
IBM provided that IBM is then a reseller of the Essbase
Software. If IBM is not a reseller of the Essbase Software,
then Arbor will, within 30 days after ShowCase's request,
determine whether it will waive this condition for the
succeeding 6 month period if ShowCase is acquired by or merges
with IBM during such 6 month period. There is no limit to the
number of times that this process may be repeated. A "change
of control" shall mean any change in the actual or beneficial
ownership of more than 50 percent (or, with respect to a
then-existing holder of equity rights, such lesser amount as
would be required for such holder directly or indirectly to
hold more than 50 percent of the voting stock) of its voting
stock in one or more related transactions.
4.3 Termination by ShowCase. This Agreement may be terminated by
ShowCase upon any of the following events:
a. If ShowCase gives written notice to Arbor of its desire to
terminate the Agreement, which termination shall be effective
12 months after delivery of such notice.
b. If Arbor materially breaches any material provision of this
Agreement and fails to fully cure such breach within 30 days
of written notice describing the breach.
4.4 Liabilities. Neither party shall incur any liability whatsoever for
any damage, loss or expenses of any kind suffered or incurred by the
other (or for any compensation to the other) arising from or incident
to any termination of this Agreement by such party which complies with
the terms of the Agreement whether or not such party is aware of any
such damage, loss or expenses. This section is not intended to preclude
an action for damages against a party that commits a breach.
4.5 Obligations on Termination. Upon termination of this Agreement by
either party or naturally at the end of the term (a) all exclusive
rights and licenses of ShowCase and restrictions on Arbor hereunder
shall terminate; (b) ShowCase will immediately return to Arbor all
Arbor Proprietary Information including the Technical Information,
catalogues and literature in its possession, custody or control in
whichever form held (including all copies or embodiments thereof) and
will cease using any trademarks, service marks and other designations
of Arbor, and (c) in the event of a termination of this Agreement in
accordance with Section 4.2, ShowCase's nonexclusive license set forth
in Section 2.8 shall terminate and ShowCase shall, without additional
consideration, assign, convey and transfer to Arbor all right, title
and interest in and to the ShowCase AS/400 Port.
4.6 Remedies. Termination is not the sole remedy under this Agreement
and, whether or not termination is effected, all other remedies will
remain available.
4.7 After Termination. Upon the termination of this Agreement for any
reason, the licenses granted by ShowCase and its Authorized Partners to
its end user customers will remain in full force and effect, and Arbor
will honor each such end user license, provided that the end user
customer is not in default thereof. ShowCase will make good faith
efforts to have each end user license agreement assigned to Arbor so
that Arbor shall be the licensor. Arbor agrees that it will provide
software maintenance and support services to all such end user
customers, who are not in default of the terms of their license
agreements, in accordance with its then-current terms, conditions, and
prices. Arbor agrees to indemnify and hold harmless ShowCase from any
liability to an end user customer arising from maintenance and support
services provided by Arbor after the date on which Arbor agrees to
provide such services to the end user customer in question.
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5. ROYALTIES
5.1 ShowCase Royalty Payment to Arbor. Except as provided in Sections
5.3, 5.4, and 5.5 below, ShowCase will pay Arbor a royalty for each
copy of the ShowCase AS/400 Port and the non-ported Essbase Software
distributed by ShowCase or its Authorized Partners. ShowCase will pay
Arbor (*) percent of Arbor's then-current local country list price for
the ShowCase AS/400 Port and (*) percent of Arbor's then-current local
country list price for the non-ported Essbase Software, whether the
sale is directly by ShowCase or by a ShowCase Authorized Partner. For
those non-ported Essbase Software products for which Arbor pays
royalties to a third party, the royalty for such products shall
increase by (*) percent of the net royalties paid to the third party.
ShowCase need not pay any royalties to Arbor with respect to the (*)
running on the AS/400 platform when used for the direct loading of (*)
via the ShowCase Warehouse Manager and Warehouse Builder products.
Arbor agrees to provide ShowCase with 90 days prior written notice of
any change in its relevant list prices. If Arbor offers any promotions
with respect to the ShowCase AS/400 Port or the non-ported Essbase
Software, Arbor agrees to notify ShowCase of such promotion and
ShowCase's royalty payment to Arbor for sales during the promotion
period shall be based on such promotion prices. The royalties due Arbor
hereunder shall be reduced as specified in Exhibit A for large
transactions with a single customer. (*) . The parties agree to
negotiate in good faith regarding discounts for large transactions not
covered in Exhibit A.
5.2 ShowCase Royalty Payment for Essbase Restricted Use Licenses.
ShowCase shall be entitled to license restricted use licenses of the
Essbase Software through its Authorized Partners. Restricted use
licensing arrangements include programs under which Essbase may only be
used for a specific application, or for a number of ports not to exceed
(*) ports, and where the end user customer would be required to license
a full use license to use the Essbase Software beyond these
restrictions. For restricted use sales made by ShowCase's Authorized
Partners of the Essbase Software, ShowCase shall pay Arbor a royalty of
(*) percent of Arbor's then-current local country list price. These
terms apply so long as the business terms to ShowCase's Authorized
Partner are the same for both the ShowCase AS/400 Port and non-ported
version of the Essbase Software.
5.3 Royalties for IBM sales of the Essbase Software. For sales made by
IBM or its channels of the ShowCase AS/400 Port, ShowCase shall pay
Arbor a royalty of (*) percent of Arbor's then-current local country
list price.
5.4 Royalties for sales of the IBM AS/400 DB2/OLAP version of the
Essbase Software. For sales made by IBM or its channels of the IBM
AS/400 DB2/OLAP version of the Essbase Software, ShowCase shall pay
Arbor a royalty of (*) percent of Arbor's local country list price in
effect as of the effective date of this Agreement. For sales made by
ShowCase or its Authorized Partners of the IBM DB2/OLAP server,
ShowCase shall pay Arbor a royalty of (*) percent of Arbor's
then-current local country list price for the ShowCase AS/400 Port,
less any royalties paid to IBM, but the minimum royalty shall be (*)
percent of Arbor's local country list price in effect as of the
effective date of this Agreement. For purposes of this Section 5.4, the
Arbor local country list price shall be adjusted to the then-current
local country list price on or after the date 39 months from the
effective date of the agreement between ShowCase and IBM, but in any
case no later than December 31, 2001. However, if, during the period
between the effective date of this Agreement and the date referred to
in the preceding sentence, Arbor's local country list price decreases,
then the applicable Arbor local country list price as of the effective
date of this Agreement shall immediately be decreased accordingly.
5.5 Migrations. If any licensee of the Essbase Software on a non-AS/400
platform, licensed directly by Arbor, desires to convert to an AS/400,
then such licensee shall license the ShowCase AS/400 Port from ShowCase
or its Authorized Partner, and ShowCase shall pay royalties to Arbor
with respect to such
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
Page 7 of 17
<PAGE>
license equal to (*) . However, if the licensee of the Essbase Software
on a non-AS/400 platform has a restricted use license, then ShowCase or
its Authorized Partner may license the ShowCase AS/400 Port and pay
Arbor a royalty of (*) percent of Arbor's then current local country
list price.
5.6 Minimum Royalty Payments. In order for ShowCase to maintain the
exclusive right to distribute the ShowCase AS/400 Port, subject to the
reservation of rights granted to Arbor in Section 3.1, and subject to
Arbor's Buy-Back Right set forth in Section 2.7, Arbor must receive the
minimum royalty payments specified in (a) through (f) below. If Arbor
fails to receive its minimum royalty payments specified below for any
given Agreement Year (as defined in (a) through (f) below), ShowCase
shall have the option to pay Arbor the remaining balance of the
commitment for that Agreement Year within 30 days after the end of that
Agreement Year, thereby meeting its commitment and protecting its
distribution rights for the subsequent Agreement Year. Any such payment
will be treated as a credit towards royalty payments due to Arbor from
ShowCase in the subsequent year, but shall not be a credit towards
meeting the next year's annual royalty minimum. If Arbor fails to
receive its minimum royalty payment outlined below for a particular
Agreement Year and ShowCase elects not to pay Arbor the remaining
balance of the commitment for that Agreement Year, the exclusive
distribution rights granted to ShowCase shall, as of such date,
automatically become non-exclusive.
a. During the 12 months ending on March 31, 1998, the
cumulative royalty and license payments to Arbor by ShowCase
and by end users, respectively, of the ShowCase AS/400 Port
(net of any royalties Arbor pays to ShowCase) shall equal at
least $1,500,000. If ShowCase achieves this level, the period
of exclusivity shall be extended through March 31, 1999. If
ShowCase fails to achieve the stated level of cumulative
royalty payments, the period of exclusivity shall end on March
31, 1998.
b. During the 12 months ending March 31, 1999, the cumulative
royalty and license payments to Arbor by ShowCase and by end
users, respectively, of the ShowCase AS/400 Port (net of any
royalties Arbor pays to ShowCase) shall equal at least
$1,950,000. If ShowCase achieves this level, the period of
exclusivity shall be extended through March 31, 2000. If
ShowCase fails to achieve the stated level of cumulative
royalty payments, the period of exclusivity shall end on March
31, 1999.
c. During the 12 months ending on March 31, 2000, the
cumulative royalty and license payments to Arbor by ShowCase
and by end users, respectively, of the ShowCase AS/400 Port
(net of any royalties Arbor pays to ShowCase) shall equal at
least $2,535,000. If ShowCase achieves this level, the period
of exclusivity shall be extended through March 31, 2001. If
ShowCase fails to achieve the stated level of cumulative
royalty payments, the period of exclusivity shall end on March
31, 2000.
d. During the 12 months ending on March 31, 2001, the
cumulative royalty and license payments to Arbor by ShowCase
and by end users, respectively, of the ShowCase AS/400 Port
(net of any royalties Arbor pays to ShowCase) shall equal at
least $3,300,000. If ShowCase achieves this level, the period
of exclusivity shall be extended through March 31, 2002. If
ShowCase fails to achieve the stated level of cumulative
royalty payments, the period of exclusivity shall end on March
31, 2001.
e. If the term of the Agreement has been extended as provided
above, then during the 12 months ending on March 31, 2002, the
cumulative royalty and license payments to Arbor by ShowCase
and by end users, respectively, of the ShowCase AS/400 Port
(net of any royalties Arbor pays to ShowCase) shall equal at
least $4,290,000. If ShowCase achieves this level, the period
of exclusivity shall be extended through March 31, 2003. If
ShowCase fails to achieve the stated level of cumulative
royalty payments, the period of exclusivity shall end on March
31, 2002.
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
Page 8 of 17
<PAGE>
f. If the term of the Agreement has been extended as provided
above, then during the 12 months ending on March 31, 2003, the
cumulative royalty and license payments to Arbor by ShowCase
and by end users, respectively, of the ShowCase AS/400 Port
(net of any royalties Arbor pays to ShowCase) shall equal at
least $5,560,000. If ShowCase achieves this level, the period
of exclusivity shall be extended through March l, 2004. If
ShowCase fails to achieve the stated level of cumulative
royalty payments, the period of exclusivity shall end on March
31, 2003.
5.7 Payment Terms to Arbor. All payments due Arbor under this Agreement
shall be paid to Arbor thirty days after the end of the calendar month
in which they are accrued. Amounts not paid within such thirty day
period shall bear a late fee equal to (*) percent per month on the
outstanding amount or the maximum rate permitted by applicable law,
whichever is less. No part of any amount payable to Arbor hereunder may
be reduced due to any counterclaim, set-off, adjustment or other right
which ShowCase might have against Arbor, any other party or otherwise.
5.8 Arbor Royalty Payment to ShowCase. Arbor shall pay ShowCase a
royalty for each copy of the ShowCase AS/400 Port distributed by Arbor
or its Authorized Partners. Such royalty shall be equal to (*) percent
of ShowCase's then-current local country list price, but not to exceed
(*) percent of (*) percent of the then-current Arbor local country list
price for a similar software product running on a UNIX platform,
whether the sale is made directly by Arbor or by an Authorized Partner.
The parties agree to negotiate in good faith regarding discounts for
large transactions. ShowCase agrees to provide Arbor with 90 days'
prior written notice of any change in its relevant list price.
5.9 Arbor Royalty Payment to ShowCase For Restricted Use Licenses.
Arbor shall be entitled to license restricted use licenses of the
ShowCase AS/400 Port through its Authorized Partners. Restricted use
licensing arrangements include programs under which the ShowCase AS/400
Port may only be used for a specific application, or for a number of
ports not to exceed (*) ports, and where the end user customer would be
required to license a full use license to use the Essbase Software
beyond these restrictions. For restricted use sales made by Arbor's
Authorized Partners of the ShowCase AS/400 Port, Arbor shall pay
ShowCase a royalty of (*) percent of the ShowCase then-current local
country list price. These terms apply so long as the business terms to
Arbor's Authorized Partner are the same for both the ShowCase AS/400
Port and non-ported version of the Essbase Software.
5.10 Payment Terms to ShowCase. All payments due ShowCase under this
Agreement shall be due no later than 30 days after the end of the
calendar month in which they are accrued. Amounts not paid within such
30-day period shall bear a late fee equal to (*) percent per month on
the outstanding amount or the maximum rate permitted by applicable law,
whichever is less. No part of any amount payable to ShowCase hereunder
may be reduced due to any counterclaim, set-off, adjustment or other
right which Arbor might have against ShowCase, any other party, or
otherwise.
6. MAINTENANCE
6.1 Maintenance for ShowCase Customers. ShowCase shall provide First
Level Support and Second Level Support (as well as Third Level support
for the ShowCase AS/400 Port) to those customers who have purchased the
ShowCase AS/400 Port or the Essbase Software from ShowCase or its
Authorized Partners. Arbor will provide First Level Support, Second
Level Support and Third Level Support directly to ShowCase (and not to
its distributors or end users) with respect to all such sales. Arbor
will also provide maintenance releases and/or software upgrades. For
such support, ShowCase shall pay Arbor (a) (*) percent of the
cumulative prior years' royalties from all customers, or (b) $(*) per
agreement year, whichever is higher; provided, however, that royalties
from end users that have canceled their licenses of the ShowCase AS/400
Port or the Essbase Software shall not be included. Application and
product support through Arbor's Application Field Support Group
("AFSG") will be made available to ShowCase
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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<PAGE>
at a rate equal to (*) percent of the rate set forth on Arbor's
published AFSG consulting services fee schedule at the time such
services are to be rendered.
6.2 Maintenance for ShowCase AS/400 Port Sales by Arbor. Arbor and its
Authorized Partners shall offer to their customers of the ShowCase
AS/400 Port two alternatives for maintenance. First, Arbor or its
Authorized Partner can collect or cause to be collected and promptly
pay to ShowCase an annual maintenance fee equal to (*) percent of the
then-current ShowCase local country list price for the ShowCase AS/400
Port, and then ShowCase will provide First, Second and Third Level
support directly to such customers. After the first year of maintenance
for a customer, ShowCase will handle all renewals and will extend its
maintenance contract to the customers at ShowCase's then current rates.
Alternatively, Arbor or its Authorized Partner can provide First and
Second Level support and ShowCase will provide Third Level support, and
Arbor or its Authorized Partner will pay ShowCase an annual maintenance
fee equal to (*) percent of the then current ShowCase local country
list price.
6.3 Maintenance After Arbor Buy-Back. For the first 12 months after
Arbor has exercised its Buy-Back Right, the maintenance obligations
described above will remain the same. Thereafter, Arbor will be
responsible for maintaining the ShowCase AS/400 Port. ShowCase
maintenance payment terms will remain as described in Section 6.1 for
12 months following the exercise of the Buy-Back Right.
7. PRODUCT AND PORTING
ShowCase will own the ShowCase AS/400 Port, but will not own (and hereby
quitclaims and assigns to Arbor any rights or interests in or to) any of the
Technical Information licensed hereunder and any derivative works thereof.
ShowCase will own any attachments or add on products or modules to the ShowCase
AS/400 Port, which have been or are developed by or for ShowCase without use of
any source code of the ShowCase AS/400 Port.
8. MARKETING SUPPORT
8.1 Support Assistance. Arbor will provide the following marketing,
sales and support assistance (outlined below) at no charge.
a. ShowCase may access Arbor's Service Partners (where Arbor
has the right to grant such access) to outsource ShowCase
AS/400 Port related service requirements.
b. ShowCase and Arbor will jointly develop a plan for their
respective technical support organizations for problem
resolution.
c. ShowCase may deliver evaluation copies of the ShowCase
AS/400 Port to prospects for trial use for a period not to
exceed (*) .
d. ShowCase has the right to make copies of the ShowCase
AS/400 Port for demonstration purposes.
e. ShowCase and Arbor will make commercially reasonable
efforts to develop integrated marketing programs.
f. ShowCase and Arbor will develop marketing communications
positioning detailing ShowCase as Arbor's recommended solution
for the AS/400 market.
g. Arbor agrees to provide ShowCase with copies of the Essbase
Software running under the Windows NT or Windows 95 operating
systems, in numbers as requested by ShowCase to
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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<PAGE>
meet the needs of its sales force and that of its Authorized
Partners. Such copies are strictly and exclusively for
purposes of conducting demonstrations for customers and
prospects. These licensed demonstration copies may not be
copied, distributed, or used for any other purpose including
but not limited to test, evaluation, and internal use by
ShowCase or its customers. Arbor will not provide any support
and maintenance services in connection with this license,
other than to provide updates whenever they are generally
released to customers.
8.2 Marketing Assistance Fees (MAF). Arbor may contact ShowCase
whenever it becomes aware of an opportunity to license the ShowCase
AS/400 Port and ShowCase may contact Arbor whenever it becomes aware of
an opportunity to license the Essbase software. Such referrals will be
handled as provided below.
a. A Marketing Assistance Fee ("MAF") is a fee paid to the
party who supplies the other with a qualified referral for a
previously unidentified ShowCase AS/400 Port or Essbase
software license sales opportunity ("Opportunity"). MAFs apply
only to specific Opportunities and require the other party to
be actively involved.
b. A party officially registers an Opportunity with the other
party by using the Qualifying Order Form which is attached to
this Agreement. This form must be completed in full by the
requesting party in order to uniquely identify the
Opportunity. The management of the party fulfilling the order
approves the MAF request by signing and dating the form and
forwarding the original to the Channel Program Administrator
in Sunnyvale (Arbor) or Rochester (ShowCase) for approval by
the Vice President of Sales. After approval, copies will be
distributed to the appropriate organizations in both parties.
The original will be filed at the party fulfilling the order.
MAF requests must be submitted and approved before the order
is submitted. If the business closes, the party fulfilling the
order will make payment to the requesting party thirty (30)
days after receipt of payment from the customer. If for any
reason funds need to be returned to the customer, the
requesting party which received the MAF will refund the
appropriate amount of the MAF received, upon proper billing
from the other party.
c. A MAF request is valid for 90 days from the date of
approval. If the Opportunity does not close during the 90
days, the term may be extended at the discretion of the party
fulfilling the order for an additional 90 days. To approve
this change the previously approved Qualifying Order Form must
be resubmitted, signed and dated again. No opportunity may be
extended more than 90 additional days.
d. The MAF is (*) percent of the net software license revenue
received by the party fulfilling the order and will be paid
for each qualified referral. The maximum MAF for each specific
new referral is $(*). The maximum cumulative MAF amount paid
for referrals within a single account is $(*).
9. CONFIDENTIALITY
ShowCase will keep the terms of this Agreement, and any letter of intent,
negotiations, and all technical or commercial information, including, without
limitation, all Technical Information, received from Arbor, confidential
(collectively, the "Arbor Proprietary Information"). Similarly, Arbor will keep
the terms of this Agreement and any letter of intent, negotiations, and all
technical or commercial information received from ShowCase, confidential
(collectively, the "ShowCase Proprietary Information"; the ShowCase Proprietary
Information and the Arbor Proprietary Information together may be referred to as
the "Proprietary Information"). Each party shall only use the other party's
Proprietary Information as expressly and unambiguously provided in this
Agreement, and each party shall maintain and not disclose to any third party
(and shall similarly bind its employees in writing) any such Proprietary
Information of the other party without the other party's prior written consent.
However, a party shall
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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<PAGE>
not be obliged to maintain the confidentiality of any Proprietary Information of
the other party that the receiving party can document:
a. is or has become readily publicly available without
restriction through no fault of the receiving party or its
employees or agents; or
b. is received without restriction from a third party lawfully
in possession of such information and lawfully empowered to
disclose such information; or
c. was rightfully in possession of the receiving party without
restriction prior to its disclosure by the other party; or
d. was independently developed by employees or consultants of
the receiving party without access to such Proprietary
Information; or
e. is required to be disclosed by court or government order,
provided that the other party has been given notice of and all
opportunities to contest or limit the scope of such order.
10. ADDITIONAL SHOWCASE COVENANTS AND REPRESENTATIONS
Except as expressly and unambiguously provided herein and as conditions of
ShowCase's license hereunder, ShowCase represents, warrants and agrees:
a. Not to delete, alter, add to or fail to reproduce in and on
any copy of the ShowCase AS/400 Port or any media the Arbor
name and any copyright or other notices appearing in or on any
copy, media or master or package materials provided by Arbor
or which may be required by Arbor at any time.
b. To use its best efforts to comply with good business
practices and all laws and regulations relevant to this
Agreement or the subject matter hereof. ShowCase will not
contest the use by or authorized by Arbor of any trademark
(other than an existing ShowCase trademark or a trademark
confusingly similar thereto) or application or registration
therefor, whether during or after the term of this Agreement.
c. To maintain a file of all persons and entities to which it
distributes a copy of ShowCase AS/400 Port, including the name
and address of such person or entity, the serial number
designation of the copy of the ShowCase AS/400 Port, the date
of delivery of the copy of the ShowCase AS/400 Port and the
license agreement therefor, and to permit Arbor or a
representative to examine and audit such records, records
relevant to license fees and any related records (which shall
be deemed to be ShowCase Proprietary Information) during
reasonable business hours. If such an audit uncovers a
deficiency in reporting or payments greater than 5 percent,
ShowCase shall bear the audit expenses.
d. To comply with all export laws and regulations of the
Department of Commerce or other United States or foreign
agency or authority, and not to export, or allow the export or
re-export of any Arbor Proprietary Information, ShowCase
AS/400 Port, Essbase Software or any copy of any direct
product thereof in violation of any such laws and regulations.
ShowCase shall obtain and bear all expenses relating to any
necessary licenses and/or exemptions with respect to the
export from the U.S. of all material or items deliverable by
Arbor to any location and shall demonstrate to Arbor
compliance with all applicable laws and regulations prior to
delivery thereof by Arbor.
e. In addition to and without in any way limiting ShowCase's
other obligations hereunder, to use all methods to protect
Arbor's rights with respect to the Arbor Proprietary
Information as it uses to protect its own or any third party's
software, confidential information or rights of similar
nature.
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11. MISCELLANEOUS
11.1 Warranty Disclaimer. THE TECHNICAL INFORMATION AND SERVICES
PROVIDED TO SHOWCASE HEREUNDER ARE PROVIDED "AS IS" WITHOUT WARRANTY OF
ANY KIND INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT.
FURTHER, ARBOR DOES NOT WARRANT, GUARANTEE, OR MAKE ANY REPRESENTATIONS
REGARDING THE USE, OR THE RESULTS OF THE USE, OF THE TECHNICAL
INFORMATION OR WRITTEN MATERIALS IN TERMS OF CORRECTNESS, ACCURACY,
RELIABILITY, OR OTHERWISE.
11.2 Limitation on Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS
AGREEMENT OR OTHERWISE, (A) EXCEPT WITH RESPECT TO A BREACH OF
SECTION 5 OR ACTIONS OF SHOWCASE BEYOND THE SCOPE OF THE
LICENSE GRANTED IN SECTION 2 ABOVE, NEITHER PARTY SHALL BE
LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST
DATA, AND (B) NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE
THEORY (I) FOR ANY AMOUNTS IN EXCESS IN THE AGGREGATE OF THE
LICENSE FEES PAID TO ARBOR HEREUNDER DURING THE TWELVE MONTH
PERIOD PRIOR TO THE DATE THE CAUSE OF ACTION AROSE OR (II) FOR
COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR
SERVICES.
11.3 Infringement. While Arbor has conducted no investigation, it is
not aware of any infringement that will result from distribution of the
Technical Information in accordance with the terms hereof. If ShowCase
becomes aware of a potential infringement or claim thereof, it will
immediately notify Arbor and will, if requested by Arbor, cease
distribution (and for the period of time during which such authorized
distribution has ceased, ShowCase's royalty obligations shall be
suspended). Arbor shall, at its cost, defend or, at its sole option,
settle any claim or suit brought against ShowCase on the issue that the
Technical Information infringes a copyright or U.S. patent, or violates
a trade secret of any third party, provided that ShowCase (a) notifies
Arbor promptly in writing of any such claim or suit; (b) gives Arbor
full information and assistance in settling and/or defending the suit;
and (c) gives Arbor full authority and control of the defense and/or
settlement of any such action. Arbor shall not be liable for any costs
or expenses incurred (1) by ShowCase without Arbor's prior written
authorization; (2) for any claim based on the use or combination of the
Technical Information with any other item not provided by Arbor, (3)
for any claim based on ShowCase's modification of the Technical
Information; (4) from use of other than the latest available version of
the Technical Information, or (5) any transaction entered into by
ShowCase relating to the Technical Information without Arbor's prior
written consent which will not be unreasonably withheld.
11.4 Remedies. If the Technical Information becomes subject to a claim
of infringement for which Arbor may become liable, Arbor may at its
option (a) obtain the right to continue using the Technical
Information; (b) replace or modify the Technical Information to make it
non-infringing so long as the replacement or modification meets
substantially similar specifications; or (c) terminate the licenses.
EXCEPT FOR THESE REMEDIES, ARBOR SHALL HAVE NO LIABILITY TO SHOWCASE OR
ITS CUSTOMERS FOR VIOLATION OF ANY THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS, AND SHALL IN NO INSTANCE HAVE ANY LIABILITY TO SHOWCASE FOR
INDIRECT OR CONSEQUENTIAL DAMAGES FROM INFRINGEMENT OTHER THAN AS SET
FORTH IN THIS SECTION.
11.5 Exports. Arbor agrees to comply with all export laws and
regulations of the Department of Commerce or other United States or
foreign agency or authority, and not to export, or allow the export or
re-export of any ShowCase Proprietary Information, the ShowCase AS/400
Port, or any copy of any direct product thereof in violation of any
such laws and regulations. Arbor shall obtain and bear all expenses
relating to any necessary licenses and/or exemptions with respect to
the export from the U.S. of all material or items deliverable by Arbor
to any location and shall demonstrate to ShowCase compliance with all
applicable laws and regulations prior to delivery thereof.
Page 13 of 17
<PAGE>
11.6 Relationship of Parties. The parties hereto expressly understand
and agree that ShowCase is an independent contractor in the performance
of each and every part of this Agreement, is solely responsible for all
of its employees and agents and its labor costs and expenses arising in
connection therewith and is responsible for and will indemnify Arbor
from any and all claims, liabilities, damages, debts, settlements,
costs, attorneys' fees, expenses and liabilities of any type whatsoever
that may arise on account of ShowCase's activities (including, without
limitation, direct and indirect distributors), including without
limitation, providing unauthorized representations or warranties (or
failing to effectively disclaim all warranties and liabilities on
behalf of Arbor) to its customers or breaching any term, representation
or warranty of this Agreement.
11.7 Amendment and Waiver. Except as otherwise expressly provided
herein, any provision of this Agreement may be amended and the
observance of any provision of this Agreement may be waived (either
generally or in any particular instance and either retroactively or
prospectively) only with the written consent of the parties. However,
it is the intention of the parties that this Agreement be controlling
over additional or different terms of any purchase order, confirmation,
invoice or similar document, even if accepted in writing by both
parties, and that waivers and amendments shall be effective only if
made by non-pre-printed agreements clearly understood by both parties
to be an amendment or waiver.
11.8 Governing Law and Legal Actions. This Agreement shall be governed
by and construed under the laws of the State of California and the
United States without regard to conflicts of laws provisions thereof
and without regard to the United Nations Convention on Contracts for
the International Sale of Goods. Unless otherwise elected by Arbor in
writing for a particular instance (which Arbor may do at its option),
the sole jurisdiction and venue for actions related to the subject
matter hereof shall be the state and U.S. Federal courts in the County
of Santa Clara, California. In any action or preceding to enforce
rights under this Agreement, the prevailing party shall be entitled to
recover costs and attorneys' fees.
11.9 Headings. Headings and captions are for convenience only and are
not to be used in the interpretation of this Agreement.
11.10 Notices. Notices under this Agreement shall be sufficient only if
personally delivered, delivered by a major commercial rapid delivery
courier service or mailed by certified or registered mail, return
receipt requested to a party at its address as first set forth herein
or as amended by notice pursuant to this subsection. If not received
sooner, notice by mail shall be deemed received five days after deposit
in the U.S. mail.
11.11 Entire Agreement. This Agreement amends and restates the
Arbor/ShowCase License Agreement between Arbor and ShowCase dated
December 19, 1995, which is hereby superseded, and supersedes all
proposals, oral or written, all negotiations, conversations, or
discussions between or among parties related to the subject matter of
this Agreement and all past dealing or industry custom. This Agreement
does not amend or supersede ShowCase's Agreement with AppSource
Corporation dated January 4, 1996, as amended.
11.12 Severability. If any provision of this Agreement is held to be
illegal or unenforceable, that provision shall be limited or eliminated
to the minimum extent necessary so that this Agreement shall otherwise
remain in full force and effect and enforceable.
11.13 Basis of Bargain. Each party recognizes and agrees that the
warranty disclaimers and liability and remedy limitations in this
Agreement are material bargained for bases of this Agreement and that
they have been taken into account and reflected in determining the
consideration to be given by each party under this Agreement and in the
decision by each party to enter into this Agreement.
11.14 Non-solicitation of Employees. Throughout the term of this
Agreement and for a period of 12 months after any termination or
expiration of this Agreement, neither party shall solicit or recruit
for employment as an employee or agent, whether full-time or part-time,
by contract or by direct hire, any then-current employee or individual
consultant of the other party without the prior written consent of the
party
Page 14 of 17
<PAGE>
employing such an individual. The foregoing is not to be construed as a
prohibition against conducting general advertisement campaigns or other
recruiting activities not aimed specifically at the other party or its
employees, nor hiring an employee or individual consultant of the other
party, provided that the hiring party has not in any way solicited or
recruited the other party's employee or individual consultant and that
the employment relationship was initiated by the employee or individual
consultant.
11.15 Assignment. ShowCase may assign this Agreement to any party that
acquires all or substantially all of the assets of ShowCase only upon
the prior written consent of Arbor, which consent shall not be
unreasonably withheld. By way of clarification, ShowCase acknowledges
that it shall not be unreasonable for Arbor to withhold such consent if
Arbor in good faith determines that the acquiring or surviving entity
(1) is not financially sound, (2) is a significant competitor, (3) does
not or is not likely to possess the technical know-how and expertise
properly to maintain and support the ShowCase AS/400 Port, (4) does not
or is not likely to allocate sufficient resources to the maintenance
and support of the ShowCase AS/400 Port, or (5) is not able or willing
to provide the necessary security for the protection of the Technical
Information, the Arbor trademarks, or the Arbor Proprietary
Information. For purposes of this Section 11.15 Arbor agrees that it
will give its consent if ShowCase is acquired by or merges with IBM
provided that IBM is then a reseller of the Essbase Software. If IBM is
not a reseller of the Essbase Software, then Arbor will, within 30 days
after ShowCase's request, determine whether it will give its consent
for the succeeding 6 month period if ShowCase is acquired by or merges
with IBM during such 6 month period. There is no limit to the number of
times that this process may be repeated.
11.16 Survival of Provisions. The provisions of this Agreement which by
their terms ought to survive termination of the Agreement shall survive
such termination.
Executed as of the effective date by the authorized representatives of the
parties.
SHOWCASE CORPORATION ARBOR SOFTWARE CORPORATION
By /s/ Ken Holec By /s/ Stephen Imbler
---------------------------------- ----------------------------------
Name Ken Holec Name Stephen Imbler
--------------------------------- ---------------------------------
Title President and CEO Title Chief Financial Officer
-------------------------------- --------------------------------
Page 15 of 17
<PAGE>
QUALIFYING ORDER FORM
Prospect Company Name
---------------------------------------
Prospect Address/Phone/Fax
---------------------------------------
Prospect Primary Contact Name
---------------------------------------
Date of Initial Prospect Contact
---------------------------------------
Date of Intro. to Fulfiller Party
---------------------------------------
Requester Contact/Location
---------------------------------------
Anticipated Purchase Amount
---------------------------------------
Description of Opportunity
---------------------------------------
---------------------------------------
Anticipated Purchase Date
---------------------------------------
Sales Manager Approval
---------------------------------------
Extension Date (if approved)
---------------------------------------
Accepted by:
- --------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Name:______________________________ Name:______________________________
Title:_____________________________ Title:_____________________________
Date:_____________________________ Date:_____________________________
Page 16 of 17
<PAGE>
EXHIBIT A
VOLUME DISCOUNTS
For single transactions where the license fees charged by ShowCase are in the
ranges specified below, the royalty payable by ShowCase to Arbor will be
adjusted as shown below:
For sales of the ShowCase AS/400 Port:
License Fees Adjusted Royalty Rate
(*) (*)
For sales of non-ported Essbase Software:
License Fees Adjusted Royalty Rate
(*) (*)
Notes:
Transaction prices above $(*) will be handled on a case-by-case basis.
To qualify for the volume discounts, the sale must represent a single
transaction to one customer. Payment terms offered to end user customer do not
affect royalty payments.
Maintenance price calculation for sales that qualify for the volume discount
schedule will be based on net royalty received.
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
Page 17 of 17
<PAGE>
EXHIBIT 10.10
AMENDMENT NUMBER 1 TO
LICENSE AGREEMENT
This amendment Number 1 is entered into effective as of September 14, 1998 by
and between ShowCase Corporation and Hyperion Solutions Corporation (formerly
Hyperion Software Corporation) for the purpose of modifying the License
Agreement between the parties dated effective April 1, 1998 (the "Agreement").
1. The name of Hyperion Software Corporation has been changed to Hyperion
Solutions Corporation.
2. Unless otherwise defined in this Amendment 1, each capitalized term
used herein has the same meaning as that given to it in the Agreement.
3. Section 1.1 of the Agreement is replaced in its entirety with the
following:
"1.1 "Authorized Partner" is defined as (a) a software reseller with a
contractual relationship with Hyperion or ShowCase which adds value by
providing its own or third party applications in addition to the
Essbase Software or other Hyperion software products, or the ShowCase
AS/400 Port, respectively, or (b) a systems integrator (service
companies such EDS and Andersen Consulting), OEM, or other entity
approved in writing by the other party. Under no circumstance may IBM
be a Hyperion Authorized Partner for the ShowCase AS/400 Port without
the written approval of ShowCase, while ShowCase retains exclusive
distribution rights to the ShowCase AS/400 Port in accordance with
section 2.1."
4. Section 1.2 of the Agreement is replaced in its entirety with the
following:
"l.2 "Essbase Software" is defined as the Essbase Server, the Essbase
Application Manager, the Spreadsheet Client, the Essbase Application
Tools, Wired for OLAP, and Wired for the Web, existing as of the
effective date of this Agreement, and any future releases of such
products developed or distributed by Hyperion. Hyperion agrees to
negotiate in good faith to expand the definition of Essbase Software to
include other software products not specified above that are either
developed or distributed by Hyperion after the effective date of this
agreement."
5. New Sections 1.6 through 1.8 are added to the Agreement as follow:
"1.6 "IBM AS/400 DB2/OLAP" is defined as a customized version of the
ShowCase AS/400 Port, which is intended for use by end users using
IBM's DB2 relational storage and/or IBM's direct successor to DB2 and
excludes Wired for OLAP and Wired for the
<PAGE>
Web. Unless the context indicates otherwise, all references in this
Agreement to the ShowCase AS/400 Port include IBM AS/400 DB2/OLAP."
"1.7 "Moral Rights" is defined as personal rights associated with
authorship of a work under applicable law. These include the right to
approve modifications and to require authorship identification."
"1.8 "Harmful Code" is defined as any code, programming instruction or
set of instructions that is intentionally constructed with the ability
to damage, interfere with or otherwise adversely affect computer
programs, data files, or hardware without the consent or intent of the
computer user. It is expressly understood and agreed that license
management devices such as license keys, limitation of the number of
concurrent users to the maximum number authorized, and time-out devices
in evaluation versions of any software shall not be considered to be
Harmful Code."
6. Section 2.2 of the Agreement is replaced in its entirety with the
following:
"2.2 Grant of License to Distribute Essbase Software on Non-AS/400
Platforms. Hyperion hereby grants to ShowCase a non-exclusive,
worldwide license (subject to Sections 2.8 and 4.2) to distribute and
sublicense the Essbase Software (i.e., all Essbase Software not ported
to the AS/400 platform) to end users directly and through its
Authorized Partners, subject to the terms of this Agreement. ShowCase
may not use an Authorized Partner for the distribution of Essbase
Software not ported to the AS/400 platform, if such Authorized Partner
was an existing partner of Hyperion as of April 1, 1998, without the
prior written consent of Hyperion, which consent will not be
unreasonably withheld. Any distribution by systems integrators and
other independent software vendors must be approved in writing in
advance by Hyperion, which approval will not be unreasonably withheld.
The end user customer shall execute a software license agreement
containing terms no less restrictive than, and at least as protective
of Hyperion's intellectual property rights as, those contained in
Hyperion's Software License Agreement attached to this Agreement.
ShowCase's right to distribute and sublicense Essbase Software on
non-AS/400 Platforms, both directly and through its Authorized
Partners, shall be subject to the following conditions:
"a. The end users must also license the ShowCase Warehouse
Manager and Warehouse Builder products or replacement versions
of such products and data must reside on or originate from an
IBM AS/400; or
"b. The end users must license a ShowCase business application
built upon the Essbase Software and that adds significant
value to the Essbase Software."
7. Section 3.1 of the Agreement is replaced in its entirety with the
following:
"3.1 Grant of License to Distribute ShowCase AS/400 Port.
Notwithstanding the grant to ShowCase of the exclusive license set
forth in Section 2.1, Hyperion hereby reserves to
<PAGE>
itself the right to distribute and sublicense the ShowCase AS/400 Port
directly and through Hyperion's Authorized Partners. Hyperion may not
use an Authorized Partner for the distribution of the ShowCase AS/400
Port, if such Authorized Partner was an existing partner of ShowCase as
of April 1, 1998, without the prior written consent of ShowCase, which
consent will not be unreasonably withheld. Any distribution by systems
integrators and other independent software vendors must be approved in
writing in advance by ShowCase, which approval will not be unreasonably
withheld. The end user customer shall execute a software license
agreement containing terms no less restrictive than, and at least as
protective of ShowCase's intellectual property rights as, those
contained in ShowCase's Software License Agreement attached to this
Agreement. ShowCase acknowledges that Hyperion's Software License
Agreement attached to this Agreement satisfies the foregoing
requirement. ShowCase shall be responsible for the delivery of the
ShowCase AS/400 Port to such end users. For sales of full use licenses
of the ShowCase AS/400 Port by Authorized Partners, any additional
sales to that particular end user (whether to a different department,
division or location of the end user) shall be made by the Authorized
Partner or ShowCase, and not Hyperion or its Authorized Partners.
Hyperion's right to distribute and sublicense the ShowCase AS/400 Port
in a given transaction through its own direct field sales force shall
be subject to the following conditions (which conditions shall not
apply to Authorized Partners):
"a. Limited to end user sales in countries where Hyperion has
direct sales; and
"b. Hyperion's total revenue from the transaction must exceed
$ (*) and at least (*) percent of the established gross
revenue before royalties and discounts of the Essbase Software
must be on platforms other than the AS/400 or its direct
successor; or
"c. The end user must be an Hyperion substantial customer. An
Hyperion substantial customer is an existing Hyperion customer
who has purchased software licenses and services from Hyperion
totaling at least $ (*) during the 12 months immediately
preceding the transaction in question; or
"d. ShowCase declines to participate in the transaction after
being notified of it in writing."
8. The second sentence of Section 5.1 of the Agreement is deleted in its
entirety and replaced by the following:
"ShowCase will pay Hyperion (*) percent of Hyperion's then-current
local country list price for the ShowCase AS/400 Port (excluding the
ported Wired for OLAP and Wired for the Web products) and (*) percent
of Hyperion's then-current local country list price for the non-ported
Essbase Software (including the Wired for OLAP and Wired for the
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
<PAGE>
Web products), whether the sale is directly by ShowCase or by a
ShowCase Authorized Partner. In addition, for any sales recorded after
January 31, 1999, ShowCase will pay Hyperion (*) percent of Hyperion's
then-current local country list price for the ported Wired for OLAP and
Wired for the Web products (with both the client and server portions
being distributed together to a particular customer), whether the sale
is directly by ShowCase or by a ShowCase Authorized Partner. ShowCase's
rights and obligations with respect to Wired for OLAP and Wired for the
Web products prior to January 31, 1999 are governed by that certain
agreement between ShowCase and AppSource Corporation (a wholly-owned
subsidiary of Hyperion)."
9. The third sentence of Section 5.2 of the License Agreement is deleted
in its entirety and replaced by the following:
"For restricted use license sales of the ShowCase AS/400 Port
(excluding the Wired for OLAP and Wired for the Web products) made by
ShowCase's Authorized Partners, ShowCase shall pay Hyperion a royalty
of (*) percent of Hyperion's then-current local country list price."
10. Section 5.3 of the License Agreement is hereby deleted in its entirety
and replaced by the following:
"For sales made by IBM or its channels of the ShowCase AS/400 Port
(excluding the ported Wired for OLAP and Wired for the Web product),
ShowCase shall pay Hyperion a royalty of (*) percent of Hyperion's
then-current local list price. In addition, ShowCase will pay
Hyperion (*) percent of the net royalty from IBM or its channels
(with a floor of (*)% of Hyperion's local country list price in
effect as of the effective date of this Agreement) for the Wired for
OLAP and Wired for the Web products (with both the client and server
portions being distributed together to a particular customer)."
11. A new Section 11.0 is added to the Agreement as follows:
"1.0 Hyperion Warranties
"(a) Hyperion warrants that it has full legal rights to grant
the rights granted to ShowCase herein. Hyperion's sole
obligation in the event of a breach of this warranty is stated
in Sections 11.3 and 11.4 of the Agreement.
"(b) Hyperion warrants that it is not under, and will not
assume, any obligation that conflicts with Hyperion's
obligations or the rights and licenses granted in this
Agreement.
(*) Denotes confidential information that has been omitted and filed
separately, accompanied by a confidential treatment request, with the Securities
and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
<PAGE>
"(c) Hyperion warrants that there are no proceedings or claims
pending or threatened against Hyperion that relate to the
Essbase Software or the Technical Information.
"(d) Hyperion warrants that neither the Essbase Software nor
the Technical Information infringes any patent, copyright,
trademark or other intellectual property rights of a third
party. Further, Hyperion warrants that the Essbase Software
and Technical Information have not been the basis of a claim
of infringement threatened or asserted against Hyperion or, to
the best of Hyperion's knowledge, anyone else.
"(e) Hyperion warrants that it has the right to modify the
Essbase Software and the Technical Information, and that no
attribution other than to Hyperion is required in connection
therewith.
"(f) Hyperion warrants that the source code that Hyperion
delivers as part of the Technical Information under this
Agreement corresponds to the current release or version of the
Essbase Software on the date of such delivery, Hyperion's sole
obligation in the event of a breach of this warranty is to
deliver the appropriate version of the source code.
"(g) Hyperion warrants that the Essbase Software and
applicable Technical Information delivered to Licensee
hereunder will record, store, process and present calendar
dates falling on or after January 1, 2000, in the same manner,
and with substantially similar functionality, as such Software
records, stores, process and presents calendar dates on or
before December 31, 1999. Hyperion's sole obligation in the
event of a breach of this warranty is to repair or replace the
non conforming Essbase Software or Technical Information.
"(h) Hyperion warrants that any person or entity having Moral
Rights with respect to any materials assigned, delivered or
licensed by Hyperion to ShowCase hereunder shall not assert
any Moral Rights with respect to those materials. Hyperion
acknowledges that ShowCase's exercise of rights and licenses
hereunder shall not violate any Moral Rights of Hyperion, and
Hyperion agrees not to assert any Moral Rights Hyperion has or
may have in the Essbase Software against ShowCase in its
exercise of rights and licenses hereunder.
"(i) Hyperion warrants that, to the best of its knowledge, the
Essbase Software and Technical Information, as delivered by
Hyperion to ShowCase hereunder, is not contaminated by Harmful
Code, and that Hyperion has implemented a process designed to
help prevent any such contamination by Harmful Code. Hyperion
will promptly provide ShowCase notice if Hyperion suspects any
contamination."
12. The first sentence in Section 11.1 of the Agreement is hereby deleted
in its entirety and replaced by the following:
<PAGE>
"EXCEPT FOR THE EXPRESS WARRANTIES STATED IN SECTION 11.0, THE
TECHNICAL INFORMATION AND SERVICES PROVIDED TO SHOWCASE HEREUNDER ARE
PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND INCLUDING WITHOUT
LIMITATION, ANY WARRANTIES OR MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR NONINFRINGEMENT."
13. Hyperion acknowledges and agrees that ShowCase and International
Business Machines Corporation ("IBM") will be entering into certain
development and license agreements (collectively, the "IBM Agreements")
to develop and license for distribution by IBM and its agents certain
ShowCase software products that include the ShowCase AS/400 Port.
Hyperion hereby consents to ShowCase's disclosure of information
related to the License Agreement including the Hyperion test suite,
solely to the extent required for ShowCase to perform its obligations
under the IBM Agreements, provided that any such disclosures are
subject to an appropriate nondisclosure agreement between IBM and
ShowCase, which contains terms that are as protective of Hyperion's
confidential information as those set forth in Section 9 of the
Agreement. Hyperion further agrees that, subject to the same
confidentiality provisions stated above, including Section 9 of the
Agreement, Hyperion will make available to ShowCase for delivery to
IBM, if required by IBM, a copy of the Certificate of Originality that
Hyperion submitted to IBM in connection with IBM Developer Agreement
Number STL 96204 (the "Santa Teresa Agreement") in effect between IBM
and Hyperion.
14. Hyperion consents to ShowCase establishing an escrow account with an
independent third party escrow agent in order to place into escrow the
source code for the ShowCase products licensed to IBM under the IBM
Agreements which will include the source code for the ShowCase AS/400
Port, provided however, that the terms governing release of the source
code and subsequent use by IBM thereof shall be materially the same as
those set forth in IBM Source Code Custody Agreement STL ("STL 96205")
dated September 27, 1996 by and between Hyperion and IBM. Hyperion
understands that IBM will have the right to obtain this source code for
certain ShowCase software products (including, for example, the IBM
AS/400 DB2/OLAP product) then- currently escrowed with such escrow
agent if one of certain stated release conditions occurs; provided,
however, that prior to any such release of the source code for the
ShowCase AS/400 Port, IBM shall inform Hyperion in writing of such
impending release and Hyperion shall have 30 days after its receipt of
a copy of the IBM Agreements and of notice from IBM to elect in writing
one of the following options:
(a) Hyperion may modify the Santa Teresa Agreement in order to
add the ShowCase AS/400 Port as a licensed work under the
Santa Teresa Agreement, provided that IBM also assumes the
obligation to support any IBM-owned code or products included
in the ShowCase AS/400 Port products, and provided further
that with respect to the ShowCase AS/400 Port, any reference
in the Santa Teresa Agreement to list price or a similar term
with respect to the calculation of royalties, shall refer to
ShowCase's applicable list price; or
<PAGE>
(b) Hyperion may have assigned to it, and assume on behalf of
ShowCase, all royalties, and all obligations of ShowCase under
the IBM Agreements related only to the ShowCase AS/400 Port
product.
Upon Hyperion's election of either of the above options, ShowCase, IBM
and Hyperion will all cooperate in good faith to transfer all source
code and other information reasonably needed in order for Hyperion to
assume such obligations. ShowCase shall have no obligation under the
License Agreement to pay any royalties to Hyperion for any copies of
the ShowCase AS/400 Port product subsequently distributed by IBM and
ShowCase shall not be entitled to any royalties for any copies of the
ShowCase AS/400 Port product subsequently distributed by IBM.
15. Hyperion grants to ShowCase a non-exclusive license to market,
distribute, and sublicense Wired subject to the terms and conditions
contained in this Amendment and in the Agreement. ShowCase may change
the name of Wired, add functionality to Wired, and change the
appearance of Wired packaging and display screens. However, ShowCase
shall preserve Hyperion's copyright notices and other proprietary
markings on the Wired software media, documentation, and display
screens.
16. Notwithstanding Section 2.5(a) of the License Agreement, Hyperion
acknowledges and agrees that except for copyright and patent
information displayed in the "About Box"; the IBM AS/400 DB2/OLAP
product will not include an attribution to Hyperion.
17. Except as expressly modified herein, all terms and conditions of the
Agreement remain unaltered and in full force and effect.
18. This Amendment I may be executed in counterparts, each of which shall
be considered an original, and all of which taken together shall
constitute one instrument.
Executed as of the effective date by the authorized representatives of the
parties
SHOWCASE CORPORATION HYPERION SOLUTIONS CORPORATION
By /s/ Ken Holec By /s/ William B. Binch
---------------------------------- ----------------------------------
Name Ken Holec Name William B. Binch
--------------------------------- ---------------------------------
Title President and CEO Title SVP
-------------------------------- --------------------------------
<PAGE>
EXHIBIT 10.11
SOFTWARE LICENSE AND MARKETING AGREEMENT
THIS AGREEMENT is made effective January 4th, 1996 (the "Effective Date") by and
between SHOWCASE CORPORATION, a Minnesota Corporation having a principal place
of business at 4131 Highway 52 North, Rochester, MN 55901 USA (hereinafter
"Licensee") and AppSource, a Florida corporation, having a principal place of
business at Lakeside Center, 4751 Rosewood Drive, Orlando, FL 32806, U
SA(hereinafter "AppSource").
1. PRODUCT DESCRIPTION
a. WIRED FOR OLAP. The Product, Documentation and Licensee
Product which relate to this agreement are in Exhibit A
attached to this Agreement.
2. PRODUCT FEATURES
Licensee agrees that the Product meets the specifications set forth in
Exhibit A.
3. DELIVERY
AppSource agrees to deliver to Licensee a complete copy of the Product
no later than the date specified in the Delivery Schedule set forth in
Exhibit A attached hereto. A "complete copy" shall include five (5)
diskettes comprising a complete working copy of the Product in
executable form which satisfies the functional specifications set forth
in the Documentation. A complete copy shall also include the
Documentation in its existing printed form. AppSource shall deliver the
Product and Documentation to a common carrier selected by Licensee.
4. RIGHTS GRANTED
a. Rights In Product. Subject to the terms and conditions set
forth herein, AppSource hereby grants to Licensee a license to
market, use internally and distribute the Product and
Documentation, for use in Licensee Product, marketed and/or
distributed by Licensee as listed in Exhibit A of this
agreement on a world wide basis.
Licensee shall maintain exclusive rights to market the product
in conjunction with the IBM AS/400 midrange computer.
b. Ownership. Subject to the rights and licenses granted to
Licensee hereunder, AppSource shall retain all right, title
and interest in and to the Product including all copyrights.
Licensee shall have the right any time after the First
Agreement Year, as defined in section 8h below, to purchase
the source code for the Product
-1-
<PAGE>
for use only in conjunction with the IBM AS/400 midrange
computer for a price equal to (*). Licensee will own the
rights to the source code at no fee in the event of insolvency
or bankruptcy.
c. AppSource Marks. Licensee agrees to honor and use AppSource
trademarks, copyrights and trade names belonging to AppSource
("AppSource Marks"}. Licensee may not use AppSource Marks for
other purposes without the express written permission from
AppSource.
d. Third Party and License Terms. AppSource acknowledges that
Licensee's Software License Terms attached hereto as Exhibit C
provide AppSource with adequate protection of its intellectual
property with respect to Licensee's end- users (AppSource may
require different license terms for different countries or may
refuse to allow licensing in certain countries if it deems its
intellectual property cannot be adequately protected,
including a government restricted rights clause). Licensee may
not enter into a Licensing Agreement with any end-user whereby
the Product is sold, marketed or distributed separate from the
Licensee's Product or whereby the Product is sold, marketed or
distributed under separate identity from that of Licensee
Product. Licensee's Software License Agreement must include a
clause that stipulates end-users may not re-license the
Product. Licensee may sublicense the Product to
subdistributors who, in turn, sublicense the Product to
end-users.
e. Competition. Licensee must market, sell or distribute the
Product with Licensee Product. At no time shall Licensee be
entitled to enter into direct competition with AppSource
marketing efforts of the Product outside of the AS/400
marketplace or sell, market or distribute the Product separate
from Licensee Product.
f. Internal Use. AppSource grants to Licensee a fully paid up,
royalty free, non-exclusive, non-transferable worldwide
license to use and reproduce the Product for use with Licensee
Product specified in Exhibit A.
g. Independent Software Resellers. Licensee will market and
distribute the Product and related services for the AS/400 to
independent software vendors (ISV). AppSource will market and
distribute the Product and related services for ISVs for all
non-AS/400 environments. In the event an ISV desires the
rights to distribute the Product on multiple platforms, the
ISV will negotiate separately with AppSource and Licensee for
those rights. AppSource and Licensee will exercise good faith
efforts to ensure that their respective ISV arrangements, with
mutual third parties, are compatible.
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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5. MANUFACTURING
a. All manufacturing of the required media for distribution of
the Product including PC diskettes and AS/400 tapes and
documentation will be the responsibility of the Licensee.
b. Product Translation. Licensee will pay (*) of any costs
associated with the translation of the Product. AppSource will
have the rights to these translated versions on non-AS/400
platforms.
6. PRODUCT MARKETING
a. Marketing Rights. Licensee shall have the authority to market
or not market the Product as it deems appropriate provided
Licensee does not violate AppSource's Rights (as in paragraph
4 above) in the Product. In the event Licensee rejects an
enhanced or modified Product, Licensee shall be entitled to
continue to distribute the previous version of that Product.
b. Non-Restrictive Relationship. Except as provided in Section
4a, this Agreement shall not preclude AppSource from entering
into the same or similar agreement with third parties for
distribution of the Product.
c. Escrow. AppSource agrees to maintain current versions of all
code for the System in deposit with a mutually agreed on code
escrow service, and to register, and maintain as registered,
Licensee as a party that may have access to such code under
certain "release conditions". Such "release conditions" shall
consist of any one or more of the following circumstances
remaining uncorrected for more than thirty (30) days: filing
for relief under any section of the United States Bankruptcy
Code, the making by AppSource of a general assignment for the
benefit of creditors, the appointment of a receiver or trustee
of AppSource's business property or any other action by
AppSource under any insolvency or similar law for the purpose
of its bankruptcy, reorganization or liquidation. AppSource
shall deliver promptly after the date hereof to escrow agent
the source code and related documentation and at the same time
notify Licensee of such delivery. AppSource shall bear the
fees charged by the escrow agent for such registration of the
System code.
7. PRODUCT MAINTENANCE AND SUPPORT
a. General. The parties anticipate that Licensee will make best
efforts to provide direct, primary support for the Product to
end-user customers. Licensee will be
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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responsible for supporting Licensee Product and the Product as
it relates to Licensee Product. AppSource will provide at no
charge support to Licensee with respect to the Product,
including on-line support as further set forth below.
b. AppSource Support to Licensee. AppSource will provide Licensee
with ongoing maintenance and technical support for the
Product. Maintenance and support shall include:
(i) Receiving defect reports from Licensee and fixing
defects or providing workarounds.
(ii) Maintaining a telephone number of Licensee to call
during normal business hours to report problems and
receive assistance.
(iii) Providing a knowledgeable support contact for
providing technical support.
c. Response to Defects. AppSource shall make any necessary
changes to the Product so that the Product functions and
performs substantially in accordance with its published
documentation. If Licensee believes a bug exists, Licensee
will notify AppSource of the bug, at which time it will be
categorized as follows:
(i) Severity Level 1 Bug. An error which causes the
system or a major component of it to stop or renders
it otherwise unusable, or data corruption bug.
(ii) Severity Level 2 Bug. All other errors whereby the
user can continue to operate.
The Licensee will provide information in writing as to how the
bug was created, and if possible, printouts showing the
problem. AppSource shall respond to Severity Level 1 bugs
within (*) hours of notice by Licensee. AppSource shall use
the best efforts to promptly correct any Product errors of
Severity Level 1. Severity Level 2 bugs will be corrected and
released to Licensee during subsequent Product maintenance
releases. AppSource agrees to continue support upon expiration
or termination of this Agreement at it's generally available
commercial rates.
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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d. Support of Previous Versions of Product. Support of previous
Product versions will be limited to two previous versions and
standard telephone support to the users and will not include
corrective action as set forth in Section 7.c above.
e. Product Upgrades. AppSource will promptly provide Licensee
with a master copy of any upgrade to the Product, which is
made generally available during the term of this agreement,
for distribution to Licensee customers.
f. Support & Maintenance Fees. The support and maintenance fee
will be priced at (*) of the cumulative prior months
royalties. Licensee will pay $(*) in prepaid maintenance
expenses. This prepaid maintenance will be offset against
monthly maintenance accrued during the term of this agreement.
Maintenance fees will be due within fifteen (15) days of
reporting monthly royalties as specified in section 8b below.
8. PAYMENT
a. Royalty Payments. Licensee will pay a fee equal to (*) of the
current list price of the Product on the UNIX platform.
AppSource may change it's list price at it's sole discretion
upon 90 days written notice to Licensee.
All fees are calculated in US Dollars.
b. Payment of Royalties. Licensee will report per unit royalties
on or before the 30th of the month following the month in
which they were sold. Per unit royalty payments will be due
within fifteen (15) days of reporting monthly sales. Any other
fees associated with this Agreement will be due and payable on
a net 30 basis.
d. AppSource Audit Rights. Licensee shall keep true and accurate
records of all Products distributed, in accordance with
generally accepted accounting principles, consistently
applied. No more frequently than once a year and during
regular business hours, AppSource shall have the right (upon
two business days prior notice) to have a certified public
accountant selected by AppSource audit the books of Licensee.
AppSource shall pay the cost of such audit unless such audit
should reveal an underpayment by Licensee of 5% or greater at
which such time as audit costs would be the responsibility of
Licensee.
e. To ensure that Licensee maintains the exclusive right to
distribute the Product, Licensee must meet it's minimum
royalty payment commitments outlined in Sections 8.h below.
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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f. If Licensee fails to meet its minimum royalty payment
commitments specified below for any given Agreement Year (as
defined below), Licensee has the option to pay AppSource the
remaining balance of the commitment for that Agreement Year
within thirty (30) days after the end of that Agreement Year,
thereby meeting it's commitment and protecting it's exclusive
distribution rights for the subsequent Agreement Year period.
g. If Licensee fails to meet it's minimum royalty payment
commitments outlined below for a particular Agreement Year and
elects not to pay AppSource the remaining balance of the
commitment for that Agreement year, the exclusive distribution
rights granted Licensee shall terminate and AppSource shall
have the right to grant third parties non-exclusive licenses
to prepare and distribute the Product on the AS/400 platform.
Licensee shall continue to have non-exclusive marketing rights
for the Product.
h. The first Agreement Year (i.e. Year One, and each anniversary
of the Ship Date thereafter shall be referred to as Year "X")
will commence on the earlier of (I) the production release
date for the Licensee Product, or (II) six (6) months from the
Effective Date of this agreement ("Ship Date") and end of the
day immediately preceding the first anniversary of the Ship
Date. This will require twelve (12) month cumulative royalty
payment to AppSource of (*) during Year One.
i. Year Two will start twelve (12) months following the Ship Date
and will require a twelve (12) month cumulative royalty
payment to AppSource of (*).
j. Year Three will start twenty four (24) months following the
Ship Date and will require a twelve (12) month cumulative
royalty payment to AppSource of (*).
k. Year Four will start thirty six (36) months following the Ship
Date and will require a twelve (12) month cumulative royalty
payment to AppSource of (*).
l. Year Five will start forty eight (48) months following the
Ship Date and will require a twelve (12) month cumulative
royalty payment to AppSource of (*).
9. CONFIDENTIAL INFORMATION
Neither party desires the confidential information of the other and
each agrees to pass on such non confidential information as may be
necessary to resolve an issue. However, if during the term of this
Agreement, either party requires access to information which the other
party considers to be confidential or proprietary ("Confidential
Information"), the
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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information may be exchanged in confidence, but each party must first
agree to disclose and receive the information in confidence in
accordance with the terms of the Non Disclosure Agreement as indicated
in Exhibit F.
Confidential Information shall not include that which:
a) is in the public domain prior to the disclosure to
the receiving party;
b) is lawfully in the receiving party's possession prior
to the disclosure;
c) becomes part of the public domain by publication or
otherwise through no unauthorized act or omission on
the part of the receiving party; or
d) is developed by the receiving party independent of
any Confidential Information of the disclosing party.
The burden of proving that informations is excepted under
sections 9a-d shall be on the receiving party.
10. WARRANTY
a. Warranty of Software. AppSource warrants that the Product will
conform to its Documentation at the time the master disk is
delivered to Licensee and for a period of ninety (90) days
thereafter. AppSource makes no warranty to the end- users, any
such warrant to be made and honored by Licensee. NO OTHER
WARRANTY OR CONDITION, EXPRESSED OR IMPLIED, INCLUDING
WARRANTIES OR CONDITIONS RELATED TO FITNESS FOR PURPOSE OR
MERCHANTABILITY, ARE GRANTED TO LICENSEE OR END-USERS, AND ALL
SUCH WARRANTIES AND CONDITIONS ARE EXPRESSLY AND SPECIFICALLY
EXCLUDED.
b. Defective Software. Should the Product fail to meet the
warranty set forth above, Licensee should return the Product
within the ninety day period. AppSource will then, at is sole
option, either terminate this Agreement (in writing) or
correct the problem such that the Product conforms with its
documentation. If AppSource elects to terminate this Agreement
pursuant to this Paragraph 10.b in the first 90 days,
AppSource shall refund to Licensee any royalties paid for
returned products as of date of termination.
11. LIABILITY AND INDEMNIFICATION
a. Limitations on Liability. AppSource shall not be responsible
for any damages or expenses resulting from alterations or
unauthorized use of the Product, or from the
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unintended and unforeseen results obtained by Licensee
resulting from such use. Termination of the Agreement pursuant
to its various termination terms shall not result in liability
of AppSource to Licensee for damage, loss or expense, and
Licensee expressly waives such claims.
Should any law under which this Agreement be interpreted to
prohibit exclusion of certain conditions or warranties, the
required conditions or warranties shall be deemed included.
The liability of AppSource for any breach of such term,
condition or warranty shall be limited, at the option of
AppSource, to any one or more of the following: (a)
replacement of the Product with equivalent software; (b)
repair of the Product; (c) payment of the cost of replacing
the Product or of acquiring equivalent software; (d) payment
of the cost of having the Product repaired.
AppSource or Licensee shall not be liable for any loss of
earnings, profits or goodwill or other consequential, special
or incidental damage suffered by any person including
Licensee's Clients caused directly or indirectly by the
furnishing of the Product or Licensee Product pursuant to this
Agreement, or for any other loss of business or damage arising
under this Agreement except for such loss or damages caused by
the gross negligence or willful misconduct on the part of
Licensee or AppSource, its agents, employees, independent
contractors or persons acting under his direction or control.
b. Copyright & Patent Infringement. AppSource shall, at its cost,
defend or, at its sole option, settle any claim or suit
brought against Licensee on the issue that the Product
infringes a copyright, patent or other proprietary right of
any third party provided that Licensee (a) notifies AppSource
promptly in writing of any such claim or suit; (b) gives
AppSource full information and assistance in settling and/or
defending the suit; and (c) gives AppSource full authority and
control of the defense and/or settlement of any such action.
AppSource shall not be liable for any costs or expenses
incurred (a) by Licensee without AppSource's prior written
authorization; (b) for any claim based on the use of
combination of the Product with any other software not
provided by AppSource; (c) for any claim based on Licensee's
modification of the Product; (d) from use of other than the
latest available version of the Product, or (e) any
transaction entered into by Licensee relating to the Product
without AppSource's prior written consent which will not be
unreasonably withheld.
If the Product becomes subject to a claim of infringement for
which AppSource may become liable, AppSource may at its option
(a) obtain the right to continue using the Product; (b)
replace or modify the Product to make it non-infringing so
long as the replacement or modification meets substantially
similar specifications; or (c) terminate the licenses. EXCEPT
FOR THESE REMEDIES, APPSOURCE
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SHALL HAVE NO LIABILITY TO LICENSEE OR ITS CUSTOMERS FOR
COPYRIGHT INFRINGEMENT, AND SHALL IN NO INSTANCE HAVE ANY
LIABILITY TO LICENSEE FOR DIRECT, INDIRECT OR CONSEQUENTIAL
DAMAGES FROM INFRINGEMENT OTHER THAN AS SET FORTH IN THIS
SECTION 11.b.
12. PROTECTION OF INTELLECTUAL PROPERTY
Copyrights. Licensee acknowledges AppSource's representation that the
Product and Documentation are protected under the copyright laws of the
United States and certain other countries that have entered into
treaties with the United States, in either registered or unregistered
form. Licensee acknowledges that AppSource owns these copyrights and
has the following exclusive rights with regard to the Product: to
reproduce the Product and documentation in any and all forms; to adapt,
transform or rearrange the Product and documentation; to prepare
derivative software; and to control the distribution of the Product and
documentation. Licensee agrees, and shall have its customers who are
not end-users agree, not to act in contravention of any of AppSource's
rights or to assist others in doing so. Licensee agrees and shall have
its customers agree to preserve all copyright notices in the Product
and documentation. Licensee shall do all things necessary to preserve
AppSource's copyright protection in any country where Licensee licenses
Licensee Products. In the event the Product is licensed in a country
which does not authorize protection of the Product by copyright,
Licensee shall take whatever actions are necessary to preserve
AppSource's rights in the Product under the law of such country.
13. TERM AND TERMINATION
a. Term. This Agreement shall have an initial term from the
effective date and shall expire five (5) years from the
effective date of the Agreement unless terminated earlier as
permitted below.
b. Termination for Cause. AppSource may terminate this Agreement
upon the happening of any of the following events if Licensee
fails to cure the problem within thirty (30) days of notice of
an intent to cancel if not cured:
(i) Licensee fails to make any payment when due; or
(ii) Licensee materially breaches any representation,
warranty, or any material term of this Agreement or
fails to perform any duty required hereunder; or
(iii) Licensee fails to comply with any legal
prerequisites, formalities and/or material government
regulations; or
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(iv) Licensee ceased to conduct its business in a normal
manner; or
(v) Licensee sells, markets or distributes the Product
without Licensee Product.
c. Termination by Licensee. Licensee may terminate this Agreement
upon the happening of one of the following events if AppSource
fails to cure the problem within thirty (30) days of notice of
any intent to cancel if not cured:
(i) AppSource breaches any warranty or material term of
this Agreement or fails to perform any duty required
hereunder; or
(ii) AppSource fails to comply with any legal
prerequisites, formalities, and/or material
government regulation.
(iii) AppSource ceases to conduct its business in a normal
manner, provided that it shall not be grounds for
termination if AppSource merges into another company
and the surviving company continues to conduct
AppSource's business.
d. Effect of Termination. Licensee agrees that upon expiration or
termination of this Agreement under this Paragraph 13,
AppSource is discharged from any further obligations under
this Agreement and Licensee's rights to distribute and license
Software and to use AppSource's trade name and trademarks
shall cease as of the date of such expiration or termination
except as follows: Within thirty (30) days of the delivery by
AppSource or receipt by AppSource of a notice of termination
at the end of any term or expiration, or within thirty (30)
days after automatic termination or termination for cause,
Licensee shall: (1) return to AppSource the master disk(s);
(2) destroy all copies of the Product in whatever form they
exist, including deleting all copies from any electronic
memories; and (3) remove the Product from all Licensee Product
not yet shipped; provided, however, that Licensee shall be
permitted to ship Licensee Product (containing the Product) to
all end users with which it has a contractual obligation to do
so, whether through subdistributors or otherwise (as of the
termination or expiration date). All licenses for the Product
previously given to end-users by or through Licensee, provided
they were in accordance with the terms of this Agreement,
shall continue in effect after termination or expiration of
the Agreement. Licensee may not license any inventory of
Licensee Product containing the Product after the termination
date unless a prior written agreement has been reached with
AppSource.
All requirements of indemnification, payment, and terms
related to use or protection of intellectual property or
confidential information, and provisions
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related to venue and choice of laws, shall survive termination
or expiration of this Agreement. AppSource shall be entitled
to pursue all available remedies against Licensee for breach
of the Agreement or damages caused by Licensee.
f. Continuing Interest. Licensee warrants and acknowledges that
Licensee does not now have, nor shall have after termination
or expiration, any continuing interest or rights to the good
will, assets or proceeds of AppSource, and that AppSource's
sole responsibilities and liabilities are as set forth herein.
AppSource's right to terminate is absolute, and Licensee
acknowledges it has considered the term of the Agreement and
the termination provisions in making expenditures of money and
time in preparing for the performance of this Agreement and
has further considered the possible loss or damage on account
of the loss of prospective profits or anticipated sales or on
account of expenditures, investments, leases, property
improvements or commitments in connection with the good will
or business of Licensee resulting from the ending of this
Agreement. AppSource shall have no liability to Licensee as a
result of termination or expiration of this Agreement in
accordance with its terms, including without limitation claims
relating to loss of profit, goodwill, creation of clientele,
advertising costs, costs of samples or supplies, termination
of employees, employee's salaries or any other items.
14. MISCELLANEOUS PROVISIONS
a. Notices. Unless otherwise stated, all notices required under
this Agreement shall be in writing and shall be considered
given upon personal delivery of the written notice or within
forty-eight (48) hours after deposit in the U.S. mail,
certified or registered, and appropriately addressed to
AppSource or Licensee.
b. Governing Law. This Agreement is made under and shall be
construed in accordance with the laws of the State of Florida,
USA.
c. No Publication. Each party agrees not to publicize or disclose
the terms of this Agreement to any third party without the
consent of the other; provided, however, that the parties have
agreed to the release set forth in Exhibit E attached hereto.
In particular, no press releases shall be made without the
mutual consent of each party.
e. Severability. The terms of this Agreement shall be applicable
severally to each Product and any dispute affecting either
party's rights or obligations as to one or more Product(s)
shall not affect the rights granted hereunder as to any other
Licensed Software.
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f. Heading. The captions of Sections of the Agreement are for
reference only and are not to be construed in any way as
terms.
g. No Assignment. Licensee may not assign or transfer any of the
rights or responsibilities set forth herein without the
express written consent of the other party which shall not be
unreasonably withheld and any purported attempt to do so shall
be deemed void.
h. Dispute Resolutions. Any and all disputes in connection with
or arising out of this Agreement shall, insofar as possible,
be settled amicably by the parties. The parties agree to
negotiate in good faith to settle any such disputes. The
parties further agree to escalate any such disputes to
progressively higher levels of management in their respective
organizations in order to settle such disputes.
i. No Waiver. Neither party's failure to exercise any of its
rights hereunder shall constitute or be deemed a waiver or
forfeiture of any such rights.
j. Exhibits. Each Exhibit referred to herein is hereby
incorporated in full within this Agreement wherever reference
to such Exhibit is made.
k. Modifications. This Agreement may only be modified by a
writing signed by an authorized representative of both
AppSource and Licensee.
l. Entire Agreement. This document represents the entire
agreement between the parties as to the matters set forth and
integrates all prior discussion or understanding between them.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly authorized representatives on the date first written above.
AppSource Licensee
By: /s/ Richard Daley By: /s/ John Freund
----------------------------- -----------------------------------
Typed Name: Richard Daley Typed Name: John Freund
--------------------- ---------------------------
Title: President Title: Vice President, Marketing
-------------------------- --------------------------------
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EXHIBIT A
SOFTWARE PRODUCTS
1. PRODUCT
WIRED for OLAP for Windows
2. DOCUMENTATION
Documentation. As used in this agreement, "Documentation"
shall mean such user and technical manuals and other
documentation that AppSource ordinarily makes available with
the Product. Documentation will describe all features of the
Product and consist of:
a. WIRED for OLAP Manual in its existing form.
3. LICENSEE PRODUCTS
ShowCase Analyzer for Microsoft Windows which incorporates the
Product
4. DELIVERY SCHEDULE
All items in 1 and 2 to be delivered within ten (10) working
days of any order placed.
5. SPECIFICATIONS
WIRED For OLAP Version 1.0 for Windows
Runs under Windows 3.1 or Higher
Compatible with DOS 3.1 or higher
Minimum 8 MB RAM
Minimum 486 based processor
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EXHIBIT B
AppSource MARKS
1. AppSource MARKS
Manual and software copyright 1995 by AppSource. All rights reserved.
2. STANDARDS OF QUALITY
a. Software containing any of AppSource's Marks shall be
designed, manufacture and reproduced to exceed or meet the
quality of comparable products manufactured or reproduced by
AppSource, and will meet any additional specifications defined
by AppSource (in consultation with Licensee) to be necessary
in view of conditions relating to the availability of
materials, processes, labor and the like.
b. AppSource Marks may only be reproduced in accordance with the
standards supplied by AppSource.
c. Upon request by AppSource, Licensee will promptly submit to
AppSource (or AppSource's designated representative) samples
of any Software containing AppSource's Marks for inspection
and testing.
d. In the event that AppSource determines that any Software fails
to meet these Standards of Quality, AppSource may give notice
of breach. Upon notice of breach, Licensee shall immediately
cease the use of AppSource's Marks on or in relation to those
Licensed Software products identified in the notice of breach
which fail to meet the Standard of Quality. Licensee shall
remove all labels or other indications of AppSource's Marks
already placed on such products or packages thereof in its
possession or control prior to shipping or transferring these
products to a third party.
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EXHIBIT 10.13
SHOWCASE LICENSE AGREEMENT
Agreement Number: STL97307
STL Reference No. 4997ST1740
This Agreement dated as of December 9, 1998 ("Effective Date") is between
ShowCase Corporation ("SHOWCASE") with an address at 4131 Highway 52 North,
Suite G111, Rochester, MN 55901-3144, and International Business Machines
Corporation ("IBM") with an address at 555 Bailey Avenue, San Jose, CA 95141.
Under this agreement, SHOWCASE will port IBM's Relational Storage Interface
(RSI) to the OS/400 platform and integrate it with the SHOWCASE Essbase/400
calculation engine, and will license the result to IBM. Also, IBM will license
certain software from SHOWCASE for distribution as an IBM logo'd product. By
signing below, the parties agree to the terms of this Agreement. The complete
Agreement between the parties regarding this transaction consists of this
License Agreement and the following Attachments:
1. "Description of Licensed Work Number 001;"
2. "Description of Licensed Work Number 002;"
3. "Schedule;"
4. "Acceptance Criteria;"
5. "Testing, Maintenance and Support;"
6. "Royalties;"
7. "Certificate of Originality;"
8. "Source Code Custody Agreement;" and,
9. "Description of Escrowed Work."
Agreements which are related to this Agreement are:
10. "Agreement for the Exchange of Confidential Information Number
M96-2547," as supplemented; and
11. "Outbound License Agreement Number STL98095."
This Agreement replaces all prior oral or written communications between the
parties relating to the subject matter. Once signed, any reproduction of this
Agreement made by reliable means (for example, photocopy, or facsimile) is
considered an original, unless prohibited by local law.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
INTERNATIONAL BUSINESS SHOWCASE CORPORATION
MACHINES CORPORATION
By: /s/ Roy J. Maharaj By: /s/ Ken Holec
-------------------------------- ------------------------------
Authorized Signature Authorized Signature
Print Print
Name: Roy J. Maharaj Name: Ken Holec
-------------------------------
Date: 1/6/99 Date: December 23, 1998
---------------------------- -----------------------------
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December 9, 1998
License Agreement
1.0 DEFINITIONS
Capitalized terms in the Agreement have the following meanings.
1.01 Code is a computer programming code, including both Object Code and Source
Code.
a. Object Code is Code substantially in binary form, and includes
header files of the type necessary for use or inter operation with
other computer programs. It is directly executable by a computer after
processing or linking, but without compilation or assembly. Object Code
is all Code other than Source Code.
b. Source Code is Code in a form which when printed out or displayed is
readable and understandable by programmer of ordinary skills. It
includes related source code level system documentation, comments and
procedural code. Source Code does not include Object Code.
1.02 Deliverable is any item that SHOWCASE provides under this Agreement.
1.03 Derivative Work is a work that is based on an underlying work and that
would be a copyright infringement if prepared without the authorization of the
copyright owners of the underlying work. Derivative Works are subject to the
ownership rights and licenses of a party or of others in the underlying work.
1.04 Distributors are those authorized or licensed by IBM, IBM Subsidiaries or
IBM Distributors to license or distribute Products.
1.05 Enhancements are changes or additions other than Error Corrections, to the
Licensed Work.
a. Basic Enhancements are all Enhancements, other than Major
Enhancements, including those that support new releases of operating
systems and devices.
b. Major Enhancements provide substantial additional value and are
offered to customers for an additional charge.
1.06 Error Corrections are revisions that correct errors and deficiencies
(collectively referred to as "errors") in the Licensed Work.
1.07 Externals are (1) any pictorial, graphic, and audiovisual works (such as
icons, screens, sounds, and characters) generated by execution of Code, and (2)
any programming interfaces, languages or protocols implemented in Code to enable
interaction with other computer programs or the end user. Externals do not
include the Code that implements them.
1.08 Licensed Work is (1) any material described in or that conforms to the
description in the Attachments entitled "Description of Licensed Work," or that
is delivered to IBM as the Licensed Work, including (but not limited to) Code,
associated documentation, and Externals, and (2) Error Corrections and
Enhancements to be provided to IBM pursuant to this Agreement.
1.09 Product is an offering to customers or other users, whether or not branded
by IBM or its Subsidiaries, that includes all or any portion of the Licensed
Work.
a. OLAP Product is a Product that includes the Licensed Work described
in the Attachment entitled "Description of Licensed Work #001" or a
Derivative Work of such Licensed Work.
b. VW Product is a Product that includes the Licensed Work described in
the Attachment entitled "Description of Licensed Work #002" or a
Derivative Work of such Licensed Work.
1.010 Moral Rights are personal rights associated with authorship of a work
under applicable law. They include the rights to approve modifications and to
require authorship identification.
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December 9, 1998
License Agreement
1.011 SHOWCASE Tag-Line is the following statement for inclusion by IBM on a
Product start-up splash screen and marketing deliverables as appropriate:
"Developed by ShowCase Corporation."
1.012 Subsidiary is an entity during the time that more than 50% of its voting
stock is owned or controlled, directly or indirectly, by another entity. If
there is not voting stock, a Subsidiary is an entity during the time that more
than 50% of its decision-making power is controlled, directly or indirectly, by
another entity.
1.013 Tools include devices, compilers, programming, documentation, media and
other items required for the development, maintenance or implementation of a
Deliverable that are not commercially available.
2.0 RESPONSIBILITIES OF SHOWCASE
2.01 SHOWCASE will port IBM's Relational Storage Interface (RSI), provided to
SHOWCASE pursuant to Outbound License Agreement Number STL98095, to the OS/400
platform and integrate it with the SHOWCASE Essbase/400 calculation engine. The
resulting integrated combination by SHOWCASE will become a Licensed Work which
SHOWCASE licenses to IBM under this Agreement and as specified in DLW # 001.
SHOWCASE will continue to ensure the compatibility of the Licensed Work with the
OS/400 operating system and the current version of Essbase by making all needed
modifications or Enhancements to the Licensed Work. SHOWCASE will also license
certain software to IBM as identified in DLW #002 for distribution as an IBM
logo'd product.
2.02 SHOWCASE will provide the following Deliverables to IBM according to the
schedule in the Attachment entitled "Schedule" and in accordance with the
Attachment entitled "Acceptance Criteria":
a. one complete set of the Licensed Works described in the Attachments
entitled "Description of Licensed Work." The Licensed Work includes
Object Code deposited on any media delivered to IBM.
b. Tools for the Licensed Works as identified in the form specified in
the Attachment entitled "Tools and Commercially Available Materials."
c. any updates to the list identifying any commercially available
devices, compilers, programming, documentation, media and other items
required for the development, maintenance or implementation of a
Deliverable. The commercially available items are identified in the
form specified in the Attachment entitled "Tools and Commercially
Available Materials."
d. completed certificate of originality with the Licensed Work, and
with each Enhancement to the Licensed Work, in the form specified in
the Attachment entitled "Certificate of Originality." IBM acknowledges
that it has received from Arbor Software now known as Hyperion
Solutions Corporation (hereinafter "Hyperion"), an appropriate
Certificate of Originality for the Essbase Software owned by Hyperion,
which is ported to the AS/400 by SHOWCASE and included in the OLAP
Product. IBM may suspend payments to SHOWCASE for the Licensed Work if
SHOWCASE does not provide a properly completed certificate. Payment
will resume after IBM receives and accepts the certificate.
2.03 For the term of this Agreement, SHOWCASE will provide to IBM testing,
maintenance and support for the Licensed Works, as described in this Agreement,
including the Attachment entitled "Testing, Maintenance and Support." After IBM
receives the initial contact from the customer (level 0), SHOWCASE will provide
Levels 1, 2, and 3 maintenance and support.
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2.04 SHOWCASE will provide to IBM, at no charge, Enhancements and Error
Corrections for the Licensed Work beginning when IBM accepts the Licensed Work
including corrections for any problems found during any beta tests. Beta test
Object Code for Enhancements will be made available to IBM no later than the
earliest date on which SHOWCASE provides such beta test Object Code to any other
entity. SHOWCASE will provide IBM a golden master for Enhancements on the same
day on which SHOWCASE delivers a golden master for manufacturing of the SHOWCASE
logo'd version of the Licensed Work.
2.05 SHOWCASE will implement the License Use Management (LUM) support in a
tactical and strategic fashion.
1. The tactical implementation includes the implementation of
code from the DB2 OLAP code base for LUM support in both the
Strategy 2.0 products licensed to IBM as well as the IBM DB2
OLAP port of the RSI code. This code will support the IBM
trusted user concept for IBM Licensed Program Products -- the
code will ask the customer for products / users installed and
the output will generate the Hyperion/SHOWCASE key needed to
operate the code in question.
2. The strategic implementation of LUM support is to implement
the SLM/400 security features of OS/400 with specifications as
documented in the IBM publication, "AS/400 License Management
Guideline Document for Software Vendors, Version 1.2." This
SLM publication was provided by IBM to SHOWCASE during the
week ended November 13, 1998. This should be implemented at a
minimum by June 1, 2000 in a major release of the products.
There may be additional requirements for LUM support coming
from SLM/400 covering User management. This would be
implemented as the support is available; but such additional
requirements will be assessed by both parties and jointly
agreed upon, including any appropriate funding.
2.06 SHOWCASE will provide, at no charge, up to (*) "Instructor days"((*) world
wide, staffed by (*) SHOWCASE instructors.) of education to the IBM sales team
and IBM partners concerning the Licensed Works, on mutually agreed upon dates,
but no later than thirty (30) days prior to the date on which IBM plans to make
a Product generally available to customers. Relevant points concerning these
sessions are as follows:
a. The education includes topics such as feature/function/benefit
education, competitive positioning, demonstration training, and
in-depth sales support and technical training.
b. Multiple IBM students may attend the classes (Up to 25 students per
class).
c. Following such sessions SHOWCASE will provide education updates to
IBM in Rochester, Minnesota on new releases at such time as SHOWCASE
makes them available to any others.
d. Further formal education will be provided as jointly agreed.
e. For classes not held in Rochester, Minnesota, IBM will reimburse
SHOWCASE for the instructors' reasonable travel and living expenses for
the desired classes. Charge and payment information will be provided by
the group requesting the sessions.
f. IBM reserves the right to develop its own education offerings.
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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2.07 SHOWCASE will:
a. participate in a reasonable number of progress reviews, as requested
by IBM, to demonstrate SHOWCASE's performance of SHOWCASE's
obligations;
b. provide on-site assistance of no more than (*) days as required for
the first customer participating in the IBM beta programs.
c. implement a process designed to help prevent any such contamination
by Harmful Code. SHOWCASE will promptly provide IBM notice if SHOWCASE
suspects any contamination;
d. have agreements with SHOWCASE's personnel and third parties to
perform obligations and to grant or assign rights to IBM as required by
this Agreement. On request, SHOWCASE will provide IBM with evidence of
these agreements;
e. acknowledge that IBM's exercise of rights and licenses hereunder
shall not violate any Moral Rights of SHOWCASE, and SHOWCASE will agree
not to assert any Moral Rights SHOWCASE has or may have in the Licensed
Work against IBM in its exercise of rights and licenses hereunder;
f. obtain all necessary consents of individuals or entities required
for the use of names, likeness, voices, and the like in the Licensed
Work;
g. maintain records to verify authorship of the Licensed Work for 4
years after the termination or expiration of this Agreement. On
request, SHOWCASE will deliver or otherwise make available this
information in a form specified by IBM;
h. not assign or transfer this Agreement or SHOWCASE's rights under it,
or delegate or subcontract SHOWCASE's obligations, without IBM's prior
written consent, such consent will not be unreasonably withheld. Any
attempt to do so without such written consent is void;
i. not provide any information or the fact that SHOWCASE has licensed
the Licensed Work to IBM, to the media, or issue any press releases or
other publicity, regarding this Agreement or the parties' relationship
under it, without IBM's prior written consent (excluded from this
restriction is that information which is now or hereafter becomes
generally known or available through no act or failure to act on the
part of SHOWCASE); and
j. not disclose to a third party the terms of this Agreement without
IBM's prior written consent except as expressly permitted hereunder.
SHOWCASE may, however, make such disclosures (i) to its accountants,
lawyers or other professional advisors provided that any such advisor
is under a confidentiality obligation and (ii) as required by law
provided SHOWCASE obtains any confidentiality treatment for it which is
available.
k. be allowed to provide customer installation information pertaining
to this Agreement to (*) solely to fulfill SHOWCASE's contractual
obligations to Hyperion providing that Hyperion is subject to the same
confidentiality restrictions specified within this Agreement and the
Agreement for Exchange of Confidential Information Number M96-2547, as
supplemented.
2.08 SHOWCASE will execute and meet the deposit requirements of the Source Code
Custody Agreement in the Attachment entitled "Source Code Custody Agreement."
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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2.09 SHOWCASE will enable the Licensed Works for National Language Support (NLS)
and Double Byte Character Set (DBCS) and provide all foreign language versions
of Licensed Works to IBM as, and to the extent, they become available.
Currently, English, French, German, Italian, and Japanese are available.
SHOWCASE will provide IBM with an acceptable plan to provide a Spanish language
version of the Licensed Works; and given a justified business case by IBM which
SHOWCASE and IBM jointly agree upon, including any appropriate funding, SHOWCASE
will provide NLS enablement for additional language versions of the Licensed
Works in six (6) months. To assist SHOWCASE, IBM will provide any of those
modules or MRI's which have previously been translated and which IBM has the
right to share.
2.010 IBM acknowledges and understands that the Licensed Work included in the
OLAP Product (the "Essbase AS/400 Port") is based on Code owned by Hyperion and
licensed by SHOWCASE. Prior to any release of Source Code for such Licensed Work
pursuant to the terms of the Source Code Custody Agreement, IBM hereby agrees to
inform Hyperion in writing of such impending release and that Hyperion shall
have thirty (30) days to elect in writing one of the following options:
1. modify, in agreement with IBM, that certain IBM Developer
Agreement Number STL96204 and its DLW #001 dated September 27,
1996, between Hyperion and IBM (the "Santa Teresa Agreement")
by adding the Essbase AS/400 Port as a Licensed Work under the
Santa Teresa Agreement. Provided that SHOWCASE provides to IBM
the Source Code needed for support and assigns to IBM
copyright ownership in the Code ported to OS/400 by SHOWCASE
which was based on the code licensed to SHOWCASE pursuant to
the Outbound License Agreement Number STL98095 (including
Derivative Works thereof-all referred to as "RSI Code"), IBM
hereby consents to assuming the obligation to support all
portions of the OLAP Product that runs on OS/400 (excluding
the Essbase AS/400 Port and any Enhancements and Maintenance
Modifications thereto), including any version of RSI Code. And
IBM agrees to pay royalties to Hyperion as those IBM pays
Hyperion pursuant to the Santa Teresa Agreement for the
Licensed Works thereunder licensed on other platforms, with a
minimum OTC royalty established by multiplying the same
percentage rate established in the Santa Teresa Agreement for
product on other platforms by the SHOWCASE US List Price
established in this Agreement for the OS/400 OLAP Product; in
such case no further royalties will be due to SHOWCASE under
this License Agreement Number STL97307 for licensing of its
OLAP Product; or
2. have assigned to it, and assume on behalf of SHOWCASE, all
obligations of SHOWCASE under this Agreement, Source Code
Custody Agreement, and the Outbound License Agreement Number
STL98095 with respect to the OLAP Product, including, without
limitation, all necessary development and support thereof, and
IBM hereby agrees to give its written consent to such
assignments.
In the event that IBM assumes support of the RSI Code, then SHOWCASE shall
deliver to IBM all available Source Code necessary for IBM to support it, and
SHOWCASE hereby grants and assigns to IBM, its successors and assigns, all
right, title and interest whatsoever, throughout the world, in and under
copyright in the Derivative Work of the RSI Code (the Code ported to the OS/400
operating system by SHOWCASE pursuant to the Outbound License Agreement Number
STL98095, for the full duration of all such rights and any renewals or
extensions thereof. SHOWCASE agrees to cooperate with IBM and execute documents
reasonably required to support such assignment and allow IBM to exercise its
rights to the Code.
Notwithstanding anything to the contrary in this Agreement (including all of its
Attachments) or the Agreement for the Exchange of Confidential Information
Number M96-2547, as supplemented, upon the occurrence of any of the foregoing
events, IBM consents and agrees
a. to cooperate with SHOWCASE and Hyperion in good faith to transfer
all Source Code and other information reasonably needed in order for
Hyperion to assume such obligations,
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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b. in the event a release condition for the release of the Source Code
for the OLAP Product (pursuant to the Source Code Custody Agreement)
occurs, to SHOWCASE's disclosure of information related to the Outbound
License Agreement, this License Agreement and the Source Code Custody
Agreement, solely to the extent required to permit Hyperion to perform
SHOWCASE's obligations hereunder with respect to the Licensed Works,
including the Essbase Software, provided that any such disclosures are
subject to an appropriate nondisclosure agreement between Hyperion and
SHOWCASE, which contains terms that are as protective of IBM's
confidential information as those set forth in the Agreement for the
Exchange of Confidential Information Number M96-2547, as supplemented,
and
c. In the case of Hyperion electing option number 2 above, IBM shall
pay to Hyperion all royalties due to SHOWCASE under this License
Agreement for the OLAP Product subsequently distributed; and no further
such royalties shall be due to SHOWCASE.
The parties agree that upon any release of the source code for the OLAP Product
pursuant to this Agreement,
(a) SHOWCASE shall have no continued obligations under the Outbound
License Agreement, this Agreement or the Source Code Custody
Agreement to support or maintain any existing Licensed Work
included in the OLAP Product, or to create any new Derivative
Works of the Licensed Work for inclusion in the OLAP Product;
(b) the mere occurrence by itself of such release or termination shall
not constitute a breach (although such release may be triggered by
a breach) by SHOWCASE of its obligations under this Agreement, the
Outbound License Agreement, the Source Code Custody Agreement or
any other related agreements between the parties, and this
Agreement shall otherwise remain in full force and effect pursuant
to its terms; and
(c) SHOWCASE shall continue to be obligated to fulfill its obligations
hereunder with respect to all Licensed Works included in Products,
other than the OLAP Product. If Hyperion does not elect in writing
one of the above options within thirty (30) days of receipt of
IBM's notice, then IBM may obtain the escrowed Materials in
accordance with the SCCA.
3.0 IBM'S RESPONSIBILITIES
3.01 IBM will perform reviews and testing of the Licensed Works in accordance
with the Attachment entitled "Acceptance Criteria."
3.02 IBM will perform beta test programs to ensure that the Products are ready
for general availability. IBM will report problems found during the beta test
programs to SHOWCASE.
3.03 IBM will make payments for SHOWCASE's porting activity in accordance with
Section 5.0, "Payments."
3.04 IBM will pay royalties to SHOWCASE pursuant to Section 6.0, "Royalties."
3.05 IBM will include the SHOWCASE Tag-Line as defined in Section 1.011 and
retain all patent and copyright information displayed in the "About Box" of the
OLAP Product.
3.06 IBM will provide SHOWCASE, as specified in the Attachment entitled Testing,
Maintenance and Support (Section 3.0) with reasonable access to IBM's RETAIN
system (IBM's system used to manage and process PMRs and APARs) as necessary for
SHOWCASE to perform its Maintenance and Support obligations as required in this
Agreement.
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3.07 IBM will provide SHOWCASE with RSI Server Source Code solely for the
purpose of porting such Code and maintaining the Licensed Works as described in
this Agreement, and for distribution as part of SHOWCASE's products in
accordance with the Outbound License Agreement Number STL98095. The provision of
the RSI Server Source Code will be subject to the terms of AECI Agreement Number
M96-2547, and its Supplement Number STL001.
3.08 IBM will not execute an agreement with Hyperion Solutions Corporation (or
its successors or assigns) to be the provider of an OLAP Product for the OS/400
platform which uses the specific technology defined in DLW #001 for five (5)
years from the date of the execution of this Agreement, unless this Agreement is
terminated prior to that time in accordance with Section 10, TERM AND
TERMINATION, or pursuant to Section 2.010 of this Agreement, in which case this
restriction shall not apply.
4.0 OWNERSHIP AND LICENSE
4.01 SHOWCASE will own the changes it develops to the RSI (the initial Code
ported to the OS/400 operating system and any and all revisions, releases or new
versions of the initial Code) which SHOWCASE will develop and deliver to IBM as
part of DLW #001, subject to IBM's continued ownership of the underlying RSI
Code.
4.02 SHOWCASE grants IBM a nonexclusive, worldwide, irrevocable license to
prepare Derivative Works of the Licensed Work and to use, execute, reproduce,
display, perform, transfer, distribute and sublicense the License Work and such
Derivative Works, in any medium or distribution technology whatsoever, whether
known or unknown. SHOWCASE grants IBM the right to authorize or sublicense
others to exercise any of the rights granted to IBM in this Section.
4.03 SHOWCASE grants IBM a nonexclusive, worldwide, irrevocable, paid-up license
to prepare Derivative Works of Tools, and to use, execute, reproduce, display,
perform, and distribute internally the Tools and such Derivative Works, in any
medium or distribution technology whatsoever, whether known or unknown. The
rights and licenses granted by SHOWCASE to IBM hereunder include the right of
IBM to authorize or sublicense its Subsidiaries, contractors, and consultants to
exercise any of the rights granted to IBM in this Section.
4.04 The grant of rights and licenses to the Licensed Work and Tools includes a
nonexclusive, worldwide, irrevocable, paid-up license under any patents and
patent applications that are owned or licensable by SHOWCASE now or in the
future and are (1) required to make, have made, use and have used the Licensed
Work or its Derivative Works or (2) required to license or transfer the Licensed
Work or its Derivative Works. This license applies to the Licensed Work and its
Derivative Works operating alone or in combination with equipment or Code. The
license scope is to make, have made, use, have used, sell, license or transfer
items, and to practice and have practiced methods, to the extent required to
exercise the rights granted hereunder to the Licensed Work and Tools.
4.05 Subject to SHOWCASE's ownership of the Licensed Work and Tools, IBM will
own any changes it creates to produce Derivative Works.
4.06 SHOWCASE grants IBM a nonexclusive, worldwide, irrevocable, paid-up license
to use the names and trademarks SHOWCASE uses to identify the Licensed Work for
IBM's marketing of the Licensed Work and its Derivative Works. SHOWCASE grants
IBM the right to authorize or sublicense others to exercise any of the rights
granted to IBM in this Section. If IBM's use of SHOWCASE's names and trademarks
is improper and SHOWCASE provides IBM notice that SHOWCASE objects to it, IBM
will take all reasonable steps necessary to resolve SHOWCASE's objections.
SHOWCASE may reasonably monitor the quality of products bearing its trademark
under this license.
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4.07 Any goodwill attaching to IBM's trademarks, service marks, or trade names
belongs to IBM and this Agreement does not grant SHOWCASE any right to use them.
IBM may state that SHOWCASE has provided the Licensed Work.
5.0 PAYMENT
IBM will pay SHOWCASE (*) within thirty days of receipt of a SHOWCASE invoice
submitted upon or after the execution of this Agreement.
6.0 ROYALTIES
6.01 For OLAP Products:
IBM will pay SHOWCASE (*) of the SHOWCASE list price in effect on
the date of the execution of this Agreement, by geography, for
each authorized copy of the OLAP Product licensed to an end user
by IBM, IBM Subsidiaries or Distributors as specified in the
Attachment titled "Royalties." Should SHOWCASE decrease its list
price for the SHOWCASE Strategy 2.0 OLAP Server for OS/400 which
comprises the Licensed Work under DLW 001, such decreased list
price shall apply to calculate amounts due under this Agreement.
Any increase in list price shall not affect amounts due under this
Agreement, but royalties may be increased as provided in Section
10.04 below.
6.02 For VW Products:
IBM will pay SHOWCASE (*) the SHOWCASE list price in effect on the
date of the execution of this Agreement, by geography, for each
authorized copy of the VW Product licensed to an end user by IBM,
IBM Subsidiaries or Distributors as specified in the Attachment
titled "Royalties." Should SHOWCASE decrease its list price for
the SHOWCASE Products for OS/400 which comprise the Licensed Work
under DLW 002 such decreased list price shall apply to calculate
amounts due under this Agreement. Any increase in list price shall
not affect amounts due under this Agreement, but royalties may be
increased as provided in Section 10.04 below.
6.03 In the event that IBM wishes to distribute any other Product, the parties
must first negotiate and agree in writing to an appropriate royalty to be paid
to SHOWCASE.
6.04 For Major Enhancements not included as part of the Products in Sections
6.01 and 6.02 above, but licensed as a separate priced feature, IBM will pay
SHOWCASE (*) of the SHOWCASE initial list price on the date the Major
Enhancement is offered, by geography, for each authorized copy of the Major
Enhancement licensed to an end user by IBM, IBM Subsidiaries or Distributors. An
Amendment to the Attachment titled "Royalties" will be made at that time to
reflect the inclusion of the Major Enhancement. Should SHOWCASE decrease its
list price for the SHOWCASE Products for OS/400 which comprise a Major
Enhancement, such decreased list price shall apply to calculate amounts due
under this Agreement. Any increase in list price shall not affect amounts due
under this Agreement, but royalties may be increased as provided in Section
10.04 below.
6.05 Under IBM's Software Subscription offering (however named in the future),
customers pay a fee, for which they receive all program (version/release)
upgrades for a fixed period of time. Such upgrade protection may be offered for
the Products and any Major Enhancements which are separately priced features
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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covered in Section 6.03 above. SHOWCASE royalties specified in Sections 6.01,
6.02, and 6.03 shall not apply to upgrade copies of the (i) Products and (ii)
Major Enhancements licensed as separately priced features pursuant to Section
6.03 above, which are provided to Customers who have licensed a Product and/or
such a separately priced feature and purchased upgrade protection. IBM will not
pay any per copy royalties for upgrade copies received by customers under such
Software Subscription offering. SHOWCASE shall receive a royalty for the initial
Product or Major Enhancement as a separately priced feature as specified in
Sections 6.01, 6.02, or 6.03 above. SHOWCASE shall also receive the amount
specified in the Attachment, "Royalties," for upgrade protection purchased by
the Customer. For example, if IBM receives payment for a one year software
subscription under the Software Subscription offering for a Product(s) or Major
Enhancement as a separately priced feature, IBM will pay SHOWCASE a royalty
consistent with the product and geography from the Upgrade Protection chart in
the ROYALTY Attachment. If a new version of the Licensed Work is made generally
available within the covered period of time, the customer who bought the
offering receives the new version of the Product or Major Enhancement as a
separately priced feature at no additional charge. IBM will not pay SHOWCASE any
additional royalty for such upgrades.
6.06 IBM has no loyalty obligation for:
a. the Licensed Work or its Derivative Works used for:
1.) IBM's and IBM Subsidiaries' (including third parties under
contract) development, maintenance or support activities;
2.) marketing demonstrations, customer testing or trial periods
(including early support, prerelease, or other similar
programs up to a maximum of forty five (45) days), Product
training or education (the royalty exclusion in this case
applies only to Product training and education which is not
generating revenue for IBM and IBM Subsidiaries); or
3.) off-line backup and archival purposes;
b. the Licensed Work (or functionally equivalent work) that becomes
available generally to third parties without a payment obligation
through no action or fault of IBM;
c. documentation provided with, contained in, or derived from the
Licensed Work;
d. Error Corrections or Basic Enhancements;
e. warranty replacement copies of the Product; or
f. Externals.
6.07 IBM, IBM Subsidiaries, and Distributors may, without incurring any royalty
obligation, copy the Product and distribute it on a CD-ROM, or other media or
distribution technology on or through which the Product is secured (e.g.,
"encrypted" or "locked") to limit a customer's access to or use of the Product.
IBM may allow the customer, under a limited license, a limited preview, trial or
demonstration use of the Product up to a maximum of forty five (45) days. IBM
will have no royalty obligation to SHOWCASE unless IBM, IBM Subsidiaries, or
Distributors license the Product to such customer for full productive use.
6.08 IBM may request a lower royalty for the Licensed Work when a licensing
transaction requires a substantial discount. If SHOWCASE agrees, both parties
will sign a letter specifying the licensing transaction and its lower royalty
payment. The SHOWCASE Chief Financial Officer is authorized to sign such letters
on SHOWCASE's behalf.
6.09 Royalties are paid against revenue recorded by IBM in a royalty payment
quarter. In the US, a royalty payment quarter ends on the last business day of
the calendar quarter. Outside of the US, a royalty payment quarter is defined
according to IBM's current administrative practices. Payment will be made by the
last day of the second calendar month following the royalty payment quarter.
Royalties will be paid less adjustments and refunds due to IBM. IBM will provide
with each payment the standard royalty accounting report which IBM provides to
its suppliers; the current report at the time of execution of this Agreement
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provides information by part number, country code, and royalty rate. All
payments will be made in US dollars. Payments based on foreign revenue will be
converted to US dollars on a monthly basis at the rate of exchange published by
Reuters Financial Service on approximately the same day each month.
6.010 Each party will be solely responsible for any taxes incurred by the party,
directly or indirectly, associated with its performance of this Agreement.
6.011 SHOWCASE is responsible for making any payments or royalties due to third
parties for Code or materials included in the Licensed Work or its Derivative
Works;
6.012 The payments defined in this Section fully compensate SHOWCASE for its
performance under, and for the rights and licenses granted in, this Agreement.
7.0 TESTING
7.01 SHOWCASE will perform the following tests prior to each delivery of the
Licensed Work:
a. component testing;
b. functional verification testing;
c. system testing; and
d. compatibility testing.
Upon IBM's request, the details of such testing will be mutually agreed to by
the parties.
7.02 SHOWCASE will provide to IBM concurrent with each delivery of the Licensed
Work and Tools all test results, test scenarios, test cases, and test reports
associated with the pre-delivery testing.
7.03 Upon receipt of the Licensed Work by IBM, IBM may evaluate the Licensed
Work for a period of forty five (45) days and perform such tests as indicated in
the Attachment entitled "Acceptance Criteria" and as IBM deems appropriate to
determine if:
a. the Licensed Work meets the specifications described in the
Attachments entitled "Description of Licensed Work;"
b. the Licensed Work executes repetitively within the system
environment described in the Attachments entitled "Description of
Licensed Work;" and
c. IBM can successfully execute to completion all functional and system
test scenarios developed by IBM.
IBM's testing does not relieve SHOWCASE of its obligations under this Agreement.
IBM has no obligation to identify errors.
IBM will accept or reject the Licensed Works within sixty (60) business days
from receipt of the Licensed Works. This time period begins the business day
following IBM's receipt of the Licensed Works. If IBM does not accept or reject
a Licensed Works in writing within sixty (60) business days of receipt, that
Licensed Works will be considered accepted by IBM.
IBM will clearly state the reason(s) for rejection. Within ten (10) business
days of the notice of rejection, SHOWCASE will present a corrective action plan
to IBM which is accepted and approved by IBM. SHOWCASE will then make the
corrections and resubmit the Licensed Works to IBM. IBM may withhold any further
payments until Licensed Works conform to the acceptance criteria.
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8.0 REPRESENTATIONS AND WARRANTIES
8.01 SHOWCASE makes the following ongoing representations and warranties:
a. SHOWCASE warrants that it has full legal rights to grant the rights
granted herein;
b. SHOWCASE is not under, and will not assume, any contractual
obligation that prevents SHOWCASE from performing its obligations or
conflicts with the rights and licenses granted in this Agreement;
c. there are no liens, encumbrances or claims pending or threatened
against SHOWCASE, or to SHOWCASE's knowledge, anyone else, that relate
to the rights and licenses granted to this Agreement;
d. SHOWCASE warrants that neither the Licensed Work or Tools infringes
any intellectual property rights of a third party including, to the
best of SHOWCASE's knowledge, any patents or patent applications. The
Deliverables have not been the basis of a claim of infringement
threatened or asserted against SHOWCASE or, to the best of SHOWCASE's
knowledge, anyone else. SHOWCASE's sole obligation, and IBM's sole
remedy, in the event of a breach of this warranty is stated in Sections
9.01, 9.02 and 9.03 below, subject to the limitation in Section 9.05;
e. SHOWCASE warrants that the Licensed Work and Tools will perform in
material conformance with the requirements set forth in this Agreement,
including the Attachment entitled "Description of Licensed Work", and
will materially conform to SHOWCASE's user documentation, and any sales
and marketing materials provided by SHOWCASE;
f. the fully commented Source Code that SHOWCASE provides under the
Source Code Custody Agreement corresponds to the current release or
version of the Licensed Work provided by SHOWCASE under this Agreement;
g. the Licensed Work supports the Year 2000; it is capable of correctly
providing and receiving date data, as well as properly exchanging
accurate date data with all products (for example, hardware, software
and firmware) with which the Licensed Work is designed to be used;
h. SHOWCASE warrants that, to the best of its knowledge, the Licensed
Work provided to IBM under this License Agreement is not contaminated
by Harmful Code, and that SHOWCASE has implemented a process designed
to help prevent any such contamination by Harmful Code. SHOWCASE will
promptly provide IBM notice if SHOWCASE suspects any contamination, and
will remain liable for any damages resulting from Harmful Code provided
by SHOWCASE; and
i. SHOWCASE warrants that all SHOWCASE personnel, and to the best of
SHOWCASE'S knowledge, authors of third party materials, have waived
their Moral Rights in the Licensed Work to the extent permitted by law.
SHOWCASE acknowledges that IBM's exercise of rights and licenses
hereunder shall not violate any Moral Rights of SHOWCASE, and SHOWCASE
agrees not to assert any Moral Rights SHOWCASE has or may have in the
Licensed Work against IBM in its exercise of rights and licenses
hereunder.
SHOWCASE will immediately provide IBM written notice of any change that may
affect its representations and warranties.
8.02 Except as provided above, anything either party provides to the other
related to this Agreement is "AS IS", without warranty of any kind.
9.0 INDEMNIFICATION AND LIABILITY
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9.01 SHOWCASE will defend and indemnify IBM and IBM's Subsidiaries if a third
party makes a claim against IBM or its Subsidiaries based on an actual or
alleged:
a. material failure by SHOWCASE, to the extent not caused by IBM, to
perform SHOWCASE's obligations under this Agreement;
b. material breach of SHOWCASE's representations and warranties;
c. material failure by SHOWCASE to comply with government laws and
regulations;
d. material infringement by SHOWCASE, the Licensed Work or Tools of
patents, copyrights, trademarks, trade secrets, publicity, privacy, and
other intellectual property rights; or
e. inclusion or misuse of the patent notices and markings that SHOWCASE
includes in the "About Box" of the OLAP Product or which are placed in
the OLAP Product by SHOWCASE or at SHOWCASE's request.
9.02 IBM will:
a. promptly provide SHOWCASE notice of any such claim; and
b. allow SHOWCASE to control, and will cooperate with SHOWCASE in the
defense of, the claim and settlement negotiations.
IBM may participate in the proceedings at its option and expense.
9.03 In addition, if an infringement claim appears likely or is made, SHOWCASE
will:
a. obtain the necessary rights for IBM, IBM subsidiaries and
Distributors and their respective customers to continue to distribute,
license, otherwise transfer and use the Licensed Work on an
uninterrupted basis and exercise all rights granted in the Licensed
Work and Tools; or
b. modify the Licensed Work and Tools at SHOWCASE's expense to resolve
the claim. This modified Licensed Work will comply with the Attachment
entitled "Description of Licensed Work."
If SHOWCASE is not able to do either within a reasonable period of time, IBM may
terminate this Agreement for SHOWCASE's breach.
9.04 Unless otherwise expressly provided herein, IBM may pursue any other remedy
it may have in law or in equity in addition to any remedies specified in this
Agreement.
9.05 Regardless of the type of claim, neither party is liable to the other for
indirect, incidental, special, or consequential damages, including, but not
limited to, lost profits or revenues, under any part of this Agreement, even if
informed that they may occur. This limitation does not apply to (a) SHOWCASE's
liabilities for indemnity to the extent that damages claimed by a third party
might be characterized as damages of the type listed above or (b) any
obligations of either party to make a payment which is due under this Agreement.
However, with regard to the obligations of indemnification of SHOWCASE under
Section 9.01 a. above, the liability of SHOWCASE shall be limited to a total
aggregate amount of (*). IBM's total liability is limited to payments due to
SHOWCASE under this Agreement unless there is infringement of SHOWCASE's
intellectual property rights or confidential information by IBM or IBM
infringement of the intellectual property rights of any ShowCase licensor which
falls outside of the license grants herein.
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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10.0 TERM AND TERMINATION
10.01 This Agreement begins on the Effective Date and will remain in effect for
seven (7) years, with automatic one (1) year renewal terms, unless terminated
sooner under the terms of this Agreement. After the sixth (6th) year, SHOWCASE
may terminate the Agreement by providing notice of intent to not renew twelve
(12) months prior to any term expiration date.
10.02 Either party may terminate this Agreement for the other's material breach
by providing the breaching party with a written notice that describes the
breach. The termination will become effective 90 days after receipt of the
notice unless the breach is cured within that 90 day period.
10.03 IBM may terminate this Agreement without cause on twelve (12) months
written notice to SHOWCASE, provided that the effective date of any such
termination may only be on a date which is at least twelve (12) months after the
sixth (6th) anniversary of the date on which a Product has been made generally
available.
10.04 If, at the end of four (4) years six (6) months from the Effective Date of
this Agreement, (i) SHOWCASE notifies IBM, in writing, that its cost structure
based on the distribution of the Licensed Works hereunder has increased
significantly, or (ii) if IBM notifies SHOWCASE that it has determined that it
needs to renegotiate the royalties due hereunder, both parties agree to
renegotiate the list price used for calculation of royalties in Section 6.0
above. If no agreement has been reached within ninety (90) days of IBM's receipt
of the notification, either party may give notice of termination of this
Agreement which will be effective six (6) months from receipt by the other party
of such notice of termination. This process may be invoked a maximum of one (1)
time per calendar year thereafter if required.
10.05 Notwithstanding any expiration or termination of this Agreement,
SHOWCASE's obligations of maintenance and support for Products, pursuant to
Section 2.03 of this Agreement and Attachment, "Testing, Maintenance, and
Support," shall continue at no additional cost to IBM (subject to payment of
Royalties associated with upgrade protection purchased by the customer) until
the effective date which IBM has announced, in good faith, as the end of Product
maintenance and support to customers.
10.06 Expiration or termination of this Agreement does not affect any end-user
licenses granted in this Agreement for the Licensed Work or Tools. Termination
of this Agreement does not affect any end-user licenses granted in this
Agreement for the Licensed Work or Tools delivered or due to IBM prior to the
effective date of termination. In the event of termination by IBM for breach by
SHOWCASE, IBM will not be obligated to make any payments that would have become
due under this Agreement on or after the effective date of termination, other
than royalty payments.
10.07 Subject to Subsection 10.06, any provisions of this Agreement that by
their nature extend beyond termination or expiration will survive in accordance
with their terms. These include Ownership and License, Representations and
Warranties, Indemnification and Liability, and General. These terms will apply
to either party's successors and assigns.
11.0 COORDINATORS
11.01 Any notice required or permitted to be made by either party to this
Agreement must be in writing. Notices are effective when received by the
appropriate coordinator as demonstrated by reliable written confirmation (for
example, certified mail receipt or facsimile receipt confirmation sheet).
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11.02 The Contract Coordinators responsible to receive all notices and
administer this Agreement are:
For IBM: For SHOWCASE:
Name: Robert L. Elliott Name: Tom Rydz
Title: Contract Manager Title: Director of Business Alliances
Address: 555 Bailey Ave. Address: 9700 Higgins Road W, Suite 1100
San Jose, CA 95141 Rosemont, IL 60018
Phone: (408) 463-2232 Phone: (847) 685-6505
Fax: (408) 463-5605 Fax: (847) 685-6570
The Technical Coordinators responsible to accept all Deliverables, coordinate
all exchanges of confidential information, and administer and coordinate the
technical matters associated with this Agreement are:
For IBM: For SHOWCASE:
Name: Shokey Ansari Name: Jon Otterstatter
Title: Mgr., STL Business Intelligence Title: Vice President of Development
Solutions Development
Address: 555 Bailey Ave. Address: 4131 Highway 52 North
San Jose, CA 95141 Rochester, MN 55901-3144
Phone: (408) 463-4469 Phone: (507) 287-2865
Fax: (408) 463-3181 Fax: (507) 287-2803
Technical Coordinators may propose, accept (by signature or initial), and
implement technical changes to this Agreement that do not change dollar amounts
or materially change Deliverables or the schedules of this Agreement.
11.03 A party will provide written notice to the other when its coordinators
change.
12.0 GENERAL
12.01 Independent Contractor. Each party is an independent contractor. Neither
party is, nor will claim to be, a legal representative, partner, franchisee,
agent or employee of the other except as specifically stated in the Subsection
entitled "Copyright" below. Neither party will assume or create obligations for
the other. Each party is responsible for the direction and compensation of it
employees.
12.02 Freedom of Action. Each party may have similar agreements with others.
Each party may design, develop, manufacture, acquire or market competitive
products and services, and conduct its business in whatever way it chooses. IBM
is not obligated to announce or market any products or services. IBM does not
guarantee the success of its marketing efforts. IBM will independently establish
prices for its products and services.
12.03 Reliance. Neither party relies on any promises, inducements or
representations made by the other or expectations of more business dealings,
except as expressly provided in this Agreement. This Agreement accurately states
the parties' agreement.
12.04 Compliance With Applicable Laws. Each party will comply with all
applicable laws and regulations at its expense including, to the extent
applicable, Executive Order 11246 on Equal Employment Opportunity, as amended,
the Occupational Safety and Health Act of 1970, as amended, and the Americans
with Disabilities Act of 1990, as amended. This also includes all applicable
government export and import laws and regulation.
12.05 Confidential Information. The parties agree that information exchanged
under this Agreement that is considered by either party to be confidential
information will be subject to the terms of the AECI Agreement No. M96-2547
referenced on the first page of this Agreement and its Supplements. In addition,
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SHOWCASE will not provide IBM with any information which may be considered
confidential information of any third party unless provided under the AECI. The
obligations set forth in the AECI with regard to confidential information will
not limit or preclude the exercise of the licenses granted in this Agreement.
12.06 Copyright. Any publication by IBM of the Licensed Work or a Derivative
Work thereof may contain an appropriate copyright notice, as determined by IBM.
SHOWCASE will enforce and maintain its copyright protection in the Licensed
Work. IBM is not responsible for enforcing and maintaining such copyright
protection. However, SHOWCASE authorizes IBM to act as SHOWCASE's agent in the
copyright registration of the Licensed Work. At IBM's request, SHOWCASE agrees
to provide IBM reasonable assistance in registering any Product.
12.07 Order of Precedence. If there is a conflict among the terms of this base
License Agreement and its Attachments, the terms of this base License Agreement
prevail over those of the Attachments, unless the parties expressly indicate in
the Attachments that particular terms within the Attachments prevail. Terms in
IBM's purchase orders and SHOWCASE's invoices or acknowledgments, if any, are
void.
12.08 Headings. The headings of this Agreement are for reference only. They will
not affect the meaning or interpretation of this Agreement.
12.09 Counterparts. This Agreement may be signed in one or more counterparts,
each of which will be considered an original, but all of which together form one
and the same instrument.
12.010 Amendment and Waivers. For a change to this Agreement to be valid, both
parties must sign it. No approval, consent or waiver will be enforceable unless
signed by the granting party. Failure to insist on strict performance or to
exercise a right when entitled does not prevent a party from doing so later for
that breach or a future one.
12.011 Actions. Neither party will bring legal action relating to the subject
matter of this Agreement, against the other more than 2 years after the cause of
action rose, except in the case of indemnification for infringement, in which
case this period runs for 2 years after the award or settlement was made.
12.012 Dispute Resolution. Both parties will act in good faith to resolve
disputes prior to instituting litigation. Each party waives its rights to a jury
trial in any resulting litigation. Litigation will only be commenced in the
State of New York.
12.013 Governing Law. This Agreement will be governed by the substantive law of
the State of New York applicable to contracts executed in and performed entirely
within that State. The United Nations Convention on Contracts for International
Sale of Goods does not apply. SHOWCASE will, upon written notice from IBM,
submit to personal jurisdiction in any forum where IBM is sued for claims
related to this Agreement.
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DESCRIPTION OF LICENSED WORK #001
1.0 GENERAL DESCRIPTION OF LICENSED WORK:
STRATEGY OLAP PRODUCT WITH RST PORTED TO OS/400
The Licensed Works to be part of the OLAP Product include the
following, all as modified to work with and through the RSI.
a. SHOWCASE STRATEGY DB2 OLAP Server
1.) General description: STRATEGY DB2 OLAP Server is an
enterprise-scale on-line analytical processing system designed
for a wide-range of multidimensional reporting and analysis
applications. The STRATEGY DB2/ OLAP server is based on the
Hyperion Essbase OLAP server with the integrated
multidimensional data store of Hyperion Essbase replaced with
IBM's Relational Storage Interface (RSI). The relational
storage interface enables the STRATEGY DB2 OLAP Server to
store data directly in IBM DB2 and other relational databases.
The STRATEGY DB2 OLAP Server utilizes the Hyperion Essbase
OLAP engine for data access, navigation, application
programming interfaces (APIs), application design and
management and data calculation. However, while Hyperion
Essbase stores data in a specialized multidimensional data
store, STRATEGY DB2 OLAP Server stores data in a relational
database management system using a star schema data structure.
Thus, STRATEGY DB2 OLAP Server provides the capacity of
industry leading relational databases, and can be managed by
familiar RDBMS systems management, backup, and recovery tools.
It also offers the advantage of providing access to data in
the star schema using standard SQL. The requirement for an
underlying relational database also means that the STRATEGY
DB2 OLAP Server leverages the existing skills of information
technology professionals.
2.) Documentation: Softcopy
3.) Format: Object Code
4.) Documentation: on-line documentation, and related printed
documentation.
Note: Online documentation and the printed Essbase documentation set are
provided and maintained by Hyperion (AppSource) .
b. SHOWCASE STRATEGY DB2 OLAP Server Partitioning
1.) General description: Strategy DB2 OLAP Server Partitioning is
a collection of features that makes it easy to design and
administer databases that span Strategy DB2 OLAP Server
applications or servers. Partitioning can affect the
performance and scalability of Essbase/400 applications and
provides more effective response to organizational demands,
reduced calculation time, increased reliability and
availability and incorporation of detail and dimensionality.
Partitioning can help users to:
a.) Synchronize the data in multiple partitioned
databases. Strategy DB2 OLAP Server tracks changes
made to values in a partition and provides tools for
updating the data values in related partitions.
b.) Synchronize the outlines of multiple partitioned
databases. Strategy DB2 OLAP Server tracks changes
made to the outlines of partitioned databases and
provides tools for updating related outlines.
c.) Allow users to navigate between databases with
differing dimensionality. When users drill across to
the new database, they can drill down to more
detailed data.
2.) Documentation: Soft copy and hard copy
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3.) Format: Object Code
4.) Documentation: Online documentation printed Essbase
documentation set, and related printed documentation created
with Microsoft Word 97.
Note: Online documentation and the printed Essbase documentation set are
provided and maintained by Hyperion (AppSource) .
c. SHOWCASE STRATEGY DB2 OLAP Server Currency Conversion
1.) General description: Strategy DB2 OLAP Server Currency
Conversion is an option designed to help multinational
companies that conduct business in the local currency of the
countries in which they operate. Strategy DB2 OLAP Server
Currency Conversion enables such companies to convert data
entered in the local currency of various countries to a common
currency that is used by the world and regional headquarters
for consolidation and analysis. Any exchange rate scenario can
be modeled and users can even perform ad hoc currency
conversions of data directly from their spreadsheets.
2.) Documentation: Soft copy and hard copy
3.) Format: Object Code
4.) Documentation: Online documentation, printed Essbase
documentation set and related printed documentation created
with Microsoft Word 97.
Note: Online documentation and the printed Essbase documentation set are
provided and maintained by Hyperion (AppSource) .
d. SHOWCASE STRATEGY DB2 OLAP Server SQL Drill Through
1.) General description - Strategy DB2 OLAP Server SQL Drill
Through provides right linking between summary data residing
in an Essbase/400 multidimensional database and detail data
residing in the relational store for either the OLTP or data
warehouse repository. Using SQL Drill Through, users can
automatically create an SQL query that retrieves the detail
data that corresponds to a specific data call residing in the
Strategy DB2 OLAP Server. The combination yields a powerful
and full-featured analytical environment.
2.) Documentation: Soft copy and hard copy
3.) Format: Object Code
4.) Documentation: Online documentation, printed Essbase
documentation set and related printed documentation created
with Microsoft Word 97.
Note: Online documentation and the printed Essbase documentation set are
provided and maintained by Hyperion (AppSource) .
e. SHOWCASE STRATEGY DB2 OLAP Server Spreadsheet Toolkit
1.) General description: The Strategy DB2 OLAP Sever Spreadsheet
Toolkit includes more than 20 macro and VBA functions that let
users build customized Microsoft Excel or Lotus 1-2-3
applications that incorporate Essbase/400 commands. Commands
such as EssCascade, EssConnect, and EssDisconnect provide all
of the functionality of their corresponding Essbase/400 menu
commands and allow companies to easily customize the Strategy
DB2 OLAP Server to meet their particular business needs.
2.) Documentation: Softcopy and hardcopy
3.) Format: Object Code
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4.) Documentation: Online documentation, printed Essbase
documentation set, and related printed documentation created
with Microsoft Word 97.
Note: Online documentation and the printed Essbase documentation set are
provided and maintained by Hyperion (AppSource)
f. OLAP Server Application Programming Interface (API)
1.) General description - Hyperion Essbase API lets you use
standard tools to create custom Hyperion Essbase application
that take advantage of the robust data storage, retrieval, and
analytical capabilities of the DB2 OLAP Server. The API
supports C, C++, and other application development
environments.
2.) Documentation: Soft copy and hard copy
3.) Format: Object Code
4.) Documentation: Online documentation, printed Essbase
documentation set, and related printed documentation created
with Microsoft Word 97.
Note: Online documentation and the printed Essbase documentation set are
provided and maintained by Hyperion (AppSource) .
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DESCRIPTION OF LICENSED WORK #002
1.0GENERAL DESCRIPTION OF LICENSED WORK: STRATEGY VW PRODUCT
The Licensed Works to be part of the VW Product include the following:
a. SHOWCASE STRATEGY Warehouse Manager
1.) General description: Warehouse Manager is the integrated solution to
controlling and managing a data warehouse. It consists of both AS/400
server and PC client software. Warehouse Manager provides the
following software for managing a data warehouse:
a.) Warehouse Manager server is the foundation of SHOWCASE STRATEGY
and includes patented technology for managing SHOWCASE STRATEGY's
data warehousing environment on the AS/400. It provides APPC and
TCP/IP support and the interface to many OS/400 features.
Specifically, Warehouse Manager server allows end users to work
with unique AS/400 data structures such as date fields, edit
codes, IDDU files, or other DDS structures found in a database,
and also allows users to import existing Query/400 applications
into various SHOWCASE STRATEGY products. Warehouse Manager also
provides support for third party data dictionaries such as the
classic J.D. Edwards interactive data dictionary. In addition,
Warehouse Manager goes beyond other ODBC connections to the
AS/400 in choosing how a query is processed on the AS/400, thus
optimizing query performance.
b.) Alias Manager allows administrators to assign metadata (alias
names) to DB2/400 objects, making it easier for users to
understand and find data in complicated AS/400 databases.
c.) License Manager enables administrators to authorize who can use
SHOWCASE STRATEGY desktop applications and to administer
passwords for SHOWCASE STRATEGY. While SHOWCASE STRATEGY products
can be installed on any desktop, License Manager is the tool that
gives administrators control over who can use the products to
access or manage databases.
d.) Resource Manager enables administrators to control AS/400 usage.
It provides administrators with the capability to administer
which users or groups of users can run against the system
interactively or who must use the AS/400 batch subsystem when
accessing the database. Additionally, it provides the capability
to prevent runaway query jobs on the AS/400.
e.) Security Manager enables administrators to enhance existing
AS/400 security. It enables administrators to secure data at the
collection, table/view, column, and row level by user or by
groups of users without affecting applications already using
AS/400 security.
2.) documentation: Softcopy
3.) format: Object Code
4.) documentation: Online documentation created with Microsoft Word 95 and
RoboHelp 5.0, related printed documentation created with Microsoft
Word 97.
b. SHOWCASE STRATEGY Data View Manager
1.) General description: Data View Manager enables administrators or
business analysts to create a simplified view of any AS/400 database,
whether it's used for transaction processing or analysis. The
simplified view is saved on the AS/400 as a data view and insulates
end users from complex query tasks such as defining table join
criteria, building frequently used result columns, and summarizing
detail data. In fact, administrators or business analysts can use data
views to remove unnecessary columns of data from view, build
frequently-used Sub-SELECT support, and define understandable column
names. Once created, a data view can be used in several SHOWCASE
STRATEGY products, including Warehouse Builder, Query, Report Writer,
and Analyzer Data Modeler. A data view can even be used in Data View
Manager as the basis for another data view. The net result is that
administrators and/or business analysts can create an easy-to-use
relational data warehouse and potentially improve query and reporting
performance by ensuring that data is accessed correctly.
2.) documentation: Softcopy
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3.) format: Object Code
4.) documentation: Online documentation created with Microsoft Word 95 and
RoboHelp 5.0, related printed documentation created with Microsoft
Word 97.
c. SHOWCASE STRATEGY Warehouse Builder
1.) General description: Warehouse Builder is a powerful data
transformation product that allows users to convert data into
meaningful information within a relational data warehouse.
Specifically, Warehouse Builder has the power to transform and
simplify data as it is being moved. It can cleanse data to make it
more understandable to end users, summarize data at the time of
transfer, and track transaction history information. Additionally,
Warehouse Builder can automatically populate Essbase/400
multidimensional databases, apply load rules, initiate calculations,
and run Essbase/400 routines such as SQL data loads and dimension
builds. These direct links to Essbase/400 simplify and speed up the
creation of the multidimensional portion of a data warehouse.
2.) Documentation: Softcopy
3.) Format: Object Code
4.) Documentation: Online documentation created with Microsoft Word 95 and
RoboHelp 5.0, related printed documentation created with Microsoft
Word 97.
d. SHOWCASE STRATEGY Analyzer
1.) General description: Analyzer is a powerful tool that provides
seamless access to Essbase/400 databases and the ability to drill
through the consolidated information in an Essbase/400 database to
underlying detail data stored in relational databases. Analyzer's
various analysis functions include the ability to pivot, rank, filter,
sort, and apply traffic lighting to information. Users can view data
in a spreadsheet or a chart, and link numerous spreadsheets and charts
together to provide a logical, speed-of-thought path through corporate
information. In addition, Analyzer provides the tools necessary to
create pinboards and forms in which to display data. Its advanced
features include the ability to update data in Essbase/400 databases
(if users have the proper authority), thereby allowing users to
conduct "what if" analysis and work with budgeting applications. The
result is an application that uniquely empowers businesses to leverage
the wealth of information in their data warehouse by spotting
opportunities, pinpointing and resolving problems, and more.
2.) Documentation: Softcopy
3.) Format: Object Code
4.) Documentation: Online documentation created with Microsoft Word 95 and
RoboHelp 5.0, related printed documentation created with Microsoft
Word 97.
e. SHOWCASE STRATEGY Analyzer for the Web
1.) General description: Analyzer for the Web is a "thin" version of
Analyzer that allows users to conduct basic data analysis tasks via a
corporate intranet or extranet. Analyzer for the Web is built in the
powerful Java programming language. Therefore, users can run Analyzer
for the Web from within inexpensive and popular Java-enabled web
browsers such as Microsoft Internet Explorer and Netscape Navigator.
This architecture, combined with the fact that Analyzer for the Web
features an interface that is very similar to Analyzer's, enables
companies to eliminate the overhead of supporting and training users
on different software for in-house and remote data analysis.
2.) Documentation: Softcopy
3.) Format: Object Code
4.) Documentation: Online documentation is in the form of HTML pages.
Related printed documentation is created with Microsoft Word 97.
Note: Source online documentation files are provided and maintained by Hyperion
(AppSource) Corp.
f. SHOWCASE STRATEGY Analyzer OLAP Server
1.) General description: Analyzer OLAP Server is used for reading and
writing Analyzer, Analyzer Designer and Analyzer Data Modeler system
database files. All system database files reside on the AS/400 and are
administered through SHOWCASE STRATEGY's Warehouse Manager client
software. Access to the Analyzer OLAP Server is controlled through
AS/400 user profiles defined in Warehouse Manager. Users log in to
Analyzer with their AS/400 user ID and password. The same AS/400 user
ID and password is automatically passed to the Essbase/400 server when
the user logs in to Essbase/400.This simplification means
administrators have fewer profiles and user IDs to administer and end
users have fewer IDs and passwords to keep track of.
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2.) documentation: Softcopy
3.) format: Object Code
4.) documentation: Online documentation created with Microsoft Word 95 and
RoboHelp 5.0, related printed documentation created with Microsoft
Word 97.
g. SHOWCASE STRATEGY Query
1.) General description: Query enables users to quickly and easily access
their relational data for simple ad-hoc data analysis. It allows users
to incorporate result columns, run-time prompts, and complex
expressions into their queries and also provides a performance
analyzer that helps users to tune their queries for optimal
performance. In addition, Query includes Microsoft Excel and Lotus
1-2-3 add-ins that allow users to bring AS/400 data directly into
their formatted spreadsheets. Then, each time users open those
spreadsheets, they have the Option of refreshing them with the latest
information from their databases.
2.) Documentation: Softcopy
3.) Format: Object Code
4.) Documentation: Online documentation created with Microsoft Word 95 and
RoboHelp 5.0, related printed documentation created with Microsoft
Word 97.
h. SHOWCASE STRATEGY Report Writer
1.) General description: Report Writer takes Query's powerful data-access
capabilities and extends them to enable users to convert AS/400 data
into powerful reports that include headers, footers, crosstabs,
images, graphics, and much more. It offers a powerful macro language
that can be used to create complex reports and various report objects,
such as derived fields. Additionally, Report Writer provides end users
with pre-formatted style sheets to use as standard report templates.
This saves the user time in report formatting by enabling them to
simply apply a style sheet to selected AS/400 data.
2.) Documentation: Softcopy
3.) Format: Object Code
4.) Documentation: Online documentation created with Microsoft Word 95 and
RoboHelp 5.0, related printed documentation created with Microsoft
Word 97.
i. Other
1.) General description: This category represents miscellaneous SHOWCASE
STRATEGY software and documentation that is required to deliver a
complete solution. Examples include:
a.) client and host installation and setup software and documentation
b.) product tutorials and sample files
c.) sample database files
2.) Documentation: Softcopy
3.) Format: Object Code
4.) Documentation: Online client documentation created with Microsoft Word
95 and RoboHelp 5.0, online host documentation, and related printed
documentation created with Microsoft Word 97.
Note: Some sample files and demo database files are provided and maintained by
Hyperion (AppSource).
j. Metadata integration and VWP processing:
1.) General description:
Using the templates provided by Visual Warehouse (VW), construct the business
views and source/target definitions that VW can manage. This process includes
the reading of the VW templates, filling in the information required with
metadata from the SHOWCASE STRATEGY Warehouse Builder. The information required
includes:
a.) The definition of the source data being manipulated/extracted by
SHOWCASE STRATEGY Warehouse Builder (Source Information Resource
in VW terms).
b.) The definition of the target data being produced by SHOWCASE
STRATEGY Warehouse Builder (Target Information Resource in VW
terms).
c.) The definitions of the process applied to the source data to
produce the target data (Business Views in VW terms).
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d.) The definition of the applications that will execute the SHOWCASE
scripts (VWPs in Visual Warehouse terms).
e.) The definition of the process flows (business view cascade in VW
terms).
Creation of the Visual Warehouse programs that will execute the
SHOWCASE scripts on the OS platform that the scripts were written for.
All of the above must work with Visual Warehouse V5.2 with latest CSD
2.) documentation soft-copy
3.) format: Object Code
4.) documentation: end-user documentation, on-line documentation, and
other related written materials
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ATTACHMENT
IBM Acceptance Criteria
Prior to IBM's acceptance of SHOWCASE's version of the Licensed Works, the
execution of SHOWCASE's tests must have been successfully demonstrated and
documented by SHOWCASE.
Prior to the start of acceptance test at IBM for each Licensed Work, all
SHOWCASE Deliverables for that Licensed Work (including executables, manuals,
online help and messages) must be available. IBM's acceptance test of the
Licensed Work as documented below initially targets the Visual Warehouse/400
package, followed by DB2 OLAP Server/400 and Visual Warehouse for NT (IBM
Product) driving the integration points with Visual Warehouse/400 and the DB2
OLAP Server/400.
A. VISUAL WAREHOUSE/400
1.0 Installation and Configuration
1. Installation
Installation procedures for the Licensed Works will be followed as provided
in the SHOWCASE documentation. Install tests will be performed, by IBM,
using all pre-requisite levels of OS/400 and NT operating systems. US
English configurations will initially be tested, followed by non-English
configurations to demonstrate NLS (SBCS, DBCS) enablement and install.
IBM will run installation verification programs (IVP), according to
documentation, to demonstrate successful installation of the "Licensed
Works" on the AS/400 platform. No network configuration will be involved in
the install test. SHOWCASE will provide their regression test to IBM as a
foundation for IVP.
2. Configuration
Native and network configurations will be tested to demonstrate the
operation of Visual Warehouse/400 (native), as well as Visual Warehouse/NT
(IPCS card) as enterprise warehouse manager for Visual Warehouse/400.
Following the directions in the documentation, Visual Warehouse/400 will be
configured for native operation, as well as to interact with Visual
Warehouse/NT. TCP/IP will be the protocol used for establishing the
connection between the servers. Due to firewall restrictions,
configurations with proxy server(s) may not be tested.
Execute the IVP to demonstrate successful installation and running of
Visual Warehouse/400 Manager, Report Writer, and Analyzer Server.
Various installation and configuration error scenarios will be tested to
ensure proper operation of exception handling routines, error messages to
log, end-user notifications, and documented Help to guide problem
resolution.
3. Migration and Coexistence
Following the directions in the SHOWCASE supplied documentation, IBM will
write and test the documentation (for the enterprise model) that describes
how Visual Warehouse/400 can be configured to connect to Visual
Warehouse/NT server. (Phase II)
Ensure access to local AS/400 Agent can be established from Visual
Warehouse/NT. This access will be used for data access and write from/to
AS/400 based data sources
4. Removal
Verify the "un-install" of Visual Warehouse/400 per supplied documentation.
2.0 Information
Visual inspection will be done to ensure the "Licensed Works" information
is complete; all program functions are completely described; all ordinary
publication component content (such as the table of contents, index,
appendices, and so on) exist; all information categories (book, online
help, messages) exist in their final form; and that all graphics are
provided and do not require re-work.
1. Information usability test
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Tests will be conducted to evaluate the usability of Visual Warehouse/400
information. Assumption is that there are no cross-platform components
(e.g. MVS, OS/2, NT) with the "Licensed Works".
Test start: No components installed. Product prerequisites are installed
and available.
Test end: Visual Warehouse/400 components are installed, configured, and
operational. Basic source/target mapping tasks are done, scripts to
extract, transform, and copy data (equivalent of Visual Warehouse/NT
Business Views) can be created, and a small set of relational (and
non-relational in the Enterprise model) can be moved from local and remote
data sources to local DB2/400.
2. Information usability test success criteria (5-point rating from 1 (very
unsat.) to 5 (very sat.)):
a. Success: testers successfully complete all tasks required to get to
"test end".
b. Satisfactory or very satisfactory ratings for online help.
c. Satisfactory or very satisfactory overall ratings for all
documentation.
d. Satisfactory or very satisfactory ratings for the end-user interface,
sample administration and warehousing operation, by testers, using
sample data. This rating includes the installation interface.
3.0 National Language Support
1. Run National Language Support (NLS) and localization tests, per supplied
documentation and supplied sample data. National language versions of the
"Licensed Works" include English, French, German, Italian, Japanese, and
other language versions when available.
2. IBM will report any significant deviations from IBM's Designing
International Software (6X09-1220) document or guidelines to SHOWCASE for
response/resolution.
4.0 Year 2000 Support
Licensed Works will be tested for ability to handle date values beyond Year
2000 and dates in and between the 20th and 21st centuries.
5.0 Performance, Scalability, and Reliability
It is understood that all statements related to performance, scalability
and reliability as provided in this section are reasonably believed
estimates that can only be verified after tests are performed at IBM
facilities. Reliability is to be demonstrated by running tests without
incident from the existing Visual Warehouse/NT testcase stores modified for
Visual Warehouse/400. These include but are not limited to: Regression
tests that involve single data source to target mappings, multiple data
source to target mappings, where data sources include data from DB2,
Oracle, and other (enterprise model supported) data sources on AS/400 and
non-AS/400 platforms to DB2/400. Testcases will be expanded to include
multiple IMS and VSAM data sources on an MVS platform. Visual Warehouse/NT
reasonably supports 50 concurrent users, and allows cascading business
views up to 35 levels, without catastrophic (e.g., APAR Severity Level 1)
incidents. Visual Warehouse/400 needs to meet, or surpass, this level of
scalability. Concurrency and code quality are focus acceptance items in
this test. This test will be based on the test buckets described above. In
order for the above tests to be successful, IBM will obtain a reasonable
amount of assistance from SHOWCASE personnel for the configuration and
deployment of the Product components. IBM and SHOWCASE will negotiate the
required assistance on Product documentation. IBM will provide an
environment that has the necessary capacity to perform this test. This
includes, but is not limited to:
An AS/400 environment that has enough resources to support 50
concurrent users. These resources include enough MIPS, real storage,
and virtual storage to support 50 concurrent users. The TCP/IP
sub-system must be properly configured to support the expected number
of concurrent users.
Performance Expectations:
Tests will measure both the throughput and elapsed time for the result
sets from various warehousing scenarios to be committed in the target
DB2/400 database. Session establishment time will not be included in
these performance tests.
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IBM must provide an infrastructure that allows these tests to be successful.
Assuming that IBM has provided an environment to support 50 concurrent users and
that the code quality test has been completed successfully, the query
performance objective may not be met without additional tuning/infrastructure
changes.
6.0 New Function
The Product must perform to specifications as documented in SHOWCASE
documentation supplied to IBM. Tests will be run to test enhancements and new
functions. The list below itemizes the areas to be tested, but testing is not
necessarily limited to these functions:
1. Multi-user operation as described in scalability section above;
2. Performance related functions to be verified as described in performance
section above;
3. Use of any system exit routines for accounting, access validation,
debugging, and performance monitoring; and
4. Security and authentication testing of multi-user data servers.
7.0 CUPRIMDSO Measurements
1. Will be measured throughout the Beta program.
2. No Severity-1 problem remains open at Beta Program start. SHOWCASE will
also have bypasses available for all Severity-2 problems including a plan
to resolve within 2 weeks after Beta start.
3. Satisfaction level at the end of the program must be: Very satisfied or
Satisfied.
B. DB2 OLAP/400 SERVER
1.0 Installation and Configuration
1. Installation
Installation procedures for the Licensed Work will be followed as provided
in the SHOWCASE documentation. Install tests will be performed, at the
discretion of IBM, using all pre-requisite levels of OS/400 and NT
operating systems. US English configurations will initially be tested,
followed by non-English configurations to demonstrate NLS (SBCS, DBCS)
enablement and install.
IBM may, at its discretion, also run installation verification programs
(IVP), according to documentation, to demonstrate successful installation
of the "Licensed Works" on the AS/400 platform.
2. Configuration
Network configurations, using TCP/IP, will be tested to demonstrate the
inter-operability of the DB2 OLAP/400 Server with:
1.) the ESSBASE Application Manager and ESSCMD on a non-AS/400 operating
platform (IBM prefers that WinNT be used.)
2.) the SQL Interface for loading DB2 relational data from a local
DB2/400, remote DB2/400, DB2/390 and DB2/UDB on AIX.
Various installation and configuration error scenarios must be tested to
ensure proper operation of exception handling routines, error messages to
log, end-user notifications, and documented Help to guide problem
resolution.
3. Removal
Verify the "un-install" of the DB2 OLAP/400 Server per supplied
documentation.
2.0 Information
SHOWCASE will provide IBM with all SHOWCASE STRATEGY product documentation.
Such information to include all program functions completely described; all
ordinary publication component content (such as the
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table of contents, index, appendices, and so on); all information
categories (book, on-line help, messages) in their final form; and all
graphics which will not require re-work. If IBM needs to create any
additional documents, IBM will create this work but may reuse SHOWCASE
documentation as necessary.
3.0 National Language Support
1. Run National Language Support (NLS) and localization tests, per supplied
documentation and supplied sample data. National language versions of the
DB2 OLAP/400 server include English, French, German, Italian, Japanese, and
other language versions when available.
2. SHOWCASE must follow IBM's Designing International Software (6XO9-1220)
document or guidelines and report to IBM any deviation for follow-up
response/resolution.
4.0 Year 2000 Support
DB2 OLAP/400 must be shown to have the ability to handle date values beyond
Year 2000 and dates in and between the 20th and 21st centuries.
5.0 Performance, Scalability, and Reliability
1. Reliability Expectations:
a. Reliability is to be demonstrated by running without incident the
existing Hyperion ESSBASE tests suite. These tests can be found on a
CD from Hyperion under the directory REGRESS. These tests cover server
as well as client testing. Most of the server tests run directly on
the server, although there are some client-side tests whose purpose is
to test the server. Therefore, in order to do complete server testing,
there are tests to be run from both the server and the client.
b. The tests include the Basic and Extended Acceptance test suite
(SACCEPT) as well as the Basic Regression test suite (CALCS, CONTROL,
DATALOAD, DIMLOAD, LOGS, MULTCUBE, OUTLINES, REPORTS, and VIRTUAL).
c. Concurrence and code quality are focus acceptance items in this
test. This test will be based on the test buckets described above. At
IBM's discretion, some or all of the above may also be run by IBM. In
such a case, IBM will obtain a reasonable amount of assistance from
SHOWCASE personnel for the configuration and deployment of the Product
components. IBM and SHOWCASE will negotiate the required assistance on
Product documentation.
d. The AS/400 version of the Hyperion Test suites will be provided to
IBM by SHOWCASE.
2. Performance Expectations:
Using the OLAP Council's APB1 Benchmark, APB1 metrics will be collected by
SHOWCASE for both the DB2 OLAP/400 Server and Essbase/400. The difference
between the performance metrics of the two servers on the AS 400 platform
will be a similar ratio as that experienced between the native Essbase and
the DB2 OLAP server on other platforms to constitute successful performance
exit criteria.
6.0 CUPRIMDSO Measurements
1. Will be measured throughout the Beta program.
2. No Severity-1 problem remains open at Beta Program start. SHOWCASE will
also have bypasses available for all Severity-2 problems including a plan
to resolve within 2 weeks after Beta start.
3. Satisfaction level at the end of the program must be: Very satisfied or
Satisfied.
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License Agreement
ATTACHMENT
ROYALTIES
Royalty
-------
US EMEA AP LA
-- ---- -- --
Analyzer
(*) (*)
DB2 OLAP for OS/400
(*) (*)
Warehouse Builder
(*) (*)
Warehouse Manager
(*) (*)
Report Writer
(*) (*)
Entry Level
(*) (*)
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
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December 9, 1998
License Agreement
Royalty on Software Subscription
--------------------- ---------------------------
1 year 2 years
--------------------- ---------------------------
US EMEA AP LA US EMEA AP LA
Analyzer
- ------------------------------------------- ---------------------------
(*) (*) (*)
DB2 OLAP for OS/400
(*) (*) (*)
Warehouse Builder
(*) (*) (*)
Warehouse Manager
(*) (*) (*)
Report Writer
(*) (*) (*)
Entry Level
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
(*) (*) (*)
- -----------------------------------------------------------------------
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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December 9, 1998
License Agreement
ATTACHMENT
Schedule
Milestones Date
---------- ----
a. Execution of this Agreement (*)
b. SHOWCASE's delivery of the RSI OS/400 ported Source Code (*)
c. SHOWCASE's delivery of the Licensed Works in DLW (*)
#001 which substantially complies with its specifications
d. SHOWCASE's delivery of the Licensed Works in DLW (*)
#002 which substantially complies with its specifications
e. Successful completion of IBM's testing of the Licensed Work (*)
for DLW # 001
f. Successful completion of IBM's testing of the Licensed Work (*)
for DLW #002
g. Receipt of the completed Certificate of Originality for the (*)
Licensed Work for DLW #001
h. Receipt of the completed Certificate of Originality for the (*)
Licensed Work for DLW #002
Planned start of beta customer test for DLW #001
Planned start of beta customer test for DLW #002
NOTE: SHOWCASE will need up to (*) business days to prepare and deliver the code
for the port of RSI to the OLAP server product from the date IBM delivers RSI
Source Code - this could impact b, c, e, g, and i above.
This schedule is for planning purposes and may be changed upon mutual agreement
of the parties.
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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ATTACHMENT
TESTING, MAINTENANCE AND SUPPORT
1.0 Definitions
Capitalized terms in this Attachment have the following meanings.
1.1 APAR is the completed form entitled "Authorized Program Analysis Report"
that is used to report suspected Code or documentation errors, and to request
their correction.
1.2 APAR Closing Codes are the established set of codes used to denote the final
resolution of an APAR. IBM will identify APAR Closing Codes prior to the start
of the maintenance obligations.
1.3 APAR Severity Levels are designations assigned by IBM to errors to indicate
the seriousness of the error based on the impact that the error has on the
customer's operation:
a. Severity 1 is a critical problem. The customer cannot use the Product or
there is a critical impact on the customer's operations which requires an
immediate solution;
b. Severity 2 is a major problem. The customer can use the Product, but an
important function is not available or the customer's operations are
severely impacted;
c. Severity 3 is a non-critical problem. The customer can use the Product
with some functional restrictions, but it does not have a severe or
critical impact on the customer's operations;
d. Severity 4 is a minor problem that is not significant to the customer's
operations. The customer may be able to circumvent the problem.
1.4 APAR Correction Times are the objectives that SHOWCASE must achieve for the
resolution of errors and distribution of the correction to IBM.
a. "Severity 1" requires maximum effort support until an emergency fix or
bypass is developed and available for shipment to IBM. Critical situations
may require customer, IBM and SHOWCASE personnel to be at their respective
work locations or available on an around- the-clock basis. The objective
will be to provide relief to the customer within 24 hours and provide a
final solution or fix within 7 days;
b. "Severity 2" on a best effort basis, be resolved (i.e. fixed or
bypassed) within ten (10) calendar days;
c. "Severity 3" on a best effort basis, be resolved (i.e. fixed or
bypassed) within fifteen (15) calendar days;
d. "Severity 4" on a best effort basis, be resolved (i.e. fixed or
bypassed) within twenty eight (28) calendar days.
The calendar days begin when SHOWCASE creates the APAR and supporting
documentation and end when the Error Correction or other resolution is shipped
to IBM. IBM will consider exceptions from these objectives when warranted by
technical or business considerations.
1.5 Developer Test Systems are an appropriate configuration of installed
hardware and software that SHOWCASE maintains which is representative of typical
customer installations for the Product. These Developer Test Systems will
contain, at a minimum, the following:
a. the current and current minus 1 level of the Product;
b. the current and current minus 1 level of the prerequisite/co-requisite
hardware and software that IBM specifies to SHOWCASE; and
c. specific fix-packs as required.
The Developer Test Systems will consist of the appropriate configured
workstations only unless IBM specifies and provides SHOWCASE other equipment at
no charge.
1.6 IBM Test Systems are an appropriate configuration of installed hardware and
software that IBM maintains which is representative of typical IBM customer
installations using the Product. These test systems will contain, at a minimum,
a level of prerequisite/co-requisite hardware and software that is correspondent
with that of the Developer Test Systems.
1.7 Maintenance Level Service is the service provided when a customer identifies
an error.
a. Level 0 is the service provided on the phone with a customer when the
customer first reports a problem or issue.
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License Agreement
b. Level 1 is the service provided in response to the customer's initial
phone call identifying an error.
c. Level 2 is the service provided to reproduce an attempt to correct the
error or to find that the service provider cannot reproduce the error.
d. Level 3 is the service provided to isolate the error at the component
level of the Code. The service provider distributes the Error Correction or
circumvention or gives notice if no Error Correction or circumvention is
found.
1.8 Problem Determination is the process of determining whether a problem is
being caused by hardware, software or documentation.
1.9 Problem Management Record ("PMR") is a record created when a customer makes
the initial support request. This record becomes a part of the Problem
Management System database and records the essential information about the
customer question or problem.
1.10 Problem Management System ("PMS") is an internal IBM developed software
system used to record customer demographic information and encode data about the
reported question or problem. The PMS will contain call records and document
call activity, including the recording and tracking of all questions and
problems to final resolution. The PMS can be used to verify that each customer
is "entitled" to program support.
1.11 Problem Source Identification is the process of determining which software
or documentation component is failing or attributing the failure to some
external cause such as a customer error or no trouble found.
1.12 Reader Comment Form ("RCF") is the form which is used to record errors and
comments on the documentation. The RCF is generally the last page of a manual or
brochure. The customer completes it and mails it to the address specified.
2.0 Maintenance and Support Responsibilities
2.1 The parties will agree to the specific details of the process flow each will
follow to resolve customer calls for requests for support 30 days prior to the
general availability of the Product.
2.2 SHOWCASE will provide IBM electronic (soft copy) information on any known
problems in the Licensed Work and the work arounds and solutions, if available,
within 30 days of the Effective Date of this Agreement.
2.3 Product customers will initiate requests for support by contacting IBM. IBM
will perform the following maintenance Level 0 support responsibilities, as
described below. IBM will:
a. ensure customer entitlement;
b. create the PMR; and
c. obtain from the customer a description of the problem.
SHOWCASE will perform the following Level 1 support responsibilities to verify
its severity:.
d. search the IBM and SHOWCASE databases for known problems;
e. provide the available resolution to the customer if the problem is
known;
f. recommend local IBM assistance as required;
g. If no resolution, pass the PMR to Level 2; and
h. update the PMR, documenting Level 1 actions.
IBM will be the initial customer contact point for questions, problems and
assistance concerning the Product. IBM may use a third party to perform its
obligations.
2.4 Thirty days prior to general availability of the Product, SHOWCASE will
establish a process to check incoming electronic requests for Level 1, Level 2,
and Level 3 support at least twice daily. 2.5 SHOWCASE will perform the
following Level 2 and Level 3 support responsibilities.
a. Level 2 SHOWCASE will:
1.) receive the PMR from Level 1;
2.) analyze problem symptoms and gather additional data from the customer as
required;
3.) recreate the problem on the Developer Test System;
4.) determine if the error is due to improper installation of the Product by
the customer;
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December 9, 1998
License Agreement
5.) determine if the suspected error is due to prerequisite or operationally
related equipment or software at the customer location;
6.) attempt a bypass or circumvention for high impact problems, i.e., Severity
1 and 2;
7.) if no resolution and the problem appears to be a newly discovered Code or
documentation error, create an APAR record; and
8.) update the PMR, documenting Level 2 actions.
b. Level 3 SHOWCASE will:
1.) receive the APAR/PMR and supporting documentation and materials;
2.) analyze the problem symptoms and diagnose the suspected error;
3.) notify Level 2 if additional information, materials or documentation are
required;
4.) attempt to recreate the problem on the Developer Test System, if required;
5.) assist in Level 2 in attempting to develop a bypass or circumvention for
high impact problems, e.g., Severity 1 and 2;
6.) determine if Error Corrections are required to the Licensed Work;
7.) if Error Corrections are required to the Licensed Work, provide Error
Corrections to IBM in the format specified by IBM;
8.) return all APARs to IBM with one of the defined APAR Closing Codes
assigned, including text describing the resolution of the error. In the
event a Code error was found, provide the rationale for the closing of the
APAR;
9.) provide resolution to APARs according to the assigned APAR Severity Level
and within the defined APAR Correction Time. The APAR Correction Times
include building, testing, certifying successful tests of Error
Corrections, and packaging for shipment to IBM any applicable Error
Corrections in the format specified by IBM;
10.) receive technical questions, and supporting documentation and materials;
11.) analyze the technical questions and provide answers to IBM;
12.) provide technical backup support to IBM on the Product as provided above.
In addition, SHOWCASE will provide assistance in answering questions that
may arise concerning the operation and use of the Licensed Work that cannot
be resolved by IBM; and
13.) close out the problem record with the customer.
2.6 At least twice a year, SHOWCASE will provide a corrected version of the
Licensed Work that includes all Error Corrections to the Licensed Work.
Additional corrected versions of the Licensed Work will be provided as
determined and mutually agreed to by IBM and SHOWCASE in the event they become
necessary due to the frequency or severity of newly discovered defects. In order
to provide Error Corrections, SHOWCASE will maintain a current copy of the
Product.
2.7 SHOWCASE will maintain procedures to ensure that new Error Corrections are
compatible with previous Error Corrections.
2.8 Packaging of Error Corrections and migration Code will be done as mutually
agreed to by IBM and SHOWCASE.
3.0 RETAIN Access and APAR Management
3.1 IBM will provide SHOWCASE with access to IBM's RETAIN system (IBM's system
used to manage and process PMRs and APARs) as necessary for SHOWCASE to perform
its Maintenance and Support obligations as required in this Agreement. Thirty
(30) days prior to general availability of the Licensed Works, SHOWCASE will
establish a process to check PMR activity on the IBM RETAIN system during normal
business hours and provide IBM with a number to call for offshift hours. IBM
will provide sign-on IDs for the IBM RETAIN system. SHOWCASE will be responsible
for the connection to the IBM network and all hardware and software used to
connect and communicate with the IBM RETAIN system. SHOWCASE will be responsible
for any charges or expenses relating to the hookup and network charges for
accessing the system.
3.2 Generally, APARs will originate from IBM customers reporting problems or
sending in Reader Comment Forms. SHOWCASE will also report to IBM as APARs all
valid errors discovered by SHOWCASE
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License Agreement
or SHOWCASE's customers. After receiving an APAR, IBM will assign an APAR number
and Severity Level, and forward the APAR to SHOWCASE for action.
3.3 For verified APARs for the Licensed Work, SHOWCASE will provide Error
Corrections as set out below within the applicable APAR Correction Times:
a. the fix to the Object Code in machine-readable form including a hard
copy description of the Error Corrections (which may include a paper
submission of the Error Corrections);
b. the Error Corrections to the Source Code in machine-readable form that
corresponds to the Object Code Error Corrections; and
c. for a procedural workaround, the corrected procedure in machine-readable
form.
3.4 Reader Comment Forms received by IBM that do not form the basis of an APAR
will be forwarded to SHOWCASE for proper and prompt handling as appropriate.
4.0 General
4.1 SHOWCASE will provide to IBM the name and phone numbers of SHOWCASE's
personnel to contact when high priority problems are encountered outside of
normal working hours that require immediate assistance. SHOWCASE's normal
working hours are defined as 8:30 AM to 5:00 PM, Monday through Friday, Central
Time.
4.2 SHOWCASE will provide to IBM, on request, information regarding the status
of reported APARs related to the Licensed Work.
4.3 It is desirable that IBM report APARs and status requests to SHOWCASE via an
electronic interface and that SHOWCASE send APAR Error Corrections, status
updates and requests for additional documentation to IBM via the same interface.
IBM and SHOWCASE will jointly plan the electronic system. Each party is
responsible for funding the costs of this interface at its location.
4.4 Critical situations may require the parties to use the telephone for
immediate communications. The parties will follow such communications via the
electronic interface for tracking and recording purposes. Each party is
responsible for funding the costs of this communication at its location.
4.5 In circumstances where materials have to be exchanged using facsimile or
courier services, each party is responsible for funding the costs of these
exchanges via facsimile or courier services at its location.
4.6 SHOWCASE will participate in monthly telephone conference calls with IBM to
review the status and performance of the parties' obligations. These calls may
be scheduled more or less frequently as agreed to by the Technical Coordinators.
Each party is responsible for funding the costs of these conference calls at its
location.
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EXHIBIT 10.14
OUTBOUND LICENSE AGREEMENT
Agreement Number: STL98095
STL Reference No. 4997ST2609
This Agreement dated as of December 9, 1998 ("Effective Date") is between
International Business Machines Corporation ("IBM") with an address at 555
Bailey Avenue, San Jose CA 95141, and ShowCase Corporation ("SHOWCASE") with an
address at 4131 Highway 52 North, Suite G111, Rochester, MN 55901-3144. Under
this Agreement, SHOWCASE licenses from IBM program Code known as Relational
Storage Interface ("RSI") which enables SHOWCASE to prepare a Derivative Work
for incorporation into a Product which will be marketed under a SHOWCASE logo
for which SHOWCASE will pay royalties to IBM.
By signing below, the parties agree to the terms of this Agreement. The complete
Agreement between the parties regarding this transaction consists of this
License Agreement and the following Attachments:
1. "Description of Licensed Work;"
2. "Schedule;"
3. "IBM Trademark Guidelines"; and
4. "Certificate of Originality."
The following are related agreements between IBM and SHOWCASE:
1. Agreement for the Exchange of Confidential Information
("AECI") No. M96-2547, as supplemented; and
2. License Agreement No. STL97307.
This Agreement replaces all prior oral or written communications between the
parties relating to the subject matter. Once signed, any reproduction of this
Agreement made by reliable means (for example, photocopy or facsimile) is
considered an original, unless prohibited by local law.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
INTERNATIONAL BUSINESS SHOWCASE CORPORATION
MACHINES CORPORATION
By: /s/ Roy J. Maharaj By: /s/ Ken Holec
- ----------------------------------------- ---------------------------------
Authorized Signature Authorized Signature
Name: Roy J. Maharaj Name: Ken Holec
------------------------------------ -------------------------------
Type or Print Type or Print
Title: STL Mgr. Business Alliances and
Contract Management Title: President and CEO
----------------------------------- ------------------------------
Date: 1/6/99 Date: December 23, 1998
----------------------------------- ------------------------------
<PAGE>
December 9, 1998
Outbound License Agreement
1. DEFINITIONS
Capitalized terms in the Agreement have the following meanings.
1.1 Code is computer programming code, including both Object Code and Source
Code.
a. Object Code is Code substantially in binary form, and includes header
files of the type necessary for use or inter-operation with other
computer programs. It is directly executable by a computer after
processing or linking, but without compilation or assembly. Object
Code is all Code other than Source Code.
b. Source Code is Code in a form which when printed out or displayed is
readable and understandable by a programmer of ordinary skills. It
includes related source code level system documentation, comments and
procedural code. Source Code does not include Object Code.
1.2 Deliverable is any item that IBM provides under this Agreement.
1.3 Derivative Work is a work that is based on an underlying work and that
would be a copyright infringement if prepared without the authorization of
the copyright owners of the underlying work. Derivative Works are subject
to the ownership rights and licenses of a party or of others in the
underlying work.
1.4 Distributors are those authorized or licensed by SHOWCASE, SHOWCASE
Subsidiaries or SHOWCASE Distributors to license or distribute Products.
1.5 Enhancements are changes or additions, other than Error Corrections, to the
Licensed Work.
a. Basic Enhancements are all Enhancements, other than Major
Enhancements, including those that support new releases of operating
systems and devices.
b. Major Enhancements provide substantial additional value and are
offered to customers for an additional charge.
1.6 Error Corrections are revisions that correct errors and deficiencies
(collectively referred to as "errors") in the Licensed Work.
1.7 Externals are (1) any pictorial, graphic, and audiovisual works (such as
icons, screens, sounds, and characters) generated by execution of Code, and
(2) any programming interfaces, languages or protocols implemented in Code
to enable interaction with other computer programs or the end user.
Externals do not include the Code that implements them.
1.8 Licensed Work is (1) any material described in or that conforms to the
description in the Attachment entitled "Description of Licensed Work," or
that is delivered to SHOWCASE as the Licensed Work, including (but not
limited to) Code, associated documentation, and Externals, and (2) Error
Corrections and Enhancements provided to SHOWCASE pursuant to this
Agreement.
1.9 Moral Rights are personal rights associated with authorship of a work under
applicable law. They include the rights to approve modifications and to
require authorship identification.
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1.10 Product is an offering to customers or other users, branded by SHOWCASE or
its Subsidiaries, that includes a Derivative Work of the Licensed Work
along with Essbase technology, all ported to the OS/400 platform.
1.11 SHOWCASE TAG-LINE is the following statement for inclusion by SHOWCASE on
Product media, packaging, installation splash screen, and documentation,
for Products: "Storage Interface Powered by IBM* DB2*Relational
Technology." And the following attribution which must be proximate to the
highlighted trademarks: "IBM and DB2 are registered trademarks of
International Business Machines Corporation, used under license therefrom."
o Such Tag-Line shall be included in Derivative Works in accordance with
Attachment "IBM Trademark Guidelines"
1.12 Subsidiary is an entity during the time that more than 50% of its voting
stock is owned or controlled, directly or indirectly, by another entity. If
there is no voting stock, a Subsidiary is an entity during the time that
more than 50% of its decision-making power is controlled, directly or
indirectly, by another entity.
1.13 Tools include devices, compilers, programming, documentation, media and
other items required for the development, maintenance or implementation of
a Deliverable that are not commercially available.
2 RESPONSIBILITIES OF PARTIES
2.1 IBM will provide the following Deliverables to SHOWCASE according to the
schedule set forth in the Attachment entitled "Schedule":
a. one complete set of the Licensed Work described in the Attachment
entitled "Description of Licensed Work." The Licensed Work includes
Code either delivered on CD-ROM or via an ftp site.
b. a completed Certificate of Originality with the Licensed Work, and
with each Enhancement to the Licensed Work, in the form specified in
the Attachment entitled "Certificate of Originality." SHOWCASE may
suspend payments to IBM for the Licensed Work if IBM does not provide
a properly completed certificate. Payment will resume after SHOWCASE
receives and accepts the certificate.
2.2 IBM will provide SHOWCASE, during the porting exercise, with reasonable
software engineering technical support pertaining to the RSI.
2.3 IBM will provide to SHOWCASE, at no charge, Enhancements and Error
Corrections for the Licensed Work which IBM implements beginning when
SHOWCASE accepts the Licensed Work and continuing for the term of this
Agreement. IBM has no maintenance or support obligations for the Product.
2.4 IBM will:
a. participate in progress reviews, as requested by SHOWCASE, to
demonstrate IBM's performance of IBM's obligations;
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b. implement a process designed to help prevent contamination by harmful
Code. IBM will promptly provide SHOWCASE notice if IBM suspects
contamination;
c. have agreements with IBM's personnel and third parties to perform
obligations and to grant or assign rights to SHOWCASE as required by
this Agreement;
d. obtain a written agreement not to assert any Moral Rights from any
person or entity having Moral Rights in the Licensed Work. IBM agrees
not to assert any Moral Rights in the Licensed Work;
e. obtain all necessary consents of individuals or entities required for
the use of names, likenesses, voices, and the like in the Licensed
Work;
f. maintain records to verify authorship of the Licensed Work for 4 years
after the termination or expiration of this Agreement. On request, IBM
will deliver or otherwise make available this information in a form
specified by SHOWCASE;
g. not assign or transfer this Agreement or IBM's rights under it, or
delegate or subcontract IBM's obligations, without SHOWCASE's prior
written consent provided, however, that IBM can without SHOWCASE
consent, assign and/or delegate any and all rights and obligations to
any IBM Subsidiary and can assign or transfer its rights under this
Agreement without advice or consent. Any attempt to do so is void;
h. not provide any information to the media, or issue any press releases
or other publicity, regarding this Agreement or the parties'
relationship under it, without SHOWCASE's prior written consent; and
i. not disclose to a third party the terms of this Agreement or the fact
that SHOWCASE has licensed the Licensed Work, without SHOWCASE's prior
written consent. IBM may, however, make such disclosures (i) to its
accountants, lawyers or other professional advisors provided that any
such advisor is under a confidentiality obligation and (ii) as
required by law provided IBM obtains any confidentiality treatment for
it which is available.
2.5 SHOWCASE will:
a. prepare a Derivative Work of the Licensed Work by porting the Licensed
Work to the OS/400 operating system, and
b. perform all maintenance and support for the Licensed Work as part of
Products.
2.6 IBM acknowledges that pursuant to License Agreement No. STL97307 ("License
Agreement") and the related Source Code Custody Agreement ("SCCA") of even
date herewith between the parties, it has the right to obtain release of
certain Source Code (including the right to use such Source Code as
specified in the SCCA) for the Product then-currently escrowed with such
escrow agent if one of the release conditions in the SCCA occurs. In
addition, IBM acknowledges that the OLAP Product (which is defined in the
License Agreement) contains the Essbase Software, which is licensed by
SHOWCASE from Hyperion Solutions Corporation ("Hyperion"), and ported by
SHOWCASE to the AS/400 operating system (the "Essbase AS/400 Port").
Accordingly, prior to any release of the Source Code for such Essbase
AS/400 Port pursuant to the terms of the SCCA, IBM hereby agrees to inform
Hyperion in writing of such impending release and Hyperion shall have
thirty (30) days to elect in writing, one of the following options:
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a. modify, in agreement with IBM, that certain agreement between Hyperion
and IBM entitled IBM Developer Agreement number STL96204 and its DLW
#001 dated September 27, 1996 (the "Santa Teresa Agreement") by adding
the Essbase AS/400 Port as a Licensed Work under the Santa Teresa
Agreement. Provided that SHOWCASE provides to IBM the Source Code
needed for support and assigns to IBM copyright ownership in the Code
ported to OS/400 by SHOWCASE and which was based on the code licensed
to SHOWCASE pursuant to this Outbound License Agreement Number
STL98095 (including any Derivative Works thereof - all referred to as
the "RSI Code"), IBM hereby consents to assuming the obligation to
support all portions of the OLAP Product that operates on OS/400
(excluding the Essbase AS/400 Port and Enhancements and Maintenance
Modifications thereto). And IBM agrees to pay any royalties to
Hyperion multiplying the same percentage rate established in the Santa
Teresa Agreement for product on other platforms by the SHOWCASE US
List Price established in this Agreement for the OS/400 OLAP Product;
in such case no further royalties will be due to SHOWCASE under
License Agreement Number STL97307 for licensing of its OLAP Product
for the Licensed Works thereunder licensed on other platforms, with a
minimum OTC royalty established by that are the same as those IBM pays
Hyperion pursuant to the Santa Teresa Agreement for the Licensed
Works; or
b. have assigned to it, and assume on behalf of SHOWCASE, all obligations
of SHOWCASE under the License Agreement Number STL97307, this Outbound
License Agreement Number STL98095, and SCCA of STL97307 with respect
to the OLAP Product, including, without limitation, all necessary
development and support thereof, and IBM hereby agrees to give its
written consent to such assignments.
In the event that IBM assumes support of the RSI Code, then SHOWCASE shall
deliver to IBM all available Source Code necessary for IBM to support it,
and SHOWCASE hereby grants and assigns to IBM, its successors and assigns,
all right, title and interest whatsoever, throughout the world, in and
under copyright in the RSI Code (the Derivative Work of the Code licensed
from IBM and ported to the OS/400 operating system by SHOWCASE pursuant to
the Outbound License Agreement Number STL98095), for the full duration of
all such rights and any renewals or extensions thereof. SHOWCASE agrees to
cooperate with IBM and execute documents reasonably required to support
such assignment and allow IBM to exercise its rights to the Code.
The parties agree that should Hyperion elect option a above, then,
(a) IBM shall do all things reasonably necessary, including, without
limitation, permit SHOWCASE to transfer Source Code and all other
necessary information related to the RSI Code and Essbase AS/400
Port, in order for Hyperion to assume such obligations with
respect to the OLAP Product;
(b) SHOWCASE shall have no continued obligations under Section 2.5 of
this Agreement to support or maintain any existing Derivative
Works of the Licensed Work included in the OLAP Product, or to
create any new Derivative Works of the Licensed Work for
inclusion in the OLAP Product;
(c) the mere occurrence by itself of such release or termination
shall not constitute a breach (although such release may be
triggered by a breach) by SHOWCASE of its obligations under this
Agreement, and this Agreement shall otherwise remain in full
force and effect pursuant to its terms; and
(d) no further royalties shall be due to SHOWCASE for licensing by
IBM of the OLAP Product.
If Hyperion does not elect in writing one of the above options within
thirty (30) days of receipt of IBM's notice, then IBM may obtain the
escrowed Materials in accordance with the SCCA.
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3 LICENSE
3.1 IBM grants SHOWCASE a nonexclusive, worldwide, irrevocable license to (a)
prepare a Derivative Work of the Licensed Work solely in order to adapt it
to run on the OS/400 operating system, and to use, execute, reproduce,
display, perform such Derivative Work, and (b), in Object Code form only,
transfer, distribute and sublicense such Derivative Work in Products to end
user customers, in any medium or distribution technology whatsoever,
whether known or unknown. IBM grants SHOWCASE the right to authorize or
sublicense others to exercise any of the rights granted to SHOWCASE in
subsection (b) of this Section.
3.2 The grant of rights and licenses to the Licensed Work includes a
nonexclusive, worldwide, irrevocable, paid-up license under any patents and
patent applications that are owned or licensable by IBM now or in the
future and are (1) required to make and use the Licensed Work or its
Derivative Work or (2) required to license or transfer the Licensed Work or
its Derivative Work within the scope of the licenses granted above. This
license applies to the Licensed Work and its Derivative Works operating
alone or in combination with equipment or Code. The license scope is to
make, use, sell, license or transfer items, and to practice and have
practiced methods, to the extent required to exercise the rights granted
hereunder to the Licensed Work.
3.3 Subject to IBM's ownership of the Licensed Work, SHOWCASE will own the
Derivative Work it creates.
3.4 IBM grants SHOWCASE the right to use, and requires SHOWCASE to use, the
SHOWCASE Tag-Line solely for inclusion on software media, an installation
splash screen, packaging, and documentation for Products subject to the
guidelines specified in Attachment, "IBM Trademark Guidelines."
3.5 Any goodwill attaching to SHOWCASE's trademarks, service marks, or trade
names belongs to SHOWCASE and this Agreement does not grant IBM any right
to use them. SHOWCASE may state that IBM has provided the Licensed Work.
4 PAYMENT
4.1 SHOWCASE will pay IBM royalties as follows:
SHOWCASE will pay IBM royalties of (*) for each authorized copy of a
Product licensed to an end user by SHOWCASE, SHOWCASE Subsidiaries or
Distributors.
4.2 SHOWCASE has no royalty obligation for:
a. the Licensed Work or its Derivative Works used for:
(1) SHOWCASE's and SHOWCASE Subsidiaries' internal use;
(2) SHOWCASE's and SHOWCASE Subsidiaries' (including third parties
under contract) development, maintenance or support activities;
(3) marketing demonstrations, customer testing or trial periods
(including early support, pre-release, or other similar
programs), Product training or education; or
(4) backup and archival purposes;
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
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b. a copy of the Product used by a licensed end user at home or on travel
when such Product is stored on both the user's primary machine as well
as another machine, provided that the end user is not authorized to
actively use the Product on both machines at the same time;
c. the Licensed Work (or a functionally equivalent work) that becomes
available generally to third parties without a payment obligation
through no action or fault of SHOWCASE;
d. documentation provided with, contained in, or derived from the
Licensed Work;
e. Error Corrections or Enhancements;
f. warranty replacement copies of the Product; or
g. Externals.
4.3 SHOWCASE, SHOWCASE Subsidiaries, and Distributors may, without incurring
any royalty obligation, copy the Product and distribute it on a CD-ROM, or
other media or distribution technology on or through which the Product is
secured (e.g., "encrypted" or "locked") to limit a customer's access to or
use of the Product. SHOWCASE may allow the customer, under a limited
license, a limited preview, trial or demonstration use of the Product.
SHOWCASE will have no royalty obligation to IBM unless SHOWCASE, SHOWCASE
Subsidiaries, or Distributors license the Product to such customer for full
productive use.
4.4 SHOWCASE may request a lower royalty for the Licensed Work when a licensing
transaction requires a substantial discount. If IBM agrees, both parties
will sign a letter specifying the licensing transaction and its lower
royalty payment.
4.5 Royalties are paid against revenue recorded by SHOWCASE in a royalty
payment quarter. In the U.S., a royalty payment quarter ends on the last
business day of the calendar quarter. Outside of the U.S., a royalty
payment quarter is defined according to SHOWCASE's current administrative
practices. Payment will be made by the last day of the second calendar
month following the royalty payment quarter. Royalties will be paid less
adjustments and refunds due to SHOWCASE. SHOWCASE will provide a statement
summarizing the royalty calculation with each payment. All payments will be
made in U.S. dollars. Payments based on foreign revenue will be converted
to U.S. dollars on a monthly basis at the rate of exchange published by
Reuters Financial Service on approximately the same day each month.
4.6 Each party will be solely responsible for any taxes incurred by the party,
directly or indirectly, associated with its performance of this Agreement.
4.7 All payments due and payable by SHOWCASE to IBM under this DLW shall be in
U.S. dollars. Such transfer(s) shall be coordinated through IBM's Account
Administrator, Lynn Kelderhouse at the following address:
International Business Machines Corporation
Branch Office JWQ
Accounts Receivable
Internal Zip 306
150 Kettletown Road
Southbury, CT 06488
Phone: 203-262-5621
Fax: 203-262-2141
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4.8 SHOWCASE shall maintain complete and accurate accounting records, in
accordance with sound and prudent accounting practices, to support and
document royalties payable in connection with an Offering. Such records
shall be retained for a period of at least three (3) years after the
royalties to which such records relate have accrued and been paid. SHOWCASE
shall, upon written request and sixty (60) days notice, during normal
business hours, but not more frequently than once each calendar year,
provide access, for such period as may reasonably be required, and at such
locations where the appropriate records are located, to such records for
the immediately preceding three (3) year period to an independent
accounting firm chosen and compensated by IBM for purposes of audit. Such
accounting firm shall be required to sign an agreement with SHOWCASE
protecting SHOWCASE's confidential information and shall be authorized by
SHOWCASE to report to IBM only the amount of royalties due and payable for
the period examined, along with such related information as is reasonably
necessary to provide IBM with a proper understanding of the basis for its
conclusions, subject to the accounting firm's obligations of
confidentiality.
4.9 The payments defined in this Section fully compensate IBM for its
performance under, and for the rights and licenses granted in, this
Agreement.
5 TESTING
5.1 IBM will perform the following tests prior to each delivery of the Licensed
Work:
a. component testing;
b. functional verification testing; and
c. system testing.
Upon SHOWCASE's request, the details of such testing will be mutually
agreed to by the parties.
5.2 IBM will provide to SHOWCASE at SHOWCASE's request, concurrent with each
delivery of the Licensed Work, all test results, test scenarios, test
cases, and test reports associated with the pre-delivery testing.
5.3 Upon receipt of the Licensed Work by SHOWCASE, SHOWCASE may evaluate the
Licensed Work for a period of 30 days and perform such tests as SHOWCASE
deems appropriate to determine if:
a. the Licensed Work meets the specifications described in the Attachment
entitled "Description of Licensed Work;"
b. the Licensed Work executes repetitively within the system environment
described in the Attachment entitled "Description of Licensed Work;"
and
c. SHOWCASE can successfully execute to completion all functional and
system test scenarios developed by SHOWCASE.
SHOWCASE's testing does not relieve IBM of its obligations under this
Agreement.
6 REPRESENTATIONS AND WARRANTIES
6.1 IBM makes the following ongoing representations and warranties:
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a. IBM has full legal rights to grant the rights granted herein;
b. IBM is not under, and will not assume, any contractual obligation that
prevents IBM from performing its obligations or conflicts with the
rights and licenses granted in this Agreement;
c. there are no liens, encumbrances or claims pending or threatened
against IBM, or to IBM's knowledge, anyone else, that relate to the
rights and licenses granted in this Agreement;
d. the Licensed Work does not contain libelous matters nor does it
directly or indirectly infringe any publicity, privacy or intellectual
property rights of a third party including, to IBM's knowledge, any
patents or patent applications;
e. the Licensed Work and the Tools will perform in accordance with the
requirements set forth in this Agreement, including the Attachment
entitled "Description of Licensed Work", and will conform to IBM's
user documentation, and any sales and marketing materials provided by
IBM;
f. the fully commented Source Code that IBM provides corresponds to the
current release or version of the Licensed Work provided by IBM under
this Agreement;
g. the Licensed Work supports the Year 2000;
h. the Licensed Work is not contaminated by harmful code; and
i. all authors have waived their Moral Rights in the Licensed Work to the
extent permitted by law.
IBM will immediately provide SHOWCASE written notice of any change that may
affect its representations and warranties.
6.2 Except as provided above, anything either party provides to the other
related to this Agreement is "AS IS", without warranty of any kind.
7 INDEMNIFICATION AND LIABILITY
7.1 IBM will defend and indemnify SHOWCASE and SHOWCASE's Subsidiaries if a
third party makes a claim against SHOWCASE or its Subsidiaries based on an
actual or alleged:
a. failure by IBM, to the extent not caused by SHOWCASE, to perform IBM's
obligations under this Agreement;
b. breach of IBM's representations and warranties;
c. failure by IBM to comply with government laws and regulations; or
d. infringement by IBM, the Licensed Work or Tools of patents,
copyrights, trademarks, trade secrets, and other intellectual property
rights.
7.2 SHOWCASE will:
a. promptly provide IBM notice of any such claim; and
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b. allow IBM to control, and will cooperate with IBM in the defense of,
the claim and settlement negotiations.
SHOWCASE may participate in the proceedings at its option and expense.
7.3 In addition, if an infringement claim appears likely or is made, IBM will:
a. obtain the necessary rights for SHOWCASE, SHOWCASE Subsidiaries and
Distributors and their respective customers to continue to distribute,
license, otherwise transfer and use the Licensed Work on an
uninterrupted basis and exercise all rights granted in the Licensed
Work and Tools; or
b. modify the Licensed Work and Tools at IBM's expense to resolve the
claim. This modified Licensed Work will comply with the Attachment
entitled "Description of Licensed Work."
If IBM is not able to do either within a reasonable period of time,
SHOWCASE may terminate this Agreement for IBM's breach.
7.4 In addition to any remedies specified in this Agreement, SHOWCASE may
pursue any other remedy it may have in law or in equity.
7.5 Regardless of the type of claim, neither party is liable to the other for
indirect, incidental, special, or consequential damages including, but not
limited to, lost profits or revenues, under any part of this Agreement,
even if informed that they may occur. This limitation does not apply to (a)
IBM's liabilities for indemnity to the extent that damages claimed by a
third party might be characterized as damages of the type listed above or
(b) any obligations of either party to make a payment which is due under
this Agreement. SHOWCASE's total liability is limited to payments due to
IBM under this Agreement.
8 TERM AND TERMINATION
8.1 This Agreement begins on the Effective Date and will remain in effect for
ten (10) years with automatic one (1) year renewal terms, unless terminated
sooner under the terms of this Agreement. After the ninth (9) year, IBM may
terminate the Agreement by providing notice of intent to not renew twelve
(12) months prior to any term expiration date.
8.2 Either party may terminate this Agreement for the other's material breach
by providing the breaching party with a written notice that describes the
breach. The termination will become effective 90 days after receipt of the
notice unless the breach is cured within that 90 day period.
8.3 SHOWCASE may terminate this Agreement without cause on 12 months written
notice to IBM, provided that the effective date of any such termination may
only be on a date which is at least twelve (12) months after the fourth
(4th) anniversary of the date on which a Product has been made generally
available; provided, however, that SHOWCASE may terminate without cause at
any time on ninety (90) days written notice in the event that IBM does not
satisfactorily meet its obligations under Section 2.0 of this Agreement.
8.4 IBM may terminate this Agreement without cause on ninety (90) days written
notice in the event that IBM's license to the SHOWCASE licensed work
licensed under License Agreement STL97307 is (i) terminated by SHOWCASE for
any reason other than IBM's material breach of the contract or (ii)
terminated by either party pursuant to section 10.04 of STL97307.
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8.5 If, at the end of four (4) years and six (6) months from the Effective Date
of this Agreement, IBM notifies SHOWCASE, in writing, that the business
parameters supporting distribution of the Licensed Works hereunder has
changed significantly, both parties agree to renegotiate royalties in
Section 4.0 above. If no agreement has been reached within ninety (90) days
of SHOWCASE's receipt of the notification, either party may give notice of
termination of this Agreement which will be effective six (6) months from
receipt by the other party of such notice of termination. This process may
be invoked a maximum of one (1) time per year thereafter if required.
8.6 Expiration or termination of this Agreement does not affect any Product
licenses granted to end user customers pursuant to rights under this
Agreement for the Licensed Work. In the event of termination by SHOWCASE
for breach by IBM, SHOWCASE will not be obligated to make any payments that
would have become due under this Agreement on or after the effective date
of termination, other than per copy royalty payments incurred, if any.
8.7 Subject to Subsection 8.5, any provisions of this Agreement that by their
nature extend beyond termination or expiration will survive in accordance
with their terms. These include License, Representations and Warranties,
Indemnification and Liability, and General. These terms will apply to
either party's successors and assigns.
9 COORDINATORS
9.1 Any notice required or permitted to be made by either party to this
Agreement must be in writing. Notices are effective when received by the
appropriate coordinator as demonstrated by reliable written confirmation
(for example, certified mail receipt or facsimile receipt confirmation
sheet).
9.2 The Contract Coordinators responsible to receive ail notices and administer
this Agreement are:
For For
SHOWCASE: IBM:
Name: Tom Rydz Name: Robert L. Elliott
Title: Director of Business Alliances Title: Contract Manager
Address: ShowCase Corporation Address: IBM Corporation
9700 W. Higgins Rd, Ste 1100 555 Bailey Ave.
Rosemont, IL 60018-4796 San Jose, CA 95141
Phone: (847) 685-6505 Phone: (408) 463-2232
Fax: (847) 685-6570 Fax: (408) 463-5605
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9.3 The Technical Coordinators responsible to accept all Deliverables,
coordinate all exchanges of confidential information, and administer and
coordinate the technical matters associated with this Agreement are:
For For
SHOWCASE: IBM:
Name: Jon Otterstatter Name: Ms. Cathy Grape
Title: Vice President, Title: DB2 OLAP Server
Development Product Manager
Address: ShowCase Corporation Address: IBM Corporation
4131 Highway 52 North 555 Bailey Ave.
Rochester, MN San Jose, CA 95141
55901-3144
Phone: (507) 287-2865 Phone: (408) 463-2156
Fax: (507) 287-2803 Fax: (408) 463-4763
Technical Coordinators may propose, accept (by signature or initial), and
implement technical changes to this Agreement that do not change dollar
amounts or materially change Deliverables or the schedules of this
Agreement.
9.4 A party will provide written notice to the other when its coordinators
change.
10 GENERAL
10.1 Independent Contractor. Each party is an independent contractor. Neither
party is, nor will claim to be, a legal representative, partner,
franchisee, agent or employee of the other except as specifically stated
in the Subsection entitled "Copyright" below. Neither party will assume or
create obligations for the other. Each party is responsible for the
direction and compensation of its employees.
10.2 Freedom of Action. Each party may have similar agreements with others.
Each party may design, develop, manufacture, acquire or market competitive
products and services, and conduct its business in whatever way it
chooses. SHOWCASE is not obligated to announce or market any products or
services. SHOWCASE does not guarantee the success of its marketing
efforts. SHOWCASE will independently establish prices for its products and
services.
10.3 Reliance. Neither party relies on any promises, inducements or
representations made by the other or expectations of more business
dealings, except as expressly provided in this Agreement. This Agreement
accurately states the parties' agreement.
10.4 Compliance With Applicable Laws. Each party will comply with all
applicable laws and regulations at its expense including, to the extent
applicable, Executive Order 11246 on Equal Employment Opportunity, as
amended, the Occupational Safety and Health Act of 1970, as amended, and
the Americans With Disabilities Act of 1990, as amended. This also
includes all applicable government export and import laws and regulations.
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10.5 Confidential Information. The parties agree that information exchanged
under this Agreement that is considered by either party to be confidential
information will be subject to the terms of the AECI, referenced on the
first page of this Agreement, and its Supplements. In addition, IBM will
not provide SHOWCASE with any information which may be considered
confidential information of any third party unless provided under the
AECI. The obligations set forth in the AECI with regard to confidential
information will not limit or preclude the exercise of the licenses
granted in this Agreement.
10.6 Copyright. Any publication by SHOWCASE of the Licensed Work or the
Derivative Work thereof may contain an appropriate copyright notice, as
determined by SHOWCASE.
IBM will enforce and maintain its copyright protection in the Licensed
Work. SHOWCASE is not responsible for enforcing and maintaining such
copyright protection.
10.7 Order of Precedence. If there is a conflict among the terms of this base
License Agreement and its Attachments, the terms of this base License
Agreement prevail over those of the Attachments, unless the parties
expressly indicate in the Attachments that particular terms within the
Attachments prevail. Terms in SHOWCASE's purchase orders and IBM's
invoices or acknowledgments, if any, are void.
10.8 Headings. The headings of this Agreement are for reference only. They will
not affect the meaning or interpretation of this Agreement.
10.9 Counterparts. This Agreement may be signed in one or more counterparts,
each of which will be considered an original, but all of which together
form one and the same instrument.
10.10 Amendment and Waivers. For a change to this Agreement to be valid, both
parties must sign it. No approval, consent or waiver will be enforceable
unless signed by the granting party. Failure to insist on strict
performance or to exercise a right when entitled does not prevent a party
from doing so later for that breach or a future one.
10.11 Actions. Neither party will bring a legal action relating to the subject
matter of this Agreement, against the other more than 2 years after the
cause of action arose, except in the case of indemnification for
infringement, in which case this period runs for 2 years after the award
or settlement was made.
10.12 Dispute Resolution. Both parties will act in good faith to resolve
disputes prior to instituting litigation. Each party waives its rights to
a jury trial in any resulting litigation. Litigation will only be
commenced in the State of New York.
10.13 Governing Law. This Agreement will be governed by the substantive law of
the State of New York applicable to contracts executed in and performed
entirely within that State. The United Nations Convention on Contracts for
the International Sale of Goods does not apply. IBM will, upon written
notice from SHOWCASE, submit to personal jurisdiction in any forum where
SHOWCASE is sued for claims related to IBM's indemnification obligations.
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Description of Licensed Work
1.0 General description of Licensed Work: Relational Storage Interface
1. Relational Data Store Component ("RDSC") version consistent with the
version of Essbase which SHOWCASE has ported to the OS/400 operating
system
2. Education Materials Source (soft-copy) for IBM's RDSC introductory
education classes
2.0 Specific description of Licensed Work:
Relational Data Store Component ("RDSC") version consistent with all
versions 5.0 of Essbase which SHOWCASE has ported to the OS/400 operating
system, and all future modifications to and Derivative Works of RDSC
applicable to the OS/400 operating system.
* format ( Source Code, either on CD-ROM or via ftp site).
* RDSC Functions - The purpose of the RDSC is to replace the Essbase
multidimensional data store with a relational data store. Generally,
the RDSC is intended to be functionally equivalent to the then current
Essbase multidimensional store. In particular, index (.ind) and page
(.pag) data files will be replaced by a number of relational tables.
When implemented, the relational schema is intended to serve as an
efficient multidimensional store. The outline file (.otl) lists the
data elements (members and dimensions) of an Essbase database and
defines their relationships (e.g., hierarchical and mathematical).
Although the RDSC will not replace the outline file with relational
tables, the outline data will be mirrored as read-only reference data
in relational tables that are part of the relational store.
All other Essbase database elements are intended to be unaffected by
the implementation of the RDSC.
Although the objective of the RDSC is to be substantially similar in
function to the Essbase multidimensional store, there will be some
architectural and operational differences. The key differences (known
at this time) are listed below. As design and implementation proceed
other significant differences may arise.
o In order to provide an efficient and natural relational
representation of an Essbase database, the RDSC must ensure that
one dimension is defined as the measures dimension. The measures
dimension generally corresponds to the accounts dimension in an
Essbase database. While Essbase currently provides for some
special handling of dimensions labeled as accounts dimensions, it
does not require one. In the vast majority of business models,
this additional restriction should not pose a problem.
o Relational databases generally limit the number of columns
permitted in tables and views; this may have an impact on the
number of members allowed in the measures dimension.
o Whenever possible, the RDSC will use dimension and measures
member names as view and column names in the appropriate elements
of the relational schema. However, differences in naming rules
between Essbase and a given RDBMS will not always permit this
simple mapping. For example, Essbase member names can be up to
eighty characters in length, whereas DB2 column names are limited
Page 14
<PAGE>
December 9, 1998
Outbound License Agreement
to eighteen characters. A given RDBMS may not allow some
characters in table and column names that Essbase does permit in
dimension and member names. When a conflict arises the RDSC must
construct a valid view or column name. Essbase applications will
be generally unaffected by this problem. SQL applications may
have to use dimension tables to look-up the derived table or
column name.
o Performance of the RDSC is expected to be similar to the Essbase
multidimensional store, but it will be slower. In terms of
response time, the target is to complete queries in no more than
three (3) times the amount of time required by the Essbase
multidimensional store. Furthermore, the RDSC will generally not
be able to support the same number of active client connections
that the Essbase server can support on a given hardware and
software platform.
* documentation:
* internal (i.e., if requested by SHOWCASE, development
documentation, Source Code documentation, etc.)
* external (i.e., end-user documentation, on-line documentation,
etc.)
* other materials (as requested):
* test results
* test cases
* maintenance and support reports (including information required
and format)
* education/training material
Page 15
<PAGE>
December 9, 1998
Outbound License Agreement
Attachment
Schedule Page 1 of 1
Milestones
----------
Date
----
a. Execution of this Agreement (*)
b IBM's delivery of the Licensed Work which (*)
substantially complies with its specifications
c. Successful completion of SHOWCASE's testing of the (*)
Licensed Work
d. Receipt of the completed Certificate of Originality for (*)
the Licensed Work
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
Page 16
<PAGE>
December 9, 1998
Outbound License Agreement
Attachment
Maintenance and Support Page 1 of 1
1.0 IBM has no maintenance or support obligations
Page 17
<PAGE>
December 9, 1998
Outbound License Agreement
Attachment
Attachment - IBM Trademark Guidelines Page 1 of 1
IBM (R) is a registered trademark of the IBM Corporation. These guidelines
were developed to help you use them consistently and appropriately on
advertising, packaging, documentation, and products. Following these guidelines
will build an identity for the product in the marketplace and establish an image
of quality. It will also protect and maintain these valuable trademark assets.
Legal rights for the trademarks are owned by IBM and licensed to others.
Usage is encouraged, as long as it conforms to licensing agreements and these
guidelines.
1. Usage Basics
a. You are not authorized to use the eight-bar IBM logotype.
b. IBM (R) is a registered trademark available to you for use under
your license grant from IBM.
c. The registered trademark designator (R) must appear in readable
form with the most prominent usage of the trademark. The
designator may be superscripted. Outside the U.S., an asterisk
may replace the trademark designator, and in some countries a
translation of the attribution may be required. Check with your
legal department about local laws and customs.
d. Never attempt to translate the IBM trademark into other
languages. The English characters create a unique symbol and,
therefor, constitute the only acceptable version.
e. Do not create plural or possessive forms of the IBM trademark.
f. The IBM trademark should be sufficiently spaced apart from your
product logo and should have sufficient clear space around it -
minimally the height of one capital letter. Do not pair the
trademark with any type, such as a tag line, or combine it with
another logo or symbol.
g. The IBM trademark should appear in a single color, preferably
black, that provides sufficient contrast to any background colors
to be clearly visible.
h. You may not use the IBM trademark on promotional items without
express authorization.
i. Usage of the IBM trademark requires the following attribution:
"IBM is a registered trademark of International Business Machines
Corporation, used under license therefrom."
j. IBM retains the right to review and approve all uses of the IBM
trademark, and to require reasonable modification thereof.
Improper application may result in loss of the right to use this
trademark.
Page 18
<PAGE>
EXHIBIT 10.16
IBM
Software Vendor Marketing Partnerships
- --------------------------------------------------------------------------------
Amendment 01 to MIRA #T97074-00 T97074-01
AMENDMENT NUMBER 01 TO MRA #T97074-00
This is Amendment Number 01 to our Marketing Relationship Agreement No.
T97074-00 dated May 22, 1997 (hereinafter called "Agreement") between IBM
Corporation ("IBM") and ShowCase Corporation ("You").
Whereas the parties have entered into the Agreement that sets forth the terms
and conditions whereby IBM may remarket or cooperatively market Your Products in
the United States; and
Whereas You've notified IBM in writing of: 1) changes to Your Products names,
licensing structure and current list prices; and 2) additional new available
Products; and
Whereas the parties have agreed to 1) expand only the remarketing relationship
of this Agreement to include Canada; and 2) incorporate Your new Product's,
Product names, licensing structure and list prices under this Agreement;
NOW THEREFORE, the parties agree to modify the Agreement, its Attachments and
Amendments as follows:
1. Section 1 entitled "Definitions" of the Agreement, is hereby modified by
superseding and replacing the definition of "Products" with the following:
Products are your computer programs, and any third party computer programs
included with your Products under your End User License, in Object Code form,
including documentation, related materials, maintenance modifications, Basic
Enhancements and any security devices or "locks" that are listed in this
Agreement.
2. Section 3 entitled "Territory," of the Agreement, is hereby superseded and
replaced with the following:
3. Territory
3.1 The territory for this Agreement, applicable for the resale of the Products
pursuant to the Reseller Attachment, shall consist of the United States and
Puerto Rico (US), and Canada.
3.2 The territory for this Agreement, applicable for the cooperative marketing
of the Products pursuant to the Cooperative Marketing Attachment, shall be the
United States and Puerto Rico.
3. Section 4.1 of Section 4.0 entitled "Royalties," of the Reseller Attachment
of the Agreement is hereby modified by superseding and replacing its text as
follows and by adding the new Product/IBM Rate tables:
IBM will continue to pay you the current royalty amount set forth in the
Agreement's current existing table ("IBM Rate") for each Product IBM or its
Affiliates licenses to a customer.
Effective upon: 1) the date IBM Announces availability of your Products (listed
in the Product Offering List Attachment) in the US or within ninety (90) days
from the date the parties execute this Amendment, whichever occurs first; and 2)
the date IBM Announces availability of your Products (listed in the Product
<PAGE>
Offering List Attachment) in Canada; the already existing IBM Rates set forth in
the Agreement's current existing table are hereby superseded and replaced with
the new IBM Rates, listed in the tables below, that IBM will pay you for each
Product IBM or its Affiliates licenses to a customer. The formula used to
calculate the IBM Rate for Products shall be the same formula used to calculate
the IBM Rate for New Products. You agree (*). IBM is not required to lease any
minimum quantities. IBM payments to you will be at the IBM Rate subject to any
withholding tax requirement and/or any applicable transaction based taxes
(including, without limitation, sales and value-add taxes), and shall be net of
refunds and adjustments granted to customers. You may, (*), increase your
Products list prices by giving IBM prior written notice. Any such increase shall
become effective ninety (90) days after IBM receives such notice. You agree (*)
not yet installed from the date (*) effective. For any such (*), you agree to
give IBM forty-five (45) days prior written notice. With respect to any
temporary Promotional offers for the Products, IBM's participation in any such
offers will be solely at IBM's option. In either case above, a letter amendment
specifying your new list prices will be executed by the parties. The new IBM
Rate, reflecting such price change, will be paid to you for all Products IBM or
its Affiliates licenses to a customer on or after the first day of the affected
period stated above. IBM will not pay you any other payments related to the
Products (for example, under any IBM Business Partner Agreement). IBM shall have
full freedom and flexibility in pricing your Products and in establishing the
terms and conditions under which they are offered to customers. IBM is not
required to pay you, and you agree not to charge IBM for, taxes for the Products
which are licensed by IBM in the Territory.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Product Type Product Name IBM Rate for US & Canada
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Products All Products listed on Product (*) of Your Products US List Prices
Offering List Attachment specified in the Product Offering
List Attachment
- ----------------------------------------------------------------------------------------------------------------
Upgrades All Products listed under Product (*) of Your Products Upgrades US
Upgrades section of Product List Prices specified in the
Offering List Attachment Product Offering List Attachment
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
4. Section 4.4 of Section 4.0 entitled "Royalties," of the Reseller Attachment
of the Agreement is hereby modified by superseding and replacing its text as
follows:
4.4 Royalties are paid against revenue recorded by IBM in a royalty payment
quarter. In the U.S., a royalty payment quarter ends on the last business day of
the calendar quarter. Outside the U.S., a royalty payment quarter is defined
according to IBM's current administration practices. IBM shall make payments to
you 30 days following the close of the royalty payment quarter in which IBM
records that a customer has acquired a royalty bearing license for a Product,
and recognizes revenue for the Product. All payments to you shall be net of
refunds, adjustments, and if applicable, taxes. Payment will be accompanied by a
summary of the basis for determining its amount. IBM will maintain records to
support the payment amount. Payment will be made by either electronic funds
transfer, or by mail. Payment is deemed to be made on the date of electronic
funds transfer, or on the date of mailing, as applicable. All payments will be
made in U.S. dollars.
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
-2-
<PAGE>
5. Section 6.1 of Section 6 entitled "Payment to IBM" of the Cooperative
Marketing Attachment to this Agreement is hereby modified by superseding and
replacing the IBM Fee table with the following:
- -------------------------------------------------------------------------------
Product Type Product Name IBM Fee
- -------------------------------------------------------------------------------
Products All Products listed in Product (*) of Your Revenue
Offering List Attachment for Products
- -------------------------------------------------------------------------------
6. Attached "Product Offering List Attachment" is hereby added to the Agreement
as a new Attachment.
7. Exhibit entitled "Your End User License" to the Agreement is hereby
superseded and replaced with the attached "Exhibit - Your End User License".
8. Attachment entitled "Certificate of Originality" to the Agreement is hereby
superseded and replaced with the attached "Attachment - Certificate of
Originality".
Except as amended hereby, the Agreement and any Amendments and Attachments
thereto shall remain in full force and effect.
In WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their respective authorized representatives.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
International Business Machines ShowCase Corporation
Corporation
/s/ Julie F. Joyce /s/ Ken Holec
- -------------------------------- --------------------------------
Julie F. Joyce Print Name: Ken Holec
Director, Worldwide Strategy & Title: President and Chief
Business Development Executive Officer
Date: 10-28-98 Date: 10/26/98
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
-3-
<PAGE>
IBM
Software Vendor Marketing Partnerships
Product Offering List Attachment T97074-01
PRODUCT OFFERING LIST ATTACHMENT
Product Upgrades
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Products Your US List Prices
- ---------------------------------------------------------------------------------------------------
<S> <C>
Analyzer Client Ports (*)
- ---------------------------------------------------------------------------------------------------
Analyzer for the Web Ports (*)
- ---------------------------------------------------------------------------------------------------
Analyzer Server, 1 way s-10 or 170 (*)
- ---------------------------------------------------------------------------------------------------
Analyzer Server, 1 way processor (*)
- ---------------------------------------------------------------------------------------------------
Analyzer Server, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Analyzer Server, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase Personal Desktop (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Currency Conversion 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Currency Conversion 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Currency Conversion 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Development Server, 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Development Server, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Development Server, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Ports (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Server, 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Server, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Server, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Spreadsheet Toolkit, 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Spreadsheet Toolkit, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Spreadsheet Toolkit, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 SQL Drill Through, 1 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 SQL Drill Through, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 SQL Drill Through, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Partitioning 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Partitioning 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Essbase/400 Partitioning 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Strategy Report Writer (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Builder Server 1 way S-10 or 170 (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Builder Initial Server 1 way processor (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Builder Initial Server 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Builder Initial Server 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Builder Secondary 1 way processor (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Builder Secondary 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Builder Secondary 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Builder DB2/AIX Source (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Builder DB2/MVS Source (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Builder DB2/NT Source (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Manager Server 1 way S-10 or 170 (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Manager Initial Server 1 way processor (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Manager Initial Server 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Manager Initial Server 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
<PAGE>
IBM
Software Vendor Marketing Partnerships
Product Offering List Attachment T97074-01
PRODUCT OFFERING LIST ATTACHMENT
Product Upgrades
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------------
Warehouse Manager Ports (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Manager Secondary Server, 1 way processor (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Manager Secondary Server, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Warehouse Manager Secondary Server, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Development Currency Conversion, 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Development Currency Conversion, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Development Currency Conversion, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Development Partitioning, 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Development Partitioning, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Development Partitioning, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Development Spreadsheet Toolkit, 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Development Spreadsheet Toolkit, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Development Spreadsheet Toolkit, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Development SQL Drill Through, 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Development SQL Drill Through, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Development SQL Drill Through, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Financial Deployment Accelerators JDE, 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Financial Deployment Accelerators JDE, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Financial Deployment Accelerators JDE, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators JDE, 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators JDE, 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators JDE, 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Product Upgrades
- ---------------------------------------------------------------------------------------------------
Products Your US List Prices
- ---------------------------------------------------------------------------------------------------
ShowCase Analyzer Server Upgrades:
- ---------------------------------------------------------------------------------------------------
From Analyzer Server 1 way S-10 or 170 to 1 way processor (*)
- ---------------------------------------------------------------------------------------------------
From Analyzer Server 1 way S-10 or 170 to 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
From Analyzer Server 1 way S-10 or 170 to 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
From Analyzer Server 1 way processor to 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
From Analyzer Server 1 way processor to 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
From Analyzer Server 2-4 way processor to 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
(*)
- ---------------------------------------------------------------------------------------------------
ShowCase Essbase/400 Server Upgrades:
- ---------------------------------------------------------------------------------------------------
1-way processor to 2-4 processor (*)
- ---------------------------------------------------------------------------------------------------
Currency Conversion 1 way processor to Currency Con. 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 1-way processor to Spreadsheet Toolkit 2-4 way (*)
- ---------------------------------------------------------------------------------------------------
SQL Drill Through 1-way processor to SQL Drill Through 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Partitioning 1-way processor to Partitioning 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
1-way processor to 8-12 processor (*)
- ---------------------------------------------------------------------------------------------------
Currency Conversion 1 way processor to Currency Con. 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 1-way processor to Spreadsheet Toolkit 8-12 way (*)
- ---------------------------------------------------------------------------------------------------
SQL Drill Through 1-way processor to SQL Drill Through 8-12 way (*)
- ---------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
<PAGE>
IBM
Software Vendor Marketing Partnerships
Product Offering List Attachment T97074-01
PRODUCT OFFERING LIST ATTACHMENT
Product Upgrades
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------------
Partitioning 1-way processor to Partitioning 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
2-4 way processor to 8-12 processor (*)
- ---------------------------------------------------------------------------------------------------
Currency Con. 2-4 way processor to Currency Conversion 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 2-4 way processor to Spreadsheet Toolkit 8-12 way (*)
- ---------------------------------------------------------------------------------------------------
SQL Drill Through 2-4 way processor to SQL Drill Through 8-12 way (*)
- ---------------------------------------------------------------------------------------------------
Partitioning 2-4 way processor to Partitioning 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
ShowCase Essbase/400 Development Server Upgrades:
- ---------------------------------------------------------------------------------------------------
1-way processor to 2-4 processor (*)
- ---------------------------------------------------------------------------------------------------
Currency Conversion 1 way processor to Currency Conversion 2-4 way (*)
- ---------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 1-way processor to Spreadsheet Toolkit 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
SQL Drill Through 1-way processor to SQL Drill Through 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Partitioning 1-way processor to Partitioning 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
1-way processor to 8-12 processor (*)
- ---------------------------------------------------------------------------------------------------
Currency Conversion 1 way processor to Currency Con. 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 1-way processor to Spreadsheet Toolkit 8-12 way (*)
- ---------------------------------------------------------------------------------------------------
SQL Drill Through 1-way processor to SQL Drill Through 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Partitioning 1-way processor to Partitioning 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
2-4 way processor to 8-12 processor (*)
- ---------------------------------------------------------------------------------------------------
Currency Con. 2-4 way processor to Currency Conversion 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 2-4 way processor to Spreadsheet Toolkit 8-12 way (*)
- ---------------------------------------------------------------------------------------------------
SQL Drill Through 2-4 way processor to SQL Drill Through 8-12 way (*)
- ---------------------------------------------------------------------------------------------------
Partitioning 2-4 way processor to Partitioning 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
ShowCase Warehouse Builder Upgrades: (*)
- ---------------------------------------------------------------------------------------------------
Server 1-way S-10 or 170 to Initial Server 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Server 1-way S-10 or 170 to Initial Server 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Server 1-way S-10 or 170 to Initial Server 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Initial Server 1 way processor to Initial Server 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Initial Server 1 way processor to Initial Server 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Initial Server 2-4 way processor to Initial Server 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Secondary Server 1 way processor to Secondary Server way 2-4 processor (*)
- ---------------------------------------------------------------------------------------------------
Secondary Server 1 way processor to Secondary Server 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Secondary Server 2-4 way processor to Secondary Server 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
ShowCase Warehouse Manager Upgrades:
- ---------------------------------------------------------------------------------------------------
Server 1-way S-10 or 170 to Initial Server 1-way processor (*)
- ---------------------------------------------------------------------------------------------------
Server 1-way S-10 or 170 to Initial Server 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Server 1-way S-10 or 170 to Initial Server 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Initial Server 1 way processor to Initial Server 2-4 processor (*)
- ---------------------------------------------------------------------------------------------------
Initial Server 1 way processor to Initial Server 8-12 processor (*)
- ---------------------------------------------------------------------------------------------------
Initial Server 2-4 way processor to Initial Server 8-12 processor (*)
- ---------------------------------------------------------------------------------------------------
Secondary Server 1 way processor to Secondary Server 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------------
Secondary Server 1 way processor to Secondary Server 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Secondary Server 2-4 way processor to Secondary Server 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
ShowCase Deployment Accelerators Upgrades:
- ---------------------------------------------------------------------------------------------------
Financial Deployment Accelerators JDE 1-way to 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Financial Deployment Accelerators JDE 1-way to 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Financial Deployment Accelerators JDE 2-4 way to 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators JDE 1-way to 2-4 way processor (*)
- ---------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators JDE 1-way to 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators JDE 2-4 way to 8-12 way processor (*)
- ---------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
<PAGE>
EXHIBIT 10.17
IBM
Solution Developer Marketing Partnerships
- --------------------------------------------------------------------------------
Amendment 02 to MRA #T97074-00 T97074-02
AMENDMENT NUMBER 02 TO MRA #T97074-00
This is Amendment Number 02 to our Marketing Relationship Agreement No.
T97074-00 dated May 22, 1997 (hereinafter called "Agreement") between IBM
Corporation ("IBM") and ShowCase Corporation ("You").
Whereas the parties have entered into the Agreement that sets forth the terms
and conditions whereby IBM may remarket Your Products in the United States and
Canada or cooperatively market Your Products in the United States; and
Whereas the parties have agreed to: 1) expand only the remarketing relationship
of this Agreement to consist of every country in the world in which IBM is
conducting business; and 2) terminate the Agreement's cooperative marketing
relationship; and
Whereas the parties have agreed to add to the Agreement the Maintenance Support
(1st Year only) for the Products and your associated list prices for Maintenance
Support;
NOW THEREFORE, the parties agree to modify the Agreement, its Attachments and
Amendments as follows:
1.0 Section 1 entitled "Definitions," of the Agreement, is hereby modified by
adding the following new definitions to this Section:
Enablement or (Internationalization) shall mean that a Product has the ability
to implement national functions and the facility to be translated to other
languages. Enablement includes three (3) categories which correspond to
characteristics of various languages: (a) single byte character set (SBCS),
left-to-right languages (U.S. English, German, Greek, etc.); (b) single byte
bi-directional languages (Hebrew, Arabic); and (c) double byte character set
(DBCS) or multi-byte character set (MBCS) languages (Japanese, Korean,
simplified and traditional Chinese). The Products shall avoid hardcoding
language dependent codepages and character sets.
National Language Support (NLS) shall mean that the Products have the ability to
enter, store, process, retrieve, distribute, display and print character data in
the foreign language of choice. NLS includes Internationalization
characteristics.
2.0 Section 3.0 entitled "Territory" of the Agreement is hereby superseded and
replaced with the following:
3.0 Territory
3.1 The territory for this Agreement, applicable for the resale of the Products
pursuant to the Reseller Attachment, shall consist of all countries in the world
in which IBM or an IBM Affiliate is conducting business.
3.2 For Agreement management purposes, territory shall be interpreted as the
geographic areas of the United States and Puerto Rico (US), Canada, Asia Pacific
(AP), Latin America (LA), Europe, Middle East, Africa and the former republics
of the USSR (EMEA).
3. Section 8 entitled "Training"of the Agreement, is hereby deleted in its
entirety.
4. Section 4.1 of Section 4.0 entitled "Royalties," of the Reseller Attachment
of the Agreement is hereby modified by superseding and replacing its text as
follows and by adding the new Product/IBM Rate tables:
1 of 11
<PAGE>
IBM will continue to pay you the current royalty amount set forth in the
Agreement's current existing table ("IBM Rate") for each Product IBM or its
Affiliates licenses to a customer.
Effective upon: 1) the date IBM Announces availability/withdrawal of your
Products (listed in the Product Offering List Attachment) in the US or within
ninety (90) days from the date the parties execute this Amendment, whichever
occurs first; and 2) the date IBM Announces availability/withdrawal of your
Products (listed in the Product Offering List Attachment) in Canada, EMEA, LA
and AP; the already existing IBM Rates set forth in the Agreement's current
existing table are hereby superseded and replaced with the new IBM Rates, listed
in the tables below, that IBM will pay you for each Product IBM or its
Affiliates licenses to a customer. The formula used to calculate the IBM Rate
for Products shall be the same formula used to calculate the IBM Rate for New
Products. You agree (*). IBM is not obligated to lease any minimum quantities.
IBM payments to you will be at the IBM Rate subject to any withholding tax
requirement and/or any applicable transaction based taxes (including, without
limitation, sales and value-add taxes), and shall be net of refunds and
adjustments granted to customers. You may, (*), increase your Products list
prices by giving IBM prior written notice, except that, this restriction shall
not apply with respect to your list prices for the Essbase and Analyzer Products
which may be increased at any time during a calendar year upon prior written
notice to IBM. Any such increase's shall become effective ninety (90) days after
IBM receives such notice. You agree (*) not yet installed from the date (*). For
any such (*), you agree to give IBM forty-five (45) days prior written notice.
With respect to any temporary Promotional offers for the Products, IBM's
participation in any such offers will be solely at IBM's option. For any open
ended promotions you offer for the Products, you agree to give IBM thirty (30)
days prior written notification ( to include either electronic mail or facsimile
transmission) of the date the promotion is withdrawn. In either case above, a
letter amendment specifying your new list prices will be executed by the
parties. The new IBM Rate, reflecting such price change, will be paid to you for
all Products IBM or its Affiliates licenses to a customer on or after the first
day of the affected period stated above. IBM will not pay you any other payments
related to the Products (for example, under any IBM Business Partner Agreement).
IBM shall have full freedom and flexibility in pricing your Products and in
establishing the terms and conditions under which they are offered to customers.
IBM is not required to pay you, and you agree not to charge IBM for, taxes for
the Products which are licensed by IBM in the Territory.
<TABLE>
<CAPTION>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Product Type Product Name IBM Rate for US, Canada &AP (excluding
Japan)
- --------------------------------------------------------------------------------------------------------------------
Products All Products listed on Product Offering List (*) of Your Products US List Prices
Attachment specified in the Product Offering List
Attachment
- --------------------------------------------------------------------------------------------------------------------
Upgrades All Products listed under Product Upgrades section (*) of Your Products Upgrades US List
of Product Offering List Attachment Prices specified in the Product Offering
List Attachment
- --------------------------------------------------------------------------------------------------------------------
Services Maintenance Support (1st Year only) for all (*) of Your Products/Products Upgrades
Products and Product Upgrades listed on Product Maintenance Support US List Prices
Offering List Attachment specified in the Product Offering List
Attachment
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Product Type Product Name IBM Rate for EMEA, LA & Japan
- --------------------------------------------------------------------------------------------------------------------
Upgrades All products listed on Product Offering List (*) of Your Products International List
Attachment Prices specified in the Product Offering
List Attachment
- --------------------------------------------------------------------------------------------------------------------
Upgrades All Products Listed under Product Upgrades Section (*) of Your Products Upgrades
of Product Offering List Attachment International List Prices specified in
the Product Offering List Attachment
- --------------------------------------------------------------------------------------------------------------------
Services Maintenance Support (1st Year only) for all (*) of Your Products/Product Upgrades
Products and Product Upgrades listed on Product Maintenance Support International List
Offering List Attachment. Prices specified in the Product Offering
List Attachment
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
2 of 11
<PAGE>
5.0 Section 4.2 of Section 4.0 entitled "Royalties," of the Reseller Attachment
of the Agreement is hereby superseded and replaced as follows:
4.2 In the event IBM finds it necessary to offer a customer a special discount,
IBM may request a Lower IBM Rate for such transaction. If you agree to such
lower IBM Rate, you will provide to IBM in writing (to include either electronic
mail or a facsimile transmission) your approval to adjust the IBM Rate.
6.0 Add new Section 5 entitled "Additional Terms and Conditions" to the Reseller
Attachment of the Agreement as follows:
5.0 Additional Terms and Conditions:
5.1 National Language Support (NLS) and Double Byte Character Set (DBCS): You
will enable the Products for NLS/DBCS and provide all foreign language versions
of the Products to IBM as, and to the extent, they become available. Currently
English, French, German, Italian and Japanese are available. You will provide
IBM with an acceptable plan to provide a Spanish language version of the
Products; and given a justified business case by IBM which you and IBM will
jointly agree upon, including any appropriate funding, you will provide NLS for
additional language versions of the Products in six (6) months.
7.0 Ninety (90) days from the date the parties execute this Amendment No. 02,
the "Cooperative Marketing Attachment" to the Agreement is hereby deemed
terminated in its entirety, and any and all references to cooperative marketing
in the Agreement are hereby eliminated.
8.0 Attached entitled "Product Offering List Attachment" is hereby superseded
and replaced with the newly attached "Product Offering List Attachment".
Except as amended hereby, the Agreement and any Amendments and Attachments
thereto shall remain in full force and effect.
In WITNESS WHEREOF, the parties hereto have caused this Amendment 02 to be
executed by their respective authorized representatives.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
International Business Machines ShowCase Corporation
Corporation
/s/ Julie F. Joyce /s/ Ken Holec
- --------------------------------- -----------------------------------
Julie F. Joyce Name: Ken Holec
Director, Worldwide Strategy & Title: President & CEO
Business Development
Date: 3-15-99 Date: 3/9/99
3 of 11
<PAGE>
IBM
Solution Developer Marketing Partnerships
- --------------------------------------------------------------------------------
Product Offering List Attachment T97074-02
Product Offering List Attachment - Product Upgrades
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Products (English, German, French, Italian and Your US List Prices Your International
Japanese versions are available) List Prices
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Analyzer Client Ports (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Analyzer for the Web Ports (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Analyzer Server, 1 processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Analyzer Server, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Analyzer Server, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase Personal Desktop (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Currency Conversion 1 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Currency Conversion 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Currency Conversion 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Development Server 1 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Development Server 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Development Server 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Ports (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Server 1 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Server 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Server 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Spreadsheet Toolkit, 1 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Spreadsheet Toolkit, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Spreadsheet Toolkit, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 SQL Drill Through, 1 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 SQL Drill Through, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 SQL Drill Through, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
4 of 11
<PAGE>
IBM
Solution Developer Marketing Partnerships
- --------------------------------------------------------------------------------
Product Offering List Attachment T97074-02
Product Offering List Attachment - Product Upgrades
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Products (English, German, French, Italian and Your US List Prices Your International
Japanese versions are available) List Prices
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Essbase/400 Partitioning 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Partitioning 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 Partitioning 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Strategy Report Writer (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Builder Initial Server 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Builder Initial Server 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Builder Initial Server 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Builder Secondary Server 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Builder Secondary Server 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Builder Secondary Server 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Builder DB2/AIX Source (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Builder DB2/VMS Source (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Builder DB2/NT Source (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Manager Initial Server, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Manager Initial Server, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Manager Initial Server, 8-12 way process (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Manager Ports (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Manager Secondary Server, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Manager Secondary Server, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Warehouse Manager Secondary Server, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
5 of 11
<PAGE>
IBM
Solution Developer Marketing Partnerships
- --------------------------------------------------------------------------------
Product Offering List Attachment T97074-02
Product Offering List Attachment - Product Upgrades
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Products (English, German, French, Italian and Your US List Prices Your International
Japanese versions are available) List Prices
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Development Currency Conversion, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Currency Conversion, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Currency Conversion, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Partitioning, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Partitioning, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Partitioning, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Spreadsheet Toolkit, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Spreadsheet Toolkit, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Spreadsheet Toolkit, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development SQL Drill Through, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development SQL Drill Through, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development SQL Drill Through, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Financial Deployment Accelerators, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Financial Deployment Accelerators, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Financial Deployment Accelerators, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 API, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 API, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 API, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Essbase/400 API, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Essbase/400 API, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
6 of 11
<PAGE>
IBM
Solution Developer Marketing Partnerships
- --------------------------------------------------------------------------------
Product Offering List Attachment T97074-02
Product Offering List Attachment - Product Upgrades
<TABLE>
<CAPTION>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Development Essbase/400 API, 8-12 way processors (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Analyzer Server Web Extension, 1-way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Analyzer Server Web Extension, 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Analyzer Server Web Extension, 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
7 of 11
<PAGE>
IBM
Solution Developer Marketing Partnerships
- --------------------------------------------------------------------------------
Product Offering List Attachment T97074-02
Product Offering List Attachment - Product Upgrades
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Products (English, German, French, Italian and Your US List Prices Your International
Japanese versions are available) List Prices
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ShowCase Analyzer Server Upgrades:
- --------------------------------------------------------------------------------------------------------------------
From Analyzer Server 1-way to 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
From Analyzer Server 1-way to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
From Analyzer Server 2-4 way to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
ShowCase Essbase/400 Upgrades:
- --------------------------------------------------------------------------------------------------------------------
1-way processor to 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Currency Conversion 1-way processor to Currency Con. 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 1-way processor to Spreadsheet Toolkit 2-4 way (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
SQL Drill Through 1-way processor to SQL Drill Through 2-4 way (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Partitioning 1-way processor to Partitioning 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
1-way processor to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Currency Conversion 1-way processor to Currency Con. 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 1-way processor to Spreadsheet Toolkit 8-12 way (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
SQL Drill Through 1-way processor to SQL Drill Through 8-12 way (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Partitioning 1-way processor to Partitioning 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
2-4 way processor to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Currency Con. 2-4 way processor to Currency Conversion 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 2-4 way processor to Spreadsheet Toolkit 8-12 way (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
SQL Drill Through 2-4 way processor to SQL Drill Through 8-12 way (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Partitioning 2-4 way processor to Partitioning 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
8 of 11
<PAGE>
IBM
Solution Developer Marketing Partnerships
- --------------------------------------------------------------------------------
Product Offering List Attachment T97074-02
Product Offering List Attachment - Product Upgrades
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Products (English, German, French, Italian and Your US List Prices Your International
Japanese versions are available) List Prices
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ShowCase Essbase/400 Development Server Upgrades:
- --------------------------------------------------------------------------------------------------------------------
1-way processor to 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Currency Conversion 1-way processor to Currency Conversion 2-4 way (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 1-way processor to Spreadsheet Toolkit 2-4 way (*) (*)
processor
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
SQL Drill Through 1-way processor to SQL Drill Through 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Partitioning 1-way processor to Partitioning 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
1-way processor to 8-12 processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Currency Conversion 1-way processor to Currency Con. 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 1-way processor to Spreadsheet Toolkit 8-12 way (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
SQL Drill Through 1-way processor to SQL Drill Through 8-12 way processor (*)
(*) Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Partitioning 1-way processor to Partitioning 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
2-4 way processor to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Currency Con. 2-4 way processor to Currency Conversion 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Spreadsheet Toolkit 2-4 way processor to Spreadsheet Toolkit 8-12 way (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
SQL Drill Through 2-4 way processor to SQL Drill Through 8-12 way processor (*)
(*) Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Partitioning 2-4 way processor to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
(*) (*)
- --------------------------------------------------------------------------------------------------------------------
ShowCase Warehouse Builder Upgrades:
- --------------------------------------------------------------------------------------------------------------------
Initial Server 1-way processor to Initial Server 2-4 processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Initial Server 1-way processor to Initial Server 8-12 processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Initial Server 2-4 way processor to Initial Server 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
9 of 11
<PAGE>
IBM
Solution Developer Marketing Partnerships
- --------------------------------------------------------------------------------
Product Offering List Attachment T97074-02
Product Offering List Attachment - Product Upgrades
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Products (English, German, French, Italian and Your US List Prices Your International
Japanese versions are available) List Prices
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ShowCase Warehouse Builder Upgrades Cont'd:
- --------------------------------------------------------------------------------------------------------------------
Secondary Server 1-way processor to Secondary Server 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Secondary Server 1-way processor to Secondary Server 8-12 way (*) (*)
processor
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Secondary Server 2-4 way processor to Secondary Server 8-12 way (*) (*)
processor
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
ShowCase Warehouse Manager Upgrades:
- --------------------------------------------------------------------------------------------------------------------
Initial Server 1-way processor to Initial Server 2-4 processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Initial Server 1-way processor to Initial Server 8-12 processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Initial Server 2-4 way processor to Initial Server 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Secondary Server 1-way processor to Secondary Server 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Secondary Server 1-way processor to Secondary Server 8-12 way (*) (*)
processor
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Secondary Server 2-4 way processor to Secondary Server 8-12 way (*) (*)
processor
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
ShowCase Deployment Accelerators Upgrades:
- --------------------------------------------------------------------------------------------------------------------
Financial Deployment Accelerators 1-way to 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Financial Deployment Accelerators 1-way to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Financial Deployment Accelerators 2-4 way to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators 1-way to 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators 1-way to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Sales Analysis Deployment Accelerators 2-4 way to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
10 of 11
<PAGE>
IBM
Solution Developer Marketing Partnerships
- --------------------------------------------------------------------------------
Product Offering List Attachment T97074-02
Product Offering List Attachment - Product Upgrades
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Products (English, German, French, Italian and Your US List Prices Your International
Japanese versions are available) List Prices
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Essbase/400 API Upgrades:
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 API 1-way processor to 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 API 1-way processor to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Essbase/400 API 2-4 way processor to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Development Essbase/400 API Upgrades:
- --------------------------------------------------------------------------------------------------------------------
Development Essbase/400 API 1-way processor to 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Essbase/400 API 1-way processor to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Development Essbase/400 API 2-4 way processor to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
ShowCase Analyzer Server Web Extension Upgrades:
- --------------------------------------------------------------------------------------------------------------------
Analyzer Server Web Extension 1-way processor to 2-4 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Analyzer Server Web Extension 1-way processor to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
Analyzer Server Web Extension 2-4 way processor to 8-12 way processor (*) (*)
Maintenance Support (1st Year Only)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) Denotes confidential information that has been omitted and filed separately,
accompanied by a confidential treatment request, with the Securities and
Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
amended.
11 of 11
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS AND REPORT ON SCHEDULE
The Board of Directors
ShowCase Corporation:
The audits referred to in our report dated May 7, 1999 included the related
consolidated financial statement schedule as of March 31, 1999 and for each of
the years in the three-year period ended March 31, 1999 included in the
registration statement. This consolidated financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits. In our
opinion, such financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 28, 1999
