<PAGE>
As filed with the Securities and Exchange Commission on April 28, 1999
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
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: [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Titles of Each Class of Maximum Aggregate Amount of
Securities to be Registered Offering Price (1) Registration Fee
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<S> <C> <C>
Common Stock, par value $.01 per share..... $35,000,000 $9,730
</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o).
-------------------------
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 , 1999
PROSPECTUS
Shares
Common Stock
-------------
This is ShowCase Corporation's initial public offering of common stock.
We expect the public offering price to be between $ and $ 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 of this prospectus.
-------------
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public Offering Price........................... $ $
Underwriting Discount........................... $ $
Proceeds, before expenses, to ShowCase.......... $ $
</TABLE>
The underwriters may also purchase up to an additional 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 -- graphics to come]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 5
Forward-Looking Statements............................................... 15
Trademarks............................................................... 15
Use of Proceeds.......................................................... 16
Dividend Policy.......................................................... 16
Capitalization........................................................... 17
Dilution................................................................. 18
Selected Consolidated Financial Data..................................... 19
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 20
Business................................................................. 29
Management............................................................... 41
Certain Transactions..................................................... 49
Principal Shareholders................................................... 50
Description of Capital Stock............................................. 52
Shares Eligible for Future Sale.......................................... 55
Underwriting............................................................. 57
Legal Matters............................................................ 59
Experts.................................................................. 59
Where You Can Find More Information...................................... 60
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. The terms "ShowCase," "we," "us" and "our" as
used in this prospectus refer to "ShowCase Corporation" and its subsidiaries as
a combined entity, except where it is made clear that these terms mean only the
parent company.
ShowCase Corporation
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. Our ShowCase STRATEGY product
suite, introduced in 1996, supports ad hoc information access, enterprise
reporting and analytics. We have eight years of experience delivering business
intelligence solutions to our clients.
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 and multidimensional analysis 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. Our channel 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>
Recent Developments
Preliminary estimates of our results of operations for the three months
and the year ended March 31, 1999 (unaudited), together with statement of
operations data for the three months ended March 31, 1998 (unaudited) and for
the year ended March 31, 1998, are summarized below.
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
March 31, March 31,
---------------- ----------------
1998 1999 1998 1999
------- ------- ------- -------
(in thousands)
<S> <C> <C> <C> <C>
Consolidated Statement of Operations Data:
Total revenues.............................. $ 7,006 $10,257 $23,755 $35,519
Operating income (loss)..................... (982) 195 (3,602) (559)
Net income (loss)........................... (996) 218 (3,234) (616)
</TABLE>
2
<PAGE>
The Offering
<TABLE>
<S> <C>
Common stock offered.... shares
Common stock outstanding
after this offering.... shares. The number of shares that will be outstanding after the
offering is based on the actual number outstanding as of March 31, 1999. It
excludes options to purchase 1,545,807 shares of common stock 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 note 9 of
notes to consolidated financial statements.
Use of proceeds......... 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>
3
<PAGE>
Summary Consolidated Financial Data
The summary consolidated financial data below should be read in
conjunction 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, Nine Months Ended
-------------------------------------- -------------------------
December 31, December 31,
1994 1995 1996 1997 1998 1997 1998
------ ------- ------- ------- ------- ------------ ------------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Total revenues.......... $6,471 $10,018 $13,278 $18,027 $23,755 $16,751 $25,262
Operating income
(loss)................. 490 558 826 36 (3,602) (2,620) (753)
Net income (loss)....... 387 397 814 50 (3,234) (2,238) (834)
====== ======= ======= ======= ======= ======= =======
Net income (loss) per
share:
Basic................. $ 0.10 $ 0.10 $ 0.21 $ 0.01 $ (0.82) $ (0.57) $ (0.19)
Diluted............... $ 0.07 $ 0.06 $ 0.13 $ 0.01 $ (0.82) $ (0.57) $ (0.19)
Shares used in computing
basic net income (loss)
per share.............. 3,867 3,908 3,850 3,847 3,928 3,909 4,348
Shares used in computing
diluted net income
(loss) per share....... 5,907 6,339 6,457 6,445 3,928 3,909 4,348
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1998
--------------------------
Actual As Adjusted
----------- --------------
(in thousands)
<S> <C> <C>
Consolidated Balance Sheet Data:
Cash and marketable securities..................... $ 7,637 $
Working capital.................................... 609
Total assets....................................... 19,546
Long-term debt and capital lease obligations, less
current portion................................... 751
Total stockholders' equity......................... 2,118
</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 December 31, 1998, as adjusted,
reflects our sale of shares of common stock offered by this prospectus at
an assumed initial public offering price of $ per share, after deducting the
estimated underwriting discount and offering expenses that we will pay. See
"Use of Proceeds" and "Capitalization."
4
<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 $753,000 for the nine months ended December 31,
1998. 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
December 31, 1998, we had an accumulated deficit of approximately $4.0 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;
5
<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. We expect such software and services to
6
<PAGE>
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 corporate intranets and extranets. 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.
Our products currently operate primarily on the IBM AS/400
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 customers of the AS/400 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 channel partners are not successful and if we cannot
recruit additional channel partners we may not be able to expand our sales
In addition to our direct sales force, we rely on channel 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 channel
partners and maintaining successful relationships with these partners. Our
channel partners may offer products from several different companies,
including, in some cases, products that compete with our products. In
7
<PAGE>
addition, in the future our channel partners may develop products that compete
with our products. Our existing and potential channel 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
channel strategic partners may not devote adequate resources to selling our
products. If we are unable to retain our existing channel 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 channel 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 channel partners our operating margins could
decrease.
Our relationships with Hyperion Solutions Corporation and IBM are important to
our success
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% and 39.4% of our total license fees for fiscal
1998 and the nine months ended December 31, 1998, respectively. 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 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. 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 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 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.
8
<PAGE>
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 software. 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 channel
partners may establish cooperative relationships with our competitors, which
may limit our ability to sell our products through various distribution
channels.
Sales may be delayed or lost due to our lengthy sales cycles
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;
. 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.
9
<PAGE>
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 37.6% of our total revenues for
the nine months ended December 31, 1998. We currently have wholly-owned
subsidiaries in Belgium, Germany, France, the Netherlands 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;
. 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.
Fluctuations in foreign currency exchange rates may lead to 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.
10
<PAGE>
Possible consequences of euro conversion
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
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,
11
<PAGE>
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 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, beneficially own approximately
percent 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.
12
<PAGE>
Our charter documents and Minnesota law 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."
No prior public market has existed for our common stock and stock prices could
be highly volatile
Our common stock has never been sold in a public market. 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;
. 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 shares of
common stock outstanding, assuming no exercise of the underwriters' over-
allotment option and no exercise of outstanding options or warrants after March
31, 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 28,620 shares
will be freely tradeable 90 days after the date of this prospectus and the
remaining shares will be subject to 180
13
<PAGE>
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."
Some holders of our common stock have registration rights
After the offering, the holders of 2,759,226 shares of our common stock,
which represent percent 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 in 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."
14
<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.
15
<PAGE>
USE OF PROCEEDS
We estimate our net proceeds from the sale of the shares of our
common stock offered in this offering to be approximately $ million, or
approximately $ million if the underwriters' over-allotment option is
exercised in full, based on an assumed initial public offering price of $
per share and after deducting the estimated underwriting discount and offering
expenses.
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.
16
<PAGE>
CAPITALIZATION
The following table summarizes our capitalization as of December 31, 1998
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 December 31, 1998
-----------------------------
Pro Forma
Actual Pro Forma As Adjusted
------ --------- -----------
(in thousands)
<S> <C> <C> <C> <C>
Long-term debt and capital lease obligations,
less current portion........................ $ 751 $ 751 $
------ ------
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,
4,486,327 shares outstanding, actual;
50,000,000 shares authorized, 7,245,553
shares outstanding, pro forma; 50,000,000
shares authorized, shares
outstanding, pro forma as adjusted (1)..... 45 72
Additional paid-in capital.................. 6,313 6,300
Accumulated deficit......................... (4,001) (4,001)
Unrealized holding gain (loss) on
securities................................. (147) (147)
Deferred compensation....................... (197) (197)
Foreign currency translation adjustment..... 91 91
------ ------ ----------
Total stockholders' equity................. 2,118 2,118
------ ------ ----------
Total capitalization..................... $2,869 $2,869 $
====== ====== ==========
</TABLE>
- --------
(1) The number of shares outstanding is based on the actual number of shares
outstanding as of December 31, 1998. 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 note 9 of notes to consolidated financial
statements.
17
<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 $ or $ 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 shares of common stock offered by this prospectus at an
assumed initial public offering price of $ 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 $ or
$ per share of common stock. This represents an immediate increase in net
tangible book value to existing shareholders of $ per share and an
immediate dilution to new investors of $ per share. The following table
illustrates the per share dilution to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share $
Pro forma net tangible book value per share as of
March 31, 1999 $
Increase per share attributable to this offering
Pro forma net tangible book value per share after the
offering
----------
Dilution per share to new investors in this offering $
==========
</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>
Total
Shares Purchased Consideration
----------------- ------------------ Average Price
Number Percent Amount Percent Per Share
--------- ------- ---------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 7,262,093 % $6,187,176 % $0.85
New public investors
--------- ---- ---------- ---- -----
Total
========= ==== ========== ==== =====
</TABLE>
If the underwriters' over-allotment option is exercised in full, the
number of shares held by new investors will increase to , or %, 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 note 9 of notes to consolidated
financial statements.
18
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated statement of operations data shown below for
the years ended March 31, 1996, 1997 and 1998 and the consolidated balance
sheet data as of March 31, 1997 and 1998 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, 1994 and 1995 and the consolidated balance sheet data as of
March 31, 1994, 1995 and 1996 are derived from audited financial statements not
included elsewhere in this prospectus. The selected consolidated financial data
for the nine months ended December 31, 1997 and 1998 and as of December 31,
1998 were derived from our unaudited financial statements which, in the opinion
of management, include all adjustments, consisting solely of normal recurring
adjustments, necessary for a fair presentation of the financial information
shown in these statements. 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, Nine Months Ended
------------------------------------- -------------------------
December 31, December 31,
1994 1995 1996 1997 1998 1997 1998
------ ------ ------ ------- ------- ------------ ------------
Consolidated Statement of
Operations Data: (in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License fees............ $5,491 $8,131 $9,451 $11,639 $14,279 $10,077 $15,077
Maintenance and
support................ 608 1,469 2,707 4,888 6,651 4,765 7,302
Professional service
fees................... 372 418 1,120 1,500 2,825 1,909 2,883
------ ------ ------ ------- ------- ------- -------
Total revenues......... 6,471 10,018 13,278 18,027 23,755 16,751 25,262
------ ------ ------ ------- ------- ------- -------
Cost of revenues:
License fees............ 536 1,145 1,145 1,365 2,645 1,709 2,894
Maintenance and
support................ 224 511 520 990 1,572 1,122 1,828
Professional service
fees................... 274 602 676 1,172 2,005 1,343 1,995
------ ------ ------ ------- ------- ------- -------
Total cost of
revenues.............. 1,034 2,258 2,341 3,527 6,222 4,174 6,717
------ ------ ------ ------- ------- ------- -------
Gross margin............. 5,437 7,760 10,937 14,500 17,533 12,577 18,545
Operating expenses:
Sales and marketing..... 2,676 4,152 6,661 9,940 15,494 11,153 13,723
Product development..... 1,052 1,821 2,070 2,553 3,051 2,204 3,236
General and
administrative......... 1,219 1,229 1,380 1,971 2,590 1,840 2,339
------ ------ ------ ------- ------- ------- -------
Total operating
expenses.............. 4,947 7,202 10,111 14,464 21,135 15,197 19,298
------ ------ ------ ------- ------- ------- -------
Operating income (loss).. 490 558 826 36 (3,602) (2,620) (753)
Other income (expense),
net..................... (3) 9 138 14 543 507 54
------ ------ ------ ------- ------- ------- -------
Net income (loss) before
income taxes............ 487 567 964 50 (3,059) (2,113) (699)
Income taxes............. 100 170 150 -- 175 125 135
------ ------ ------ ------- ------- ------- -------
Net income (loss)........ $ 387 $ 397 $ 814 $ 50 $(3,234) $(2,238) $ (834)
====== ====== ====== ======= ======= ======= =======
Net income (loss) per
share
Basic................... $ 0.10 $ 0.10 $ 0.21 $ 0.01 $ (0.82) $ (0.57) $ (0.19)
Diluted................. $ 0.07 $ 0.06 $ 0.13 $ 0.01 $ (0.82) $ (0.57) $ (0.19)
Shares used in computing
basic net income (loss)
per share(1)............ 3,867 3,908 3,850 3,847 3,928 3,909 4,348
Shares used in computing
diluted net income
(loss) per share........ 5,907 6,339 6,457 6,445 3,928 3,909 4,348
</TABLE>
<TABLE>
<CAPTION>
As of March 31,
----------------------------------
As of
December 31,
1994 1995 1996 1997 1998 1998
------ ------ ------ ------ ------ ------------
Consolidated Balance Sheet
Data: (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Cash and marketable
securities................... $1,404 $1,326 $2,587 $2,989 $5,847 $7,637
Working capital............... 966 1,106 1,165 1,060 1,579 609
Total assets.................. 3,355 5,344 6,666 11,400 16,315 19,546
Long-term debt and capital
lease obligations, less
current portion.............. 122 570 446 682 1,157 751
Total stockholders' equity.... 1,329 1,725 2,519 2,602 3,105 2,118
</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.
19
<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. Our ShowCase STRATEGY product
suite, introduced in 1996, supports ad hoc information access, enterprise
reporting and analytics. We have eight years of experience delivering business
intelligence solutions to our clients.
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 were $25.3 million for the
nine months ended December 31, 1998. Although our revenues have increased
significantly during these periods, this growth may not continue. We had a net
income of approximately $50,000 in fiscal 1997, a net loss of $3.2 million in
fiscal 1998 and a net loss of approximately $834,000 for the nine months ended
December 31, 1998 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 channel partners are recognized upon receipt of a report of delivery.
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 our
channel partners. 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 channel partners include IBM, software application
vendors, resellers and distributors located
20
<PAGE>
in the United States, Italy, Switzerland, Mexico, Japan, Australia, Singapore,
Hong Kong, Thailand and South Korea. Sales through our channel partners
accounted for approximately 40% of license fee revenues for fiscal 1997, 20%
for fiscal 1998 and 20% for the nine months ended December 31, 1998. If our
channel sales 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 37.6% of our total revenue
for the nine months ended December 31, 1998. 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, Nine Months Ended
------------------- -------------------------
December 31, December 31,
1996 1997 1998 1997 1998
----- ----- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
As a Percentage of Total
Revenues:
Revenues:
License fees................ 71.2% 64.6% 60.1% 60.2% 59.7%
Maintenance and support..... 20.4 27.1 28.0 28.4 28.9
Professional service fees... 8.4 8.3 11.9 11.4 11.4
----- ----- ----- ----- -----
Total revenues............ 100.0 100.0 100.0 100.0 100.0
Cost of revenues:
License fees................ 8.6 7.6 11.1 10.2 11.5
Maintenance and support..... 3.9 5.5 6.6 6.7 7.2
Professional service fees... 5.1 6.5 8.4 8.0 7.9
----- ----- ----- ----- -----
Total cost of revenues.... 17.6 19.6 26.2 24.9 26.6
----- ----- ----- ----- -----
Gross margin.................. 82.4 80.4 73.8 75.1 73.4
Operating expenses:
Sales and marketing......... 50.2 55.1 65.2 66.6 54.3
Product development......... 15.6 14.2 12.8 13.2 12.8
General and administrative.. 10.4 10.9 10.9 11.0 9.3
----- ----- ----- ----- -----
Total operating expenses.. 76.1 80.2 89.0 90.7 76.4
----- ----- ----- ----- -----
Operating income (loss)....... 6.2 0.2 (15.2) (15.6) (3.0)
Other income (expense), net... 1.0 0.1 2.3 3.0 0.2
----- ----- ----- ----- -----
Net income (loss) before
income taxes................. 7.3 0.3 (12.9) (12.6) (2.8)
Income taxes.................. 1.1 -- 0.7 0.7 0.5
----- ----- ----- ----- -----
Net income (loss)............. 6.1% 0.3% (13.6)% (13.4)% (3.3)%
===== ===== ===== ===== =====
</TABLE>
Revenues
Total revenues. Revenues increased from $13.3 million in fiscal 1996 to
$18.0 million in fiscal 1997 and to $23.8 million in fiscal 1998, representing
increases of 35.8% in fiscal 1997 and 31.8% in fiscal 1998. Revenues increased
from $16.8 million for the nine months ended December 31, 1997 to $25.3 million
for the nine months ended December 31, 1998, representing an increase of 50.8%.
License fees. License fee revenues increased from $9.5 million in fiscal
1996 to $11.6 million in fiscal 1997 and to $14.3 million in fiscal 1998,
representing increases of 23.2% in fiscal 1997 and 22.7% in fiscal
21
<PAGE>
1998. License fee revenues increased from $10.1 million for the nine months
ended December 31, 1997 to $15.1 million for the nine months ended December 31,
1998, representing an increase of 49.6%. License fee revenues as a percentage
of total revenues were 71.2% for fiscal 1996, 64.6% for fiscal 1997, 60.1% for
fiscal 1998 and 59.7% for the nine months ended December 31, 1998. 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. Beginning in
fiscal 1997, revenues from Essbase/400 licenses became a significant percentage
of total license fee revenues.
Maintenance and support. Maintenance and support revenues increased from
$2.7 million in fiscal 1996 to $4.9 million in fiscal 1997 and to $6.7 million
in fiscal 1998, representing increases of 80.6% in fiscal 1997 and 36.1% in
fiscal 1998. Maintenance and support revenues increased from $4.8 million for
the nine months ended December 31, 1997 to $7.3 million for the nine months
ended December 31, 1998, representing an increase of 53.2%. Maintenance and
support revenues as a percentage of total revenues were 20.4% for fiscal 1996,
27.1% for fiscal 1997, 28.0% for fiscal 1998 and 28.9% for the nine months
ended December 31, 1998. 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 $1.1 million in fiscal 1996 to $1.5 million in fiscal 1997 and to $2.8
million in fiscal 1998, representing increases of 33.9% in fiscal 1997 and
88.3% in fiscal 1998. Professional service fee revenues increased from $1.9
million for the nine months ended December 31, 1997 to $2.9 million for the
nine months ended December 31, 1998, representing an increase of 51.0%.
Professional service fee revenues as a percentage of total revenues were 8.4%
for fiscal 1996, 8.3% for fiscal 1997, 11.9% for fiscal 1998 and 11.4% for the
nine months ended December 31, 1998. 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 $1.1 million in fiscal 1996
to $1.4 million in fiscal 1997 and to $2.6 million in fiscal 1998, representing
12.1% of license fee revenues in fiscal 1996, 11.7% in fiscal 1997 and 18.5% in
fiscal 1998. Cost of license fees increased from $1.7 million for the nine
months ended December 31, 1997 to $2.9 million for the nine months ended
December 31, 1998, representing 17.0% and 19.2% of license fee revenues for
these periods. 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. 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 $0.5 million in fiscal 1996 to $1.0 million in fiscal
1997 and to $1.6 million in fiscal 1998, representing 19.2% of total
maintenance and support revenues in fiscal 1996, 20.3% in fiscal 1997 and 23.6%
in fiscal 1998. Cost of maintenance and support increased from $1.1 million for
the nine months ended December 31, 1997 to $1.8 million for the nine months
ended December 31, 1998, representing 23.5% and 25.0% of total license fee
revenues for these periods. The increase in cost of maintenance and support was
primarily due to the hiring of additional personnel and the implementation of 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.
22
<PAGE>
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 $0.7 million in fiscal 1996 to
$1.2 million in fiscal 1997 and to $2.0 million in fiscal 1998, representing
60.4% of professional service fee revenues in fiscal 1996, 78.1% in fiscal 1997
and 71.0% in fiscal 1998. Cost of professional service fees increased from $1.3
million for the nine months ended December 31, 1997 to $2.0 million for the
nine months ended December 31, 1998, representing 70.4% and 69.2% of
professional service fee revenues for these periods. The dollar increase in
cost of professional service fees was primarily due to the expansion of our
professional services staff. Cost of professional service fees as a percentage
of professional service fee revenues has 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 $6.7 million in fiscal 1996 to
$9.9 million in fiscal 1997 and to $15.5 million in fiscal 1998, representing
50.2% of total revenues in fiscal 1996, 55.1% in fiscal 1997 and 65.2% in
fiscal 1998. Sales and marketing expenses increased from $11.2 million for the
nine months ended December 31, 1997 to $13.7 million for the nine months ended
December 31, 1998, representing 66.6% and 54.3% of total revenues for these
periods. This increase in both dollar amount and as a percentage of total
revenues from fiscal 1996 through fiscal 1998 reflected the establishment of a
direct field sales force, the hiring of additional sales and marketing
personnel and the expansion of promotional activities. 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 $2.1 million
in fiscal 1996 to $2.6 million in fiscal 1997 and to $3.1 million in fiscal
1998, representing 15.6% of total revenues in fiscal 1996, 14.2% in fiscal 1997
and 12.8% in fiscal 1998. Product development expenses increased from
$2.2 million for the nine months ended December 31, 1997 to $3.2 million for
the nine months ended December 31, 1998, representing 13.2% and 12.8% of total
revenues for these periods. This increase in dollar amount is due to expenses
associated with the development of new products and the hiring of additional
personnel. Product development expenses decreased as a percentage of total
revenues in fiscal 1997 and fiscal 1998 and for the nine months ended December
31, 1998 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 $1.4 million in fiscal 1996 to $2.0
million in fiscal 1997 and to $2.6 million in fiscal 1998, representing 10.4%
of total revenues in fiscal 1996 and 10.9% in each of fiscal 1997 and 1998.
General and administrative expenses increased from $1.8 million for the nine
months ended December 31, 1997 to $2.3 million for the nine months ended
December 31, 1998 representing 11.0% and 9.3% of total revenues for these
periods. These increases in dollar amounts were primarily due to increased
staffing and related expenses necessary to manage and support the expansion of
our operations. 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.
23
<PAGE>
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
decreased from $137,000 in fiscal 1996 to $14,000 in fiscal 1997 and increased
to $543,000 in fiscal 1998. Other income decreased from $507,000 for the nine
months ended December 31, 1997 to $54,000 for the nine months ended December
31, 1998. The increase in other income in fiscal 1998 can be attributed
primarily to earnings on investment of the proceeds from our sale of preferred
stock. The decrease in other income for the nine months ended December 31, 1998
from the nine months ended December 31, 1997 can be attributed to the gain on
the sale of a security of a third party during the nine months ended
December 31, 1997.
Provision (Benefit) for Income Taxes
Income taxes decreased from $150,000 in fiscal 1996 to no income taxes in
fiscal 1997 due to lower income from operations in fiscal 1997. Income taxes
were $175,000 in fiscal 1998 and $135,000 for the nine months ended December
31, 1998, 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
$1,055,000 as of March 31, 1997 and $1,840,000 as of March 31, 1998, primarily
related to deferred revenue on which taxes have been paid. See note 7 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 fiscal
1998, 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 $415,000 as of March 31, 1997 and
$1,500,000 as of March 31, 1998. The amount recognized approximates the amount
of cash refundable that could be generated if we were to continue our operating
loss position.
24
<PAGE>
Selected Quarterly Operating Results
The following table shows unaudited consolidated financial information
for each of the four quarters in our fiscal year ended March 31, 1998 and for
the first three quarters in our fiscal year ended March 31, 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,
1997 1997 1997 1998 1998 1998 1998
-------- -------- ------- ------- -------- -------- -------
Consolidated Statements of
Operations Data: (in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License fees............ $2,346 $3,301 $4,429 $4,203 $4,224 $5,019 $5,834
Maintenance and
support................. 1,398 1,692 1,675 1,886 2,161 2,365 2,776
Professional service
fees.................... 621 575 712 917 913 1,037 933
------- ------ ------ ------ ------ ------ ------
Total revenues........ 4,365 5,568 6,816 7,006 7,298 8,421 9,543
Cost of revenues:
License fees............ 389 475 844 937 817 1,000 1,077
Maintenance and
support................. 367 373 382 450 565 605 658
Professional service
fees.................... 437 411 494 663 613 577 805
------- ------ ------ ------ ------ ------ ------
Total cost of
revenues............. 1,193 1,259 1,720 2,050 1,995 2,182 2,540
------- ------ ------ ------ ------ ------ ------
Gross margin.............. 3,172 4,309 5,096 4,956 5,303 6,239 7,003
Operating expenses:
Sales and marketing..... 3,418 3,412 4,322 4,342 4,387 4,378 4,958
Product development..... 686 742 776 847 979 1,219 1,038
General and
administrative.......... 559 614 668 749 736 748 855
Total operating
expenses............. 4,663 4,768 5,766 5,938 6,102 6,345 6,851
------- ------ ------ ------ ------ ------ ------
Operating income (loss)... (1,491) (459) (670) (982) (799) (106) 152
Other income (expense),
net...................... (3) 2 508 36 6 25 23
------- ------ ------ ------ ------ ------ ------
Net income (loss) before
income taxes............. (1,494) (457) (162) (946) (793) (81) 175
Income taxes.............. 50 25 50 50 40 45 50
------- ------ ------ ------ ------ ------ ------
Net income (loss)......... $(1,544) $ (482) $ (212) $ (996) $ (833) $ (126) $ 125
======= ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------------------
June 30, Sept 30, Dec 31, Mar 31, June 30, Sept 30, Dec 31,
1997 1997 1997 1998 1998 1998 1998
Percent of Total Revenues: -------- -------- ------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License fees............ 53.7% 59.3% 65.0% 60.0% 57.9% 59.6% 61.1%
Maintenance and
support................. 32.0 30.4 24.6 26.9 29.6 28.1 29.1
Professional service
fees.................... 14.2 10.3 10.4 13.1 12.5 12.3 9.8
----- ----- ----- ----- ----- ----- -----
Total revenues........ 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
Maintenance and
support................. 8.4 6.7 5.6 6.4 7.7 7.2 6.9
Professional service
fees.................... 10.0 7.4 7.2 9.5 8.4 6.9 8.4
----- ----- ----- ----- ----- ----- -----
Total cost of
revenues............. 27.3 22.6 25.2 29.3 27.3 25.9 26.6
----- ----- ----- ----- ----- ----- -----
Gross margin.............. 72.7 77.4 74.8 70.7 72.7 74.1 73.4
Operating expenses:
Sales and marketing..... 78.3 61.3 63.4 62.0 60.1 52.0 52.0
Product development..... 15.7 13.3 11.4 12.1 13.4 14.5 10.9
General and
administrative.......... 12.8 11.0 9.8 10.7 10.1 8.9 9.0
Total operating
expenses............. 106.8 85.6 84.6 84.8 83.6 75.3 71.8
----- ----- ----- ----- ----- ----- -----
Operating income (loss)... (34.2) (8.2) (9.8) (14.0) (10.9) (1.3) 1.6
Other income (expense),
net...................... (0.1) -- 7.5 0.5 0.1 0.3 0.2
----- ----- ----- ----- ----- ----- -----
Net income (loss) before
income taxes............. (34.2) (8.2) (2.4) (13.5) (10.9) (1.0) 1.8
Income taxes.............. 1.1 0.4 0.7 0.7 0.5 0.5 0.5
----- ----- ----- ----- ----- ----- -----
Net income (loss)......... (35.4)% (8.7)% (3.1)% (14.2)% (11.4)% (1.5)% 1.3%
===== ===== ===== ===== ===== ===== =====
</TABLE>
25
<PAGE>
Our operating results have varied and may in the future vary
significantly from quarter to quarter. 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 $2.2 million in fiscal 1996 and $1.2 million in
fiscal 1997, and used cash of $833,000 in fiscal 1998. Our operating activities
used cash of $2.0 million for the nine months ended December 31, 1997 and
provided cash of $2.6 million for the nine months ended December 31, 1998. 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 the nine months ended December 31, 1998 compared to the nine
months ended December 31, 1997 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 approximately $646,000 in fiscal
1996, $1.1 million in fiscal 1997 and $566,000 in fiscal 1998. Our investing
activities used cash of approximately $302,000 and $247,000 for the nine months
ended December 31, 1997 and December 31, 1998, respectively. 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 used cash of approximately $323,000 in fiscal
1996 and provided cash of approximately $290,000 in fiscal 1997 and $3.8
million in fiscal 1998. Our financing activities used cash of approximately
$6,000 in the nine months ended December 31, 1997 and used cash of
approximately $290,000 in the nine months ended December 31, 1998. 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 the nine months ended December 31, 1998, cash used by
financing activities consisted primarily of long-term debt repayment and
payments under capital lease obligations.
Our sources of liquidity as of December 31, 1998 consisted principally of
cash and marketable securities of $7.6 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.
26
<PAGE>
Quantitative and Qualitative Disclosure About Market Risks
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 December 31, 1998, we believe that movements in foreign currency
rates would not 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.
In addition, we plan to survey our major suppliers and evaluate their
plans to address potential Year 2000 issues. However, it is impossible to fully
assess the potential consequences in the event interruptions from
27
<PAGE>
suppliers occur or in the event that there are disruptions in infrastructure
areas as utilities, communications, transportation, banking or government.
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, our ability to timely ship products to our clients would
be disrupted 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. Such a result could seriously harm our
business and results of operations. 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
effect on 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.
28
<PAGE>
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. Our ShowCase STRATEGY product
suite, introduced in 1996, supports ad hoc information access, enterprise
reporting and analytics. We have eight years of experience delivering business
intelligence solutions to our clients.
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. 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.
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 marts and 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. Above the entire graphic are the words "Deployment
Accelerator."
Box on the extreme left: On the extreme left is a rectangular box with a
symbolic representation of a computer server, bearing the words "Any AS/400
Data Source." Above this representation is the acronym "OLTP." Below this
representation are the words "Legacy, Human Resources, Marketing, Sales, and
Financial 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 a computer server in the rectangular box on the extreme left to a box in
the center rectangular box bearing the words "Warehouse Builder." An arrow
points to the right from this rectangular box to a symbolic representation of
a data warehouse. Above this representation are the words "DB2/400 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 "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 "ESSBASE/400 Multidimensional Data
Mart." The lower arrow points to a symbolic representation of a relational
data mart. Above 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
"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 left of these symbolic
representations are the words "Query," "Report Writer," "Essbase/400,"
"Analyzer," and "Analyzer for the Web."]
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 multidimensional and/or
relational data through desktop computers. End users can display data as
charts, spreadsheets or custom report forms. The end user can sort, rank,
filter, calculate and graph this data for more in-depth analysis and can drill
down to the underlying data.
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 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.
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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 include order and performance/variance
analysis, sales, customer and shipping tracking, sales history and forecasting
and impact analysis. Financial Analysis Deployment Accelerators include
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 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.
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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 the fiscal years 1997 and 1998 and the nine months ended
December 31, 1998, product development expenses were $2.6 million, $3.1 million
and $3.2 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 channel 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 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 to grow our sales."
Our software application vendor channel 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.
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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. 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 success."
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 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
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 success."
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.
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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.
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.
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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 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 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
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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 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.
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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 March 31, 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
Roger E. Bottum............ 40 Vice President, Marketing
Patrick Dauga.............. 39 Vice President, International
Jonathan P. Otterstatter... 39 Vice President, Development
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.
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.
Jonathan P. Otterstatter has been our vice president, development since
May 1994. 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.
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.
Promod Haque has been one of our directors since March 1992. Dr. Haque
joined Norwest Venture Capital Management, Inc., a venture capital firm, in
November 1990. He is currently a partner of Itasca
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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 Connect, Inc., Information Advantage, Inc.,
Optical Sensors, Inc., Raster Graphics, Inc., Transaction Systems Architects,
Inc. and several privately held companies. Dr. Haque holds a B.S.E.E. degree
from the University of Delhi, India, an M.S.E.E. degree and a Ph.D.E.E. degree
from Northwestern University, and an M.M. degree from the J.L. Kellogg Graduate
School of Management, Northwestern University.
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:
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation (1) Awards
-------------------- ------------
Shares
Name and Principal Underlying All Other
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(4)
Patrick Dauga
Vice President,
International............ 180,654 92,053(3) 30,000 45,275(5)
Kevin R. Potrzeba
Vice President, Sales.... 135,000 109,476(3) 20,000 4,245(4)
Jonathan P. Otterstatter
Vice President,
Development.............. 126,000 40,100 60,000 4,245(4)
Roger E. Bottum
Vice President,
Marketing................ 109,375(2) 13,125 135,000 2,995(4)(6)
</TABLE>
- --------
(1) 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.
(2) Mr. Bottum joined ShowCase in August 1998. His annual salary as of March
31, 1999 is $175,000.
(3) Includes sales commissions in the amount of $79,003 for Mr. Dauga and
$76,226 for Mr. Potrzeba.
(4) 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.
(5) Includes amounts we pay for health insurance and retirement benefits.
(6) Includes 401(k) plan matching contributions in the amount of $500.
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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. An aggregate of 765,500 shares of common stock were
granted to our employees during fiscal 1999.
Option Grants in Fiscal 1999
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
% of Total Rates of Stock
Number of Options Exercise Price
Securities Granted to Price Appreciation for
Underlying Employees Per Option Term (5)
Options in Fiscal Share Expiration -----------------
Name Granted 1999 (4) 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.
(4) 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.
(5) 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.
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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 816,714 shares have been issued upon exercise of options
through March 31, 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 March 31,1999, options to purchase an aggregate of 1,545,807 shares
of common stock, at a weighted average exercise price of $2.32 per share, were
outstanding under the Stock Option Plan, and a total of 119,003 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.
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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
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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,
48
<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.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table provides information concerning beneficial ownership
of our common stock as of March 31, 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 7,262,093 shares of common stock outstanding as of March 31,
1999. The table also lists the applicable percentage of beneficial ownership
based on 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 shareholders below is c/o ShowCase
Corporation, 4131 Highway 52 North, Suite G111, Rochester, Minnesota 55901,
except where another address is listed below.
<TABLE>
<CAPTION>
Percentage of Common
Number of Stock Owned
Shares --------------------
Beneficially Before the After the
Name and Address of Beneficial Owner Owned Offering Offering
- ------------------------------------ ------------ ---------- ---------
<S> <C> <C> <C>
Promod Haque and
Norwest Equity Partners (1)
245 Lytton Avenue, Suite 250
Palo Alto, California 94301............... 2,812,312 38.7%
David G. Wenz
2924 Salem Point Dr. S.W.
Rochester, Minnesota 55902................ 910,000 12.5
Dennis Semerad (2).......................... 856,960 11.8
Kenneth H. Holec (3)(5)..................... 783,439 10.7
David N. Youngers
8223 75th Avenue, N.W.
Oronoco, Minnesota 55460.................. 479,815 6.6
Jonathan P. Otterstatter (4)(5)............. 144,833 2.0
C. McKenzie Lewis III (5)
5759 Long Brake Circle
Edina, Minnesota 55439.................... 27,083 0.4
Jack Noonan (5)
SPSS Inc.
233 South Wacker Drive, 11th Floor
Chicago, Illinois 60606-6307.............. 27,083 0.4
Kevin R. Potrzeba (5)....................... 28,000 0.4
Roger E. Bottum (5)......................... 13,500 0.2
Patrick Dauga (5)........................... 10,000 0.1
All directors and executive officers as a
group (10 persons) (5)..................... 4,750,961 63.2
</TABLE>
- --------
(1) Includes 1,895,028 shares held by Norwest Equity Partners IV and 917,284
shares held by Norwest Equity Partners V, L.P. Promod Haque, one of our
directors, is a partner of Itasca Partners, the general partner of Norwest
Equity Partners IV, L.P., and is a partner of Itasca Partners V, L.L.P.,
the general partner of Norwest Equity Partners V. Dr. Haque disclaims
beneficial ownership of shares held by Norwest Equity Partners IV, L.P. and
Norwest Equity Partners V, L.P.
50
<PAGE>
(2) Includes 20,000 shares registered in the name of Mr. Semerad's wife, Rita
M. Semerad.
(3) Includes 3,738 shares registered in the name of each of Mr. Holec's three
minor children.
(4) 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.
(5) Shares of common stock subject to options currently exercisable or
exercisable within 60 days of March 31, 1999 are deemed outstanding for
purposes of computing the percentage beneficially owned by the person
holding these options but are not deemed outstanding for purposes of
computing the percentage beneficially owned by any other person. The
following table indicates those people whose total number of beneficially
owned shares include shares subject to options exercisable within 60 days
of March 31, 1999:
<TABLE>
<CAPTION>
Shares Subject to Options
-------------------------
<S> <C>
Kenneth H. Holec................................. 32,632
Jonathan P. Otterstatter......................... 89,833
Kevin R. Potrzeba................................ 28,000
Craig W. Allen................................... 27,750
C. McKenzie Lewis III............................ 27,083
Jack Noonan...................................... 27,083
Roger E. Bottum.................................. 13,500
Patrick Dauga.................................... 10,000
</TABLE>
51
<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 March 31, 1999, there were 7,262,093 shares of common stock
outstanding, held by 58 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.
52
<PAGE>
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:
. 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.
53
<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.
54
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon the closing of this offering, we will have shares of common
stock outstanding, assuming no exercise of the underwriters' over-allotment
option and no exercise of outstanding options to purchase common stock. 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."
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 7,262,093 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;
. 28,620 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 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 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.
55
<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."
56
<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.............................................
FAC/Equities, a division of First Albany Corporation..............
-------
Total........................................................
=======
</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 $ 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>
57
<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 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 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
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
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.
58
<PAGE>
We expect our common stock to be approved for listing on the Nasdaq
National Market, subject to notice of issuance, under the symbol "SHWC."
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, 1997 and 1998 and the
related consolidated statements of operations and comprehensive income (loss),
of stockholders' equity, and cash flows for each of the years in the three-year
period ended March 31, 1998 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.
59
<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.
60
<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, 1997 and 1998...................... F-3
Consolidated Statements of Operations and Comprehensive Income (Loss),
Years ended March 31, 1996, 1997, and 1998............................... F-4
Consolidated Statements of Stockholders' Equity,
Years ended March 31, 1996, 1997, and 1998............................... F-5
Consolidated Statements of Cash Flows,
Years ended March 31, 1996, 1997, and 1998............................... F-6
Notes to Consolidated Financial Statements................................ F-7
Unaudited Consolidated Balance Sheet, December 31, 1998................... F-17
Unaudited Consolidated Statements of Operations and Comprehensive Income
(Loss),
Nine months ended December 31, 1997 and 1998............................. F-18
Unaudited Consolidated Statements of Cash Flows,
Nine months ended December 31, 1997 and 1998............................. F-19
Notes to Unaudited Consolidated Financial Statements...................... F-20
</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, 1997 and 1998, 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, 1998. 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, 1997 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended March 31, 1998 in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
May 15, 1998
Minneapolis, MN
F-2
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
March 31,
---------------
1997 1998
Assets ------- -------
<S> <C> <C>
Current assets:
Cash......................................................... $ 2,989 $ 5,404
Marketable securities........................................ -- 443
Accounts receivable, net of allowances of $300 in 1997 and
$500 in 1998................................................ 4,891 6,162
Prepaid expenses and other current assets.................... 656 1,032
Income taxes receivable...................................... -- 251
Deferred income taxes........................................ 640 340
------- -------
Total current assets....................................... 9,176 13,632
------- -------
Property and equipment, net................................... 1,513 2,191
Investment in affiliates...................................... 165 192
Product rights, net of accumulated amortization............... 310 124
Goodwill, net of accumulated amortization..................... 236 176
------- -------
Total assets............................................... $11,400 $16,315
======= =======
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current liabilities:
Accounts payable............................................. $ 1,067 $ 1,094
Accrued liabilities.......................................... 1,510 2,885
Current portion of long-term debt............................ 275 397
Current portion of obligations under capital leases.......... 134 135
Income taxes payable......................................... 295 --
Deferred revenue............................................. 4,835 7,542
------- -------
Total current liabilities.................................. 8,116 12,053
------- -------
Long-term debt, less current portion.......................... 624 944
Capital lease obligations, less current portion............... 58 213
------- -------
Total liabilities.......................................... 8,798 13,210
------- -------
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
Common stock, $.01 par value, 10,000,000 shares authorized,
3,852,731 and 3,988,560 shares issued and outstanding....... 39 40
Additional paid-in capital................................... 2,465 5,988
Accumulated other comprehensive income:
Cumulative translation adjustment........................... 26 107
Unrealized holding gain on securities....................... -- 123
Retained earnings (accumulated deficit)...................... 67 (3,167)
------- -------
Total stockholders' equity................................. 2,602 3,105
------- -------
Total liabilities and stockholders' equity................. $11,400 $16,315
======= =======
</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,
-------------------------
1996 1997 1998
------- ------- -------
Revenues:
<S> <C> <C> <C>
License fees....................................... $ 9,451 $11,639 $14,279
Maintenance and support............................ 2,707 4,888 6,651
Professional service fees.......................... 1,120 1,500 2,825
------- ------- -------
Total revenues................................... 13,278 18,027 23,755
------- ------- -------
Cost of revenues:
License fees....................................... 1,145 1,365 2,645
Maintenance and support............................ 520 990 1,572
Professional service fees.......................... 676 1,172 2,005
------- ------- -------
Total cost of revenues........................... 2,341 3,527 6,222
------- ------- -------
Gross margin........................................ 10,937 14,500 17,533
------- ------- -------
Operating expenses:
Sales and marketing................................ 6,661 9,940 15,494
Product development................................ 2,070 2,553 3,051
General and administrative......................... 1,380 1,971 2,590
------- ------- -------
Total operating expenses......................... 10,111 14,464 21,135
------- ------- -------
Operating income (loss)............................. 826 36 (3,602)
------- ------- -------
Other income (expense), net:
Interest expense................................... (97) (97) (123)
Interest income.................................... 104 156 74
Equity in income (losses) of unconsolidated
affiliates........................................ (52) (33) 27
Gain on sales of securities........................ -- -- 551
Other income (expense), net........................ 183 (12) 14
------- ------- -------
Total other income (expense), net................ 138 14 543
------- ------- -------
Net income (loss) before income taxes............... 964 50 (3,059)
Income taxes........................................ 150 -- 175
------- ------- -------
Net income (loss)................................... 814 50 (3,234)
------- ------- -------
Other comprehensive income (loss):
Foreign currency translation adjustment............ (5) 31 81
Unrealized holding gain on securities.............. -- -- 123
------- ------- -------
Comprehensive income (loss)......................... $ 809 $ 81 $(3,030)
======= ======= =======
Net income (loss) per share (note 10):
Basic.............................................. $ 0.21 $ 0.01 $ (0.82)
======= ======= =======
Diluted............................................ $ 0.13 $ 0.01 $ (0.82)
======= ======= =======
Weighted average shares outstanding used in
computing basic net income (loss) per share........ 3,850 3,847 3,928
Weighted average shares outstanding used in
computing diluted net income (loss) per share...... 6,457 6,455 3,928
</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 Retained
Number Number Additional other earnings Total
of of Number of paid-in comprehensive (accumulated stockholders'
shares Amount shares Amount shares Amount capital income (loss) deficit) equity
------- ------ ------- ------ --------- ------ ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at March
31, 1995.......... 473,757 $ 5 -- $-- 3,907,780 $ 39 $2,478 $ -- $ (797) $1,725
Net income......... -- -- -- -- -- -- -- -- 814 814
Change in foreign
currency
translation
adjustment........ -- -- -- -- -- -- -- (5) -- (5)
Stock purchased and
retired under
stock repurchase
agreement......... -- -- -- -- (72,779) (1) (17) -- -- (18)
Stock issued
pursuant to stock
option plan....... -- -- -- -- 7,940 -- 3 -- -- 3
------- ---- ------- --- --------- ---- ------ ---- ------- ------
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
======= ==== ======= === ========= ==== ====== ==== ======= ======
</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,
-----------------------
1996 1997 1998
------ ------ -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................... $ 814 $ 50 $(3,234)
Adjustments to reconcile net income (loss)
to cash provided by (used in) operating activities:
Depreciation and amortization...................... 408 618 749
Equity in income (losses) of unconsolidated
affiliates........................................ 52 32 (27)
Deferred income taxes.............................. (125) (515) 300
Gain on sale of securities......................... -- -- (551)
Loss on disposition of property and equipment...... 13 13 14
Changes in operating assets and liabilities, net of
acquisitions:
(Increase) decrease in:
Accounts receivable.............................. 942 (2,998) (1,271)
Prepaid expenses and other current assets........ 131 (394) (376)
Income taxes receivable.......................... -- -- (251)
Increase (decrease) in:
Accounts payable................................. 23 314 27
Accrued liabilities.............................. (65) 765 1,375
Deferred revenue................................. 44 3,022 2,707
Income taxes payable............................. (7) 262 (295)
------ ------ -------
Net cash provided by (used in) operating
activities..................................... 2,230 1,169 (833)
------ ------ -------
Cash flows from investing activities:
Purchase of property and equipment................... (307) (804) (822)
Investments in affiliates............................ (20) (198) --
Proceeds from sale of securities..................... -- -- 256
Acquisition of subsidiaries, net of cash acquired.... (119) -- --
Purchase of product rights........................... (200) (55) --
------ ------ -------
Net cash used in investing activities........... (646) (1,057) (566)
------ ------ -------
Cash flows from financing activities:
Proceeds from exercise of stock options.............. 3 2 33
Proceeds from issuance of preferred stock............ -- -- 3,500
Proceeds from issuance of long-term debt............. -- 722 784
Payments on long-term debt........................... (179) (236) (342)
Repurchase of common stock........................... (18) -- --
Payments under capital lease obligations............. (129) (198) (161)
------ ------ -------
Net cash provided by (used in) financing
activities..................................... (323) 290 3,814
------ ------ -------
Net increase in cash.................................. 1,261 402 2,415
Cash, beginning of year............................... 1,326 2,587 2,989
------ ------ -------
Cash, end of year..................................... $2,587 $2,989 $ 5,404
====== ====== =======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest............................................ $ 97 $ 97 $ 123
====== ====== =======
Income taxes........................................ $ 282 $ 207 $ 240
====== ====== =======
</TABLE>
Supplemental disclosure of noncash investing and financing activities:
The Company acquired property and equipment totaling $109 and $317 under
capital leases during 1996 and 1998, respectively.
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 AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997 and 1998
(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 data access products. 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.
The Company owns 40% of ShowCase Japan and 20% of ShowCase Italia SpA
(Italy), which distribute ShowCase products and provide related services
to clients in these countries. The Company uses the equity method to
account for its investment in these 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
Revenues derived from software licenses are recognized upon (a) the
execution of a license agreement, (b) delivery of the software product,
(c) reasonable assurance of customer acceptance of the software and
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 are deferred until execution of a license
agreement and fulfillment of all revenue recognition requirements.
Revenues derived from maintenance contracts which are bundled with the
initial licenses and all revenues from extended maintenance contracts
are deferred and recognized ratably over the term of the maintenance
contract. Revenues from maintenance contracts are included in
maintenance and support revenues. Revenues from training and consulting
services are recognized as the services are performed. The Company's
policy is in compliance with the provisions of the American Institute of
Certified Public Accountants' Statement of Position ("SOP") 91-1,
Software Revenue Recognition. SOP No. 97-2, Software Revenue
Recognition, will be effective for the Company beginning April 1, 1998.
The Company does not expect the adoption of SOP No. 97-2 to have a
material effect on the Company's operating results.
(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. During
1996, 1997 and 1998, no software development costs were capitalized.
(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 periods of three to five
years. Unamortized product rights are reviewed periodically to determine
F-7
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
March 31, 1997 and 1998
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, 1998, no impairment charges have been
recognized. Accumulated amortization was $269,584 and $431,250 as of
March 31, 1997 and 1998, 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 asset is impaired, the Company recognizes
an impairment charge to reduce the unamortized balance to its net
realizable value. As of March 31, 1998, no impairment charges have been
recognized. Accumulated amortization was $64,000 and $124,000 as of
March 31, 1997 and 1998, 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.
(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 employee 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
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 interest and other income. The cost of
securities sold is based on the specific identification method.
F-8
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
March 31, 1997 and 1998
(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 stockholders'
equity. 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.
(m) Reclassifications
Certain amounts previously reported have been reclassified to conform to
the 1998 presentation.
(2) 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 in fiscal 1998. There were no Company
contributions to this plan in fiscal 1996 or 1997.
(3) Significant Customers
Revenues from one unaffiliated customer aggregated approximately 15% and
21% of revenue in 1996 and 1997, respectively. Accounts receivable from
this unaffiliated customer were not significant as of March 31, 1997.
Revenues from the Company's Japan affiliate aggregated approximately 6%
of total revenue for 1998. Accounts receivable from the Company's Japan
affiliate aggregated approximately 6% of total accounts receivable as of
March 31, 1998.
(4) Marketable Securities
During 1998, the Company acquired stock in a vendor which is classified
as available for sale. The estimated fair value and cost basis of this
security at March 31, 1998 were $442,986 and $319,972, respectively.
Unrealized holding gain for the year ended March 31, 1998 was $123,014.
(5) 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 1997 1998
--------------------- ------- -------
<S> <C> <C> <C>
Computers and software.......... 3 to 5 years $ 2,040 $ 2,930
Office furniture and equipment.. 4 to 10 years 559 645
Leasehold improvements.......... 5 to 9 years 75 102
------- -------
2,674 3,677
Less accumulated depreciation
and amortization............... (1,161) (1,486)
------- -------
Net property and equipment...... $ 1,513 $ 2,191
======= =======
</TABLE>
F-9
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
March 31, 1997 and 1998
(6) Investment in Affiliate
On March 26, 1997, the Company entered into a joint venture agreement
and acquired a 40% interest in ShowCase Japan for $165,000. ShowCase
Japan began operations April 1, 1997 as the distributor of ShowCase
products and services in Japan.
(7) Income Taxes
Income before income taxes was derived from the following sources (in
thousands):
<TABLE>
<CAPTION>
Year Ended March
31,
---------------------
1996 1997 1998
------ ---- -------
<S> <C> <C> <C>
Domestic........................................... $1,158 $(34) $(2,597)
Foreign............................................ (194) 84 (462)
------ ---- -------
$ 964 $ 50 $(3,059)
====== ==== =======
</TABLE>
The provision for current income tax expense consists of the following
(in thousands):
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
Current:
Federal......................................... $ 263 $ 490 $(325)
State and local................................. 12 25 --
Foreign......................................... -- -- 200
Deferred:
Federal......................................... (125) (492) 300
State and local................................. -- (23) --
------ ------ ------
$ 150 $ -- $ 175
====== ====== ======
</TABLE>
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,
--------------------
1996 1997 1998
----- ---- -------
<S> <C> <C> <C>
Expected federal income tax expense (benefit)...... $ 328 $ 17 $(1,040)
State taxes, net of federal benefit................ 9 2 (52)
Change in valuation allowance...................... (158) -- 1,085
Research and experimentation credits............... -- (23) --
Foreign sales corporation.......................... (30) (20) --
Foreign operations and withholding taxes........... -- -- 152
Other.............................................. 1 24 30
----- ---- -------
$ 150 $ -- $ 175
===== ==== =======
</TABLE>
F-10
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
March 31, 1997 and 1998
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at March
31, 1997 and 1998 are presented below (in thousands):
<TABLE>
<CAPTION>
1997 1998
------ -------
<S> <C> <C>
Deferred tax assets:
Accounts receivable allowances......................... $ 102 $ 170
Vacation and other accruals............................ 82 111
Deferred revenues...................................... 874 1,266
Foreign net operating loss carryforwards............... 24 161
Research and experimentation credit carryforwards...... -- 196
Other.................................................. 50 46
------ -------
1,132 1,950
Valuation allowance...................................... (415) (1,500)
------ -------
717 450
Deferred tax liabilities:
Depreciation........................................... (77) (110)
------ -------
Net deferred tax asset................................... $ 640 $ 340
====== =======
</TABLE>
The valuation allowance for deferred tax assets as of March 31, 1997 and
1998 was $415,000 and $1,500,000, 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, 1998, there are foreign net operating loss carryforwards of
approximately $473,000, which will expire through 2012.
(8) Long-term Debt
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
1997 1998
----- ------
<S> <C> <C>
Note payable to bank with principal due in monthly
installments
of $31, plus interest at the bank's base rate
(8.5% at March 31, 1998) plus 1.5% through September
2002..................................................... $ 854 $1,312
Note payable to Belgian bank with interest at 6.95%, due
in
monthly installments of $3 through December 1998......... 45 18
Note payable to IBM, interest at 6.25%, principal and
interest
payable quarterly through November 2000.................. -- 11
----- ------
899 1,341
Less current portion...................................... (275) (397)
----- ------
$ 624 $ 944
===== ======
</TABLE>
F-11
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
March 31, 1997 and 1998
The Company has a $2,000,000 revolving line of credit agreement with a
bank through September 30, 1998, bearing interest at the bank's base
rate plus 1.5%. Borrowings are limited to 75% of eligible accounts
receivable reduced by 50% of the outstanding term loan and are payable
on demand. No borrowings were outstanding under the line of credit at
March 31, 1998.
The note payable to bank and the revolving line of credit note are
secured by substantially all of the Company's assets and contain certain
restrictive financial covenants which, among other things, require the
Company to maintain $1,500,000 of tangible net worth, a debt to tangible
net worth ratio of not more than 6.5 to 1, and restrict property and
plant acquisitions as well as the incurring of additional debt. The bank
has granted a waiver related to an event of default as of March 31,
1998.
Future maturities of long-term debt as of March 31, 1998 are as follows
(in thousands):
<TABLE>
<S> <C>
1999............................................................... $ 397
2000............................................................... 380
2001............................................................... 377
2002............................................................... 187
------
$1,341
======
</TABLE>
(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 of a qualified public offering, the preferred
stock is required to be converted to common stock. The preferred
stockholders are 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 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, 1998.
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"). Each preferred share
is convertible at the option of the holder at any time at a rate of one
share of common stock for each preferred share, subject to certain
adjustments. In the event of a qualified public offering, the preferred
stock is required to be converted to common stock. The preferred
stockholders are entitled to the same number of votes as if the
preferred stock was
F-12
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
March 31, 1997 and 1998
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 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 $4.00 per common share at March 31,
1998. The conversion price will also vary from $3.00 to $4.50 per common
share depending upon the revenue the Company achieves in fiscal year
1999.
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, 1998, the Company has authorized 2,748,743 undesignated
preferred shares, none of which are outstanding.
(d) Stock Options
The Company has adopted a stock option plan. Options granted under this
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, 1998, the Company had 1,539,117 shares of its common stock
reserved for issuance upon the exercise of options granted under the
Company's stock option plan.
The Company has elected to continue to follow Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations to account for its stock options. Accordingly,
no compensation expense related to stock option plans has been recorded
in 1998, 1997 and 1996. 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>
1996 1997 1998
---- ---- -------
<S> <C> <C> <C>
Net income (loss) (in thousands):
As reported........................................... $814 $50 $(3,234)
Pro forma............................................. 811 34 (3,266)
</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 fair value of stock options granted was $.27, $.30 and $.39 per
option in 1996, 1997 and 1998, respectively. The fair value at the date
of grant was estimated using the Black-Scholes stock option pricing
model with the following average assumptions for 1996, 1997 and 1998: a
weighted average risk free interest rate of 6.5%; weighted average
dividend yield of 0%; weighted average expected volatility of 0%; and
weighted average expected lives of five years.
F-13
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
March 31, 1997 and 1998
The following table summarizes the activity of the Company's stock option
plan:
<TABLE>
<CAPTION>
Weighted average
Shares exercise price
--------- ----------------
<S> <C> <C>
Outstanding--March 31, 1995.................... 957,153 $ .25
Options granted.............................. 205,700 .98
Options exercised............................ (7,940) .35
Options canceled............................. (47,360) .56
--------- -----
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
========= =====
</TABLE>
The following table summarizes the Company's stock options outstanding at
March 31, 1998:
<TABLE>
<CAPTION>
Options outstanding Options exercisable
-------------------------------------- -------------------------
Number Weighted Number Weighted
outstanding Weighted average average exercisable average
at March 31, remaining exercise at March 31, exercise
Range of exercise price 1998 contractual life price 1998 price
----------------------- ------------ ---------------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
$ .07- .21.............. 592,484 5 years $.19 493,387 $.18
.35- .87.............. 178,800 7 years .47 139,797 .48
.98-1.42.............. 593,500 9 years 1.17 95,180 1.05
--------- -------
1,364,784 728,364
========= =======
</TABLE>
(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 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 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-14
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
March 31, 1997 and 1998
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>
Years ended March 31,
------------------------
1996 1997 1998
------- ------- --------
<S> <C> <C> <C>
Basic income (loss) per share:
Net income (loss)............................ $ 814 $ 50 $ (3,234)
Weighted average shares...................... 3,850 3,847 3,928
------- ------- --------
Basic income (loss) per share................ $ .21 $ .01 $ (.82)
======= ======= ========
Diluted income (loss) per share:
Net income (loss)............................ $ 814 $ 50 $ (3,234)
Weighted average shares...................... 3,850 3,847 3,928
Effect of dilutive "in-the-money" stock
options..................................... 712 713 --
Effect of conversion of preferred stock...... 1,895 1,895 --
------- ------- --------
Total dilutive shares...................... 6,457 6,455 3,928
------- ------- --------
Diluted income (loss) per share................ $ .13 $ .01 $ (.82)
======= ======= ========
</TABLE>
The number of weighted average option 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 for fiscal 1998.
For the year ended March 31, 1998, 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, 1998, the Series A and
Series B convertible preferred stock were convertible into 1,895,028 and
875,000 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, 1997 and 1998 and for each of the years for the three-year period
ended March 31, 1998 is as follows (in thousands):
<TABLE>
<CAPTION>
Years ended March 31,
-----------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Revenues:
U.S. operations................................. $11,009 $14,904 $17,890
Non-U.S. operations............................. 2,269 3,123 5,865
------- ------- -------
$13,278 $18,027 $23,755
======= ======= =======
<CAPTION>
March 31,
---------------
1997 1998
------- -------
<S> <C> <C> <C>
Tangible long-lived assets:
U.S. operations................................. $ 1,307 $ 1,842
Non-U.S. operations............................. 206 349
------- -------
$ 1,513 $ 2,191
======= =======
</TABLE>
F-15
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
March 31, 1997 and 1998
(12)Leases
(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>
1997 1998
----- -----
<S> <C> <C>
Computers and software....................................... $ 337 $ 645
Office furniture and equipment............................... 55 53
Product rights............................................... 325 325
----- -----
717 1,023
Less accumulated amortization................................ (405) (609)
----- -----
$ 312 $ 414
===== =====
</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, 1998 (in thousands):
<TABLE>
<CAPTION>
Years ending March 31:
----------------------
<S> <C>
1999................................................................ $ 173
2000................................................................ 144
2001................................................................ 82
-----
Total minimum lease payments........................................ 399
Less amount representing interest from 5% to 16%.................... (51)
-----
Present value of minimum lease payments............................. 348
Less current portion................................................ (135)
-----
$ 213
=====
</TABLE>
(b) Operating Leases
The Company leases certain office facilities and equipment under
operating leases. Total lease expense aggregated $559,713, $1,056,102
and $1,363,336 in 1996, 1997 and 1998, respectively. Minimum future
obligations as of March 31, 1998, including operating costs under non-
cancelable leases, are approximately as follows (in thousands):
<TABLE>
<CAPTION>
Years ending March 31:
----------------------
<S> <C>
1999............................................................... $ 842
2000............................................................... 378
2001............................................................... 214
2002............................................................... 48
2003............................................................... 10
-------
$ 1,492
=======
</TABLE>
F-16
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
December 31,
1998
------------
<S> <C>
Assets
Current assets:
Cash............................................................. $ 7,464
Marketable securities............................................ 173
Accounts receivable, net of allowances of $675................... 8,453
Prepaid expenses and other current assets........................ 856
Deferred income taxes............................................ 340
-------
Total current assets........................................... 17,286
-------
Property and equipment, net........................................ 1,949
Investment in affiliates........................................... 180
Goodwill, net of accumulated amortization.......................... 131
-------
Total assets................................................... $19,546
=======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable................................................. $ 1,019
Accrued liabilities.............................................. 4,187
Current portion of long-term debt................................ 375
Current portion of obligations under capital leases.............. 161
Income taxes payable............................................. 131
Deferred revenue................................................. 10,804
-------
Total current liabilities...................................... 16,677
-------
Long-term debt, less current portion............................... 656
Capital lease obligations, less current portion.................... 95
-------
Total liabilities.............................................. 17,428
-------
Stockholders' equity:
Series A convertible preferred stock; $.01 par value;
473,757 shares authorized, issued, and outstanding,
total liquidation preference of $2,400.......................... 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
Common stock, $.01 par value, 10,000,000 shares
authorized, 4,486,327 shares issued and outstanding............. 45
Additional paid-in capital....................................... 6,313
Accumulated other comprehensive income:
Cumulative translation adjustment.............................. 91
Unrealized holding loss on securities.......................... (147)
Deferred compensation............................................ (197)
Accumulated deficit.............................................. (4,001)
-------
Total stockholders' equity................................... 2,118
-------
Total liabilities and stockholders' equity................... $19,546
=======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-17
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months
Ended December
31,
----------------
1997 1998
------- -------
<S> <C> <C>
Revenues:
License fees................................................ $10,077 $15,077
Maintenance and support..................................... 4,765 7,302
Professional service fees................................... 1,909 2,883
------- -------
Total revenues............................................ 16,751 25,262
------- -------
Cost of revenues:
License fees................................................ 1,709 2,894
Maintenance and support..................................... 1,122 1,828
Professional service fees................................... 1,343 1,995
------- -------
Total cost of revenues.................................... 4,174 6,717
------- -------
Gross margin................................................. 12,577 18,545
------- -------
Operating expenses:
Sales and marketing......................................... 11,153 13,723
Product development......................................... 2,204 3,236
General and administrative.................................. 1,840 2,339
------- -------
Total operating expenses.................................. 15,197 19,298
------- -------
Operating loss............................................... (2,620) (753)
Other income (expense), net:
Interest expense............................................ (109) (139)
Interest income............................................. 56 186
Gain on sales of securities................................. 551 --
Other income (expense), net................................. 9 7
------- -------
Total other income (expense), net......................... 507 54
------- -------
Net loss before income taxes................................. (2,113) (699)
Income taxes................................................. 125 135
------- -------
Net loss..................................................... (2,238) (834)
------- -------
Other comprehensive income (loss):
Foreign currency translation adjustment..................... 32 (16)
Unrealized holding loss on securities....................... -- (270)
------- -------
Comprehensive loss........................................... $(2,206) $(1,120)
======= =======
Net loss per share (note 3):
Basic....................................................... $ (0.57) $ (0.19)
======= =======
Diluted..................................................... $ (0.57) $ (0.19)
======= =======
Weighted average shares outstanding used in
computing basic net loss per share.......................... 3,909 4,348
Weighted average shares outstanding used in
computing diluted net loss per share........................ 3,909 4,348
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-18
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
------------------
1997 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (2,113) $ (834)
Adjustments to reconcile net loss to cash provided
by (used in) operating activities:
Depreciation and amortization............................ 489 655
Gain on sale of securities............................... (551) --
Deferred compensation amortization....................... -- 22
Changes in operating assets and liabilities, net of
acquisitions:
(Increase) decrease in:
Accounts receivable.................................... (797) (2,141)
Prepaid expenses and other current assets.............. (248) 175
Income taxes receivable................................ -- 251
Increase (decrease) in:
Accounts payable....................................... (131) (75)
Accrued liabilities.................................... 847 1,302
Deferred revenue....................................... 888 3,112
Income taxes payable................................... (371) 130
-------- --------
Net cash provided by (used in) operating activities.. (1,987) 2,597
-------- --------
Cash flows from investing activities:
Purchase of property and equipment........................ (558) (259)
Proceeds from affiliates.................................. -- 12
Proceeds from sale of securities.......................... 256 --
-------- --------
Net cash used in investing activities................ (302) (247)
-------- --------
Cash flows from financing activities:
Proceeds from exercise of stock options................... 29 111
Proceeds from issuance of long-term debt.................. 338 --
Payments on long-term debt................................ (281) (281)
Payments under capital lease obligations.................. (92) (120)
-------- --------
Net cash used in financing activities................ (6) (290)
-------- --------
Net increase (decrease) in cash............................ (2,295) 2,060
Cash, beginning of period.................................. 2,989 5,404
-------- --------
Cash, end of period........................................ $ 694 $ 7,464
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ................................................. $ 109 $ 139
======== ========
Income taxes.............................................. $ 391 $ 142
======== ========
Cash received during the period from income tax refunds.... $ 19 $ 389
======== ========
</TABLE>
Supplemental disclosure of noncash investing and financing activities:
During the nine months ended December 31, 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 unaudited consolidated financial statements.
F-19
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
(1)Basis of Presentation
The unaudited interim consolidated financial statements include the
accounts of Showcase Corporation and its wholly owned subsidiaries and
have been prepared by the Company in accordance with generally accepted
accounting principles, pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, certain information and
footnote disclosures normally included in the financial statements have
been omitted or condensed pursuant to such rules and regulations. The
accompanying unaudited interim consolidated financial statements should
be read in conjunction with the financial statements and related notes
included herein. The information furnished reflects, in the opinion of
the management of the Company, all adjustments, consisting primarily of
recurring accruals, considered necessary for a fair presentation of the
financial position and the results of operations.
(2)New Accounting Pronouncements
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 No. 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 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 channel partners are recognized upon
receipt of a report of delivery. Maintenance and support fees 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. The adoption of SOP No. 97-2 did not have a
material effect on the Company's operating results.
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 have no material impact on its 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
F-20
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
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 No. 98-9 becomes effective. The Company
does not expect a material change to its accounting for revenues as a
result of the provisions of No. SOP 98-9.
(3)Net Income (Loss) per Share
For ShowCase Corporation, 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 the Company, 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
warrants 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.
For the nine months ended December 31, 1997 and 1998, basic loss per
share is the same as diluted loss per share because the effect of the
inclusion of other potentially dilutive securities in the calculation of
diluted loss per share was antidilutive.
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 the calculation of net loss per share would have been
antidilutive was 901,547 and 564,055 for the nine months ended December
31, 1997 and 1998, respectively. The effect of conversion of the
Company's preferred stock was also excluded from the calculation of net
loss per diluted share because the resulting impact would also have been
antidilutive for the nine months ended December 31, 1997 and 1998. At
December 31, 1998, the Series A and Series B convertible preferred stock
were convertible into 1,895,028 and 864,198 common shares, respectively.
(4)Deferred Compensation
During the nine months ended December 31, 1998, the Company granted
options to purchase 438,900 shares of stock to employees for which the
related exercise price was less than the deemed value of the Company's
common stock for accounting purposes on the date of grant. Deferred
compensation cost recognized for these option grants totaled
approximately $219,000. The Company recognized an expense of
approximately $22,000 for the nine months ended December 31, 1998 for
these stock option grants based on 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.
F-21
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998
(5) 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 December 31, 1998. The Company recognizes lease
expense equal to the fair value of the warrants amortized over the
related lease term.
(6) Undesignated Preferred Shares
As of December 31, 1998, the Company has authorized 2,748,743
undesignated preferred shares, none of which are outstanding.
F-22
<PAGE>
[Inside back cover -- graphics to come]
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
Shares
Common Stock
--------------------
P R O S P E C T U S
--------------------
Merrill Lynch & Co.
U.S. Bancorp Piper Jaffray Inc.
Dain Rauscher Wessels,
a division of Dain Rauscher Incorporated
FAC/Equities
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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............................................... $9,730
NASD filing fee.................................................... $4,000
Nasdaq National Market listing fee................................. $
Legal fees and expenses............................................ $
Accounting fees and expenses....................................... $
Transfer Agent's and Registrar's fees.............................. $
Printing and engraving expenses.................................... $
Miscellaneous...................................................... $
Total.............................................................. $
</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.
<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 March
31, 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
- ------ -----------
<S> <C>
1.1* Form of Purchase Agreement.
3.1 Articles of Incorporation of the Company, as currently in effect.
Amended and Restated Articles of Incorporation of the Company, adopted subject to
3.2 completion of this offering.
3.3 Amended and Restated Bylaws of the Company, as currently in effect.
Amended and Restated Bylaws of the Company, adopted subject to completion of the
3.4 offering.
4.1* Specimen of Common Stock certificate.
Warrant Agreement to purchase shares, of the Series B Preferred Stock of the
4.2 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.
Lease Agreement dated as of November 30, 1998 between Mortenson Properties, Inc.
10.4 as Landlord and the Company as Tenant.
Employment Agreement dated as of November 22, 1993, between the Company and
10.5 Kenneth H. Holec.
Service Agreement dated as of March 17, 1998, between the Company and Patrick
10.6 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.
License Agreement, effective as of April 1, 1998, between the Company and Arbor
10.9** Software Corporation (the "Hyperion License Agreement").
Amendment No. 1 to the Hyperion License Agreement, effective as of September 14,
10.10** 1998, between the Company and Hyperion Solutions Corporation.
Software License and Marketing Agreement, effective as of January 4, 1996,
10.11** between the Company and AppSource.
10.12** Amendment to AppSource/Showcase License Agreement, effective as of March 7, 1997.
ShowCase License Agreement, dated as of December 9, 1998, between the Company and
10.13** International Business Machines Corporation ("IBM").
Outbound License Agreement, dated as of December 9, 1998, between the Company and
10.14** IBM.
Marketing Relationship Agreement, dated as of May 22, 1997, between the Company
10.15** and IBM (the "Marketing Relationship Agreement").
Amendment No. 1, dated as of October 28, 1998, to Marketing Relationship
10.16** Agreement between the Company and IBM.
Amendment No. 2, dated as of March 15, 1999, to Marketing Relationship Agreement
10.17** between the Company and IBM.
21.1 Subsidiaries of the Company.
23.1 Consent of Independent Auditors and Report on Schedules.
Consent of Dorsey & Whitney LLP (included in Exhibit No. 5.1 to the Registration
23.2 Statement).
24.1 Powers of Attorney (included on signature page).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** 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 registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Rochester, State of Minnesota, on April 28, 1999.
Showcase Corporation
/s/ Kenneth H. Holec
By:__________________________________
Kenneth H. Holec
President and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Kenneth H. Holec and Craig W.
Allen, and each of them, his true and lawful attorneys-in-fact and agents,
with full powers of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all (i) amendments
(including post-effective amendments) and additions to this registration
statement and (ii) registration statements, and any and all amendments thereto
(including post-effective amendments), relating to the offering contemplated
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents and each of them full power and authority to
do and perform each and every act and thing requisite or necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them or his or their substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Kenneth H. Holec President, Chief Executive Officer
and Director (principal executive
officer)
April 28,
_____________________________________ 1999
Kenneth H. Holec
/s/ Craig W. Allen Chief Financial Officer (principal
financial officer and principal
accounting officer)
April 28,
_____________________________________ 1999
Craig W. Allen
/s/ Promod Haque Director April 28,
_____________________________________ 1999
Promod Haque
/s/ C. McKenzie Lewis Director April 28,
_____________________________________ 1999
C. McKenzie Lewis III
/s/ Jack Noonan Director April 28,
_____________________________________ 1999
Jack Noonan
/s/ Dennis Semerad Director April 28,
_____________________________________ 1999
Dennis Semerad
II-5
<PAGE>
SHOWCASE CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
Allowance for Doubtful Accounts and Sales Returns
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------
1996 1997 1998
------ ------ ------
<S> <C> <C> <C> <C>
Balance at beginning of year........................ $ 228 $ 250 $ 300
Additions charged to costs and expenses............. 410 281 500
Write-offs and returns.............................. (388) (231) (300)
Balance at end of year.............................. 250 300 500
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
1.1* Form of Purchase Agreement.
3.1 Articles of Incorporation of the Company, as currently in effect.
Amended and Restated Articles of Incorporation of the Company, adopted subject to
3.2 completion of this offering.
3.3 Amended & Restated Bylaws of the Company, as currently in effect.
Amended and Restated Bylaws of the Company, adopted subject to completion of the
3.4 offering.
4.1* Specimen of Common Stock certificate.
Warrant Agreement to purchase shares, of the Series B Preferred Stock of the
4.2 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.
Lease Agreement dated as of November 30, 1998 between Mortenson Properties, Inc.
10.4 as Landlord and the Company as Tenant.
Employment Agreement dated as of November 22, 1993, between the Company and
10.5 Kenneth H. Holec.
Service Agreement dated as of March 17, 1998, between the Company and Patrick
10.6 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.
License Agreement, effective as of April 1, 1998, between the Company and Arbor
10.9** Software Corporation (the "Hyperion License Agreement").
Amendment No. 1 to the Hyperion License Agreement, effective as of September 14,
10.10** 1998, between the Company and Hyperion Solutions Corporation.
Software License and Marketing Agreement, effective as of January 4, 1996,
10.11** between the Company and AppSource.
10.12** Amendment to AppSource/ShowCase License Agreement effective as of March 7, 1997.
ShowCase License Agreement, dated as of December 9, 1998, between the Company and
10.13** International Business Machines Corporation ("IBM").
Outbound License Agreement, dated as of December 9, 1998, between the Company and
10.14** IBM.
Marketing Relationship Agreement, dated as of May 22, 1997, between the Company
10.15** and IBM (the "Marketing Relationship Agreement").
Amendment No. 1, dated as of October 28, 1998, to Marketing Relationship
10.16** Agreement between the Company and IBM.
Amendment No. 2, dated as of March 15, 1999, to Marketing Relationship Agreement
10.17** between the Company and IBM.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Auditors and Report on Schedules.
Consent of Dorsey & Whitney LLP (included in Exhibit No. 5.1 to the Registration
23.2 Statement).
24.1 Powers of Attorney (included on signature page).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** 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 3.1
ARTICLES OF INCORPORATION
OF
SHOWCASE CORPORATION
ARTICLE I
The name of this Corporation is ShowCase Corporation.
ARTICLE II
The registered office of this Corporation is located at 4909 North Highway
52, Rochester, Minnesota 55901.
ARTICLE III
Section 1. Shares and Series Authorized.
The aggregate number of shares of capital -stock which this Corporation is
authorized to issue is 15,000,000 shares, 10,000,000 of which shall be
designated common shares, $.01 par value, 473,757 of which shall be designated
series A convertible preferred shares, $.01 par value (hereinafter referred to
as "Series A Preferred Shares"), and 4,526,243 of which shall be undesignated
preferred shares with respect to which the Board of Directors is authorized to
designate the rights and preferences attributable thereto.
Section 2. Description of the Series A Preferred Shares.
The rights, preferences, privileges and restrictions granted to or imposed
upon the Series A Preferred Shares or the holders thereof are as follows:
(A) Voting Rights.
Each holder of Series A Preferred Shares shall have one vote on all matters
submitted to the shareholders for each share of this Corporation's common stock,
$.01 par value (hereinafter referred to as "Common Shares") which such holder of
Series A Preferred Shares would be entitled to receive upon the conversion of
his Series A Preferred Shares pursuant to the provisions of subsection 2(B)(4).
In addition, each holder of Series A Preferred Shares shall have the special
voting rights which are described in subsection 2(B)(3). Common Shares and
Series A Preferred Shares shall sometimes be collectively referred to as
"Capital Stock."
(B) Other Preferences and Special Rights.
(1) Dividends. Dividends shall be payable on the Series A Preferred Shares
out of funds legally available for the declaration of dividends, only if and
when declared by this Corporation's Board of Directors. However, in no event
shall any dividend be paid on any
<PAGE>
Common Shares unless comparable dividends are paid on the Series A Preferred
Shares. Series A Preferred Shares shall be counted on an as-if-converted basis
in determining whether dividends on Series A Preferred Shares and Common Shares
are comparable.
(2) Liquidation Right and Preference. In the event of the liquidation,
dissolution or winding up of this Corporation, whether voluntary or involuntary,
or in the event of the sale of all or substantially all of its assets to another
Corporation, or in the event of a consolidation or merger of this Corporation
with another Corporation, the holders of Series A Preferred Shares shall be
entitled to receive in cash, out of the assets of this Corporation, an amount
equal to $5.0658 per share for each outstanding Series A Preferred Share, plus,
all declared but unpaid dividends, before any payment shall be made or any
assets distributed to the holders of Common Shares or any other class of shares
of this Corporation ranking junior to the Series A Preferred Shares. If, upon
any liquidation or dissolution of this Corporation or the sale by this
Corporation of all or substantially all of its assets or such reorganization or
consolidation or merger, the assets of this Corporation are insufficient to pay
such $5.0658 per Series A Preferred Share, plus all declared but unpaid
dividends, the holders of Series A Preferred Shares shall share pro rata in any
such distribution in proportion to the full amounts to which they would
otherwise be respectively entitled. Following such payment to the holders of
Series A Preferred Shares upon such liquidation, dissolution, sale,
reorganization, consolidation or merger, the holders of Common Shares shall then
be entitled, to the exclusion of the holders of Series A Preferred Shares, to
share ratably in all the assets of this Corporation thereafter remaining.
The merger or consolidation of this Corporation into or with another
Corporation or the merger or consolidation of any other Corporation into or with
this Corporation (in which consolidation or merger the shareholders of this
Corporation receive distribution of cash or securities or other property as a
result of such consolidation or merger), or the sale, transfer or other
disposition of all or substantially all of the assets of this Corporation, shall
be deemed to be a liquidation or dissolution of this Corporation for purposes of
this subsection 2(B)(2).
(3) Special Voting Rights.
(a) The holders of a majority (determined on an as-if-converted basis) of
Series A Preferred Shares (acting together as a class) shall have the right to
elect one (1) member of this Corporation's Board of Directors at all times.
(b) Without the affirmative vote of the holders (acting together as a
class) of at least a majority (with respect to (i), (ii), (iii) and (v) below
determined on an as-if-converted basis) or at least 90% (with respect to (iv)
below) of Series A Preferred Shares at the time outstanding given in person or
by proxy at any annual meeting, or at such special meeting called for that
purpose, or, if permitted by law, in writing without a meeting, this Corporation
shall not:
(i) authorize or issue any (A) additional Series A Preferred Shares, (B) shares
of stock (other than Common Shares) having priority over Series A Preferred
Shares or ranking on a parity therewith as to the payment of dividends or
as to the payment or distribution of assets upon the liquidation or
dissolution, voluntary or involuntary, of this Corporation, or (C) any
share
<PAGE>
of stock having special voting rights that are not available to the Series A
Preferred Shares; or
(ii) declare or pay any dividend or make any other distribution on any shares of
Capital Stock of this Corporation at any time created and issued ranking
junior to Series A Preferred Shares with respect to the right to receive
dividends and/or the right to the distribution of assets upon liquidation,
dissolution or winding up of this Corporation (hereinafter called "Junior
Stock"), other than dividends or distributions payable solely in shares of
junior Stock, or purchase, redeem or otherwise acquire for any
consideration (other than in exchange for or out of the net cash proceeds
of the contemporaneous issue or sale of other shares of junior Stock or
debt securities convertible into other shares of Junior Stock), or set
aside a sinking fund or other fund for the redemption or repurchase of any
shares of junior Stock or any warrants, rights or options to purchase
shares of Junior Stock;
(iii) issue Common Shares at a price below $5.0658 per share or any stock
purchase rights, except for such share issuances or stock purchase rights
specifically permitted by the terms of the Investment Agreement dated
February 28,1991 by and between Norwest Equity Partners IV, a Minnesota
Limited Partnership and this Corporation (the "Investment Agreement");
(iv) alter or amend the rights or preferences of Series A Preferred Shares as
stated in article 3 of these articles of incorporation; or
(v) sell, lease, license or otherwise dispose of all or substantially all of
its assets, or any asset or assets which have a material effect upon the
business or financial condition of this Corporation, or consolidate with or
merge into any other Corporation or entity, or permit any other Corporation
or entity to consolidate or merge into it, or enter into a plan of exchange
with any other Corporation or entity, or otherwise acquire any other
Corporation or entity; or permit any subsidiary to do any of the forgoing,
except that any subsidiary of this Corporation may merge into another
subsidiary or into this Corporation.
(c) If an unremedied event of default (an "Event of Default") occurs under
section 15 of the Investment Agreement, which Investment Agreement may not be
amended without the approval of the shareholders of this Corporation, the
holders of Series A Preferred Shares, voting jointly as a separate class, shall
be entitled to designate and elect that number of directors that is the lowest
number that constitutes a majority (the "Majority") of the members of this
Corporation's Board of Directors, and the holders of Common Shares, voting
separately as a class, shall be entitled to elect the remaining members of this
Corporation's Board of Directors. Such right of the holders of Series A
Preferred Shares to designate and elect the Majority of the members of the Board
of Directors may be exercised until the Event of Default under the Investment
Agreement has been cured or waived. When such Event of Default under the
Investment Agreement shall have been cured or waived, the holders of Series A
Preferred Shares shall be divested of such right to elect the Majority of the
members of the Board of Directors, and any directors elected by the holders of
Series A Preferred Shares shall be automatically removed from the Board of
Directors without further action by the Directors or shareholders; subject
always to the same provisions in the vesting of such
<PAGE>
right in the holders of the Series A Preferred Shares in the case of the
occurrence of any future Event of Default under the Investment Agreement.
The foregoing right of the holders of Series A Preferred Shares with
respect to the election of directors of this Corporation may be exercised at any
annual meeting of shareholders or, within the limitations hereinafter provided,
at a special meeting of the shareholders held for such purpose. If the date upon
which such right of the holders of Series A Preferred Shares shall become vested
shall be more than thirty (30) days preceding the date of the next ensuing
annual meeting of shareholders as fixed by the Bylaws of this Corporation, the
President of this Corporation shall, immediately after delivery to this
Corporation at its principal office of a request to such effect signed by the
holders of at least a majority of Series A Preferred Shares then outstanding,
call a special meeting of the shareholders, to be held within fifteen (15) days
after the delivery of such request for the purpose of electing the directors who
they shall designate as the representatives of Series A Preferred Shares on the
Board of Directors, which directors shall serve until the next annual meeting,
until their successors shall be elected and shall qualify or until they are
divested of such office pursuant to the immediately preceding paragraph. Notice
of such meeting shall be mailed to each shareholder not less than ten (10) days
prior to the date of such meeting.
Whenever the holders of Series A Preferred Shares shall be entitled to
elect the Majority of the members of the Board of Directors, any holder of such
Series A Preferred Shares shall have the right, during regular business hours,
in person or by a duly authorized representative, to examine and to make
transcripts of the stock records of this Corporation for Series A Preferred
Shares for the purpose of communicating with other holders of Series A Preferred
Shares with respect to the exercise of such right of election.
At any annual or special meeting of shareholders held for the purpose of
electing directors when the holders of Series A Preferred Shares shall be
entitled to elect the Majority of the members of the Board of Directors, the
presence in person or by proxy of the holders of a majority of the outstanding
Series A Preferred Shares shall be required to constitute a quorum for the
election by such class of such directors, and the presence in person or by proxy
of the holders of a majority of the outstanding Common Shares shall be required
to constitute a quorum for the election by such class of the remaining
directors; provided, however, that the holders of a majority of either such
class of stock who are present in person or by proxy shall have power to adjourn
such meeting for the election of directors by such class from time to time
without notice other than announcement at the meeting. No delay or failure by
the holders of either of such classes of stock to elect the members of the Board
of Directors whom such holders are entitled to elect shall invalidate the
election of the remaining members of the Board of Directors by the holders of
the other such class of stock.
If, during any interval between annual meetings of shareholders for the
election of directors and while the holders of Series A Preferred Shares shall
be entitled to elect the Majority of the members of the Board of Directors, the
number of directors in office who have been elected by the holders of Series A
Preferred Shares or Common Shares, as the case may be, shall, by reason of
resignation, death or removal, be less than the total number of directors
subject to election by the holders of shares of such class, the vacancy or
vacancies in the directors elected by the holders of Common Shares, shall be
filled by a majority vote of the remaining directors then in office who were
<PAGE>
elected by the holders of Common Shares or succeeded a director so elected,
although such majority be less than a quorum, and the vacancy in the directors
elected by the holders of Series A Preferred Shares shall be filled by a
majority vote of the remaining directors then in office who were elected by the
holders of Series A Preferred Shares or succeeded a director so elected,
although such majority may be less than a quorum.
(4) Conversion Rights.
(a) Optional Conversion. Each Preferred Share shall be convertible at the
option of the holder thereof into Common Shares of this Corporation in
accordance with the provisions and subject to the adjustments provided for in
subsection 2(C)(4)(c). In order to exercise the conversion privilege, a holder
of Series A Preferred Shares shall surrender the certificate representing such
Series A Preferred Shares to this Corporation at its principal office, duly
endorsed to this Corporation and accompanied by written notice to this
Corporation that the holder elects to convert a specified portion or all of such
shares. Series A Preferred Shares converted at the option of the holder shall be
deemed to have been converted on the day of surrender of the certificate
representing such shares for conversion in accordance with the foregoing
provisions, and at such time the rights of the holder of such Series A Preferred
Shares, as such holder, shall cease and such holder shall be treated for all
purposes as the record holder of Common Shares issuable upon conversion. As
promptly as practicable on or after the conversion date, this Corporation shall
issue and mail or deliver to such holder a certificate or certificates for the
number of Common Shares issuable upon conversion, computed to the nearest one
hundredth of a full share, and a certificate or certificates for the balance of
Series A Preferred Shares surrendered, if any, not so converted into Common
Shares.
(b) Automatic Conversion. Series A Preferred Shares shall be automatically
converted into Common Shares, upon the election of this Corporation and delivery
of written notice of such election to the holders of Series A Preferred Shares
(which election and notice may be delivered within ninety (90) days before or
after the automatic conversion events described below without effecting the
effective time of such automatic conversion), if this Corporation closes the
issuance and sale of Common Shares in an underwritten public offering, pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, in which (i) the net proceeds received by this Corporation equal or
exceed $7,500,000 and (ii) the public offering price equals or exceeds $28.1433
per share (as adjusted from time to time to reflect stock splits, share
dividends or other corporate recapitalizations effected subsequent to February
28,1992).
(c) Conversion Price and Adjustments. The number of Common Shares issuable
in exchange for Series A Series A Preferred Shares upon either optional or
automatic conversion shall be equal to $5.0658 divided by the conversion price
then in effect (the "Conversion Price") for that series of Series A Preferred
Shares. The Conversion Price for Series A Preferred Shares shall initially be
$5.0658, but shall be subject to adjustment from time to time as hereinafter
provided:
(i) In case this Corporation shall at any time after February 28,1992
subdivide or split its outstanding Common Shares into a greater number of shares
or declare any dividend payable in Common Shares, the Conversion Price for each
series of Series A Preferred Shares in effect immediately prior to such
subdivision, split or dividend shall be proportionately decreased,
<PAGE>
and conversely, in case the outstanding Common Shares of this Corporation shall
be combined into a smaller number of shares, the Conversion Price for each
series of Series A Preferred Shares in effect immediately prior to such
combination shall be proportionately increased.
(ii) Except for issuances of shares or other equity purchase rights
specifically permitted by the terms of the Investment Agreement and except for
the issuance to Marc Shinbrood of options to purchase up to 84,809 Common Shares
and to others of options to purchase up to an additional 62,133 Common Shares,
if and whenever this Corporation shall issue or sell any Common Shares prior to
January 1, 1993, for a consideration per share less than the Conversion Price
then in effect for the Series A Preferred Shares (other than dividends payable
in Common Shares), or shall issue any options, warrants or other rights for the
purchase of such shares at a consideration per share of less than the Conversion
Price then in effect for the Series A Preferred Shares, the Conversion Price for
the Series A Preferred Shares in effect immediately prior to such issuance or
sale shall be adjusted and shall be equal to the consideration per share at
which such Common Shares were issued or sold or at which such options, warrants
or other rights are exercisable. Except for issuances of shares or other equity
purchase rights specifically permitted by the terms of the Investment Agreement,
if and whenever this Corporation shall issue or sell any Common Shares after
December 31, 1992, for a consideration per share less than the Conversion Price
then in effect for the Series A Preferred Shares (other than dividends payable
in Common Shares), or shall issue any options, warrants or other rights for the
purchase of such shares at a consideration per share of less than the Conversion
Price then in effect for the Series A Preferred Shares, the Conversion Price for
the Series A Preferred Shares in effect immediately prior to such issuance or
sale shall be adjusted and shall be equal to (i) the Conversion Price for the
Series A Preferred Shares then in effect, multiplied by (ii) a fraction, the
numerator of which shall be an amount equal to the sum of (a) the number of
Common Shares outstanding immediately prior to such issuance or sale multiplied
by the Conversion Price for the Series A Preferred Shares then in effect, and
(b) the total consideration payable to this Corporation upon such issuance or
sale of such shares and such purchase rights and upon the exercise of such
purchase rights, and the denominator of which shall be the amount determined by
multiplying (aa) the number of Common Shares outstanding immediately after such
issuance or sale plus the number of the Common Shares issuable upon the exercise
of any purchase rights thus issued, by (bb) the Conversion Price for the Series
A Preferred Shares then in effect. If any options or purchase rights that are
taken into account in any such adjustment of the Conversion Price for the Series
A Preferred Shares subsequently expire without exercise, the Conversion Price
for that the Series A Preferred Shares shall be recomputed by deleting such
options or purchase rights. If the Conversion Price for the Series -A Preferred
Shares is adjusted as the result of the issuance of any options, warrants or
other purchase rights, no further adjustment of the Conversion Price for the
Series A Preferred Shares shall be made at the time of the exercise of such
options, warrants or other purchase rights.
(iii) The anti-dilution provisions Of this subsection 2(B)(4)(c) may be
waived by the affirmative vote of the holders (acting together as a class) of at
least ninety percent (90%) of the then outstanding Series A Preferred Shares.
(d) Notice of Conversion Price Adjustment. Upon any adjustment of the
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first-class mail,
<PAGE>
postage prepaid, addressed to the registered holders of Series A Preferred
Shares at the addresses of such holders as shown on the books of this
Corporation, which notice shall state the Conversion Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
receivable at such price upon the conversion of Series A Preferred Shares,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
(e) Rights to Preconversion Distributions. The holders of Series A
Preferred Shares shall have the following rights to certain properties received
by the holders of Common Shares:
(i) In case this Corporation shall declare a dividend or distribution upon
Common Shares payable other than in cash out of earnings or surplus or other
than in Common Shares, then thereafter each holder of Series A Preferred Shares
upon the conversion thereof will be entitled to receive the number of Common
Shares into which such Series A Preferred Shares shall be converted, and, in
addition and without payment therefor, the property which such holder would have
received as a dividend if continuously since the record date for any such
dividend or distribution such holder (A) had been the record holder of the
number of Common Shares then received, and (B) had retained all dividends or
distributions in stock or securities payable in respect of such Common Shares or
in respect of any stock or securities paid as dividends or distributions and
originating directly or indirectly from such Common Shares.
(ii) Subject to the provisions of subsection 2(B)(2) regarding liquidation
rights, if any capital reorganization or reclassification of the capital stock
of this Corporation, or consolidation or merger of this Corporation with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Shares shall
be entitled to receive stock, securities or assets with respect to or in
exchange for Common Shares, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holders of Series A Preferred Shares shall thereafter
have the right to receive, in lieu of Common Shares of this Corporation
immediately theretofore receivable upon the conversion of such Series A
Preferred Shares, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding Common Shares
equal to the number of Common Shares immediately theretofore receivable upon the
conversion of such Series A Preferred Shares had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any such
case appropriate provision shall be made with respect to the rights and
interests of the holders of the Series A Preferred Shares to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Conversion Price and of the number of shares receivable upon the conversion
of such Series A Preferred Shares) shall thereafter be applicable, as nearly as
may be, in relation to any shares of stock, securities or assets thereafter
receivable upon the conversion of such Series A Preferred Shares. This
Corporation shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof the surviving corporation (if other than this
Corporation), the corporation resulting from such consolidation or the
corporation purchasing such assets shall assume by written instrument executed
and mailed to the registered holders of the Series A Preferred Shares at the
last address of such holders appearing on the books of the corporation, the
obligation to deliver to such holders such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such holders may be entitled to
receive.
<PAGE>
(f) Notice of Certain Events. In case any time:
(i) this Corporation shall pay any dividend payable in stock upon Common
Shares or make any distribution (other than regular cash dividends) to the
holders of Common Shares; or
(ii) this Corporation shall offer for subscription pro rata to the holders
of Common Shares any additional shares of stock of any class or other rights; or
(iii) there shall be any capital reorganization, reclassification of the
capital stock of this Corporation, or consolidation or merger of this
Corporation with, or sale of all or substantially all of its assets to, another
corporation; provided, however, that this provision shall not be applicable to
the merger or consolidation of this Corporation with or into another corporation
if, following such merger or consolidation, the shareholders of this Corporation
immediately prior to such merger or consolidation own at least 80% of the equity
of the combined entity; or
(iv) there shall be a voluntary or involuntary dissolution liquidation or
winding up of this Corporation; then, in any one or more of said cases, this
Corporation shall give written notice, by first-class mail, postage prepaid,
addressed to the holders of Series A Preferred Shares at the addresses of such
holders as shown on the books of this Corporation, of the date on which (A) the
books of this Corporation shall close or a record shall be taken for such
dividend, distribution or subscription rights, or (B) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Shares of record shall participate in
such dividend, distribution or subscription rights, or shall be entitled to
exchange their Common Shares for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Such written notice shall be
given at least 20 days prior to the action in question and not less than 20 days
prior to the record date or the date on which this Corporation's transfer books
are closed in respect thereto.
(g) Definition of Common Shares. As used in this subsection 2(B)(4) the
term "Common Shares" shall mean and include this Corporation's presently
authorized Common Shares and shall also include any capital stock of any class
of this Corporation hereafter authorized which shall have the right to vote on
all matters submitted to the shareholders of this Corporation and shall not be
limited to a fixed sum or percentage in respect of the rights of the holders
thereof to participate in dividends or in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of this
Corporation; provided that the shares receivable pursuant to conversion of
Series A Preferred Shares shall include shares designated as Common Shares of
this Corporation as of the date of issuance of such Series A Preferred Shares,
or, in case of any reclassification of the outstanding shares thereof, the
stock, securities or assets provided for in subsection 2(B)(4)(e)(ii) above.
<PAGE>
ARTICLE IV
The shareholders of the Corporation shall not have any preemptive rights to
subscribe for or acquire securities or rights to purchase securities of any
class, kind or series of the Corporation.
ARTICLE V
No shareholder of this Corporation shall have any cumulative voting rights.
ARTICLE VI
The shareholders shall take action by the affirmative vote of holders of a
majority of the voting power of the shares present, except where a larger
proportion is required by law, these Articles or a shareholder control
agreement.
ARTICLE VII
Any action required or permitted to be taken by the Board of Directors of
this Corporation may be taken by written action signed by that number of
directors that would be required to take the same action at a meeting of the
Board at which all directors are present, except as to those matters requiring
shareholder approval, in which case the written action must be signed by all
members of the Board of Directors then in office.
ARTICLE VIII
No director of this Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that this Article shall not eliminate or
limit the liability of a director to the extent provided by applicable law (i)
for any breach of the director's duty of loyalty to the Corporation or its
shareholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) under section
302A.559 or 80A.23 of the Minnesota Statutes, (iv) for any transaction from
which the director derived an improper personal benefit, or (v) for any act or
omission occurring prior to the effective date of this Article. No amendment to
or repeal of this Article shall apply to or have any effect on the liability or
alleged liability of any' director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
<PAGE>
CERTIFICATE OF DESIGNATION
OF
SERIES B CONVERTIBLE PREFERRED STOCK
AND
SERIES B-1 CONVERTIBLE PREFERRED STOCK
OF
SHOWCASE CORPORATION
The undersigned hereby certifies that the Board of Directors of ShowCase
Corporation (the "Corporation"), a corporation organized and existing under the
Minnesota Business Corporation Act, duly approved the terms contained in the
following resolution effective on March 11, 1998:
RESOLVED, that two series of preferred stock of the Corporation are hereby
created, and the designations and amounts thereof and the relative rights and
preferences of the shares of each series, are as follows:
Section 1. Designation and Amount. The shares of one series shall be
designated as "Series B Convertible Preferred Stock" (the "Series B Preferred
Shares"), and the number of shares constituting the Series B Preferred Shares
shall be 902,500, $.01 par value per share. The shares of the other series shall
be designated as "Series B-1 Convertible Preferred Stock" (the "Series B-1
Preferred Shares" and, together with the Series B Preferred Shares, the "Series
B Shares"), and the number of shares constituting the Series B-1 Preferred
Shares shall be 875,000, $.01 par value per share. The number of shares of each
such series may be increased or decreased by resolution of the Board of
Directors and any necessary shareholder approval; provided, however, that no
decrease shall reduce the number of Series B Preferred Shares or Series B-1
Preferred Shares to a number less than the number of shares of such series then
outstanding plus the number of shares of such series reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation convertible into Series
B Preferred Shares or Series B-1 Preferred Shares, as the case may be.
Section 2. Voting Rights. Each holder of Series B Shares shall have one
vote on all matters submitted to the shareholders for each share of the
Corporation's common stock, $.01 par value per share ("Common Shares"), which
such holder of Series B Shares would be entitled to receive upon the conversion
of his Series B Shares pursuant to the provisions of Section 6. In addition,
each holder of Series B Shares shall have the special voting rights described in
Section 3. Except as otherwise provided in this Section 2 or as required under
the Minnesota Business Corporation Act, the holders of the Company's Series A
Convertible Preferred Shares, $.01 par value per share (the "Series A Preferred
Shares"), Series B Preferred Shares, Series B-1 Preferred Shares and Common
Shares shall vote together as a single class. The Series A Preferred Shares and
the Series B Shares shall be hereinafter be referred to as the "Preferred
Shares."
<PAGE>
Section 3. Special Voting Rights. So long as ten percent (10%) of the
originally issued Series B Shares are outstanding, without the affirmative vote
or consent of holders of at least a majority of the Series B Shares, at the time
outstanding, the Corporation shall not:
(i) authorize or issue any (A) additional Series A Preferred Shares, (B)
additional Series B Preferred Shares, except as specifically permitted
by the terms of that certain Stock Purchase Agreement dated March 26,
1998 (the "Stock Purchase Agreement") between the Corporation and the
Purchasers named therein, (C) additional Series B-1 Preferred Shares,
except as provided in Section 6 hereof or (D) shares of capital stock
having priority over Series B Preferred Shares or Series B-1 Preferred
Shares or ranking on a parity therewith as to the payment of dividends
or as to the payment or distribution of assets upon the liquidation or
dissolution, voluntary or involuntary, of the Corporation;
(ii) declare or pay any dividend or make any other distribution on any
shares of capital stock of the Corporation at any time created and
issued ranking junior to Series B Preferred Shares or Series B-1
Preferred Shares with respect to the right to receive dividends and/or
the right to the distribution of assets upon liquidation, dissolution
or winding up of the Corporation (hereinafter called "Junior Stock"),
other than dividends or distributions payable solely in shares of
Junior Stock, or purchase, redeem or otherwise acquire for any
consideration (other than in exchange for or out of the net cash
proceeds of the contemporaneous issue or sale of other shares of
Junior Stock), or set aside as a sinking fund or other fund for the
redemption or repurchase of any shares of Junior Stock or any
warrants, rights or options to purchase shares of Junior Stock;
(iii) sell, lease, license or otherwise dispose of all or substantially all
of its assets, or any asset or assets which have a material effect
upon the business or financial condition of the Corporation, or
consolidate with or merge into any other corporation or entity, or
permit any other corporation or entity to consolidate or merge into
it, or enter into a plan of exchange with any other corporation or
entity, or otherwise acquire any other corporation or entity or permit
any subsidiary to do any of the foregoing, except that any subsidiary
of the Corporation may merge into another subsidiary or into the
Corporation;
(iv) alter or amend the rights or preferences of Series B Shares as stated
in this Certificate of Designation; or
(v) issue Common Shares or Common Share purchase rights at a price below
$3.00 per share (as adjusted from time to time to reflect stock
splits, share dividends or other corporate recapitalizations effected
subsequent to March 26, 1998), except for issuance of Common Shares or
Common Share purchase rights (A) upon conversion of Preferred Shares,
(B) pursuant to options, warrants, notes or other rights to acquire
Common Shares outstanding as of the date hereof, (C) to employees,
directors or consultants of the Corporation pursuant to any stock
<PAGE>
option plan approved by the Corporation's Board of Directors, or (D)
as specifically permitted by Section 3.3 of the Stock Purchase
Agreement.
Section 4. Dividends. Dividends shall be payable on the Series B Shares out
of funds legally available for the declaration of dividends, only if and when
declared by the Corporation's Board of Directors. In no event shall any dividend
be paid or declared, nor shall any distribution be made, on Common Shares,
unless holders of Series B Shares shall participate in such dividend on a pro
rata basis with the holders of Common Shares, counting Series B Shares on an
as-if-converted basis.
Section 5. Liquidation Preference. In the event of the liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of Series B Shares shall be entitled to receive out of the assets of
the Corporation, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of Common Shares or
any other class of shares of the Corporation ranking junior to the Series B
Shares, a cash amount equal to $4.00 per share for each outstanding Series B
Share, plus any dividends declared but not paid on Series B Shares (the "Series
B Preferred Liquidation Amount"); provided, however, if the assets of the
Corporation are insufficient to pay (x) the liquidation preference the holders
of Series A Preferred Shares are entitled to under Section 2(B)(2) of Article
III of the Corporation's Amended and Restated Articles of Incorporation, as
amended (the "Articles") plus (y) the Series B Preferred Liquidation Amount, the
holders of the Preferred Shares shall share pro rata in any such distribution in
proportion to the full amounts to which they would otherwise be entitled.
Following such payment to the holders of Preferred Shares, the holders of Series
B Shares shall then share ratably on an as-if converted basis with the holders
of Common Shares in all remaining assets of the Corporation.
For purposes of this Section 5, a consolidation or merger of the
Corporation with or into any other person or entity or a consolidation or merger
of any other person or entity with or into the Corporation (in which
consolidation or merger the shareholders of the Corporation receive distribution
of cash or securities or other property as a result of such consolidation or
merger), or a sale, transfer or disposition of all or substantially all the
Corporation's assets, shall be considered a liquidation, dissolution or winding
up of the Corporation, unless, with respect to a merger, consolidation or sale,
the holders of Common Shares immediately preceding such merger or consolidation
hold at least a majority of the equity securities of the surviving entity
entitled to vote in the election of directors (or similar governing body) of the
surviving entity.
Section 6. Conversion Rights.
(a) Optional Conversion. Each Series B Share shall be convertible at the
option of the holder thereof at any time into Common Shares in accordance with
Section 6(c) below. In order to exercise the conversion privilege, a holder of
Series B Shares shall surrender the certificate(s) representing such Series B
Shares to the Corporation at its principal office, duly endorsed to the
Corporation and accompanied by written notice to the Corporation that the holder
elects to convert a specified portion or all of such shares. Series B Shares
converted at the option of the holder shall be deemed to have been converted on
the day of surrender of the certificate
<PAGE>
representing such shares for conversion in accordance with the foregoing
provisions, and at such time the rights of such holder of Series B Shares, as
such holder, shall cease and such holder shall be treated for all purposes as
the record holder of the Common Shares issuable upon conversion. As promptly as
practicable on or after the conversion date, the Corporation shall issue and
mail or deliver to such holder or to the nominee or nominees of such holder a
certificate or certificates representing the number of Common Shares issuable
upon conversion, computed to the nearest one hundredth of a full share, and a
certificate or certificates for the balance of the Series B Shares surrendered,
if any, not so converted into Common Shares.
(b) Automatic Conversion. Series B Shares shall be automatically converted
into Common Shares upon the election of the Corporation and delivery of written
notice of such election to the holders of Series B Shares (which election and
notice may be delivered within ninety (90) days before or after the automatic
conversion events described below without effecting the effective time of such
automatic conversion), if the Corporation closes the issuance and sale of Common
Shares in an underwritten public offering, pursuant to an effective registration
statement under the Securities Act of 1933, as amended, in which (i) the net
proceeds received by the Corporation equal or exceed $15,000,000 and (ii) the
public offering price equals or exceeds $10.00 per share (as adjusted from time
to time to reflect stock splits, share dividends or other corporate
recapitalizations effected subsequent to March 26, 1998).
(c) Special Mandatory Conversion.
(i) At any time following the date of the Stock Purchase Agreement, if (a)
the holders of Series B Preferred Shares are entitled to exercise the
right of first refusal (the "Right of First Refusal") set forth in
Section 8.11 of the Stock Purchase Agreement with respect to any
issuance or sale by the Corporation of Additional Securities (as
defined in such Section 8.11) at a price per share that is less than
the Conversion Price (as defined below) for the Series B Preferred
Shares then in effect (the "Equity Financing"), (b) the Corporation
has complied with its notice of obligations, or such obligations have
been waived with respect to such holder, under the Right of First
Refusal with respect to such Equity Financing, and the Corporation
thereafter proceeds to consummate the Equity Financing and (c) such
holder or Purchaser Affiliate (as defined in the Stock Purchase
Agreement) (a "Non-Participating Holder") does not by exercise of such
holder's Right of First Refusal to acquire its pro rata share (as
defined in Section 8.11 of the Stock Purchase Agreement) offered in
such Equity Financing (a "Mandatory Offering"), then all of such
Non-Participating Holder's Series B Preferred Shares shall
automatically and without further action on the part of such holder be
converted effective upon, subject to, and concurrently with, the
consummation of the Mandatory Offering (the "Equity Financing Date")
into an equivalent number of shares of Series B-1 Preferred Shares;
provided, however, that no such conversion shall occur in connection
with a particular Equity Financing if, pursuant to the written request
of the Corporation, holders of 80% of the issued and outstanding
Series B Preferred Shares agree in writing to waive their Right of
First Refusal with respect to such Equity Financing. The Conversion
Price for such Series B-1
<PAGE>
Preferred Shares shall be the Conversion Price of the Series B
Preferred Shares in effect immediately prior to the issuance of such
Series B-1 Preferred Shares as adjusted pursuant to the provisions of
Section 6, except for this Section 6(c). Upon conversion pursuant to
this Section 6(c), the Series B Preferred Shares so converted shall be
canceled and not subject to reissuance.
(ii) The holder of any Series B Preferred Shares converted pursuant to this
Section 6(c) shall deliver to the Corporation during regular business
hours at the office of any transfer agent of the Corporation, or at
such other place as may be designated by the Corporation, the
certificate or certificates for the shares so converted, duly endorsed
or assigned in blank or to the Corporation. As promptly as practicable
thereafter, the Corporation shall issue and deliver to such holder, at
the place designated by such holder, a certificate or certificates for
the number of full shares of the Series B-1 Preferred Shares to be
issued and such holder shall be deemed to have become a shareholder of
record of Series B-1 Preferred Shares on the Equity Financing Date
unless the transfer books of the Corporation are closed on that date,
in which event it shall be deemed to have become a shareholder of
record of Series B-1 Preferred Shares on the next succeeding date on
which the transfer books are open. Series B-1 Preferred Shares may be
issued only in exchange for Series B Preferred Shares pursuant to this
Section 6(c).
(iii) In the event that any Series B-1 Preferred Shares are issued,
concurrently with such issuance, the Corporation shall use its best
efforts to take all such action as may be required, including amending
the Articles, (a) to cancel all authorized Series B Preferred Shares
that remain unissued after such issuance; (b) to create and reserve
for issuance upon any future Special Mandatory Conversion of any
Series B Preferred Shares, a new series of preferred stock designated
Series B-2 Convertible Preferred Stock ("Series B-2 Preferred Shares")
equal in number to the number of authorized Series B Preferred Shares,
with the designations, powers, preferences and rights and the
qualifications, limitations and restrictions identical to those then
applicable to the Series B Preferred Shares, except that the
Conversion Price for such Series B-2 Preferred Shares once initially
issued shall be the Conversion Price of Series B Preferred Shares in
effect immediately prior to such issuance; and (c) to amend the
provisions of this Section 6(c) to provide that any subsequent Special
Mandatory Conversion will be into Series B-2 Preferred Shares rather
than Series B-1 Preferred Shares. The Corporation shall take the same
actions as provided in this Section 6(c)(iii) with respect to the
Series B-2 Preferred Shares and each subsequently authorized series of
preferred stock created pursuant to this Section 6(c)(iii) upon
initial issuance of shares of the last such series to be authorized.
The right to receive any dividend declared but unpaid at the time of
conversion on any shares of Series B Shares converted pursuant to the
provisions of this Section 6(c) shall accrue to the benefit of the new
shares of preferred stock issued upon conversion thereof.
<PAGE>
(iv) This Section 6(c) shall be applicable only upon amendment of Article
IV of the Articles to eliminate the reference to the Investment
Agreement dated February 21, 1991 by and between this Corporation and
Norwest Equity Partners IV, a Minnesota Limited Partnership.
(d) Conversion Price and Adjustments. The number of Common Shares issuable
in exchange for Series B Shares upon either optional or automatic conversion
shall be equal to $4.00 divided by the conversion price then in effect (the
"Conversion Price") for the Series B Shares. The Conversion Price shall
initially be $4.00, but shall be subject to adjustment from time to time as
hereinafter provided:
(i) In case the Corporation shall at any time after March 26, 1998
subdivide or split its outstanding Common Shares into a greater number
of shares or declare any dividend payable in Common Shares, the
Conversion Price in effect immediately prior to such subdivision,
split or dividend shall be proportionately decreased, and conversely,
in case the outstanding Common Shares of the Corporation shall be
combined into a smaller number of shares, the Conversion Price in
effect immediately prior to such combination shall be proportionately
increased.
(ii) If the Corporation's total revenues for the fiscal year ended March
31, 1999 is less than $35,000,000, the Conversion Price then in effect
shall be adjusted and shall be equal to $3.00 plus the dollar amount
obtained by dividing (x) the difference between the Corporation's
total revenues for the fiscal year ended March 31, 1999 and
$30,000,000 by (y) 5,000,000; provided, however, that if the
Corporation's total revenues for the fiscal year ended March 31, 1999
is less than $30,000,000, the Conversion Price shall be $3.00.
Notwithstanding the foregoing, the Conversion Price shall be adjusted
pursuant to this Section 6(c)(ii) only if the Conversion Price then in
effect is greater than the Conversion Price obtained pursuant to this
Section 6(c)(ii).
(iii) If the Corporation's total revenues for the fiscal year ended March
31, 1999 is greater than $35,000,000 and the Conversion Price then in
effect is $4.00, the Conversion Price then in effect shall be adjusted
and shall be equal to $4.00 plus the dollar amount obtained by
dividing (x) the difference between the Corporation's total revenues
for the fiscal year ended March 31, 1999 and $35,000,000 by (y)
10,000,000; provided, however, that if the Corporation's total
revenues for the fiscal year ended March 31, 1999 is greater than
$40,000,000, the Conversion Price shall be $4.50.
(iv) Except for (a) issuances of Common Shares upon conversion of Preferred
Shares, (b) issuances of capital stock pursuant to options, to acquire
capital stock of the Corporation outstanding as of the date hereof and
(c) issuance of options and/or shares of capital stock to employees,
directors or consultants of the Corporation pursuant to any stock
purchase plan or stock option plan approved by the Corporation's Board
of Directors (including any such plan in effect prior to March
<PAGE>
26, 1998), if and whenever the Corporation shall issue or sell any
Common Shares or shares of stock of the Corporation which are
convertible into, or exchangeable for, Common Stock or other shares of
capital stock of the Corporation ("Convertible Shares") for a
consideration per share (the amount, if any, payable upon the
conversion of such Convertible Share for each Common Share receivable
thereby shall be included in determining such consideration per share)
less than the Conversion Price for Series B Preferred Shares then in
effect (other than dividends payable in Common Shares), or shall issue
any options, warrants or other rights for the purchase of such Common
Shares or Convertible Shares at a consideration per share (the amount,
if any, payable upon the exercise of such warrant, option or right for
each Common Share receivable thereby shall be included in determining
such consideration per share) of less than the Conversion Price for
Series B Preferred Shares then in effect, then, forthwith upon such
issuance or sale, the Conversion Price for Series B Preferred Shares
(but not for Series B-1 Preferred Shares) in effect immediately prior
to such issuance or sale shall be adjusted and shall be equal to the
consideration per share at which such Common Shares or Convertible
Shares were issued or sold or at which such options, warrants, or
other purchase rights are exercisable. If any such options, warrants
or other purchase rights that are taken into account in any such
adjustment of the Conversion Price for Series B Preferred Shares
subsequently expire without exercise, the Conversion Price for Series
B Preferred Shares shall be recomputed at the time of expiration by
deleting such options, warrants or other rights.
(v) For the purposes of Sections 6(d)(ii) and 6(d)(iii), the calculation
of the Company's total revenues for the fiscal year ended March 31,
1999 shall be in accordance with generally accepted accounting
principals and consistent with past practice. Furthermore, the
calculation of the Company's total revenues for the fiscal year ended
March 31, 1999 shall not include revenues due to acquisitions,
consolidations, mergers, exchanges or similar transactions by the
Company after March 26, 1998 or the introduction of new lines of
business by the Company after March 26, 1998.
(vi) The anti-dilution provisions of this Section 6(d) may be waived by the
affirmative vote of the holders of at least fifty percent (50%) of the
then outstanding Series B Preferred Shares voting together as a class,
and in the event the anti-dilution provisions of Section 6(d)(iv) are
so waived, the special mandatory conversion provisions of Section 6(c)
shall not apply to the Equity Financing which is the subject of such
waiver. Such waiver shall be at the sole discretion of the holders of
the then outstanding Series B Preferred Shares.
(e) Notice Regarding Conversion Price Adjustments. Upon any adjustment of
the Conversion Price, then and in each such case the Corporation shall promptly
give written notice thereof, by first-class mail, postage prepaid, addressed to
the registered holders of the Series B Shares at the addresses of such holders
as shown on the books of the Corporation, which notice
<PAGE>
shall state the Conversion Price resulting from such adjustment and the increase
or decrease, if any, in the number of shares receivable at such price upon the
conversion of Series B Shares, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
(f) Rights to Preconversion Distributions. The holders of Series B Shares
shall have the following right to certain properties received by the holders of
Common Shares:
(i) In case the Corporation shall declare a dividend or other distribution
upon Common Shares payable otherwise than in cash out of earnings or
surplus or other than in Common Shares, then thereafter each holder of
Series B Shares upon the conversion thereof will be entitled to
receive the number of Common Shares into which such Series B Shares
shall be converted, and, in addition and without payment therefor, the
property which such holder would have received as a dividend if
continuously since the record date for any such dividend or
distribution such holder (A) had been the record holder of the number
of Common Shares then received, and (B) had retained all dividends or
distributions in stock or securities payable in respect of such Common
Shares or in respect of any stock or securities paid as dividends or
distributions and originating directly or indirectly from such Common
Shares.
(ii) Subject to the provisions of Section 5 regarding liquidation rights,
if any capital reorganization or reclassification of the capital stock
of the Corporation, or consolidation or merger of the Corporation with
another corporation, or the sale of all or substantially all of its
assets to another corporation shall be effected in such a way that
holders of Common Shares shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Shares,
then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision shall be
made whereby the holders of the Series B Shares shall thereafter have
the right to receive, in lieu of Common Shares of the Corporation
immediately theretofore receivable upon the conversion of the Series B
Shares, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding
Common Shares equal to the number of Common Shares immediately
theretofore receivable upon the conversion of such Series B Shares had
such reorganization, reclassification, consolidation, merger or sale
not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of the holders of Series
B Shares to the end that the provisions hereof (including without
limitation provisions for adjustments of the Conversion Price and of
the number of shares receivable upon the conversion of such Series B
Shares) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter
receivable upon the conversion of such Series B Shares. The
Corporation shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof the surviving corporation (if
other than the Corporation), the corporation resulting from such
consolidation or the corporation
<PAGE>
purchasing such assets shall assume by written instrument executed and
mailed to the registered holders of the Series B Shares at the last
address of such holders appearing on the books of the Corporation, the
obligation to deliver to such holders such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such
holders may be entitled to receive.
(g) Notice of Certain Events. In case any time:
(i) the Corporation shall pay any dividend payable in stock upon Common
Shares or make any distribution (other than regular cash dividends) to
the holders of Common Shares; or
(ii) the Corporation shall offer for subscription pro rata to the holders
of Common Shares any additional shares of stock of any class or other
rights; or
(iii) there shall be any capital reorganization, reclassification of the
capital stock of the Corporation, or consolidation or merger of the
Corporation with, or sale of all or substantially all of its assets
to, another corporation; provided, however, that this provision shall
not be applicable to the merger or consolidation of the Corporation
with or into another corporation if, following such merger or
consolidation, the shareholders of the Corporation immediately prior
to such merger or consolidation own at least 80% of the equity of the
combined entity; or
(iv) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give written
notice, by first-class mail, postage prepaid, addressed to the holders of the
Series B Shares at the addresses of such holders as shown on the books of the
Corporation, on the date on which (A) the books of the Corporation shall close
or a record shall be taken for such dividend, distribution or subscription
rights, or (B) such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up shall take place, as the case may
be. Such notice shall also specify the date as of which the holders of Common
Shares of record shall participate in such dividend, distribution or
subscription rights, or shall be entitled to exchange their Common Shares for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be given at least
twenty (20) days prior to the action in question and not less than twenty (20)
days prior to the record date or the date on which the Corporation's transfer
books are closed in respect thereto.
(h) Definition of Common Shares. As used in this Section 6, the term
"Common Shares" shall mean and include the Corporation's presently authorized
Common Shares and shall also include any capital stock of any class of the
Corporation hereafter authorized which shall have the right to vote on all
matters submitted to the shareholders of the Corporation and shall not be
limited to a fixed sum or
<PAGE>
percentage in respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation; provided, that the
shares receivable pursuant to conversion of Series B Shares shall include shares
designated as Common Shares of the Corporation as of the date of issuance of
such Series B Shares, or, in case of any reclassification of the outstanding
shares thereof, the stock, securities or assets provided for in Section 6(e)(ii)
above.
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SHOWCASE CORPORATION
ARTICLE I
The name of this corporation is ShowCase Corporation.
ARTICLE II
The registered office of this corporation is located at 4115 Highway 52
North, Suite 300, Rochester, Minnesota 55901.
ARTICLE III
The aggregate number of authorized shares of the corporation is 50,000,000
shares, $.01 par value. The shares shall be divisible into classes and series,
have the designations, voting rights, and other rights and preferences, and be
subject to the restrictions, that the board of directors may from time to time
establish, fix, and determine, consistent with these articles of incorporation.
Unless otherwise designated by the board of directors, all issued shares shall
be deemed common stock with equal rights and preferences.
ARTICLE IV
The shareholders of the Corporation shall not have any preemptive rights to
subscribe for or acquire securities or rights to purchase securities of any
class, kind or series of the Corporation.
ARTICLE V
No shareholder of this Corporation shall have any cumulative voting rights.
ARTICLE VI
The shareholders shall take action by the affirmative vote of holders of a
majority of the voting power of the shares present, except where a larger
proportion is required by law, these Articles or a shareholder control
agreement.
<PAGE>
ARTICLE VII
Any action required or permitted to be taken by the Board of Directors of
this Corporation may be taken by written action signed by that number of
directors that would be required to take the same action at a meeting of the
Board at which all directors are present, except as to those matters requiring
shareholder approval, in which case the written action must be signed by all
members of the Board of Directors then in office.
ARTICLE VIII
No director of this Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that this Article shall not eliminate or
limit the liability of a director to the extent provided by applicable law (i)
for any breach of the director's duty of loyalty to the Corporation or its
shareholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) under section
302A.559 or 80A.23 of the Minnesota Statutes, (iv) for any transaction from
which the director derived an improper personal benefit, or (v) for any act or
omission occurring prior to the effective date of this Article. No amendment to
or repeal of this Article shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
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<PAGE>
EXHIBIT 3.3
AMENDED AND RESTATED BY-LAWS
of
ROCHESTER SOFTWARE CONNECTION, INC.
SHAREHOLDERS
Section 1.01 Place of Meetings. Each meeting of the shareholders shall be
held at the principal executive office of the Corporation or at such other place
as may be designated by the Board of Directors or the Chief Executive Officer;
provided, however, that any meeting called by or at the demand of a shareholder
or shareholders shall be held in the county where the principal executive office
of the Corporation is located.
Section 1.02 Regular Meetings. Regular meetings of the shareholders may be
held on an annual or other less frequent basis as determined by the Board of
Directors; provided, however, that if a regular meeting has not been held during
the immediately preceding 15 months, a shareholder or shareholders holding three
percent or more of the voting power of all shares entitled to vote may demand a
regular meeting of shareholders by written demand given to the Chief Executive
Officer or Chief Financial Officer of the Corporation. At each regular meeting
the shareholders shall elect qualified successors for directors who serve for an
indefinite term or whose terms have expired or are due to expire within six
months after the date of the meeting and may transact any other business,
provided, however, that no business with respect to which special notice is
required by law shall be transacted unless such notice shall have been given.
Section 1.03 Special Meetings. A special meeting of the shareholders may be
called for any purpose or purposes at any time by the Chief Executive Officer;
by the Chief Financial Officer; by the Board of Directors or any two or more
members thereof; or by one or more shareholders holding not less than ten
percent of the voting power of all shares of the Corporation entitled to vote,
who shall demand such special meeting by written notice given to the Chief
Executive Officer or the Chief Financial Officer of the Corporation specifying
the purposes of such meeting.
Section 1.04 Meetings Held Upon Shareholder Demand. Within 30 days of
receipt of a demand by the Chief Executive Officer or the Chief Financial
Officer from any shareholder or shareholders entitled to call a meeting of the
shareholders, it shall be the duty of the Board of Directors of the Corporation
to cause a special or regular meeting of shareholders, as the case may be, to be
duly called and held on notice no later than ninety days after receipt of such
demand. If the Board of Directors fails to cause such a meeting to be called and
held as required by this Section, the shareholder or shareholders making the
demand may call the meeting by giving notice as provided in Section 1.06 hereof
at the expense of the Corporation.
Section 1.05 Adjournments. Any meeting of the shareholders may be adjourned
from time to time to another date, time and place. If any meeting of the
shareholders is so adjourned, no notice as to such adjourned meeting need be
given if the date, time and place at which the meeting will be reconvened are
announced at the time of adjournment.
<PAGE>
Section 1.06 Notice of Meetings. Except as otherwise specified in Section
1.05 or required by law, written notice of each meeting of the shareholders,
stating the date, time and place and, in the case of a special meeting, the
purpose or purposes, shall be given at least ten days and not more than sixty
days prior to the meeting to every holder of shares entitled to vote at such
meeting. The business transacted at a special meeting of shareholders is limited
to the purposes stated in the notice of the meeting.
Section 1.07 Waiver of Notice. A shareholder may waive notice of the date,
time, place and purpose or purposes of a meeting of shareholders. A waiver of
notice by a shareholder entitled to notice is effective whether given before, at
or after the meeting, and whether given in writing, orally or by attendance.
Attendance by a shareholder at a meeting is a waiver of notice of that meeting,
unless the shareholder objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully called or convened,
or objects before a vote on an item of business because the item may not
lawfully be considered at that meeting and does not participate in the
consideration of the item at that meeting.
Section 1.08 Quorum; Acts of Shareholders. The holders of a majority of the
voting power of the shares entitled to vote at a shareholders meeting are a
quorum for the transaction of business. If a quorum is present when a duly
called or held meeting is convened, the shareholders present may continue to
transact business until adjournment, even though the withdrawal of a number of
the shareholders originally present leaves less than the proportion or number
otherwise required for a quorum. Except as otherwise required by law or
specified in the Articles of Incorporation of the Corporation, the shareholders
shall take action by the affirmative vote of the holders of a majority of the
voting power of the shares present and entitled to vote at a duly held meeting
of shareholders.
Section 1.09 Voting Rights. Subdivision 1. A shareholder shall have one
vote for each share held which is entitled to vote. Except as otherwise required
by law, a holder of shares entitled to vote may vote any portion of the shares
in any way the shareholder chooses. If a shareholder votes without designating
the proportion or number of shares voted in a particular way, the shareholder is
deemed to have voted all of the shares in that way.
Subdivision 2. The Board may fix a date not more than sixty days before the
date of a meeting of shareholders as the date for the determination of the
holders of shares entitled to notice of and entitled to vote at the meeting.
When a date is so fixed, only shareholders on that date are entitled to notice
of and permitted to vote at that meeting of shareholders.
Section 1.10 Proxies. A shareholder may cast or authorize the casting of a
vote by filing a written appointment of a proxy with an officer of the
Corporation at or before the meeting at which the appointment is to be
effective.
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<PAGE>
Section 1.11 Action-Without a Meeting. Any action required or permitted to
be taken at a meeting of the shareholders of the Corporation may be taken
without a meeting by written action signed by all of the shareholders entitled
to vote on that action. The written action is effective when it has been signed
by all of those shareholders, unless a different effective time is provided in
the written action.
DIRECTORS
Section 2.01 Number; Qualifications. Except as authorized by the
shareholders pursuant to a shareholder control agreement or unanimous
affirmative vote, the business and affairs of the Corporation shall be managed
by or under the direction of a Board of one or more directors. Directors shall
be natural persons. The shareholders at each regular meeting shall determine the
number of directors to constitute the Board, provided that thereafter the
authorized number of directors may be increased by the shareholders or the Board
and decreased by the shareholders. Directors need not be shareholders.
Section 2.02 Term. Each director shall serve for an indefinite term that
expires at the next regular meeting of the shareholders. A director shall hold
office until a successor is elected and has qualified or until the earlier
death, resignation, removal or disqualification of the director.
Section 2.03 Vacancies. Vacancies on the Board of Directors resulting from
the death, resignation, removal or disqualification of a director may be filled
by the affirmative vote of a majority of the remaining members of the Board,
though less than a quorum. Vacancies on the Board resulting from newly created
directorships may be filled by the affirmative vote of a majority of the
directors serving at the time such directorships are created. Each person
elected to fill a vacancy shall hold office until a qualified successor is
elected by the shareholders at the next regular meeting or at any special
meeting duly called for that purpose.
Section 2.04 Place of Meetings. Each meeting of the Board of Directors
shall be held at the principal executive office of the Corporation or at such
other place as may be designated from time to time by a majority of the members
of the Board.
Section 2.05 Regular Meetings. Regular meetings of the Board of Directors
for the election of officers and the transaction of any other business shall be
held without notice at the place of and immediately after each regular meeting
of the shareholders.
Section 2.06 Special Meetings. A special meeting of the Board of Directors
may be called for any purpose or purposes at any time by any member of the Board
by giving not less than two days' notice to all directors of the date, time and
place of the meeting, provided that when notice is mailed, at least four days'
notice shall be given. The notice need not state the purpose of the meeting.
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<PAGE>
Section 2.07 Waiver of Notice; Previously Scheduled Meetings. Subdivision
1. A director of the Corporation may waive notice of the date, time and place of
a meeting of the Board. A waiver of notice by a director entitled to notice is
effective whether given before, at or after the meeting, and whether given in
writing, orally or by attendance. Attendance by a director at a meeting is a
waiver of notice of that meeting, unless the director objects at the beginning
of the meeting to the transaction of business because the meeting is not
lawfully called or convened and thereafter does not participate in the meeting.
Subdivision 2. If the day or date, time and place of a Board meeting have
been provided herein or announced at a previous meeting of the Board, no notice
is required. Notice of an adjourned meeting need not be given other than by
announcement at the meeting at which adjournment is taken of the date, time and
place at which the meeting will be reconvened.
Section 2.08 Quorum; Acts of Board. The presence in person of a majority of
the directors currently holding office shall be necessary to constitute a quorum
for the transaction of business. In the absence of a quorum, a majority of the
directors present may adjourn a meeting from time to time without further notice
until a quorum is present. If a quorum is present when a duly held meeting is
convened, the directors present may continue to transact business until
adjournment, even though the withdrawal of a number of the directors originally
present leaves less than the proportion or number otherwise required for a
quorum. Except as otherwise required by law or specified in the Articles of
Incorporation of the Corporation, the Board shall take action by the affirmative
vote of a majority of the directors present at a duly held meeting.
Section 2.09 Electronic Communications. A conference among directors by any
means of communication through which the directors may simultaneously hear each
other during the conference constitutes a Board meeting, if the same notice is
given of the conference as would be required for a meeting, and if the number of
directors participating in the conference would be sufficient to constitute a
quorum at a meeting. A director may participate in a Board meeting not described
in the immediately preceding sentence by any means of communication through
which the director, other directors so participating and all directors
physically present at the meeting may simultaneously hear each other during the
meeting. Participation in a meeting by any means referred to in this Section
2.09 constitutes presence in person at the meeting.
Section 2.10 Absent Directors. A director of the Corporation may give
advance written consent or opposition to a proposal to be acted on at a Board
meeting. If the director is not present at the meeting, consent or opposition to
a proposal does not constitute presence for purposes of determining the
existence of a quorum, but consent or opposition shall be counted as a vote in
favor of or against the proposal and shall be entered in the minutes or other
record of action at the meeting, if the proposal acted on at the meeting is
substantially the same or has substantially the same effect as the proposal to
which the director has consented or objected.
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<PAGE>
Section 2.11 Action Without a Meeting. An action required or permitted to
be taken at a Board meeting may be taken without a meeting by written action
signed by all of the directors. Any action, other than an action requiring
shareholder approval, if the Articles of Incorporation so provide, may be taken
by written action signed by the number of directors that would be required to
take the same action at a meeting of the Board at which all directors were
present. The written action is effective when signed by the required number of
directors, unless a different effective time is provided in the written action.
When written action is permitted to be taken by less than all directors, all
directors shall be notified immediately of its text and effective date.
Section 2.12 Committees. Subdivision 1. A resolution approved by the
affirmative vote of a majority of the Board may establish committees having the
authority of the Board in the management of the business of the Corporation only
to the extent provided in the resolution. Committees shall be subject at all
times to the direction and control of the Board, except as provided in Section
2.13.
Subdivision 2. A committee shall consist of one or more natural persons,
who need not be directors, appointed by affirmative vote of a majority of the
directors present at a duly held Board meeting.
Subdivision 3. Section 2.04 and Sections 2.06 to 2.11 hereof shall apply to
committees and members of committees to the same extent as those sections apply
to the Board and directors.
Subdivision 4. Minutes, if any, of committee meetings shall be made
available upon request to members of the committee and to any director.
Section 2.13 Special Litigation Committee. Pursuant to the procedure set
forth in Section 2.12, the Board may establish a committee composed of one or
more independent directors or other independent persons to determine whether it
is in the best interests of the Corporation to pursue a particular legal right
or remedy of the Corporation and whether to cause, to the extent permitted by
law, the dismissal or discontinuance of a particular proceeding that seeks to
assert a right or remedy on behalf of the Corporation. The committee, once
established, is not subject to the direction or control of, or termination by,
the Board. A vacancy on the committee may be filled by a majority vote of the
remaining committee members. The good faith determinations of the committee are
binding upon the Corporation and its directors, officers and shareholders to the
extent permitted by law. The committee terminates when it issues a written
report of its determinations to the Board.
Section 2.14 Compensation. The Board may fix the compensation, if any, of
directors.
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<PAGE>
OFFICERS
Section 3.01 Number and Designation. The Corporation shall have one or more
natural persons exercising the functions of the offices of Chief Executive
Officer and Chief Financial Officer. The Board of Directors may elect or appoint
such other officers or agents as it deems necessary for the operation and
management of the Corporation, with such powers, rights, duties and
responsibilities as may be determined by the Board, including, without
limitation, a President, one or more vice Presidents, a Secretary and a
Treasurer, each of whom shall have the powers, rights, duties and
responsibilities set forth in these By-Laws unless otherwise determined by the
Board. Any of the offices or functions of those offices may be held by the same
person.
Section 3.02 Chief Executive Officer. Unless provided otherwise by a
resolution adopted by the Board of Directors, the Chief Executive Officer (a)
shall have general active management of the business of the Corporation; (b)
shall, when present, preside at all meetings of the shareholders and Board of
Directors; (c) shall see that all orders and resolutions of the Board are
carried into effect; (d) may maintain records of and certify proceedings of the
Board and shareholders; and (e) shall perform such other duties as may from time
to time be assigned by the Board of Directors.
Section 3.03 Chief Financial Officer. Unless provided otherwise by a
resolution adopted by the Board of Directors, the Chief Financial Officer (a)
shall keep accurate financial records for the Corporation; (b) shall deposit all
monies, drafts and checks in the name of and to the credit of the Corporation in
such banks and depositories as the Board of Directors shall designate from time
to time; (c) shall endorse for deposit all notes, checks and drafts received by
the Corporation as ordered by the Board, making proper vouchers therefor; (d)
shall disburse corporate funds and issue checks and drafts in the name of the
Corporation, as ordered by the Board; (e) shall render to the Chief Executive
Officer and the Board of Directors, whenever requested, an account of all of
such officer's transactions as Chief Financial Officer and of the financial
condition of the Corporation; and (f) shall perform such other duties as may be
prescribed by the Board of Directors or the Chief Executive Officer from time to
time.
Section 3.04 President. Unless otherwise determined by the Board, the
President shall be the Chief Executive Officer of the Corporation. If an officer
other than the President is designated Chief Executive Officer, the President
shall perform such duties as may from time to time be assigned by the Board of
Directors.
Section 3.05 Vice Presidents. Any one or more vice Presidents, if any, may
be designated by the Board of Directors as Executive Vice Presidents or Senior
Vice Presidents. During the absence or disability of the President, it shall be
the duty of the highest ranking Executive Vice President, and, in the absence of
any such Vice President, it shall be the duty of the highest ranking Senior Vice
President or other Vice President, who shall be present at the time and able to
act, to perform the duties of the President. The determination of who is the
highest ranking of two or more persons holding the same office shall, in the
absence of specific
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<PAGE>
designation of order of rank by the Board of Directors, be made on the basis of
the earliest date of appointment or election, or, in the event of simultaneous
appointment or election, on the basis of the longest continuous employment by
the Corporation.
Section 3.06 Secretary. The Secretary, unless otherwise determined by the
Board, shall attend all meetings of the shareholders and all meetings of the
Board of Directors, shall record or cause to be recorded all proceedings thereof
in a book to be kept for that purpose, and may certify such proceedings. Except
as otherwise required or permitted by law or by these By-Laws, the Secretary
shall give or cause to be given notice of all meetings of the shareholders and
all meetings of the Board of Directors.
Section 3.07 Treasurer. Unless otherwise determined by the Board, the
Treasurer shall be the Chief Financial Officer of the Corporation. If an officer
other than the Treasurer is designated Chief Financial Officer, the Treasurer
shall perform such duties as may from time to time be assigned by the Board of
Directors.
Section 3.08 Authority and Duties. In addition to the foregoing authority
and duties, all officers of the Corporation shall respectively have such
authority and perform such duties in the management of the business of the
Corporation as may be designated from time to time by the Board of Directors.
Unless prohibited by a resolution approved by the affirmative vote of a majority
of the directors present, an officer elected or appointed by the Board may,
without the approval of the Board, delegate some or all of the duties and powers
of an office to other persons.
Section 3.09 Term. Subdivision 1. All officers of the Corporation shall
hold office until their respective successors are chosen and have qualified or
until their earlier death, resignation or removal.
Subdivision 2. An officer may resign at any time by giving written notice
to the Corporation. The resignation is effective without acceptance when the
notice is given to the Corporation, unless a later effective date is specified
in the notice.
Subdivision 3. An officer may be removed at any time, with or without
cause, by a resolution approved by the affirmative vote of a majority of the
directors present at a duly held Board meeting.
Subdivision 4. A vacancy in an office because of death, resignation,
removal, disqualification or other cause may, or in the case of a vacancy in the
office of Chief Executive Officer or Chief Financial Officer shall, be filled
for the unexpired portion of the term by the Board.
Section 3.10 Salaries. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors or by the Chief Executive Officer if
authorized by the Board.
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<PAGE>
INDEMNIFICATION
Section 4.01 Indemnification. The Corporation shall indemnify such persons,
for such expenses and liabilities, in such manner, under such circumstances, and
to such extent, as required or permitted by Minnesota Statutes, Section
302A.521, as amended from time to time, or as required or permitted by other
provisions of law.
Section 4.02 Insurance. The Corporation may purchase and maintain insurance
on behalf of any person in such person's official capacity against any liability
asserted against and incurred by such person in or arising from that capacity,
whether or not the Corporation would otherwise be required to indemnify the
person against the liability.
SHARES
Section 5.01 Certificated and Uncertificated Shares. Subdivision 1. The
shares of the Corporation shall be either certificated shares or uncertificated
shares. Each holder of duly issued certificated shares is entitled to a
certificate of shares.
Subdivision 2. Each certificate of shares of the Corporation shall bear the
corporate seal, if any, and shall be signed by the Chief Executive Officer, or
the President or any Vice President, and the Chief Financial Officer, or the
Secretary or any Assistant Secretary, but when a certificate is signed by a
transfer agent or a registrar, the signature of any such officer and the
corporate seal upon such certificate may be facsimiles, engraved or printed. If
a person signs or has a facsimile signature placed upon a certificate while an
officer, transfer agent or registrar of the Corporation, the certificate may be
issued by the Corporation, even if the person has ceased to serve in that
capacity before the certificate is issued, with the same effect as if the person
had that capacity at the date of its issue.
Subdivision 3. A certificate representing shares issued by the Corporation
shall, if the Corporation is authorized to issue shares of more than one class
or series, set forth upon the face or back of the certificate, or shall state
that the Corporation will furnish to any shareholder upon request and without
charge, a full statement of the designations, preferences, limitations and
relative rights of the shares of each class or series authorized to be issued,
so far as they have been determined, and the authority of the Board to determine
the relative rights and preferences of subsequent classes or series.
Subdivision 4. A resolution approved by the affirmative vote of a majority
of the directors present at a duly held meeting of the Board may provide that
some or all of any or all classes and series of the shares of the Corporation
will be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until the certificate is surrendered to the
Corporation.
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<PAGE>
Section 5.02 Declaration of Dividends and Other Distributions. The Board of
Directors shall have the authority to declare dividends and other distributions
upon the shares of the Corporation to the extent permitted by law.
Section 5.03 Transfer of Shares. Shares of the Corporation may be
transferred only on the books of the Corporation by the holder thereof, in
person or by such person's attorney. In the case of certificated shares, shares
shall be transferred only upon surrender and cancellation of certificates for a
like number of shares. The Board of Directors, however, may appoint one or more
transfer agents and registrars to maintain the share records of the Corporation
and to effect transfers of shares.
Section 5.04 Record Date. The Board of Directors may fix a time, not
exceeding sixty days preceding the date fixed for the payment of any dividend or
other distribution, as a record date for the determination of the shareholders
entitled to receive payment of such dividend or other distribution, and in such
case only shareholders of record on the date so fixed shall be entitled to
receive payment of such dividend or other distribution, notwithstanding any
transfer of any shares on the books of the Corporation after any record date so
fixed.
MISCELLANEOUS
Section 6.01 Execution of Instruments. Subdivision 1. All deeds, mortgages,
bonds, checks, contracts and other instruments pertaining to the business and
affairs of the Corporation shall be signed on behalf of the Corporation by the
Chief Executive Officer, or the President, or any Vice President, or by such
other person or persons as may be designated from time to time by the Board of
Directors.
Subdivision 2. If a document must be executed by persons holding different
offices or functions and one person holds such offices or exercises such
functions, that person may execute the document in more than one capacity if the
document indicates each such capacity.
Section 6.02 Advances. The Corporation may, without a vote of the
directors, advance money to its directors, officers or employees to cover
expenses that can reasonably be anticipated to be incurred by them in the
performance of their duties and for which they would be entitled to
reimbursement in the absence of an advance.
Section 6.03 Corporate Seal. The seal of the Corporation, if any, shall be
a circular embossed seal having inscribed thereon the name of the Corporation
and the following words:
"Corporate Seal Minnesota".
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Section 6.04 Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 6.05 Amendments. The Board of Directors shall have the power to
adopt, amend or repeal the By-Laws of the Corporation, subject to the power of
the shareholders to change or repeal the same, provided, however, that the Board
shall not adopt, amend or repeal any By-Law fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors or filling vacancies
in the Board, or fixing the number of directors or their classifications,
qualifications or terms of office, but may adopt or amend a By-Law that
increases the number of directors.
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EXHIBIT 3.4
AMENDED AND RESTATED BYLAWS
OF
SHOWCASE CORPORATION
ARTICLE I.
OFFICES, CORPORATE SEAL
Section 1.01. Registered Office. The registered office of the corporation
in Minnesota shall be that set forth in the Articles of Incorporation or in the
most recent amendment of the Articles of Incorporation or resolution of the
directors filed with the Secretary of State of Minnesota changing the registered
office.
Section 1.02. Other Offices. The corporation may have such other offices,
within or without the State of Minnesota, as the directors shall, from time to
time, determine.
Section 1.03. Corporate Seal. The corporation shall have no corporate seal.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 2.01. Place and Time of Meetings. Except as provided otherwise by
Minnesota Statutes Chapter 302A, meetings of the shareholders may be held at any
place, within or without the State of Minnesota, as may from time to time be
designated by the directors and, in the absence of such designation, shall be
held at the registered office of the corporation in the State of Minnesota. The
directors shall designate the time of day for each meeting and, in the absence
of such designation, every meeting of shareholders shall be held at ten o'clock
a.m.
Section 2.02. Regular Meetings.
(a) A regular meeting of the shareholders shall be held on such date as the
Board of Directors shall by resolution establish.
(b) At a regular meeting the shareholders, voting as provided in the
Articles of Incorporation and these Bylaws, shall designate the number of
directors to constitute the Board of Directors (subject to the authority of the
Board of Directors thereafter to increase or decrease the number of directors as
permitted by law and these Bylaws), shall elect qualified successors for
directors who serve for an indefinite term or whose terms have expired or are
due to expire within six months after the date of the meeting and shall transact
such other business as may properly come before them.
Section 2.03. Special Meetings. Special meetings of the shareholders may be
held at any time and for any purpose and may be called by the President,
Treasurer, any two directors, or by a shareholder or shareholders holding 10% or
more of the shares entitled to vote on the matters to
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be presented to the meeting; except that a special meeting for the purpose of
considering any action to directly or indirectly facilitate or affect a business
combination, including any action to change or otherwise affect the composition
of the board of directors for that purpose, must be called by 25% or more of the
voting power of all shares entitled to vote. A shareholder or shareholders
holding the requisite percentage of the voting power of all shares entitled to
vote may demand a special meeting of the shareholders by written notice of
demand given to the chief executive officer or chief financial officer of the
corporation and containing the purposes of the meeting. Within 30 days after
receipt of demand by one of those officers, the board of directors shall cause a
special meeting of shareholders to be called and held on notice no later than 90
days after receipt of the demand, at the expense of the corporation. Special
meetings shall be held on the date and at the time and place fixed by the chief
executive officer or the board of directors, except that a special meeting
called by or at demand of a shareholder or shareholders shall be held in the
county where the principal executive office is located. The business transacted
at a special meeting shall be limited to the purposes as stated in the notice of
the meeting.
Section 2.04. Quorum, Adjourned Meetings. The holders of a majority of the
shares entitled to vote shall constitute a quorum for the transaction of
business at any regular or special meeting. In case a quorum shall not be
present at a meeting, those present may adjourn the meeting to such day as they
shall, by majority vote, agree upon, and a notice of such adjournment and the
date and time at which such meeting shall be reconvened shall be mailed to each
shareholder entitled to vote at least 5 days before such adjourned meeting. If a
quorum is present, a meeting may be adjourned from time to time without notice
other than announcement at the meeting. At adjourned meetings at which a quorum
is present, any business may be transacted which might have been transacted at
the meeting as originally noticed. If a quorum is present, the shareholders may
continue to transact business until adjournment notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
Section 2.05. Voting. At each meeting of the shareholders every shareholder
having the right to vote shall be entitled to vote either in person or by proxy.
Each shareholder, unless the Articles of Incorporation or statute provide
otherwise, shall have one vote for each share having voting power registered in
such shareholder's name on the books of the corporation. Jointly owned shares
may be voted by any joint owner unless the corporation receives written notice
from any one of them denying the authority of that person to vote those shares.
Upon the demand of any shareholder, the vote upon any question before the
meeting shall be by ballot. All questions shall be decided by a majority vote of
the number of shares entitled to vote and represented at the meeting at the time
of the vote except if otherwise required by statute, the Articles of
Incorporation, or these Bylaws.
Section 2.06. Closing of Books. The Board of Directors may fix a time, not
exceeding 60 days preceding the date of any meeting of shareholders, as a record
date for the determination of the shareholders entitled to notice of, and to
vote at, such meeting, notwithstanding any transfer of shares on the books of
the corporation after any record date so fixed. The Board of Directors may close
the books of the corporation against the transfer of shares during the whole
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or any part of such period. If the Board of Directors fails to fix a record date
for determination of the shareholders entitled to notice of, and to vote at, any
meeting of shareholders, the record date shall be the 20th day preceding the
date of such meeting.
Section 2.07. Notice of Meetings. There shall be mailed to each
shareholder, shown by the books of the corporation to be a holder of record of
voting shares, at his address as shown by the books of the corporation, a notice
setting out the time and place of each regular meeting and each special meeting,
except where the meeting is an adjourned meeting and the date, time and place of
the meeting were announced at the time of adjournment, which notice shall be
mailed at least ten days prior thereto; except that notice of a meeting at which
an agreement of merger or exchange is to be considered shall be mailed to all
shareholders of record, whether entitled to vote or not, at least fourteen days
prior thereto. Every notice of any special meeting called pursuant to Section
2.03 hereof shall state the purpose or purposes for which the meeting has been
called, and the business transacted at all special meetings shall be confined to
the purpose stated in the notice.
Section 2.08. Waiver of Notice. Notice of any regular or special meeting
may be waived by any shareholder either before, at or after such meeting orally
or in a writing signed by such shareholder or a representative entitled to vote
the shares of such shareholder. A shareholder, by his attendance at any meeting
of shareholders, shall be deemed to have waived notice of such meeting, except
where the shareholder objects at the beginning of the meeting to the transaction
of business because the item may not lawfully be considered at that meeting and
does not participate in the consideration of the item at that meeting.
Section 2.09. Written Action. Any action which might be taken at a meeting
of the shareholders may be taken without a meeting if done in writing and signed
by all of the shareholders entitled to vote on that action.
Section 2.10 Conduct of Shareholder Meetings. The chairman of the meeting
shall have the right and authority to prescribe such rules, regulations and
procedures and to do all such acts as, in the judgment of such chairman, are
appropriate for conduct of the meeting. To the extent not prohibited by law,
such rules, regulations or procedures may include, without limitation,
establishment of (i) an agenda or order of business for the meeting and the
method by which business may be proposed, (ii) rules and procedures for
maintaining order at the meeting and the safety of those present, (iii)
limitations on attendance at or participation in the meeting to shareholders of
record of the corporation, their duly authorized proxies or such other persons
as the chairman of the meeting shall determine, (iv) restrictions on entry to
the meeting after the time fixed for the commencement thereof and (v)
limitations on the time allotted to questions or comments by participants. Any
proposed business contained in the notice of a regular meeting is deemed to be
on the agenda and no further motions or other actions shall be required to bring
such proposed business up for consideration. Unless and to the extent otherwise
determined by the chairman of the meeting, it shall not be necessary to follow
Robert's Rules of Order or any other rules of parliamentary procedure at the
meeting of the shareholders. Following completion
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of the business of the meeting as determined by the chairman of the meeting, the
chairman of the meeting shall have the exclusive authority to adjourn the
meeting.
Section 2.11 Shareholder Proposals. To be properly brought before a regular
meeting of shareholders, business must be (i) specified in the notice of the
meeting, (ii) directed to be brought before the meeting by the Board of
Directors or (iii) proposed at the meeting by a shareholder who (A) was a
shareholder of record at the time of giving of notice provided for in these
bylaws, (B) is entitled to vote at the meeting and (C) gives prior notice of the
matter, which must otherwise be a proper matter for shareholder action, in the
manner herein provided. For business to be properly brought before a regular
meeting by a shareholder, the shareholder must give written notice to the
Secretary of the corporation so as to be received at the principal executive
offices of the corporation at least 120 days before the date that is one year
after the date of the corporation's proxy statement for the prior year's regular
meeting. Such notice shall set forth (i) the name and record address of the
shareholder and of the beneficial owner, if any, on whose behalf the proposal
will be made, (ii) the class and number of shares of the corporation owned by
the shareholder and beneficially owned by the beneficial owner, if any, on whose
behalf the proposal will be made, (iii) a brief description of the business
desired to be brought before the regular meeting and the reasons for conducting
such business and (iv) any material interest in such business of the shareholder
and the beneficial owner, if any, on whose behalf the proposal is made. The
chairman of the meeting may refuse to acknowledge any proposed business not made
in compliance with the foregoing procedure.
ARTICLE III.
DIRECTORS
Section 3.01. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors, except as
otherwise permitted by statute.
Section 3.02. Number, Qualification and Term of Office. The Board of
Directors shall consist of one or more directors, the precise number to be
established by resolution of the shareholders (subject to the authority of the
Board of Directors to increase or decrease the number of directors as permitted
by law and these bylaws). In the absence of such shareholder resolution, the
number of directors shall be the number last fixed by the shareholders, the
Board of Directors, the incorporator or the Articles of Incorporation. Directors
need not be shareholders. The directors shall be divided into three classes, as
nearly equal in number as reasonably possible, with the term of office of the
first class to expire at the 2000 regular meeting of shareholders, the term of
office of the second class to expire at the 2001 regular meeting of shareholders
and the term of office of the third class to expire at the 2002 regular meeting
of shareholders. At each regular meeting of shareholders following such initial
classification and election, directors elected to succeed those directors whose
terms expire shall be elected to hold office for a term of three consecutive
years. Each director of the corporation shall serve until such director's
successor shall have been elected and shall qualify, or until the earlier death,
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resignation, removal or disqualification of such director. In case of an
increase or decrease in the number of directors, the increase or decrease shall
be distributed among the several classes as nearly equal as possible, as shall
be determined by the affirmative vote of a majority of the entire Board of
Directors or by the holders of at least two-thirds of the stock of the
corporation entitled to vote, considered as one class.
Section 3.03. Board Meetings. Meetings of the Board of Directors may be
held from time to time at such time and place within or without the State of
Minnesota as may be designated in the notice of such meeting.
Section 3.04. Calling Meetings; Notice. Meetings of the Board of Directors
may be called by the Chairman of the Board by giving at least twenty-four hours'
notice, or by any other director by giving at least five days' notice, of the
date, time and place thereof to each director by mail, telephone, telegram or in
person.
Section 3.05. Waiver of Notice. Notice of any meeting of the Board of
Directors may be waived by any director either before, at, or after such meeting
orally or in a writing signed by such director. A director, by his attendance at
any meeting of the Board of Directors, shall be deemed to have waived notice of
such meeting, except where the director objects at the beginning of the meeting
to the transaction of business because the meeting is not lawfully called or
convened and does not participate thereafter in the meeting.
Section 3.06. Quorum. A majority of the directors holding office
immediately prior to a meeting of the Board of Directors shall constitute a
quorum for the transaction of business at such meeting.
Section 3.07. Absent Directors. A director may give advance written consent
or opposition to a proposal to be acted on at a meeting of the Board of
Directors. If such director is not present at the meeting, consent or opposition
to a proposal does not constitute presence for purposes of determining the
existence of a quorum, but consent or opposition shall be counted as a vote in
favor of or against the proposal and shall be entered in the minutes or other
record of action at the meeting, if the proposal acted on at the meeting is
substantially the same or has substantially the same effect as the proposal to
which the director has consented or objected.
Section 3.08. Conference Communications. Any or all directors may
participate in any meeting of the Board of Directors, or of any duly constituted
committee thereof, by any means of communication through which the directors may
simultaneously hear each other during such meeting. For the purposes of
establishing a quorum and taking any action at the meeting, such directors
participating pursuant to this Section 3.08 shall be deemed present in person at
the meeting, and the place of the meeting shall be the place of origination of
the conference communication.
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Section 3.09. Vacancies; Newly Created Directorships. Vacancies in the
Board of Directors of this corporation occurring by reason of death,
resignation, removal or disqualification shall be filled for the unexpired term
by a majority of the remaining directors of the Board although less than a
quorum; newly created directorships resulting from an increase in the authorized
number of directors by action of the Board of Directors as permitted by Section
3.02 may be filled by a two-thirds vote of the directors serving at the time of
such increase; and each director elected pursuant to this Section 3.09 shall be
a director until such director's successor is elected by the shareholders at
their next regular or special meeting.
Section 3.10. Removal. Any or all of the directors may be removed from
office at any time, but only for cause, by the affirmative vote of the
shareholders holding a majority of the shares entitled to vote at an election of
directors. A director named by the Board of Directors to fill a vacancy may be
removed from office at any time, with or without cause, by the affirmative vote
of the remaining directors if the shareholders have not elected directors in the
interim between the time of the appointment to fill such vacancy and the time of
the removal. In the event that the entire Board or any one or more directors be
so removed, new directors shall be elected at the same meeting.
Section 3.11. Committees. A resolution approved by the affirmative vote of
a majority of the Board of Directors may establish committees having the
authority of the board in the management of the business of the corporation to
the extent provided in the resolution. A committee shall consist of one or more
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present. Committees are subject to the direction and control
of, and vacancies in the membership thereof shall be filled by, the Board of
Directors, except as provided by Minnesota Statutes Section 302A.243.
A majority of the members of the committee present at a meeting is a quorum
for the transaction of business, unless a larger or smaller proportion or number
is provided in a resolution approved by the affirmative vote of a majority of
the directors present.
Section 3.12. Written Action. Any action which might be taken at a meeting
of the Board of Directors, or any duly constituted committee thereof, may be
taken without a meeting if done in writing and signed by all of the directors or
committee members, unless the Articles provide otherwise and the action need not
be approved by the shareholders.
Section 3.13. Compensation. Directors who are not salaried officers of this
corporation shall receive such fixed sum per meeting attended or such fixed
annual sum as may be determined, from time to time, by resolution of the Board
of Directors. The Board of Directors may, by resolution, provide that all
directors shall receive their expenses, if any, of attendance at meetings of the
Board of Directors or any committee thereof. Nothing herein contained shall be
construed to preclude any director from serving this corporation in any other
capacity and receiving proper compensation therefor.
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Section 3.14. Nomination of Directors. Nominations of persons for election
as directors may be made at a regular meeting of shareholders (i) by or at the
direction of the Board of Directors or (ii) by any shareholder who (A) was a
shareholder of record at the time of giving of notice provided for in these
bylaws, (B) is entitled to vote at the meeting and (C) gives prior notice of the
nomination in the manner herein provided. For a nomination to be properly made
by a shareholder, the shareholder must give written notice to the Secretary of
the corporation so as to be received at the principal executive offices of the
corporation at least 120 days before the date that is one year after the date of
the corporation's proxy statement for the prior year's regular meeting. Such
notice shall set forth (i) as to the shareholder giving the notice: (A) the name
and record address of the shareholder and of the beneficial owner, if any, on
whose behalf the nomination will be made, and (B) the class and number of shares
of the corporation owned by the shareholder and beneficially owned by the
beneficial owner, if any, on whose behalf the nomination will be made and (ii)
as to each person the shareholder proposes to nominate: (A) the name, age,
business address and residence address of the person, (B) the principal
occupation or employment of the person and (C) the class and number of shares of
the corporation's capital stock beneficially owned by the person. The chairman
of the meeting may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedure.
ARTICLE IV.
OFFICERS
Section 4.01. Number. The officers of the corporation shall consist of a
Chairman of the Board (if one is elected by the Board), a President, a
Treasurer, a Secretary (if one is elected by the Board) and such other officers
and agents as may, from time to time, be elected or appointed by the Board of
Directors. Any number of offices may be held by the same person.
Section 4.02. Election, Term of Office and Qualifications. The Board of
Directors shall elect or appoint, by resolution approved by the affirmative vote
of a majority of the directors present, from within or without their number, the
President, Treasurer and such other officers as may be deemed advisable, each of
whom shall have the powers, rights, duties, responsibilities, and terms in
office provided for in these Bylaws or a resolution of the Board of Directors
not inconsistent therewith. The President and all other officers who may be
directors shall continue to hold office until the election and qualification of
their successors, notwithstanding an earlier termination of their directorship.
Section 4.03. Removal and Vacancies. Any officer may be removed from his
office by the Board of Directors at any time, with or without cause. Such
removal, however, shall be without prejudice to the contract rights of the
person so removed. If there be a vacancy among the officers of the corporation
by reason of death, resignation or otherwise, such vacancy shall be filled for
the unexpired term by the Board of Directors.
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Section 4.04. Chairman of the Board. The Chairman of the Board, if one is
elected, shall preside at all meetings of the shareholders and directors and
shall have such other duties as may be prescribed, from time to time, by the
Board of Directors.
Section 4.05. President. The President shall be the chief executive officer
and shall have general active management of the business of the corporation. In
the absence of the Chairman of the Board, he shall preside at all meetings of
the shareholders and directors. He shall see that all orders and resolutions of
the Board of Directors are carried into effect. He shall execute and deliver, in
the name of the corporation, any deeds, mortgages, bonds, contracts or other
instruments pertaining to the business of the corporation unless the authority
to execute and deliver is required by law to be exercised by another person or
is expressly delegated by the Articles or Bylaws or by the Board of Directors to
some other officer or agent of the corporation. He shall maintain records of
and, whenever necessary, certify all proceedings of the Board of Directors and
the shareholders, and in general, shall perform all duties usually incident to
the office of the President. He shall have such other duties as may, from time
to time, be prescribed by the Board of Directors.
Section 4.06. Vice President. Each Vice President, if one or more are
elected, shall have such powers and shall perform such duties as prescribed by
the Board of Directors or by the President. In the event of the absence or
disability of the President, Vice Presidents shall succeed to his power and
duties in the order designated by the Board of Directors.
Section 4.07. Secretary. The Secretary, if one is elected, shall be
secretary of and shall attend all meetings of the shareholders and Board of
Directors and shall record all proceedings of such meetings in the minute book
of the corporation. He shall give proper notice of meetings of shareholders and
directors. He shall perform such other duties as may, from time to time, be
prescribed by the Board of Directors or by the President.
Section 4.08. Treasurer. The Treasurer shall be the chief financial officer
and shall keep accurate financial records for the corporation. He shall deposit
all moneys, drafts and checks in the name of, and to the credit of, the
corporation in such banks and depositories as the Board of Directors shall, from
time to time, designate. He shall have power to endorse, for deposit, all notes,
checks and drafts received by the corporation. He shall disburse the funds of
the corporation, as ordered by the Board of Directors, making proper vouchers
therefor. He shall render to the President and the directors, whenever
requested, an account of all his transactions as Treasurer and of the financial
condition of the corporation, and shall perform such other duties as may, from
time to time, be prescribed by the Board of Directors or by the President.
Section 4.09. Compensation. The officers of this corporation shall receive
such compensation for their services as may be determined, from time to time, by
resolution of the Board of Directors.
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ARTICLE V.
SHARES AND THEIR TRANSFER
Section 5.01. Certificates for Shares. All shares of the corporation shall
be certificated shares. Every owner of shares of the corporation shall be
entitled to a certificate, to be in such form as shall be prescribed by the
Board of Directors, certifying the number of shares of the corporation owned by
such shareholder. The certificates for such shares shall be numbered in the
order in which they shall be issued and shall be signed, in the name of the
corporation, by the President and by the Secretary or an Assistant Secretary or
by such officers as the Board of Directors may designate. If the certificate is
signed by a transfer agent or registrar, such signatures of the corporate
officers may be by facsimile if authorized by the Board of Directors. Every
certificate surrendered to the corporation for exchange or transfer shall be
cancelled, and no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate shall have been so
canceled, except in cases provided for in Section 5.04.
Section 5.02. Issuance of Shares. The Board of Directors is authorized to
cause to be issued shares of the corporation up to the full amount authorized by
the Articles of Incorporation in such amounts as may be determined by the Board
of Directors and as may be permitted by law. No shares shall be allotted except
in consideration of cash or other property, tangible or intangible, received or
to be received by the corporation under a written agreement, of services
rendered or to be rendered to the corporation under a written agreement, or of
an amount transferred from surplus to stated capital upon a share dividend. At
the time of such allotment of shares, the Board of Directors making such
allotments shall state, by resolution, their determination of the fair value to
the corporation in monetary terms of any consideration other than cash for which
shares are allotted.
Section 5.03. Transfer of Shares. Transfer of shares on the books of the
corporation may be authorized only by the shareholder named in the certificate,
or the shareholder's legal representative, or the shareholder's duly authorized
attorney-in-fact, and upon surrender of the certificate or the certificates for
such shares. The corporation may treat as the absolute owner of shares of the
corporation, the person or persons in whose name shares are registered on the
books of the corporation.
Section 5.04. Loss of Certificates. Except as otherwise provided by
Minnesota Statutes Section 302A.419, any shareholder claiming a certificate for
shares to be lost, stolen or destroyed shall make an affidavit or that fact in
such form as the Board of Directors shall require and shall, if the Board of
Directors so requires, give the corporation a bond of indemnity in form, in an
amount, and with one or more sureties satisfactory to the Board of Directors, to
indemnify the corporation against any claim which may be made against it on
account of the reissue of such certificate, whereupon a new certificate may be
issued in the same tenor and for the same number of shares as the one alleged to
have been lost, stolen or destroyed.
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ARTICLE VI.
DIVIDENDS, RECORD DATE
Section 6.01. Dividends. Subject to the provisions of the Articles of
Incorporation, of these Bylaws, and of law, the Board of Directors may declare
dividends whenever, and in such amounts as, in its opinion, are deemed
advisable.
Section 6.02. Record Date. Subject to any provisions of the Articles of
Incorporation, the Board of Directors may fix a date not exceeding 120 days
preceding the date fixed for the payment of any dividend as the record date for
the determination of the shareholders entitled to receive payment of the
dividend and, in such case, only shareholders of record on the date so fixed
shall be entitled to receive payment of such dividend notwithstanding any
transfer of shares on the books of the corporation after the record date. The
Board of Directors may close the books of the corporation against the transfer
of shares during the whole or any part of such period.
ARTICLE VII.
BOOKS AND RECORDS, FISCAL YEAR
Section 7.01. Share Register. The Board of Directors of the corporation
shall cause to be kept at its principal executive office, or at another place or
places within the United States determined by the board:
(1) a share register not more than one year old, containing the names and
addresses of the shareholders and the number and classes of shares
held by each shareholder; and
(2) a record of the dates on which certificates or transaction statements
representing shares were issued.
Section 7.02. Other Books and Records. The Board of Directors shall cause
to be kept at its principal executive office, or, if its principal executive
office is not in Minnesota, shall make available at its registered office within
ten days after receipt by an officer of the corporation of a written demand for
them made by a shareholder or other person authorized by Minnesota Statutes
Section 302A.461, originals or copies of:
(1) records of all proceedings of shareholders for the last three years;
(2) records of all proceedings of the board for the last three years;
(3) its articles and all amendments currently in effect;
(4) its bylaws and all amendments currently in effect;
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(5) financial statements required by Minnesota Statutes Section 302A.463
and the financial statement for the most recent interim period
prepared in the course of the operation of the corporation for
distribution to the shareholders or to a governmental agency as a
matter of public record;
(6) reports made to shareholders generally within the last three years;
(7) a statement of the names and usual business addresses of its directors
and principal officers;.
(8) any shareholder voting or control agreements of which the corporation
is aware; and
(9) such other records and books of account as shall be necessary and
appropriate to the conduct of the corporate business.
Section 7.03. Fiscal Year. The fiscal year of the corporation shall be
determined by the Board of Directors.
ARTICLE VIII.
LOANS, GUARANTEES, SURETYSHIP
Section 8.01. The corporation may lend money to, guarantee an obligation
of, become a surety for, or otherwise financially assist a person if the
transaction, or a class of transactions to which the transaction belongs, is
approved by the affirmative vote of a majority of the directors present and:
(1) is in the usual and regular course of business of the corporation;
(2) is with, or for the benefit of, a related corporation, an organization
in which the corporation has a financial interest, an organization
with which the corporation has a business relationship, or an
organization to which the corporation has the power to make donations;
(3) is with, or for the benefit of, an officer or other employee of the
corporation or a subsidiary, including an officer or employee who is a
director of the corporation or a subsidiary, and may reasonably be
expected, in the judgment of the board, to benefit the corporation; or
(4) has been approved by the affirmative vote of the holders of two-thirds
of the outstanding shares.
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The loan, guarantee, surety contract or other financial assistance may be with
or without interest, and may be unsecured, or may be secured in the manner as a
majority of the directors approve, including, without limitation, a pledge of or
other security interest in shares of the corporation. Nothing in this section
shall be deemed to deny, limit, or restrict the powers of guaranty or warranty
of the corporation at common law or under a statute of the State of Minnesota.
ARTICLE IX.
INDEMNIFICATION OF CERTAIN PERSONS
Section 9.01. The corporation shall indemnify such persons, for such
expenses and liabilities, in such manner, under such circumstances, and to such
extent as permitted by Minnesota Statutes Section 302A.521, as now enacted or
hereafter amended.
Section 9.02. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person in such person's official capacity against any
liability asserted against and incurred by such person in or arising from that
capacity, whether or not the Corporation would otherwise be required to
indemnify the person against the liability.
ARTICLE X.
AMENDMENTS
Section 10.01. These Bylaws may be amended or altered by a vote of the
majority of the whole Board of Directors at any meeting provided that notice of
such proposed amendment shall have been given in the notice given to the
directors of such meeting. Such authority in the Board of Directors is subject
to the power of the shareholders to change or repeal such Bylaws by a majority
vote of the shareholders present or represented at any regular or special
meeting of shareholders called for such purpose, and the Board of Directors
shall not make or alter any, Bylaws fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors or filling vacancies
in the Board of Directors, or fixing the number of directors or their
classifications, qualifications, or terms of office, except that the Board of
Directors may adopt or amend by unanimous action any Bylaw to increase the
number of directors.
ARTICLE XI.
SECURITIES OF OTHER CORPORATIONS
Section 11.01. Voting Securities Held by the Corporation. Unless otherwise
ordered by the Board of Directors, the President shall have full power and
authority on behalf of the corporation (a) to attend any meeting of security
holders of other corporations in which the corporation may hold securities and
to vote such securities on behalf of this corporation; (b) to execute any proxy
for such meeting on behalf of the corporation; or (c) to execute a written
action in lieu of a meeting of such other corporation on behalf of this
corporation. At such meeting, the President shall possess and may exercise any
and all rights and powers incident to the ownership of such securities that the
corporation possesses. The Board of Directors may,
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from time to time, grant such power and authority to one or more other persons
and may remove such power and authority from the President upon any other person
or persons.
Section 11.02. Purchase and Sale of Securities. Unless otherwise ordered by
the Board of Directors, the President shall have full power and authority on
behalf of the corporation to purchase, sell, transfer or encumber any and all
securities of any other corporation owned by the corporation, and may execute
and deliver such documents as may be necessary to effectuate such purchase,
sale, transfer or encumbrance. The Board of Directors may, from time to time,
confer like powers upon any other person or persons.
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EXHIBIT 4.2
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.
WARRANT AGREEMENT
To Purchase Shares of the Series B Preferred Stock of
ShowCase Corporation
Dated as of May 13, 1998 (the "Effective Date")
WHEREAS, ShowCase Corporation, a Minnesota corporation (the "Company")
has entered into a Global Master Rental Agreement dated as of May 13, 1998,
Equipment Schedule Nos. US-1, UK-1, D-1, BEL-1, FRA-1, and related Summary
Equipment Schedules (collectively, the "Leases") with Comdisco, Inc., a Delaware
corporation (the "Warrantholder"); and
WHEREAS, the Company desires to grant to Warrantholder, in
consideration for such Leases, the right to purchase shares of its Series B
Preferred Stock;
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
The Company hereby grants to the Warrantholder, and the Warrantholder
is entitled, upon the terms and subject to the conditions hereinafter set forth,
to subscribe to and purchase, from the Company, 13,750 fully paid and
non-assessable shares of the Company's Series B Preferred Stock ("Preferred
Stock") at a purchase price of $4.00 per share (the "Exercise Price"). The
number and purchase price of such shares are subject to adjustment as provided
in Section 8 hereof.
2. TERM OF THE WARRANT AGREEMENT.
Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Preferred Stock as granted herein shall
commence on the Effective Date and shall be exercisable for a period of (i) ten
(10) years or (ii) five (5) years from the effective date of the Company's
initial public offering, whichever is shorter.
Notwithstanding the term of this Warrant Agreement as set forth above,
the right to purchase Preferred Stock as granted shall expire, if not previously
exercised, immediately upon the closing of the issuance and sale of shares of
Common Stock of the Company in the Company's first public offering of securities
for its own account pursuant to an effective registration statement under the
Securities Act of 1933, as amended in which (i) the net proceeds received by the
Company equal or exceed $15,000,000.00 and (ii) the public offering price equals
or exceeds $10.00 per share (as adjusted from time to time to reflect stock
splits, share dividend or other corporate recapitalization effected subsequent
to the date hereof (the "Initial Public Offering"), provided that the Preferred
stock issuable to Warrantholder upon exercise hereof shall be included in such
registration statement, and provided further that the underwriters so request
that the Warrantholder exercise at that time.
<PAGE>
The Company shall notify the Warrantholder if the Initial Public
Offering is proposed within a reasonable period of time prior to the filing of a
registration statement and if the Company fails to deliver such written notice
within a reasonable period of time, anything to the contrary in this Warrant
Agreement notwithstanding, the rights to purchase will not expire until ten (10)
business days after the Company delivers such notice to the Warrantholder. Such
notice shall also contain such details of the proposed Initial Public Offering
as are reasonable in the circumstances and notice that this Warrant Agreement is
expected to expire upon closing thereof. If such closing does not take place,
the Company shall promptly notify the Warrantholder that such proposed
transaction has been terminated. Anything to the contrary in this Warrant
Agreement notwithstanding, the Warrantholder may rescind any exercise of its
purchase rights promptly after such notice of termination of the proposed
transaction if the exercise of warrants occurred after the Company notified the
Warrantholder that the Initial Public Offering was proposed or if the exercise
were otherwise precipitated by such proposed Initial Public Offering. In the
event of such rescission, the Warrants will continue to be exercisable on the
same terms and conditions.
3. EXERCISE OF THE PURCHASE RIGHTS.
The purchase rights set forth in this Warrant Agreement are exercisable
by the Warrantholder, in whole or in part, at any time, or from time to time,
prior to the expiration of the term set forth in Section 2 above, by tendering
to the Company at its principal office a notice of exercise in the form attached
hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed.
Promptly upon receipt of the Notice of Exercise and the payment of the purchase
price in accordance with the terms set forth below, and in no event later than
twenty-one (21) days thereafter, the Company shall issue to the Warrantholder a
certificate for the number of shares of Preferred Stock purchased and shall
execute the acknowledgment of exercise in the form attached hereto as Exhibit II
(the "Acknowledgment of Exercise") indicating the number of shares which remain
subject to future purchases, if any.
The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Preferred Stock in accordance with the following formula:
X = Y(A-B)
-----
A
Where: X = the number of shares of Preferred Stock to be issued to the
Warrantholder.
Y = the number of shares of Preferred Stock requested to be
exercised under this Warrant Agreement.
A = the fair market value of one (1) share of Preferred Stock.
B = the Exercise Price.
For purposes of the above calculation, current fair market value of
Preferred Stock shall mean with respect to each share of Preferred Stock:
(i) if the exercise is in connection with an initial public
offering of the Company's Common Stock, and if the Company's
Registration Statement relating to such public offering has been
declared effective by the SEC, then the fair market value per share
shall be the product of (x) the initial "Price to Public" specified in
the final prospectus with respect to the offering and (y) the number of
shares of Common Stock into which each share of Preferred Stock is
convertible at the time of such exercise;
(ii) if this Warrant is exercised after, and not in connection
with the Company's initial public offering, and:
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(a) if traded on a securities exchange, the fair
market value shall be deemed to be the product of (x) the
average of the closing prices over a twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Preferred Stock is convertible at the time of such exercise;
or
(b) if actively traded over-the-counter, the fair
market value shall be deemed to be the product of (x) the
average of the closing bid and asked prices quoted on the
NASDAQ system (or similar system) over the twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Preferred Stock is convertible at the time of such exercise;
(iii) if at any time the Common Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the current fair market value of Preferred
Stock shall be the product of (x) the highest price per share which the
Company could obtain from a willing buyer (not a current employee or
director) for shares of Common Stock sold by the Company, from
authorized but unissued shares, as determined in good faith by its
Board of Directors and (y) the number of shares of Common Stock into
which each share of Preferred Stock is convertible at the time of such
exercise, unless the Company shall become subject to a merger,
acquisition or other consolidation pursuant to which the Company is not
the surviving party, in which case the fair market value of Preferred
Stock shall be deemed to be the value received by the holders of the
Company's Preferred Stock on a common equivalent basis pursuant to such
merger or acquisition.
Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.
4. RESERVATION OF SHARES.
(a) Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.
(b) Registration or Listing. If any shares of Preferred Stock required
to be reserved hereunder require registration with or approval of any
governmental authority under any Federal or State law (other than any
registration under the Securities Act of 1933, as amended ("1933 Act"), as then
in effect, or any similar Federal statute then enforced, or any state securities
law, required by reason of any transfer involved in such conversion), or listing
on any domestic securities exchange, before such shares may be issued upon
conversion, the Company will, at its expense and as expeditiously as possible,
use its best efforts to cause such shares to be duly registered, listed or
approved for listing on such domestic securities exchange, as the case may be.
5. NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. NO RIGHTS AS SHAREHOLDER.
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.
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7. WARRANTHOLDER REGISTRY.
The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
The purchase price per share and the number of shares of Preferred
Stock purchasable hereunder are subject to adjustment, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a capital
reorganization of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation whether or not the Company is the surviving corporation, or the sale
of all or substantially all of the Company's properties and assets to any other
person (hereinafter referred to as a "Merger Event"), then, as a part of such
Merger Event, lawful provision shall be made so that the Warrantholder shall
thereafter be entitled to receive, upon exercise of the Warrant, the number of
shares of preferred stock or other securities of the successor corporation
resulting from such Merger Event, equivalent in value to that which would have
been issuable if Warrantholder had exercised this Warrant immediately prior to
the Merger Event. In any such case, appropriate adjustment (as determined in
good faith by the Company's Board of Directors) shall be made in the application
of the provisions of this Warrant Agreement with respect to the rights and
interest of the Warrantholder after the Merger Event to the end that the
provisions of this Warrant Agreement (including adjustments of the Exercise
Price and number of shares of Preferred Stock purchasable) shall be applicable
to the greatest extent possible.
(b) Reclassification of Shares. If the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company at any time
shall combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the Company's stock,
then the Exercise Price shall be adjusted, from and after the record date of
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction (i)
the numerator of which shall be the total number of all shares of the Company's
stock outstanding immediately prior to such dividend or distribution, and (ii)
the denominator of which shall be the total number of all shares of the
Company's stock outstanding immediately after such dividend or distribution. The
Warrantholder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares of Preferred Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Preferred Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(e) Right to Purchase Additional Stock. If, the Warrantholder's total
cost of equipment leased pursuant to the Leases exceeds $1,000,000,
Warrantholder shall have the right to purchase from the Company, at the Exercise
Price (adjusted as set forth herein), an additional number of shares, which
number shall be determined by (i) multiplying
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the amount by which the Warrantholder's total equipment cost exceeds $1,000,000
by 5.5%, and (ii) dividing the product thereof by the Exercise Price per share
referenced above.
(f) Antidilution Rights. Additional antidilution rights applicable to
the Preferred Stock purchasable hereunder are as set forth in the Company's
Certificate of Incorporation, as amended through the Effective Date, a true and
complete copy of which is attached hereto as Exhibit IV (the "Charter"). The
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter. The Company shall provide
Warrantholder with prior written notice of any issuance of its stock or other
equity security to occur after the Effective Date of this Warrant, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.
(g) Notice of Adjustments. If: (1) the Company shall declare any
dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any Merger
Event; (iv) there shall be an initial public offering; or (v) there shall be any
voluntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(A) at least twenty (20) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
Preferred Stock shall be entitled thereto) or for determining rights to vote in
respect of such Merger Event, dissolution, liquidation or winding up; (B) in the
case of any such Merger Event, dissolution, liquidation or winding up, at least
twenty (20) days' prior written notice of the date when the same shall take
place (and specifying the date on which the holders of Preferred Stock shall be
entitled to exchange their Preferred Stock for securities or other property
deliverable upon such Merger Event, dissolution, liquidation or winding up); and
(C) in the case of a public offering, the Company shall give the Warrantholder
at least twenty (20) days written notice prior to the effective date thereof.
Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.
(h) Timely Notice. Failure to timely provide such notice required by
subsection (f) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder. The notice period shall begin
on the date Warrantholder actually receives a written notice containing all the
information specified above.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Reservation of Preferred Stock. The Preferred Stock issuable upon
exercise of the Warrantholder's rights has been duly and validly reserved and,
when issued in accordance with the provisions of this Warrant Agreement, will be
validly issued, fully paid and non-assessable, and will be free of any taxes,
liens, charges or encumbrances of any nature whatsoever; provided, however, that
the Preferred Stock issuable pursuant to this Warrant Agreement may be subject
to restrictions on transfer under state and/or Federal securities laws. The
Company has made available to the Warrantholder true, correct and complete
copies of its Charter and Bylaws, as amended. The issuance of certificates for
shares of Preferred Stock upon exercise of the Warrant Agreement shall be made
without charge to the Warrantholder for any issuance tax in respect thereof, or
other cost incurred by the Company in connection with such exercise and the
related issuance of shares of Preferred Stock. The Company shall not be required
to pay any tax which may be payable in respect of any transfer involved and the
issuance and delivery of any certificate in a name other than that of the
Warrantholder.
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<PAGE>
(b) Due Authority. The execution and delivery by the Company of this
Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and the Leases and this Warrant Agreement are
not inconsistent with the Company's Charter or Bylaws, do not contravene any law
or governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and the Leases and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms.
(c) Consents and Approvals. No consent or approval of, giving of notice
to, registration with, or taking of any other action in respect of any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement, except for the filing of notices pursuant to Regulation
D under the 1933 Act and any filing required by applicable state securities law,
which filings will be effective by the time required thereby.
(d) Issued Securities. All issued and outstanding shares of Common
Stock, Preferred Stock or any other securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of Common Stock, Preferred Stock and any other securities
were issued in full compliance with all Federal and state securities laws. In
addition:
(i) The authorized capital of the Company consists of (A)
10,000,000 shares of Common Stock, of which 3,988,560 shares are issued
and outstanding, (B) 473,757 shares of Series A preferred stock, of
which 473,757 shares are issued and outstanding , (C) 902,500 shares of
Series B preferred stock, of which 875,000 are issued and outstanding
and (D) 875,000 shares of Series B-1 preferred stock, none of which are
issued and outstanding..
(ii) The Company has reserved 1,841,542 shares of Common Stock
for issuance under its Stock Option Plan, under which 1,364,784 options
are outstanding as of March 31, 1998. There are no other options,
warrants, conversion privileges or other rights presently outstanding
to purchase or otherwise acquire any authorized but unissued shares of
the Company's capital stock or other securities of the Company.
(iii) In accordance with the Company's Articles of
Incorporation, except as provided in the Investment Agreement dated
February 28, 1991 between the Company and Norwest Equity Partner IV and
the Series B Convertible Preferred Stock Purchase Agreement dated March
26, 1998 between the Company and the purchasers named therein, no
shareholder of the Company has preemptive rights to purchase new
issuances of the Company's capital stock.
(e) Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(f) Other Commitments to Register Securities. Except as set forth in
this Warrant Agreement, the Investment Agreement dated February 28, 1991 between
the Company and Norwest Equity Partner IV and the Series B Convertible Preferred
Stock Purchase Agreement dated March 26, 1998 between the Company and the
purchasers named therein, the Company is not, pursuant to the terms of any other
agreement currently in existence, under any obligation to register under the
1933 Act any of its presently outstanding securities or any of its securities
which may hereafter be issued.
(g) Exempt Transaction. Subject to the accuracy of the Warrantholder's
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of this Warrant will constitute a transaction exempt from (i)
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the registration requirements of Section 5 of the 1933 Act, in reliance upon
Section 4(2) thereof, and (ii) the qualifi cation requirements of the applicable
state securities laws.
(h) Compliance with Rule 144. At the written request of the
Warrantholder, who proposes to sell Preferred Stock issuable upon the exercise
of the Warrant in compliance with Rule 144 promulgated by the Securities and
Exchange Commission, the Company shall furnish to the Warrantholder, within ten
days after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:
(a) Investment Purpose. The right to acquire Preferred Stock or the
Preferred Stock issuable upon exercise of the Warrantholder's rights contained
herein will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Warrantholder has no present intention
of selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.
(b) Private Issue. The Warrantholder understands (i) that the Preferred
Stock issuable upon exercise of this Warrant is not registered under the 1933
Act or qualified under applicable state securities laws on the ground that the
issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.
(e) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Preferred Stock
or Preferred Stock issuable upon exercise of such rights unless and until (i) it
shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion of
counsel (which counsel may either be inside or outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act is
available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration or (2) such security shall have been sold without registration
in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been
issued to the Warrantholder at its request by the staff of the Securities and
Exchange Commission or a ruling shall have been issued to the Warrantholder at
its request by such Commission stating that no action shall be recommended by
such staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the 1933 Act in accordance with the
conditions set forth in such letter or ruling and such letter or ruling
specifies that no subsequent restrictions on transfer are required. Whenever the
restrictions imposed hereunder shall terminate, as hereinabove provided, the
Warrantholder or holder of a share of Preferred Stock then outstanding as to
which such restrictions have terminated shall be entitled to receive from the
Company, without expense to such holder, one or more new certificates for the
Warrant or for such shares of Preferred Stock not bearing any restrictive
legend.
(d) Financial Risk. The Warrantholder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.
(e) Risk of No Registration. The Warrantholder understands that if the
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1934 Act (the "1934 Act"), or file reports
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<PAGE>
pursuant to Section 15(d), of the 1934 Act", or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Preferred Stock pursuant to this Warrant
Agreement, or (ii) the Preferred Stock issuable upon exercise of the right to
purchase, it may be required to hold such securities for an indefinite period.
The Warrantholder also understands that any sale of its rights of the
Warrantholder to purchase Preferred Stock or Preferred Stock which might be made
by it in reliance upon Rule 144 under the 1933 Act may be made only in
accordance with the terms and conditions of that Rule.
(f) Accredited Investor. Warrantholder is an "accredited investor"
within the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
11. TRANSFERS.
Subject to the terms and conditions contained in Section 10 hereof,
this Warrant Agreement and all rights hereunder are transferable in whole or in
part by the Warrantholder and any successor transferee, provided, however, in no
event shall the number of transfers of the rights and interests in all of the
Warrants exceed three (3) transfers. The transfer shall be recorded on the books
of the Company upon receipt by the Company of a notice of transfer in the form
attached hereto as Exhibit III (the "Transfer Notice"), at its principal offices
and the payment to the Company of all transfer taxes and other governmental
charges imposed on such transfer.
12. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant Agreement shall be
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall be
binding upon any successors or assigns of the Company.
(b) Attorney's Fees. In any litigation, arbitration or court proceeding
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
Illinois.
(d) Counterparts. This Warrant Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission (provided that the original is sent by personal delivery
or mail as hereinafter set forth) or seven (7) days after deposit in the United
States mail, by registered or certified mail, addressed (i) to the Warrantholder
at 6111 North River Road, Rosemont, Illinois 60018, Attention: James Labe,
Venture Group, cc: Legal Department, Attention.: General Counsel, (and/or, if by
facsimile, (847) 518-5465 and (847) 518-5088) and (ii) to the Company at 4131
Highway 52 North, Suite G111, Rochester, MN 55901-3144, Attention: Craig W.
Allen (and/or if by facsimile, (507) 287-2803 or at such other address as any
such party may subsequently designate by written notice to the other party.
(f) Remedies. In the event of any default hereunder, the non-defaulting
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable. The Company expressly agrees that it
shall not oppose an application by the Warrantholder or any other person
entitled to the benefit of this Agreement requiring specific performance of any
or all provisions hereof or enjoining the Company from continuing to commit any
such breach of this Agreement.
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<PAGE>
(g) No Impairment of Rights. The Company will not, by amendment of its
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.
(h) Survival. The representations, warranties, covenants and conditions
of the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement.
(i) Severability. In the event any one or more of the provisions of
this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement may be amended
by a written instrument signed by the Company and by the Warrantholder.
(k) Additional Documents. The Company, upon execution of this Warrant
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (d), (f) and (g) of Section 9 above. If the purchase
price for the Leases referenced in the preamble of this Warrant Agreement
exceeds $1,000,000, the Company will also provide Warrantholder with an opinion
from the Company's counsel with respect to those same representations,
warranties and covenants. The Company shall also supply such other documents as
the Warrantholder may from time to time reasonably request.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.
Company: SHOWCASE CORPORATION
By: /s/ Craig W. Allen
------------------------------
Title: CFO
---------------------------
Warrantholder: COMDISCO, INC.
By: /s/ James P. Labe
------------------------------
James P. Labe
Title: President
---------------------------
COMDISCO VENTURES DIVISION
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EXHIBIT I
NOTICE OF EXERCISE
To: _________________
(1) The undersigned Warrantholder hereby elects to purchase _____ shares of
the Series ___ Preferred Stock of __________, pursuant to the terms of
the Warrant Agreement dated the ___ day of __________, 19__ (the
"Warrant Agreement") between __________ and the Warrantholder, and
tenders herewith payment of the purchase price for such shares in full,
together with all applicable transfer taxes, if any.
(2) In exercising its rights to purchase the Series ___ Preferred Stock of
__________, the undersigned hereby confirms and acknowledges the
investment representations and warranties made in Section 10 of the
Warrant Agreement.
(3) Please issue a certificate or certificates representing said shares of
Series ___ Preferred Stock in the name of the undersigned or in such
other name as is specified below.
________________________
(Name)
________________________
(Address)
Warrantholder: COMDISCO, INC.
By:______________________
Title:___________________
Date:____________________
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EXHIBIT II
ACKNOWLEDGMENT OF EXERCISE
The undersigned _______________________________, hereby acknowledge
receipt of the "Notice of Exercise from Comdisco, Inc., to purchase _____ shares
of the Series _____ Preferred Stock of ________________________, pursuant to the
terms of the Warrant Agreement, and further acknowledges that _____ shares
remain subject to purchase under the terms of the Warrant Agreement.
Company:
By:
-------------------------
Title:
----------------------
Date:
-----------------------
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EXHIBIT III
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement execute this form and
supply required Information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to
- --------------------------------------------------------------------------------
(Please Print)
whose address is
---------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
-----------------------------------
Holder's Signature:
----------------------
Holder's Address:
------------------------
-----------------------------------------
Signature Guaranteed:
--------------
NOTE: The signature to this Transfer Notice must correspond with the name as
it appears on the face of the Warrant Agreement, without alteration or
enlargement or any change whatever. Officers of corporations and those
acting in a fiduciary or other representative capacity should file
proper evidence of authority to assign the foregoing Warrant Agreement.
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EXHIBIT 4.3
REGISTRATION RIGHTS PROVISIONS
1. Registration of Stock.
1.1 Definitions.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Shares" shall mean the shares of Common Stock, par value $.01
per share ("Common Stock"), authorized by the Company's Amended and Restated
Articles of Incorporation and any additional shares of Common Stock which may be
authorized in the future by the Company, and any stock into which such Common
Shares may hereafter be changed.
"Company" shall mean ShowCase Corporation, a Minnesota corporation.
"Preferred Stock" shall mean the outstanding shares of Series A
Preferred Stock and Series B Preferred Stock of the Company and any securities
(other than Common Shares) into which such shares may hereafter be changed.
"Public Offering" shall mean any offering of Common Shares to the
public, either on behalf of the Company or any of its security holders, pursuant
to an effective registration statement under the Securities Act or any event
causing the Company to have any class of its equity securities registered with
the Commission pursuant to the Securities Exchange Act of 1934, as amended.
"Registrable Securities" shall mean (i) the Common Shares issued upon
conversion of Preferred Stock and (ii) any additional securities issued with
respect to the above described securities upon any stock split, stock dividend,
recapitalization, or similar event, provided, however, that none of the above
described securities shall be treated as Registrable Securities if (a) a
registration statement covering the sale of such Registrable Securities has been
declared effective under the Securities Act and the Registrable Securities have
been sold in accordance with the registration statement, (b) they shall be
eligible to be distributed to the public pursuant to Rule 144 promulgated under
the Securities Act in a single three-month period by the holder thereof, (c)
they have been sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act so that all transfer restrictions
and restrictive legends with respect thereto are removed upon the consummation
of such sale or (d) they cease to be outstanding.
"Registration Expenses" shall mean the expenses described in Section
1.6.
<PAGE>
"Series A Preferred Stock" shall mean the shares of the Company's
Series A Convertible Preferred Stock, $.01 par value per share.
"Series B Preferred Stock" shall mean the shares of the Company's
Series B Convertible Preferred Stock, $.01 par value per share.
"Securities Act" shall mean the Securities Act of 1933, as amended.
1.2 Demand Registration. (a) Subject to Section 1.2(d) and Section
1.2(e), if at any time the Company shall receive a written request therefor from
the record holder or holders of an aggregate of at least 51% of the Registrable
Securities, the Company shall prepare and file a registration statement under
the Securities Act covering such number of Registrable Securities as are the
subject of such request and shall use its best efforts to cause such
registration statement to become effective. Upon the receipt of a registration
request meeting the requirements of this Section 1.2(a), the Company shall
promptly give written notice to all other record holders of Registrable
Securities that such registration is to be effected. The Company shall include
in such registration statement such additional Registrable Securities as such
other record holders request within thirty (30) days after the date of the
Company's written notice to them. If (x) (i) the holders of a majority of the
Registrable Securities for which registration has been requested pursuant to
this Section 1.2(a) determine for any reason not to proceed with the
registration at any time before the related registration statement has been
declared effective by the Commission, (ii) such registration statement, if
theretofore filed with the Commission, is withdrawn and (iii) the holders of the
Registrable Securities subject to such registration statement agree to bear
their own Registration Expenses incurred in connection therewith and to
reimburse the Company for the Registration Expenses incurred by it in such
connection or (y) if such registration statement, if theretofore filed with the
Commission, is withdrawn at the initiative of the Company, then the holders of
the Registrable Securities shall not be deemed to have exercised one of their
two demand registration rights pursuant to this Section 1.2(a).
(b) At the request of the holders of a majority of the Registrable
Securities to be registered, the method of disposition of all Registrable
Securities included in a registration under Section 1.2(a) shall be an
underwritten offering. The managing underwriter of any such offering shall be
selected by the holders of a majority of the Registrable Securities for which
registration has been requested and shall be reasonably acceptable to the
Company. Neither the Company nor any holder of securities (other than
Registrable Securities) of the Company shall have the right to include any
securities in a registration statement to be filed as part of a demand
registration pursuant to Section 1.2(a) or Section 1.4 unless (i) such
securities are of the same class as the Registrable Securities to be included in
the registration, (ii) the holders of a majority of the Registrable Securities
to be registered consent to such inclusion in
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<PAGE>
writing, (iii) if such registration is an underwritten offering, the Company and
such other holders agree in writing to sell their securities on the same terms
and conditions as apply to the Registrable Securities being sold pursuant to the
request for registration and (iv) the inclusion of such securities will not, in
the judgment of any managing underwriter of the Public Offering, interfere with
the successful marketing of the Registrable Securities.
(c) The Company shall be obligated to prepare, file and cause to be
effective only two (2) registration statements (other than on Form S-3 as
provided in Section 1.4 hereof) pursuant to Section 1.2(a).
(d) Notwithstanding the foregoing, the Company may defer the filing of
any registration statement or delay the effectiveness of any such registration
statement requested pursuant to Section 1.2(a) for a period not to exceed (i)
ninety (90) days if in the good faith judgment of the Company's Board of
Directors effecting the registration would be seriously detrimental to the
Company or its shareholders or (ii) ninety days (90) days if a request for
registration is received during the period starting with the date sixty (60)
days prior to the Company's good faith estimate of the date of the filing of a
Company-initiated registration subject to Section 1.3 below, provided that the
company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective. If such a determination is made, the
Company shall furnish to all record holders of Registrable Securities a
certificate signed by the President of the Company stating that the Board of
Directors has made such a determination.
(e) If, at the time any written request for registration is received by
the Company pursuant to this Section 1.2, the Company determined to proceed with
the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for cash of any of
its securities by it or any of its security holders, such written request shall
be deemed to have been given pursuant to Section 1.3 hereof rather than this
Section 1.2, and the rights of the holders of Registrable Securities covered by
such written request shall be governed by Section 1.3 hereof.
1.3 (a) Piggyback Registration. Each time the Company shall determine
to proceed with the actual preparation and filing of a registration statement
under the Securities Act in connection with the proposed offer and sale for
money of any of its securities by it or any of its security holders (other than
a registration statement on Form S-8, Form S-4 or other limited purpose form),
the Company will give written notice of its determination to all record holders
of Registrable Securities. Upon the written request of a record holder of any
shares of Registrable Securities given within 30 days after the date of mailing
of any such notice from the Company, the
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<PAGE>
Company will, except as herein provided, cause all the Registrable Securities
the registration of which is requested to be included in such registration
statement, all to the extent requisite to permit the sale or other disposition
by the prospective seller or sellers of the Registrable Securities to be so
registered; provided, however, that nothing herein shall prevent the Company
from, at any time, abandoning or delaying any registration initiated by it; and
provided, further, that if the Company determines not to proceed with a
registration after the registration statement has been filed with the Commission
and the Company's decision not to proceed is primarily based upon the
anticipated public offering price of the securities to be sold by the Company,
the Company shall promptly complete the registration for the benefit of those
selling security holders who wish to proceed with a Public Offering of their
Registrable Securities and who bear all of the Registration Expenses in excess
of $25,000 incurred by the Company as the result of such registration after the
Company has decided not to proceed. In the discretion of the holders of the
Registrable Securities to be included in the registration (provided that such
holders are the record holders of at least 51% of the Registrable Securities),
such registration may count as a demand registration under Section 1.2 (if it
otherwise meets the requirements of Section 1.2(a)) for which the Company will
pay the Registration Expenses.
(b) If any registration pursuant to this Section 1.3 is underwritten in
whole or in part, the Company may require that the Registrable Securities
included in the registration be included in the underwriting on the same terms
and conditions as the securities otherwise being sold through the underwriters.
If, (i) in the event that the Registrable Securities requested for inclusion
pursuant to this Section 1.3 would constitute more than 25% of the total number
of shares to be included in the proposed underwritten Public Offering, and if in
the good faith judgment of the managing underwriter of the Public Offering, the
inclusion of all of the Registrable Securities originally covered by requests
for registration would reduce the number of shares to be offered by the Company
or interfere with the successful marketing of the shares offered by the Company,
the number of Registrable Securities to be included in the Offering may be
reduced in the following manner: first, securities held by officers and
directors of the Company (other than Registrable Securities) shall be excluded
from such underwritten public offering to the extent required by the managing
underwriter, second, any securities, other than Registrable Securities, proposed
to be sold in the Public Offering by persons other than the Company shall be
excluded and third, if a further reduction in the Offering is required, the
Registrable Securities requested to be included in the Offering shall be
reduced, pro rata, among the requesting holders thereof in proportion to the
number of Registrable Securities included in their respective requests for
registration; provided, however that after any such required reduction the
Registrable Securities to be included in such Public Offering shall constitute
at least 25% of the total number of shares to be included in such Public
Offering. The Registrable Securities which are thus excluded from the
underwritten
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<PAGE>
Public Offering shall be withheld from the market by the holders thereof for a
period which the managing underwriter reasonably determines is necessary in
order to effect the Public Offering.
1.4 Short Form Registration. In addition to the registration rights
provided in Sections 1.2 and 1.3, if the Company qualifies for the use of Form
S-3 (or any similar registration form), the Company shall at the request of
holders of Registrable Securities from time to time register Registrable
Securities on behalf of such holder or holders on such form; provided, however,
that the Company shall not be required to effect any such registration pursuant
to this Section 1.4 if the holders of Registrable Securities, together with the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public (net of any underwriters' discounts
or commissions) of less than $1,000,000. The Company shall be obligated to
prepare, file and cause to be effective only two (2) registration statements
pursuant to this Section 1.4 per calendar year. The Company shall give notice of
any proposed Form S-3 registration to the record holders of Registrable
Securities who did not join in the request therefor and afford them a reasonable
opportunity to do so.
1.5 Registration Procedures. If and whenever the Company is required by
the provisions of Sections 1.2, 1.3 or 1.4 to effect the registration of shares
of Registrable Securities under the Securities Act, the Company will use its
best efforts to effect the registration and sale of such Registrable Securities
in accordance with the intended methods of disposition specified by the holders
participating therein. Without limiting the foregoing, the Company in each such
case will, as expeditiously as possible:
(a) prepare and file with the Commission the requisite registration
statement to effect such registration (including such audited financial
statements as may be required by the Securities Act or the rules and regulations
promulgated thereunder) and use its best efforts to cause such registration
statement to become and remain effective for such period as may be reasonably
necessary to affect the sale of such securities provided, that such period shall
not exceed one hundred eighty (180) days; provided, further, that as far in
advance as practical before filing such registration statement or any amendment
thereto required by Section 1.5(b), the Company will furnish to counsel for the
requesting holders copies of reasonably complete drafts of all such documents
proposed to be filed (including exhibits), and any such holder shall have the
opportunity to object to any information pertaining solely to such holder that
is contained therein and the Company will make the corrections reasonably
requested by such holder with respect to such information prior to filing any
such registration statement or amendment;
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(b) prepare and file with the Commission such amendments and
supplements to such registration statement and any prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such registration
statement and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities included in such registration
statement, in accordance with the intended methods of disposition thereof, until
the earlier of (i) such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement and (ii) one hundred eighty
(180) days after such registration statement becomes effective;
(c) promptly notify each requesting holder and the underwriter or
underwriters, if any:
(i) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any
post-effective amendment thereto, when the same has become effective;
(ii) of any written request by the Commission for amendments
or supplements to such registration statement or prospectus;
(iii) of the notification to the Company by the Commission of
its initiation or threatening of any proceeding with respect to the
issuance by the Commission of, or of the issuance by the Commission of,
any stop order suspending the effectiveness of such registration
statement and promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should be
issued; and
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the applicable securities or blue sky laws of
any jurisdiction;
(d) furnish to each seller of Registrable Securities included in such
registration statement such number of conformed copies of such registration
statement, each amendment and supplement thereto, the prospectus contained in
such registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 promulgated
under the Securities Act relating to such seller's Registrable Securities, and
such other documents, as such seller may reasonably request to facilitate the
disposition of its Registrable Securities;
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<PAGE>
(e) use its best efforts to register or qualify all Registrable
Securities included in such registration statement under such other securities
or blue sky laws of such jurisdictions as each holder of Registrable Securities
thereof shall reasonably request within twenty (20) days following the original
filing of such registration statement and to keep such registration or
qualification in effect for so long as such registration statement remains in
effect, and take any other action which may be reasonably necessary or advisable
to enable such holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such holder, except that the Company shall not
for any such purpose be required (i) to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this paragraph (e) be obligated to be so qualified or (ii) to
consent to general service of process in any such jurisdiction;
(f) use its best efforts to cause all Registrable Securities included
in such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable each holder
thereof to consummate the disposition of such Registrable Securities;
(g) if and to the extent any of the following are obtained by or
furnished to the Company or the underwriters, furnish to any holder who so
requests a signed counterpart, addressed to such holder (and the underwriters,
if any), of
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration includes
an underwritten Public Offering, dated the date of any closing under
the underwriting agreement), covering such matters as such underwriters
and holder or holders may reasonably request, and
(ii) a "cold comfort" letter or letters, dated the effective
date of such registration statement (and, if such registration includes
an underwritten Public Offering, dated the date of any closing under
the underwriting agreement), signed by the certified independent public
accountants of the Company, covering such matters as such underwriters
and holder or holders may reasonably request;
provided, however, that the obligation to furnish a "cold comfort" letter
or letters shall only be imposed to the extent permitted under any
then-prevailing rules of accounting procedure;
(h) prepare and promptly file with the Commission and promptly notify
each holder whose Registrable Securities are included in such registration
statement of the filing of such amendment or supplement to such registration
statement
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<PAGE>
or prospectus as may be necessary to correct any statements or omissions if, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, any event shall have occurred, the result of which any
prospectus included in such registration statement, as then in effect, would
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and at the request of any such holder promptly prepare and furnish to such
holder a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(i) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission;
(j) provide a transfer agent and registrar for all Registrable
Securities included in such registration statement not later than the effective
date of such registration statement; and
(k) use its best efforts to cause all Registrable Securities included
in such registration statement to be listed, upon official notice of issuance,
on any securities exchange or quotation system on which any of the securities of
the same class as the Registrable Securities are then listed.
(l) prepare and file with the Commission, promptly upon the request of
any such holders, any amendments or supplements to such registration statement
or prospectus which, in the opinion of counsel for such holders (and concurred
in by counsel for the Company), are required under the Securities Act or the
rules and regulations thereunder in connection with the distribution of the
Registrable Securities by such holder.
(m) The Company may require each holder whose Registrable Securities
are being registered to, and each such holder, as a condition to including
Registrable Securities in such registration, shall, furnish the Company and the
underwriters with such information regarding such holder and the distribution of
such securities as the Company and the underwriters may from time to time
reasonably request in writing in connection with such registration. At any time
during the effectiveness of any registration statement covering Registrable
Securities offered by a holder, if such holder becomes aware of any change
materially affecting the accuracy of the information contained in such
registration statement or the prospectus (as then
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<PAGE>
amended or supplemented) relating to such holder, it will immediately notify the
Company of such change.
(n) Upon receipt of any notice from the Company of the happening of any
event of the kind described in paragraph (h) of this Section 1.5, each holder
will forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such holder receives the copies of the supplemented or amended prospectus
contemplated by paragraph (h) of this Section 1.5 and, if so directed by the
Company, shall deliver to the Company all copies, other than permanent file
copies, then in such holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice.
1.6 Expenses. With respect to any registration requested pursuant to
Section 1.2 (except as otherwise provided in such Section with respect to a
registration voluntarily terminated at the request of the requesting holders of
Registrable Securities), Section 1.3 (except as otherwise provided in such
Section with respect to a registration continued by selling security holders who
wish to proceed with a Public Offering that is withdrawn by the Company) or
Section 1.4, the Company shall bear all of the expenses ("Registration
Expenses") incident to the Company's performance of or compliance with its
obligations under this Agreement in connection with such registration including,
without limitation, all registration, filing, securities exchange or quotation
system listing and NASD fees, all registration, filing, qualification and other
fees and expenses or complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery expenses,
the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and compliance,
premiums and other costs of any policies of insurance against liabilities
arising out of the Public Offering of the Registrable Securities being
registered obtained by the Company (it being understood that the Company shall
have no obligation to obtain such insurance), fees and disbursements of counsel
for the underwriter or underwriters of such Registrable Securities (if the
Company and/or selling security holders are required to bear such fees and
disbursements), all internal Company expenses, all legal fees and disbursements
and other expenses of complying with state securities or blue sky laws of any
jurisdiction in which the securities to be offered are to be registered or
qualified and fees and disbursements of underwriters customarily paid by issuers
or sellers of securities. Fees and disbursements of counsel and accountants,
underwriting discounts and commissions and transfer taxes, if any, relating to
the Registrable Securities being registered shall in any registration be payable
by the holders of the Registrable Securities being registered, pro rata in
proportion to the number of Registrable Securities being sold by them.
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1.7 Delay of Registration. No holder of Registrable Securities shall
have any right to obtain or seek an injunction restraining or otherwise delaying
any such registration as the result of any controversy that might arise with
respect to the interpretation or implementation of this Section 1.
1.8 Indemnification.
(a) The Company will, to the full extent permitted by law, indemnify
and hold harmless each holder of Registrable Securities which are included in a
registration statement pursuant to the provisions of this Section 1 and its
directors, officers and partners and each other person, if any, who controls
such holder within the meaning of the Securities Act from and against any and
all losses, claims, damages, expenses or liabilities, (collectively, "Losses")
to which such holder or any such director, officer, partner or controlling
person may become subject under the Securities Act or otherwise, insofar as such
Losses (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a registration statement prepared
and filed hereunder, any preliminary, final or summary prospectus contained
therein or any amendment or supplement thereto or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in light
of the circumstances in which they were made) not misleading and the Company
will reimburse the holder and each such director, officer, partner and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending against any such Losses (or action
or proceeding, whether commenced or threatened, in respect thereof); provided,
however, that the Company will not be liable in any such case to the extent that
any such Losses arise out of or are based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in conformity with
written information furnished by such holder specifically for use in the
preparation of the registration statement or (ii) such holder's failure to send
or give a copy of the final prospectus to the persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
person if such statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or any such director, officer,
partner or controlling person of such holder and shall survive the transfer of
such securities by such holder. The Company shall also indemnify each other
person who participates (including as an underwriter) in the offering or sale of
Registrable Securities, their officers and directors, and partners, and each
other person, if any, who controls any such participating person within the
meaning of the Securities Act to the same extent as provided above with respect
to holders of Registrable Securities.
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<PAGE>
(b) Each holder of shares of Registrable Securities which are included
in a registration pursuant to the provisions of this Section 1 will, to the full
extent permitted by law, indemnify and hold harmless the Company, its officers,
directors and each other person, if any, who controls the Company within the
meaning of the Securities Act from and against any and all Losses to which the
Company or any such officer, director or controlling person may become subject
under the Securities Act or otherwise, insofar as such Losses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue or alleged untrue statement of any material fact
contained in a registration statement prepared and filed hereunder, any
preliminary, final or summary prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was so made in reliance
upon and in strict conformity with written information furnished by such holder
specifically for use in the preparation of such registration statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
person of the Company. The holder of Registrable Securities included in a
registration statement shall also indemnify each other person who participates
(including as an underwriter) in the offering or sale of Registrable Securities,
their officers and directors, and partners, and each other person, if any, who
controls any such participating person within the meaning of the Securities Act
to the same extent as provided above with respect to the Company. In no event
shall the liability of any holder under this Section 1.7(b) exceed the net
proceeds received by such holder from the sale of their Registrable Securities.
Each holder under this Section 1.8 shall be severally, not jointly, liable.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 1.7 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of paragraph (a)
or (b), promptly notify the indemnifying party of the commencement thereof; but
the omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought against any
indemnified party, the indemnifying party shall have the right to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, that if the defendants in any action
include both the indemnified
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<PAGE>
party and the indemnifying party and the indemnified party reasonably concludes
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or if there is a conflict of interest that would prevent
counsel for the indemnifying party from also representing the indemnified party,
the indemnified party shall have the right to select separate counsel to
participate in the defense of such action on behalf of the indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party pursuant to the provisions of said paragraph
(a) or (b) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof, other than reasonable
costs of investigation, unless (i) the indemnified party shall have employed
counsel in accordance with the proviso of the preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after the notice of the commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. If the indemnifying party is not
entitled to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel for the
indemnified parties with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other indemnified parties with respect to such claim,
in which event the indemnifying party shall be obligated to pay the fees and
expenses of additional counsel or counsels for the indemnified parties. No
indemnifying party shall consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation without the consent of the
indemnified party. No indemnifying party shall be subject to any liability for
any settlement made without its consent. An indemnified party may at any time
elect to participate in the defense of any claim or proceeding at its own
expense.
(d) The obligations of the Company and holders of Registrable
Securities under this Section 1.8 shall survive the completion of any offering
of Registrable Securities in a registration statement under this Section 1, and
otherwise.
1.9 Underwritten Offerings. If a distribution of Registrable Securities
pursuant to a registration statement is to be underwritten, the holders whose
Registrable Securities are to be distributed by such underwriters shall be
parties to such underwriting agreement. No requesting holder may participate in
such underwritten offering unless such holder agrees to sell its Registrable
Securities on the basis provided in such underwriting agreement and completes
and executes all questionnaires, powers
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of attorney, indemnities (as they relate to statements, omissions,
representations or warranties of such holder regarding solely such holder and
the Registrable Securities owned by it) and other documents reasonably required
under the terms of such underwriting agreement. If any requesting holder
disapproves of the terms of an underwriting, such holder may elect to withdraw
therefrom and from such registration by notice to the Company and the managing
underwriter, and each of the remaining requesting holders shall be entitled to
increase the number of Registrable Securities being registered to the extent of
the Registrable Securities so withdrawn in the proportion which the number of
Registrable Securities being registered by such remaining requesting holder
bears to the total number of Registrable Securities being registered by all such
remaining requesting holders.
1.10 Stand-Off Agreement. Each holder of Registrable Securities agrees,
in connection with the Company's initial Public Offering, upon request of the
Company or the underwriters managing such Public Offering, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any Common Shares of the Company other than those included in the
registration without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not exceeding 120
days) from the effective date of such registration as may be requested by the
underwriters; provided, however, that all of the officers and directors of the
Company who own stock of the Company must also agree to not less onerous
restrictions.
1.11 Amendment of Registration Rights. Without the written consent of
the holders of more than 50% of the then outstanding Registrable Securities, the
Company shall not amend this Section 1.
1.12 Registration Rights of Transferees. The registration rights
granted to the holder of Registrable Securities pursuant to this Section 1 shall
also be for the benefit of, and enforceable by, any subsequent holder of
Registrable Securities, whether or not an express assignment of such rights to
any such subsequent holder is made, so long as such subsequent holder acquires
at least five percent (5%) of the Registrable Securities then outstanding.
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<PAGE>
EXHIBIT 10.1
AMENDED
SHOWCASE CORPORATION
1991 LONG-TERM INCENTIVE
AND
STOCK OPTION PLAN
Section 1. Purpose of Plan.
This Amended Plan shall be known as the "AMENDED SHOWCASE CORPORATION 1991
LONG-TERM INCENTIVE AND STOCK OPTION PLAN" and is hereinafter referred to as the
"Plan". The purpose of the Plan is to aid in maintaining and developing
personnel capable of assuring the future success of Showcase Corporation, a
Minnesota corporation (the "Company"), to offer such personnel additional
incentives to put forth maximum efforts for the success of the business, and to
afford them an opportunity to acquire a proprietary interest in the Company
through stock options and other long-term incentive awards as provided herein.
Options granted under this Plan may be either incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986 (the "Code"), or options that do not qualify as Incentive
Stock Options. Awards granted under this Plan shall be SARs, restricted stock or
performance awards as hereinafter described. With respect to outstanding
Incentive Stock Options at the time of amendment of this Plan, such options
shall continue to be governed by the terms of the plan prior to this amendment.
Section 2. Stock Subject to Plan.
Subject to the provisions of Section 16 hereof, the stock to be subject to
options or other awards under the Plan shall be the Company's authorized common
shares, par value $0.01 per share (the "Common Shares"). Such Common Shares may
be either authorized but unissued shares, or issued shares which have been
reacquired by the Company. Subject to adjustment as provided in Section 16
hereof, the maximum number of shares on which options may be exercised or other
awards issued under this Plan shall be 1,281,524 shares. If an option or award
under the Plan expires, or for any reason is terminated or unexercised with
respect to any shares, such shares shall again be available for options or
awards thereafter granted during the term of the Plan.
Section 3. Administration of Plan.
(a) The Plan shall be administered by the Board of Directors of the Company
or a committee thereof. The members of any such committee shall be appointed by
and serve at the pleasure of the Board of Directors. (The group administering
the Plan shall hereinafter be referred to as the "Committee".)
(b) The Committee shall have plenary authority in its discretion, but
subject to the express provisions of the Plan: (i) to determine the purchase
price of the Common Stock covered
<PAGE>
by each option or award, (ii) to determine the employees to whom and the time or
times at which such options and awards shall be granted and the number of shares
to be subject to each, (iii) to determine the form of payment to be made upon
the exercise of an SAR or in connection with performance awards, either cash,
Common Shares of the Company or a combination thereof, (iv) to determine the
terms of exercise of each option and award, (v) to accelerate the time at which
all or any part of an option or award may be exercised, (vi) to amend or modify
the terms of any option or award with the consent of the optionee, (vii) to
interpret the Plan, (viii) to prescribe, amend and rescind rules and regulations
relating to the Plan, (ix) to determine the terms and provisions of each option
and award agreement under the Plan (which agreements need not be identical),
including the designation of those options intended to be Incentive Stock
Options, and (x) to make all other determinations necessary or advisable for the
administration of the Plan, subject to the exclusive authority of the Board of
Directors under Section 17 herein to amend or terminate the Plan. The
Committee's determinations on the foregoing matters, unless otherwise
disapproved by the Board of Directors of the Company, shall be final and
conclusive.
(c) The Committee shall select one of its members as its Chair and shall
hold its meetings at such times and places as it may determine. A majority of
its members shall constitute a quorum. All determinations of the Committee shall
be made by not less than a majority of its members. Any decision or
determination reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority vote at
a meeting duly called and held. The grant of an option or award shall be
effective only if a written agreement shall have been duly executed and
delivered by and on behalf of the Company following such grant. The Committee
may appoint a Secretary and may make such rules and regulations for the conduct
of its business as it shall deem advisable.
Section 4. Eligibility and Grant.
(a) Eligibility. Incentive Stock Options may only be granted under this
Plan to any full or part-time employee (which term as used herein includes, but
is not limited to, officers and directors who are also employees) of the Company
and of its present and future subsidiary corporations within the meaning of
Section 424(f) of the Code (herein called "subsidiaries"). Full or part-time
employees, directors who are not employees, consultants or independent
contractors to the Company or one of its subsidiaries or affiliates shall be
eligible to receive options which do not qualify as Incentive Stock Options and
awards. In determining the persons to whom options and awards shall be granted
and the number of shares subject to each, the Committee may take into account
the nature of services rendered by the respective employees or consultants,
their present and potential contributions to the success of the Company and such
other factors as the Committee in its discretion shall deem relevant.
(b) Grant of Additional Options. A person who has been granted an option or
award under this Plan may be granted additional options or awards under the Plan
if the Committee shall so determine; provided, however, that to the extent the
aggregate fair market value (determined at the time the Incentive Stock Option
is granted) of the Common Shares with
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<PAGE>
respect to which all Incentive Stock Options are exercisable for the first time
by an employee during any calendar year (under all plans described in subsection
(d) of Section 422 of the Code of his or her employer corporation and its parent
and subsidiary corporations) exceeds $100,000, such options shall be treated as
options that do not qualify as Incentive Stock Options. Nothing in the Plan or
in any agreement thereunder shall confer on any employee any right to continue
in the employ of the Company or any of its subsidiaries or affect, in any way,
the right of the Company or any of its subsidiaries to terminate his or her
employment at any time.
Section 5. Price.
The option price for all Incentive Stock Options granted under the Plan
shall be determined by the Committee but shall not be less than 100% of the fair
market value of the Common Shares at the date of grant of such option. The
option price for options granted under the Plan that do not qualify as Incentive
Stock Options and, if applicable, the price for all awards shall also be
determined by the Committee. For purposes of the preceding sentence and for all
other valuation purposes under the Plan, the fair market value of the Common
Shares shall be as reasonably determined by the Committee. If on the date of
grant of any option or award hereunder the Common Shares are not traded on an
established securities market, the Committee shall make a good faith attempt to
satisfy the requirements of this Section 5 and in connection therewith shall
take such action as it deems necessary or advisable.
Section 6. Term.
Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan, but the term of an
Incentive Stock Option may not extend more than ten (10) years from the date of
grant of such option and the term of options granted under the Plan which do not
qualify as Incentive Stock Options may not extend more than fifteen (15) years
from the date of granting of such option.
Section 7. Exercise Option or Award.
(a) Exercisability. The Committee shall have full and complete authority to
determine whether an option or award will be exercisable in full at any time or
from time to time during the term thereof, or to provide for the exercise
thereof in such installments, upon the occurrence of such events (such as
termination of employment for any reason) and at such times during the term of
the option as the Committee may determine and specify in the option or award
agreement.
(b) No Violation of State or Federal Laws. The exercise of any option or
award granted hereunder shall only be effective at such time that the sale of
Common Shares pursuant to such exercise will not violate any state or federal
securities or other laws.
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<PAGE>
(c) Method of Exercise. An optionee or grantee electing to exercise an
option or award shall give written notice to the Company of such election and of
the number of shares subject to such exercise. The full purchase price of such
shares shall be tendered with such notice of exercise. Payment shall be made to
the Company in cash (including bank check, certified check, personal check, or
money order), or, at the discretion of the Committee and as specified by the
Committee, (i) by delivering certificates for the Company's Common Shares
already owned by the optionee or grantee having a fair market value as of the
date of grant equal to the full purchase price of the shares, or (ii) by
delivering the optionee's or grantee's promissory note, which shall provide for
interest at a rate not less than the minimum rate required to avoid the
imputation of income, original issue discount or a below-market-rate loan
pursuant to Sections 483, 1274 or 7872 of the Code or any successor provisions
thereto, or (iii) a combination of cash, the optionee's or grantee's promissory
note and such shares. The fair market value of such tendered shares shall be
determined as provided in Section 5 herein. The optionee's or grantee's
promissory note shall be a full recourse liability of the optionee and may, at
the discretion of the Committee, be secured by a pledge of the shares being
purchased. Until such person has been issued the shares subject to such
exercise, he or she shall possess no rights as a shareholder with respect to
such shares.
Section 8. Restoration Options.
The Committee may grant "restoration" options, separately or together with
another option, pursuant to which, subject to the terms and conditions
established by the Committee and any applicable requirements of Rule 16b-3
promulgated under the Exchange Act or any other applicable law, the optionee
would be granted a new option when the payment of the exercise price of the
option to which such "restoration" option relates is made by the delivery of
shares of the Company's Common Shares owned by the optionee, as described in
this Section 8, which new option would be an option to purchase the number of
shares not exceeding the sum of (a) the number of shares of the Company's Common
Shares tendered as payment upon the exercise of the option to which such
"restoration" option relates and (b) the number of shares of the Company's
Common Shares, if any, tendered as payment of the amount to be withheld under
applicable income tax laws in connection with the exercise of the option to
which such "restoration" option relates, as described in Section 12 hereof.
"Restoration" options may be granted with respect to options previously granted
under this Plan or any prior stock option plan of the Company, and may be
granted in connection with any option granted under this Plan at the time of
such grant. The purchase price of the Common Shares under each such new option,
and the other terms and conditions of such option, shall be determined by the
Committee, consistent with the provisions of the Plan.
Section 9. Stock Appreciation Rights.
(a) Grant. At the time of grant of an option or award under the Plan (or at
any other time), the Committee, in its discretion, may grant a Stock
Appreciation Right ("SAR") evidenced by an agreement in such form as the
Committee shall from time to time approve. Any such SAR
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<PAGE>
may be subject to restrictions on the exercise thereof as may be set forth in
the agreement representing such SAR, which agreement shall comply with and be
subject to the following terms and conditions and any additional terms and
conditions established by the Committee that are consistent with the terms of
the Plan.
(b) Exercise. An SAR shall be exercised by the delivery to the Company of a
written notice which shall state that the holder thereof elects to exercise his
or her SAR as to the number of shares specified in the notice and which shall
further state what portion, if any, of the SAR exercise amount (hereinafter
defined) the holder thereof requests is to be paid in cash and what portion, if
any, is to be paid in Common Shares of the Company. The Committee promptly shall
cause to be paid to such holder the SAR exercise amount either in cash, in
Common Shares of the Company, or any combination of cash and shares as the
Committee may determine. Such determination may be either in accordance with the
request made by the holder of the SAR or in the sole and absolute discretion of
the Committee. The SAR exercise amount is the excess of the fair market value of
one share of the Company's Common Shares on the date of exercise over the per
share exercise price in respect of which the SAR was granted, multiplied by the
number of shares as to which the SAR is exercised. For the purposes hereof, the
fair market value of the Company's shares shall be determined as provided in
Section 5 herein.
Section 10. Restricted Stock Award.
Awards of Common Shares subject to forfeiture and transfer restrictions may
be granted by the Committee. Any restricted stock award shall be evidenced by an
agreement in such form as the Committee shall from time to time approve, which
agreement shall comply with and be subject to the following terms and conditions
and any additional terms and conditions established by the Committee that are
consistent with the terms of the Plan:
(a) Grant of Restricted Stock Awards. Each restricted stock award made
under the Plan shall be for such number of Common Shares as shall be
determined by the Committee and set forth in the agreement containing the
terms of such restricted stock award. Such agreement shall set forth a
period of time during which the grantee must remain in the continuous
employment of the Company in order for the forfeiture and transfer
restrictions to lapse. If the Committee so determines, the restrictions may
lapse during such restricted period in installments with respect to
specified portions of the shares covered by the restricted stock award. The
agreement may also, in the discretion of the Committee, set forth
performance or other conditions that will subject the Common Shares to
forfeiture and transfer restrictions. The Committee may, at its discretion,
waive all or any part of the restrictions applicable to any or all
outstanding restricted stock awards.
(b) Delivery of Common Shares and Restrictions. At the time of a
restricted stock award, a certificate representing the number of Common
Shares awarded thereunder shall be registered in the name of the grantee.
Such certificate shall be held by the Company or any custodian appointed by
the Company for the account of the grantee
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<PAGE>
subject to the terms and conditions of the Plan, and shall bear such a
legend setting forth the restrictions imposed thereon as the Committee, in
its discretion, may determine. The grantee shall have all rights of a
shareholder with respect to the Common Shares, including the right to
receive dividends and the right to vote such shares, subject to the
following restrictions:(i) the grantee shall not be entitled to delivery of
the stock certificate until the expiration of the restricted period and the
fulfillment of any other restrictive conditions set forth in the restricted
stock agreement with respect to such Common Shares; (ii) none of the Common
Shares may be sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered or disposed of during such restricted period or until
after the fulfillment of any such other restrictive conditions; and (iii)
except as otherwise determined by the Committee, all of the Common Shares
shall be forfeited and all rights of the grantee to such Common Shares
shall terminate, without further obligation on the part of the Company,
unless the grantee remains in the continuous employment of the Company for
the entire restricted period in relation to which such Common Shares were
granted and unless any other restrictive conditions relating to the
restricted stock award are met. Any Common Shares, any other securities of
the Company and any other property (except for cash dividends) distributed
with respect to the Common Shares subject to restricted stock awards shall
be subject to the same restrictions, terms and conditions as such
restricted Common Shares.
(c) Termination of Restrictions. At the end of the restricted period
and provided that any other restrictive conditions of the restricted stock
award are met, or at such earlier time as otherwise determined by the
Committee, all restrictions set forth in the agreement relating to the
restricted stock award or in the Plan shall lapse as to the restricted
Common Shares subject thereto, and a stock certificate for the appropriate
number of Common Shares, free of the restrictions and the restricted stock
legend, shall be delivered to the grantee or his or her beneficiary or
estate, as the case may be.
Section 11. Performance Awards.
The Committee is further authorized to grant performance awards. Subject to
the terms of this Plan and any applicable award agreement, a performance award
granted under the Plan (i) may be denominated or payable in cash, Common Shares
(including, without limitation, restricted stock), other securities, other
awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee, in its discretion, and payable to, or
exercisable by, the holder of the Performance awards, in whole or in part, upon
the achievement of such performance goals during such performance periods as the
Committee, in its discretion, shall establish. Subject to the terms of this Plan
and any applicable award agreement, the performance goals to be achieved during
any performance period, the length of any performance period, the amount of any
Performance award granted, and the amount of any payment or transfer to be made
by the grantee and by the Company under any Performance award shall be
determined by the Committee.
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<PAGE>
Section 12. Income Tax Withholding and Tax Bonuses.
(a) Withholding of Taxes. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of an optionee or grantee under the Plan, are withheld or
collected from such optionee or grantee. In order to assist an optionee or
grantee in paying all federal and state taxes to be withheld or collected upon
exercise of an option or award which does not qualify as an Incentive Stock
Option hereunder, the Committee, in its absolute discretion and subject to such
additional terms and conditions as it may adopt, shall permit the optionee or
grantee to satisfy such tax obligation by (i) electing to have the Company
withhold a portion of the shares otherwise to be delivered upon exercise of such
option or award with a fair market value, determined in accordance with Section
5 herein, equal to such taxes or (ii) delivering to the Company Common Shares
other than the shares issuable upon exercise of such option or award with a fair
market value, determined in accordance with Section 5, equal to such taxes.
(b) Tax Bonus. The Committee shall have the authority, at the time of grant
of an option under the Plan or at any time thereafter, to approve tax bonuses to
designated optionees or grantees to be paid upon their exercise of options or
awards granted hereunder. The amount of any such payments shall be determined by
the Committee. The Committee shall have full authority in its absolute
discretion to determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereafter.
Section 13. Additional Restrictions.
The Committee shall have full and complete authority to determine whether
all or any part of the Common Shares of the Company acquired upon exercise of
any of the options or awards granted under the Plan shall be subject to
restrictions on the transferability thereof or any other restrictions affecting
in any manner the optionee's or grantee's rights with respect thereto, but any
such restriction shall be contained in the agreement relating to such options or
awards.
Section 14. Ten Percent Shareholder Rule.
Notwithstanding any other provision in the Plan, if at the time an option
is otherwise to be granted pursuant to the Plan the optionee owns directly or
indirectly (within the meaning of Section 424(d) of the Code) Common Shares of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or its parent or subsidiary
corporations, if any (within the meaning of Section 422(b)(6) of the Code), then
any Incentive Stock Option to be granted to such optionee pursuant to the Plan
shall satisfy the requirements of Section 422(c)(5) of the Code, and the option
price shall be not less than 110% of the fair market value of the Common Shares
of the Company determined as described herein,
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<PAGE>
and such option by its terms shall not be exercisable after the expiration of
five (5) years from the date such option is granted.
Section 15. Non-Transferability.
No option or award granted under the Plan shall be transferable by an
optionee or grantee, otherwise than by will or the laws of descent or
distribution. Except as otherwise provided in an option or award agreement,
during the lifetime of an optionee or grantee, the option shall be exercisable
only by such optionee or grantee.
Section 16. Dilution or Other Adjustments.
If there shall be any change in the Common Shares through merger,
consolidation, reorganization, recapitalization, dividend in the form of stock
(of whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options and awards shall be
made by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares subject to
the Plan, the number of shares and the price per share subject to outstanding
options and awards and the amount payable upon exercise of outstanding awards,
in order to prevent dilution or enlargement of option or award rights.
Section 17. Amendment or Discontinuance of Plan.
The Board of Directors may amend or discontinue the Plan at any time.
Subject to the provisions of Section 16 no amendment of the Plan, however, shall
without shareholder approval: (i) increase the maximum number of shares under
the Plan as provided in Section 2 herein, (ii) decrease the minimum price
provided in Section 5 herein, (iii) extend the maximum term under Section 6, or
(iv) modify the eligibility requirements for participation in the Plan. The
Board of Directors shall not alter or impair any option or award theretofore
granted under the Plan without the consent of the holder of the option.
Section 18. Time of Granting.
Nothing contained in the Plan or in any resolution adopted or to be adopted by
the Board of Directors or by the shareholders of the Company, and no action
taken by the Committee or the Board of Directors (other than the execution and
delivery of an option or award agreement), shall constitute the granting of an
option or award hereunder.
Section 19. Effective Date and Termination of Plan.
(a) The Plan was approved by the Board of Directors on January 19, 1994,
and shall be approved by the shareholders of the Company within twelve (12)
months thereof.
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<PAGE>
(b) Unless the Plan shall have been discontinued as provided in Section 16
hereof, the Plan shall terminate February 28, 2001. No option or award may be
granted after such termination, but termination of the Plan shall not, without
the consent of the optionee or grantee, alter or impair any rights or
obligations under any option or award theretofore granted.
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<PAGE>
EXHIBIT 10.2
SHOWCASE CORPORATION
1999 STOCK INCENTIVE PLAN
Section 1. Purpose
(a) Purpose. The purpose of the ShowCase 1999 Stock Incentive Plan (the
"Plan") is to aid in attracting and retaining employees, management personnel
and other personnel and members of the Board of Directors who are not also
employees ("Non-Employee Directors") of ShowCase Corporation (the "Company")
capable of assuring the future success of the Company, to offer such personnel
and Non-Employee Directors incentives to put forth maximum efforts for the
success of the Company's business and to afford such personnel and Non-Employee
Directors an opportunity to acquire a proprietary interest in the Company.
Section 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, as determined by
the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award or other Stock-Based Award
granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean a committee of the Board of Directors of the
Company designated by such Board to administer the Plan and composed of not less
than two directors, each of whom is a "Non-Employee Director" within the meaning
of Rule 16b-3 (which term "Non-Employee Director" is defined in this paragraph
for purposes of the definition of "Committee" only and is not intended to define
such term as used elsewhere in the Plan). Each member of the Committee shall
also be an "outside director" within the meaning of Section 162(m) of the Code.
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(f) "Eligible Person" shall mean any employee, officer, director (including
any Non-Employee Director), consultant or independent contractor providing
services to the Company or any Affiliate who the Committee determines to be an
Eligible Person.
(g) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee.
(h) "Incentive Stock Option" shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of the
Code or any successor provision.
(i) "Non-Qualified Stock Option" shall mean an option granted under Section
6(a) of the Plan, that is not intended to be an Incentive Stock Option.
(j) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(k) "Other Stock-Based Award" shall mean any right granted under Section
6(e) of the Plan.
(l) "Participant" shall mean an Eligible Person designated to be granted an
Award under the Plan.
(m) "Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
(n) "Person" shall mean any individual, corporation, partnership,
association or trust.
(o) "Restricted Stock" shall mean any Share granted under Section 6(c) of
the Plan.
(p) "Restricted Stock Unit" shall mean any unit granted under Section 6(c)
of the Plan evidencing the right to receive a Share (or a cash payment equal to
the Fair Market Value of a Share) at some future date.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934.
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(r) "Shares" shall mean shares of Common Stock, $.01 par value, of the
Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.
(s) "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
Section 3. Administration.
The Plan shall be administered by the Committee. Subject to the terms of
the Plan and applicable law, the Committee shall have full power and authority
to: (i) designate Participants; (ii) determine the type or types of Awards to be
granted to each Participant under the Plan; (iii) determine the number of Shares
to be covered by (or with respect to which payments, rights or other matters are
to be calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock or Restricted Stock
Units; (vi) determine whether, to what extent and under what circumstances
Awards may be exercised in cash, Shares, other securities, other Awards or other
property, or canceled, forfeited or suspended; (vii) determine whether, to what
extent and under what circumstances cash, Shares, other securities, other
Awards, other property and other amounts payable with respect to an Award under
the Plan shall be deferred either automatically or at the election of the holder
thereof or the Committee; (viii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (ix)
establish, amend, suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (x) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon any
Participant, any holder or beneficiary of any Award and any employee of the
Company or any Affiliate.
Section 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(c),
the total number of Shares available for granting Awards under the Plan shall be
2,500,000. If any Shares covered by an Award or to which an Award relates are
not purchased or are forfeited, or if an Award otherwise terminates without
delivery of any Shares, then the number of Shares counted against the aggregate
number of Shares available under the Plan with respect to such Award, to the
extent of any such forfeiture or termination, shall again be available for
granting Awards under the Plan.
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(b) Accounting for Awards. For purposes of this Section 4, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be counted on the
date of grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan. Such Shares may again become available for
granting Awards under the Plan pursuant to the provisions of Section 4(a) of the
Plan, subject to the limitations set forth in Section 4(c) of the Plan.
(c) Adjustments. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or other property) which thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or other
property) subject to outstanding Awards and (iii) the purchase or exercise price
with respect to any Award; provided, however, that the number of Shares covered
by any Award or to which such Award relates shall always be a whole number.
(d) Award Limitations Under the Plan. No Eligible Person may be granted any
Award or Awards, the value of which Awards are based solely on an increase in
the value of the Shares after the date of grant of such Awards, for more than
500,000 Shares, subject to adjustment as provided in the Plan, in any calendar
year. The foregoing annual limitation specifically includes the grant of any
"performance-based" Awards within the meaning of Section 162(m) of the Code.
Section 5. Eligibility.
Any Eligible Person, including any Eligible Person who is an officer or
director of the Company or any Affiliate, shall be eligible to be designated a
Participant; provided, however, that an Incentive Stock Option may only be
granted to full or part-time employees (which term as used herein includes,
without limitation, officers and directors who are also employees) and an
Incentive Stock Option shall not be granted to an employee of an Affiliate
unless such Affiliate is also a "subsidiary corporation" of the Company within
the meaning of Section 424(f) of the Code or any successor provision.
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Section 6. Awards.
(a) Options. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee; provided, however, that such
purchase price for Shares granted as Incentive Stock Options shall not be
less than 100% of the Fair Market Value of a Share on the date of grant of
such Incentive Stock Option.
(ii) Option Term. The term of each Option shall be fixed by the
Committee.
(iii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including, without
limitation, cash, Shares, other securities, other Awards or other property,
or any combination thereof, having a Fair Market Value on the exercise date
equal to the relevant exercise price) in which, payment of the exercise
price with respect thereto may be made or deemed to have been made.
(iv) Reload Options. The Committee may grant "reload" options,
separately or together with another Option, pursuant to which, subject to
the terms and conditions established by the Committee and any applicable
requirements of Rule 16b-3 or any other applicable law, the Participant
would be granted a new Option when the payment of the exercise price of a
previously granted option is made by the delivery of shares of the
Company's Common Stock owned by the Participant pursuant to Section
6(a)(iii) hereof or the relevant provisions of another plan of the Company,
and/or when shares of the Company's Common Stock are tendered or forfeited
as payment of the amount to be withheld under applicable tax laws in
connection with the exercise of an option, which new Option would be an
option to purchase the number of Shares not exceeding the sum of (A) the
number of shares of the Company's Common Stock provided as consideration
upon the exercise of the previously granted option to which such "reload"
option relates and (B) the number of shares of the Company's Common Stock
tendered or forfeited as payment of the amount to be withheld under
applicable tax laws in connection with the exercise of the option to which
such "reload" option relates. "Reload" options may be granted with respect
to options granted under this Plan or any other stock option plan of the
Company or any of its affiliates (which shall explicitly include plans
assumed by the Company in connection with mergers and the like). Such
"reload" options shall have a per share exercise price equal to the Fair
Market Value as of the date of grant of the new Option. Any such reload
options shall be subject to availability of sufficient shares for grant
under the Plan.
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(b) Stock Appreciation Rights. The Committee is hereby authorized to grant
Stock Appreciation Rights to Participants subject to the terms of the Plan and
any applicable Award Agreement. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of (i) the Fair Market Value of one Share on the date of exercise
(or, if the Committee shall so determine, at any time during a specified period
before or after the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as specified by the Committee, which price shall not be less
than 100% of the Fair Market Value of one Share on the date of grant of the
Stock Appreciation Right. Subject to the terms of the Plan and any applicable
Award Agreement, the grant price, term, methods of exercise, dates of exercise,
methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units. The Committee is hereby
authorized to grant Awards of Restricted Stock and Restricted Stock Units to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Restrictions. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a Share
of Restricted Stock or the right to receive any dividend or other right or
property with respect thereto), which restrictions may lapse separately or
in combination at such time or times, in such installments or otherwise as
the Committee may deem appropriate.
(ii) Stock Certificates. Any Restricted Stock granted under the Plan
shall be evidenced by issuance of a stock certificate or certificates,
which certificate or certificates shall be held by the Company. Such
certificate or certificates shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the
restrictions applicable to such Restricted Stock. In the case of Restricted
Stock Units, no Shares shall be issued at the time such Awards are granted.
(iii) Forfeiture; Delivery of Shares. Except as otherwise determined
by the Committee, upon termination of employment (as determined under
criteria established by the Committee) during the applicable restriction
period, all Shares of Restricted Stock and all Restricted Stock Units at
such time subject to restriction shall be forfeited and reacquired by the
Company; provided, however, that the Committee may, when it finds that a
waiver would be in the best interest of the Company, waive in whole or in
part any or all remaining restrictions with respect to Shares of Restricted
Stock or Restricted Stock Units. Shares representing Restricted Stock that
is no longer subject to restrictions shall be delivered to the holder
thereof promptly after the applicable restrictions lapse or are waived.
Upon the lapse or waiver of restrictions and the restricted period relating
to
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Restricted Stock Units evidencing the right to receive Shares, such Shares
shall be issued and delivered to the holders of the Restricted Stock Units.
(d) Performance Awards. The Committee is hereby authorized to grant
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii)
shall confer on the holder thereof the right to receive payments, in whole or in
part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. Subject to the terms of the Plan and
any applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted and the amount of any payment or transfer to be made
pursuant to any Performance Award shall be determined by the Committee.
(e) Other Stock-Based Awards. The Committee is hereby authorized to grant
to Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purpose of the Plan; provided,
however, that such grants must comply with applicable law. Subject to the terms
of the Plan and any applicable Award Agreement, the Committee shall determine
the terms and conditions of such Awards. Shares or other securities delivered
pursuant to a purchase right granted under this Section 6(e) shall be purchased
for such consideration, which may be paid by such method or methods and in such
form or forms (including without limitation, cash, Shares, other securities,
other Awards or other property or any combination thereof), as the Committee
shall determine, the value of which consideration, as established by the
Committee, shall not be less than 100% of the Fair Market Value of such Shares
or other securities as of the date such purchase right is granted.
(f) General.
(i) No Cash Consideration for Awards. Awards shall be granted for no
cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate other than the Plan. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the Company or
any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
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(iii) Forms of Payment under Awards. Subject to the terms of the Plan
and of any applicable Award Agreement, payments or transfers to be made by
the Company or an Affiliate upon the grant, exercise or payment of an Award
may be made in such form or forms as the Committee shall determine
(including, without limitation, cash, Shares, other securities, other
Awards or other property or any combination thereof), and may be made in a
single payment or transfer, in installments or on a deferred basis, in each
case in accordance with rules and procedures established by the Committee.
Such rules and procedures may include, without limitation, provisions for
the payment or crediting of reasonable interest on installment or deferred
payments.
(iv) Limits on Transfer of Awards. No Award and no right under any
such Award shall be transferable by a Participant otherwise than by will or
by the laws of descent and distribution; provided, however, that, if so
determined by the Committee, a Participant may, in the manner established
by the Committee, designate a beneficiary or beneficiaries to exercise the
rights of the Participant and receive any property distributable with
respect to any Award upon the death of the Participant; and provided,
further, except in the case of an Incentive Stock Option, Awards may be
transferable as specifically provided in any applicable Award Agreement or
amendment thereto pursuant to terms determined by the Committee. Except as
otherwise provided in any applicable Award Agreement or amendment thereto
(other than an Award Agreement relating to an Incentive Stock Option),
pursuant to terms determined by the Committee, each Award or right under
any Award shall be exercisable during the Participant's lifetime only by
the Participant or, if permissible under applicable law, by the
Participant's guardian or legal representative. Except as otherwise
provided in any applicable Award Agreement or amendment thereto (other than
an Award Agreement relating to an Incentive Stock Option), no Award or
right under any such Award may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or encumbrance
thereof shall be void and unenforceable against the Company or any
Affiliate.
(v) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee.
(vi) Restrictions; Securities Exchange Listing. All certificates for
Shares or other securities delivered under the Plan pursuant to any Award
or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the Plan or
the rules, regulations and other requirements of the Securities and
Exchange Commission and any applicable federal or state securities laws,
and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. If the
Shares or other securities are traded on a securities exchange, the Company
shall not be required to deliver any Shares or other securities covered by
an Award unless and until such Shares or other securities have been
admitted for trading on such securities exchange.
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Section 7. Amendment and Termination; Adjustments.
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan; provided, however,
that, notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the shareholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be made that,
absent such approval:
(i) would cause Rule 16b-3 or Section 162(m) of the Code to become
unavailable with respect to the Plan;
(ii) would violate the rules or regulations of the NASDAQ National
Market, any other securities exchange or the National Association of
Securities Dealers, Inc. that are applicable to the Company; or
(iii) would cause the Company to be unable, under the Code, to grant
Incentive Stock Options under the Plan.
(b) Amendments to Awards. The Committee may waive any conditions of or
rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as otherwise
herein provided or in the Award Agreement.
(c) Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.
Section 8. Income Tax Withholding; Tax Bonuses.
(a) Withholding. In order to comply with all applicable federal or state
income tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal or state payroll, withholding,
income or other taxes, which are the sole and absolute responsibility of a
Participant are withheld or collected from such Participant. In order to assist
a Participant in paying all or a portion of the federal and state taxes to be
withheld or collected upon exercise or receipt of (or the lapse of restrictions
relating to) an Award, the Committee, in its discretion and subject to such
additional terms and conditions as it may adopt, may permit the Participant to
satisfy such tax obligation by (i) electing to have the Company withhold a
portion of the Shares otherwise to be delivered upon exercise or receipt of (or
the lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount
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of such taxes or (ii) delivering to the Company Shares other than Shares
issuable upon exercise or receipt of (or the lapse of restrictions relating to)
such Award with a Fair Market Value equal to the amount of such taxes. The
election, if any, must be made on or before the date that the amount of tax to
be withheld is determined.
(b) Tax Bonuses. The Committee, in its discretion, shall have the
authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to) Awards
in order to provide funds to pay all or a portion of federal and state taxes due
as a result of such exercise or receipt (or the lapse of such restrictions). The
Committee shall have full authority in its discretion to determine the amount of
any such tax bonus.
Section 9. General Provisions.
(a) No Rights to Awards. No Eligible Person, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to different Participants.
(b) Delegation. The Committee may delegate to one or more officers of the
Company or any Affiliate or a committee of such officers the authority, subject
to such terms and limitations as the Committee shall determine, to grant Awards
to Eligible Persons who are not officers or directors of the Company for
purposes of Section 16 of the Securities Exchange Act of 1934, as amended.
(c) Award Agreements. No Participant will have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company.
(d) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, and such arrangements may
be either generally applicable or applicable only in specific cases.
(e) No Right to Employment, Etc. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ, or as
giving a Non-Employee Director the right to continue as a Director, of the
Company or any Affiliate. In addition, the Company or an Affiliate may at any
time dismiss a Participant from employment, or terminate the term of a
Non-Employee Director, free from any liability or any claim under the Plan,
unless otherwise expressly provided in the Plan or in any Award Agreement.
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(f) Governing Law. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Minnesota.
(g) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(i) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash shall be paid in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated or otherwise
eliminated.
(j) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
(k) Section 16 Compliance. The Plan is intended to comply in all respects
with Rule 16b-3 or any successor provision, as in effect from time to time and
in all events the Plan shall be construed in accordance with the requirements of
Rule 16b-3. If any Plan provision does not comply with Rule 16b-3 as hereafter
amended or interpreted, the provision shall be deemed inoperative. The Board of
Directors, in its absolute discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan with respect to persons
who are officers or directors subject to Section 16 of the Securities and
Exchange Act of 1934, as amended, without so restricting, limiting or
conditioning the Plan with respect to other Participants.
Section 10. Effective Date of the Plan.
The Plan shall be effective as of April 9, 1999, subject to approval by the
Company's shareholders in accordance with applicable law.
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Section 11. Term of the Plan.
New Awards shall only be granted under the Plan during a 10-year period
beginning on the effective date of the Plan. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond the end of such 10-year period, and the authority of
the Committee provided for hereunder with respect to the Plan and any Awards,
and the authority of the Board of Directors of the Company to amend the Plan,
shall extend beyond the end of such period.
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EXHIBIT 10.3
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.
(e) "Company" means ShowCase Corporation, a Minnesota corporation, and
its successors by merger or consolidation as contemplated by Article XI
herein.
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(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 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.
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(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 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.
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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 whole shares of Common Stock 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 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
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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 whole 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, 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
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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.
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.
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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.
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.
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
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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.
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
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<PAGE>
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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EXHIBIT 10.4
LEASE AGREEMENT
between
MORTENSON PROPERTIES, INC. (Landlord)
and
SHOWCASE CORPORATION (Tenant)
November 30, 1998
<PAGE>
LEASE SUMMARY
1. Landlord: Mortenson Properties, Inc., a Minnesota corporation
2. Tenant: ShowCase Corporation, a Minnesota corporation
3. Premises: A portion of Building 662, 4111 41st Street N.W., Rochester, MN
4. Rentable Square Feet: 26,716
5. Usable Square Feet: 21,950
6. Commencement Date: June 26, 1999
8. Expiration Date: June 30, 2004
9. Rent Commencement
Date: June 26, 1999
10. Initial Base Rent
(Annually): $243,115.60
11. Initial Base Rent
(Monthly): $20,259.64
13. Tenant's Pro Rata
Share of the Building: 25.52%
14. Option to Renew: 1 Option for 5 years
EXHIBITS:
A - Premises
B - Legal Description
C - Estoppel and Commencement Date Certificate
D - Approved Signage
E - Rules and Regulations
F - Plans and Specifications for Tenant Improvements
Note: This Lease Summary does not, in any way, modify the terms of the lease,
but rather is for information purposes only.
<PAGE>
BUILDING LEASE
THIS LEASE (the Lease) is made this 30th day of November, 1998, between
MORTENSON PROPERTIES, INC., a Minnesota corporation (Landlord), and SHOWCASE
CORPORATION, a Minnesota corporation (Tenant).
1. Premises: Landlord hereby leases to Tenant those certain premises
designated on the Plans attached hereto as Exhibit A and incorporated herein by
this reference (the Premises), consisting of a total of approximately 26,716
square feet of space (BOMA rentable area) on the third floor of the building
located at 4111 41st Street, N.W., Rochester, MN (hereinafter the Building),
located on the real property more particularly described on Exhibit B attached
hereto and incorporated herein by this reference, together with a non-exclusive
right, subject to the provisions hereof, to use all appurtenances thereunto,
including, but not limited to, sidewalks, drives, parking areas and any other
external areas designated by Landlord for use by tenants of the Building (the
Building and real property hereinafter collectively sometimes called the
Building Complex). For purposes of this Lease, "BOMA Rentable Area" shall mean
and refer to the measuring formula for full floor tenants defined in Building
Owners and Managers Association (BOMA) publication Z65.1-1980, a revision of
Z65.1-1972, together with all updated revisions thereof. This Lease is subject
to the terms, covenants and conditions set forth herein and Tenant and Landlord
each covenant as a material part of the consideration for this Lease to keep and
perform each and all of said terms, covenants and conditions to be kept and
performed by them.
2. Term:
(a) The initial term (the Initial Term) of this Lease shall be for a term
of five (5) years and six (6) days commencing at 12:01 a.m. on June 26, 1999
(the Commencement Date), and terminating at 12:00 midnight on June 30, 2004 (the
Expiration Date), unless sooner terminated pursuant to the terms hereof.
(b) If the Initial Term begins other than on the first day of the month,
Tenant shall pay proportionate rent at the same monthly rate set forth herein
(also in advance) for such partial month and all other terms and conditions of
this Lease shall be in force and effect during such partial month but the end of
the Initial Term hereof shall not be adjusted or extended due to any change in
the Commencement Date. Landlord and Tenant shall execute an Estoppel and
Commencement Date Certificate in the form attached hereto as Exhibit C, within
ten (10) days of the date the term commences, certifying as to the actual
commencement and expiration dates of the term, the rent commencement date, if
different, and such other matters as may be reasonably required by Landlord.
(c) Tenant may renew this Lease for one additional term of five (5) years
(the Additional Term) in the manner provided for herein. Tenant may extend the
term of this Lease provided (i) Tenant delivers written notice (a Renewal
Notice) of such extension to Landlord at least nine (9) months prior to the
expiration of the Initial Tenn and (ii) Tenant is not in default hereunder as of
the date of such notice. If Tenant elects an Additional Term, all of the terms
and conditions of this Lease shall govern the Additional Term, except that Base
Rent shall be adjusted pursuant to
<PAGE>
Paragraph 3(b) hereof. All references to the "term" of this Lease refers to the
Initial Term and any Additional Term elected by Tenant.
3. Rent:
(a) Tenant shall pay to Landlord as Base Rent, an annual rent for the
Premises (Base Rent) during the Initial Term in the amounts set forth below:
Base Rent Schedule
Period Rate Annual Base Rent Monthly Installment
------ ---- ---------------- -------------------
June 26, 1999 to $9.10 per rentable $243,115.60 $20.259.64
December 31, 2001 square foot
January 1, 2001 to $9.60 per rentable $265,473.60 $21,372.80
Expiration Date square foot
The foregoing amounts shall be adjusted, if necessary, to reflect the actual
rentable area of the Premises.
All installments of Base Rent shall be payable in advance, on the first
(1st) day of each calendar month during the term hereof. Rent for the first and
last months of the term hereof shall be prorated based upon the number of days
during each of said months that the Lease term was in effect. One monthly
installment of Base Rent shall be due and payable on the date of execution of
this Lease by Tenant. All Base Rent shall be paid without notice, demand,
deduction or offset, at the offices of Landlord or to such other person or at
such other place as Landlord may designate in writing. Tenant shall pay to
Landlord as "Additional Rent" all other sums due under this Lease.
(b) The annual Base Rent for the Additional Term, if elected by Tenant
hereunder, shall be adjusted effective as of the first day of the Additional
Tenn to the annual "Market Rent" of the Premises. For purposes of this Lease,
"Market Rent" means the prevailing market rent for the Premises determined as
follows: For purposes of this Lease "Market Rent" shall be the amount for which
the Premises could be leased for the Additional Term in an arm's-length
transaction upon the same terms and conditions (other than Basic Rent) as are
otherwise contained in this Lease, assuming both the Landlord and Tenant are
prudent persons willing to enter into such a Lease but under no compulsion to do
so. Landlord and Tenant shall, within thirty (30) days after the date Landlord
receives a Renewal Notice from Tenant, attempt to agree between themselves as to
the Market Rent of the Premises for purposes of establishing the Base Rent for
the Additional Term. If the parties are unable to agree upon the Market Rent
within said thirty (30) days, then the Market Rent shall be determined by an
appraisal process. The appraisal process shall be completed by three reputable
real estate professionals, each of whom shall (i) have no interest in the
business of either party hereto; (ii) have at least five (5) years of experience
appraising commercial properties similar to the
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<PAGE>
Premises; and (iii) be a member of the American Institute of Real Estate
Appraisers with the designation of "MAI." One appraiser shall be appointed by
Tenant and the second appraiser shall be appointed by Landlord. The third
appraiser shall be appointed by the first two appraisers. If, for any reason the
first two appraisers are unable to agree on the third appraiser within ten (10)
days after the appointment of the second appraiser or if either party refuses or
neglects to appoint an appraiser as herein provided within ten (10) days after
the appointment of the first appraiser, then such third appraiser or other
appraiser whose appointment was not made as previously specified shall be
appointed by the President of the Minnesota chapter of the American Institute of
Real Estate Appraisers, or such other such bodies exercising similar functions.
Such appointment shall be made within ten (10) days after the request is
submitted to the President. The appraisers shall submit their written
determinations of Market Rent within thirty (30) days after the appointment of
the third appraiser.
The determinations of all three appraisers shall be issued in sealed
envelopes and shall be opened simultaneously. If the determinations of at least
two of the appraisers are identical in amount, said amount shall be deemed to be
the Market Rent. If the determinations of all three appraisers are different in
amount, the Market Rent shall be determined as follows:
(i) If neither the highest value nor the lowest value differs from the
middle appraised market value by more than 15% of such middle appraised value,
then the Market Rent shall be deemed to be average of the three appraisals; and
(ii) If either the highest value or the lowest value differs from the
middle appraised value by more than 15% of such middle appraised value, then the
Market Rent shall be deemed to be the average of the middle appraised value and
the appraised value closest in amount to said middle value.
Upon the completion of the process, the Market Rent as determined above
shall constitute the Base Rent for the Additional Term. Each party shall bear
its own expense in connection with the appraisal process, except that the fees
for all of the appraisers shall be split equally between Landlord and Tenant.
Notwithstanding any other term or condition of this Lease to the contrary, in no
event shall the Market Rent as determined by the appraisers set forth above be
less than the Base Rent as of the expiration of the Initial Term.
4. Rent Adjustment:
(a) The following terms shall have the following meanings with respect to
the provisions of this Paragraph 4:
(1) "Building Rentable Area" shall mean all rentable space available for
lease in the Building, calculated on the basis set forth in BOMA Publication
265.1-1980. If there is a significant change in the aggregate Building Rentable
Area, of a permanent nature, as a result of an
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<PAGE>
addition to the Building, partial destruction thereof or similar circumstance,
Landlord's Accountants (as herein defined) shall determine and make an
appropriate adjustment to the provisions herein.
(2) "Tenant's Pro Rata Share" shall mean a fraction, the numerator of which
is the BOMA Rentable Area of the Premises occupied by Tenant (i.e., 26,716
square feet) and the denominator of which is the Building Rentable Area (i.e.,
104,698.60 square feet), and is equal to 25.52%.
At such time, if ever, any space is added to or subtracted from the
Premises pursuant to the terms of this Lease, Tenant's Pro Rata Share shall be
increased or decreased accordingly.
(3) "Operating Expenses" shall mean:
A. All operating expenses of any kind or nature which are necessary,
ordinary or customarily incurred with respect to the operation and
maintenance of the Building as determined in accordance with generally
accepted accounting principles and shall include, but not be limited to:
(i) Costs of supplies, including but not limited to the cost of
"relamping" all tenant lighting as the same may be required from time
to time;
(ii) Costs incurred in connection with obtaining and providing
energy for the Building, including but not limited to costs of
propane, butane, natural gas, steam, electricity, solar energy and
fuel oils, coal or any other energy sources as well as costs for
heating, ventilation, and air conditioning services (HVAC);
(iii) Costs of water and sanitary and storm drainage services;
(iv) Costs of janitorial and security services, if any, provided
to the common areas of the Building;
(v) Costs of general maintenance and repairs, including costs
under HVAC and other mechanical maintenance contracts; and repairs and
replacements of equipment used in connection with such maintenance and
repair work;
(vi) Costs of maintenance and replacement of landscaping; and
costs of maintenance, repair, striping and seal coating of parking
areas, common areas, plazas and other areas used by tenants of the
Building, including trash and snow removal;
(vii) Insurance premiums, including fire and all-risk coverage,
together with loss of rent endorsement; public liability insurance;
and any other insurance carried by Landlord on the Building or any
component parts thereof,
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(viii) Labor costs, including wages and other payments, costs to
Landlord of workmen's compensation and disability insurance, payroll
taxes, welfare fringe benefits and all legal fees and other costs or
expenses incurred in resolving any labor disputes;
(ix) Professional building management fees in amounts consistent
with building management fees charged for similar buildings in
Rochester, Minnesota;
(x) Legal, accounting, inspection and other consultation fees
(including, without limitation, fees charged by consultants retained
by Landlord for services that are designed to produce a reduction in
Operating Expenses or reasonably to improve the operation, maintenance
or state of repair of the Building) incurred for the normal prudent
operation of the Building;
(xi) The costs of capital improvements and structural repairs and
replacements made in or to the Building or the cost of any machinery
or equipment installed in the Building in order to conform to changes,
subsequent to the Lease Commencement Date, in any applicable laws,
ordinances, rules, regulations or orders of any governmental or
quasi-governmental authority having jurisdiction over the Building
(herein, Required Capital Improvement); the costs of any capital
improvements and structural repairs and replacements designed
primarily to reduce Operating Expenses (herein, Cost Savings
Improvements); and all other capital improvements and structural
repairs and replacements (Other Capital Improvements) reasonably
necessary to permit Landlord to maintain the Building as a first class
office building. The expenditures for Other Capital Improvements,
Required Capital Improvements and Cost Savings Improvements shall be
amortized over the useful life of such capital improvement or
structural repair or replacement (as reasonably determined by
Landlord's accountants); and
(xiii) Any other expense which under generally accepted
accounting principles would be considered a normal maintenance or
operating expense.
If Landlord selects an accrual accounting basis for calculating
Operating Expenses, Operating Expenses shall be deemed to have been paid
when such expenses have accrued in accordance with generally accepted
accounting principles, provided a switch from cash to accrual accounting
shall not result in Tenant paying twice for any expenses in any year.
Landlord may incur Operating Expenses for the Building Complex as whole and
prorate such Building Complex Operating Expenses to the Building in a
reasonable manner.
B. Expressly exclude Landlord's income taxes; leasing commissions,
legal expenses, advertising and promotional expenses; interest on debt or
amortization payments on any mortgages or deeds of trust; costs of repairs
or other work occasioned by fire, windstorm or other casualty to the extent
of insurance proceeds received; and any other expense which under generally
accepted accounting principles would not be considered a normal maintenance
or operating expense, except as otherwise specifically provided herein.
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(4) "Real Estate Taxes" shall mean all real property taxes and assessments
levied against the Building by any governmental or quasi-governmental authority,
including any taxes, assessments, surcharges, or service or other fees of a
nature not presently in effect which shall hereafter be levied on the Building
as a result of the use, ownership or operation of the Building or for any other
reason, whether in lieu of or in addition to any current real estate taxes and
assessments; provided, however, that any taxes which shall be levied on the
rentals of the Building shall be determined as if the Building were Landlord's
only property and provided further, that in no event shall the term "Taxes and
Assessments", as used herein, include any federal, state or local income taxes
levied or assessed on Landlord, unless such taxes are a specific substitute for
real property taxes; such term shall, however, include gross taxes on rentals
and expenses incurred by Landlord for tax consultants and in contesting the
amount or validity of any such Taxes or Assessments (all of the foregoing are
collectively referred to herein as Taxes); provided expenses for tax consultants
and for contesting the amount or validity of such Taxes or Assessments charged
to Tenant shall not exceed the savings achieved. "Assessments" shall include any
and all so-called special assessments, license tax, business license fee,
business license tax, commercial rental tax, levy, charge or tax imposed by any
authority having the direct power to tax, including any city, county, state or
federal government, or any school, agricultural, lighting, water, drainage or
other improvement or special district thereof, against the Premises or the
Building, or against any legal or equitable interest of Landlord therein. For
the purposes of this Lease, any special assessment shall be deemed payable in
maximum number of installments as is permitted by law, whether or not actually
so paid.
(b) It is hereby agreed that Tenant shall pay to Landlord as Additional
Rent during each calendar year during the term hereof an estimate of Tenant's
Pro Rata Share of Operating Expenses for the calendar year and an estimate of
Tenant's Pro Rata Share of Real Estate Taxes for the calendar year, as
reasonably estimated by Landlord, payable monthly, at the rate of one twelfth
(1/12) thereof, on the same date and at the same place Base Rent is payable,
with an adjustment to be made between the parties at a later date as hereinafter
provided. Landlord shall deliver to Tenant, as soon as practicable following the
end of any calendar year, an estimate of the Operating Expenses and Real Estate
Taxes for the new calendar year (the Budget Sheet). Until receipt of the Budget
Sheet, Tenant shall continue to pay its monthly Tenant's Pro Rata Share of
Operating Expenses and Real Estate Taxes based upon the estimate for the
preceding calendar year. To the extent that the Budget Sheet reflects an
estimate of Tenant's Pro Rata Share of Operating Expenses and Real Estate Taxes
for the new calendar year greater than the amount actually paid to the date of
receipt of the Budget Sheet for the new calendar year, Tenant shall pay such
amount to Landlord within thirty (30) days of receipt of the Budget Sheet. Upon
receipt of the Budget Sheet, Tenant shall thereafter pay the amount of its
monthly Tenant's Pro Rata Share of Operating Expenses and Real Estate Taxes as
set forth in the Budget Sheet. As soon as practicable following the end of any
calendar year, Landlord shall submit to Tenant a statement in reasonable detail
describing the computations of the Operating Expenses and Real Estate Taxes,
setting forth the exact amount of Tenant's Pro Rata Share of Operating Expenses
and Real Estate Taxes for the calendar year just completed (the Statement), and
the difference, if any, between the actual Tenant's Pro Rata Share of Operating
Expenses and Real Estate Taxes for the calendar year just completed and the
estimated amount of Tenant's Pro Rata
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Share of Operating Expenses and Real Estate Taxes paid by Tenant to Landlord.
Notwithstanding the foregoing, Landlord's failure to deliver the Statement to
Tenant shall in no way serve as a waiver of Landlord's rights under this
Paragraph. To the extent that the actual Tenant's Pro Rata Share of Operating
Expenses and Real Estate Taxes for the period covered by the Statement is higher
than the estimated Tenant's Pro Rata Share of Operating Expenses and Real Estate
Taxes which Tenant previously paid during the calendar year just completed,
Tenant shall also pay to Landlord such balance within thirty (30) days following
receipt of the Statement from Landlord. To the extent that the actual Tenant's
Pro Rata Share of Operating Expenses and Real Estate Taxes for the period
covered by the Statement is less than the estimated Tenant's Pro Rata Share of
Operating Expenses and Real Estate Taxes which Tenant previously paid during the
calendar year just completed, Landlord shall promptly pay the excess in cash to
Tenant.
(c) If the Lease term hereunder covers a period of less than a full
calendar year during the first or last calendar years of the term hereof,
Tenant's Pro Rata Share of Operating Expenses and Real Estate Taxes for such
partial year shall be calculated by proportionately reducing the Operating
Expenses and Real Estate Taxes to reflect the number of months in such year
during which Tenant leased the Premises (the Adjusted Operating Expenses and
Adjusted Real Estate Taxes). The Adjusted Operating Expenses and Adjusted Real
Estate Taxes shall then be compared with the actual Operating Expenses and
actual Real Estate Taxes for said partial year to determine the amount, if any,
of any increases in the actual Operating Expenses and Real Estate Taxes for such
partial year over the Adjusted Operating Expenses and Adjusted Real Estate
Taxes. Tenant shall pay Tenant's Pro Rata Share of any such increases within ten
(10) days following receipt of notice thereof.
(d) Tenant shall have the right at its own expense and at a reasonable time
(after written notice to Landlord) within one hundred eighty (180) days after
receipt of the Statement to audit Landlord's books relevant to the Additional
Rent due under this Paragraph 4. If Tenant does not audit Landlord's books and
deliver the results thereof to Landlord within said one hundred eighty (180) day
period, the terms and amounts set forth in the Statement shall be deemed
conclusive and final and Tenant shall have no further right to adjustment. If
Tenant's examination reveals that an error has been made in Landlord's
determination of Tenant's Pro Rata Share of Operating Expenses and Real Estate
Taxes and Landlord agrees with such determination, then the amount of such
adjustment shall be payable by Landlord or Tenant, to the other party as the
case may be. If Tenant's examination reveals an error has been made in
Landlord's determination of Tenant's Pro Rata Share of Operating Expenses and
Real Estate Taxes, and Landlord disagrees with the results thereof, Landlord
shall have thirty (30) days to obtain an audit from an accountant of its choice
to determine Tenant's Pro Rata Share of Operating Expenses and Real Estate
Taxes. If Landlord's accountant and Tenant's accountant are unable to reconcile
their audits, both accountants shall mutually agree upon a third accountant,
whose determination of Tenant's Pro Rata Share of Operating Expenses and Real
Estate Taxes shall be conclusive. If the amount of error by Landlord is
determined to be five percent (5%) or more, the reasonable costs of the three
audits made pursuant to this subparagraph shall be paid by Landlord. In the
event the amount of error by Landlord is determined to be less than five percent
(5%), the reasonable costs of the three audits made pursuant to this
subparagraph shall be paid by Tenant.
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(e) Landlord's failure during the Lease term to prepare and deliver any
statements or bills, or Landlord's failure to make a demand under this Paragraph
or under any other provision of this Lease shall not in any way be deemed to be
a waiver of, or cause Landlord to forfeit or surrender its rights to collect any
items of Additional Rent which may have become due pursuant to this Paragraph
during the term of this Lease. Tenant's liability for all Additional Rent due
under this Lease shall survive the expiration or earlier termination of this
Lease.
(f) Notwithstanding any provision herein to the contrary, if the Building
is not fully occupied during any full or partial calendar year, Operating
Expenses shall be adjusted so that the Operating Costs shall be computed for
such year as though the Building was fully occupied during such year.
5. Character of Occupancy:
(a) The Premises are to be used for general office purposes and for no
other purpose without the prior written consent of Landlord, which consent shall
not be unreasonably withheld.
(b) Tenant shall not suffer nor permit the Premises nor any part thereof to
be used in any manner, nor anything to be done therein, nor suffer or permit
anything to be brought into or kept therein, which would in any way (i) make
void or voidable any fire or liability insurance policy then in force with
respect to the Building Complex, (ii) make unobtainable from reputable insurance
companies authorized to do business in Minnesota any fire insurance with
extended coverage, or liability, elevator, boiler or other insurance required to
be furnished by Landlord under the terms of any lease or mortgage to which this
Lease is subordinate at standard rates, (iii) cause or in Landlord's reasonable
opinion be likely to cause physical damage to the Building Complex or any part
thereof, (iv) constitute a public or private nuisance, (v) impair, in the
reasonable opinion of Landlord, the exterior appearance of the Building Complex,
(vi) discharge objectionable fumes, vapors or odors into the Building air
conditioning system or into the Building flues or vents not designed to receive
them or otherwise in such manner as may unreasonably offend other occupants of
the Building, (vii) impair or interfere with any of the Building services or
impair or interfere with the use of any of the other areas of the Building by
the other tenants or occupants of the Building Complex, any such impairment or
interference to be based upon the reasonable judgment of Landlord, (viii) create
waste in, on or around the Premises, Building, or Building Complex, or (ix) make
any noise or set up any vibration which will disturb other tenants, except in
the course of permitted repairs or alterations at times permitted by Landlord.
(c) Tenant shall not use the Premises nor permit anything to be done in or
about the Premises or Building Complex which will in any way conflict with any
law, statute, ordinance, protective covenants affecting the Building Complex or
governmental or quasi-governmental rules or regulations now in force or which
may hereafter be enacted or promulgated. Tenant shall give written notice within
five (5) days from receipt thereof to Landlord of any notice it receives of the
violation of any law or requirement of any public authority with respect to the
Premises or the use
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or occupation thereof. Landlord shall give prompt notice to Tenant of any notice
it receives relative to the violation by Tenant of any law or requirement of any
public authority with respect to the Premises or the use or occupation thereof.
6. Services and Utilities:
(a) Landlord agrees, without charge except as provided herein, and in
accordance with standards from time to time prevailing for similar office
buildings in the Rochester area, to furnish water to the Building for use in
lavatories and drinking fountains and to the Premises; during ordinary business
hours (at least the hours of 7:00 a.m. to 7 p.m. Monday through Saturday) to
furnish such heated or cooled air to the Premises as may be reasonably required
for the comfortable use and occupancy of the Premises provided that Tenant
complies with the recommendations of Landlord's engineer or other duly
authorized representative, regarding occupancy and use of the Premises, and
during ordinary business hours to cause electric current to be supplied for
lighting the Premises and public halls.
(b) Landlord shall provide electricity for normal office purposes including
but not limited to fluorescent and incandescent lighting, including task and
task ambient lighting systems and for normal office equipment including but not
limited to duplicating (reproduction) machines, communications and audio visual
equipment, vending machines, portable computers (provided they do not require
any significant additional voltage or special electrical requirements),
executive kitchen equipment and internal communication systems (which may
include piped-in music). To the extent that electric current is utilized in
excess of the amounts indicated above, Tenant's rent shall be increased from
time to time by Landlord in such amounts to cover the cost of providing such
increased use. Landlord shall have the right, if it determines based on its own
judgment that Tenant is using electric current for purposes other than those
described above or for other than normal office use, to require Tenant to
install a check meter to determine the amount which Tenant is utilizing. The
cost of such excess usage, and check meter, including but not limited to
monitoring, installation and repair thereof, shall be paid by Tenant.
(c) If Tenant requires water in excess of that usually furnished or
supplied for use in the Premises as general office space, Tenant agrees to pay
to Landlord such amounts as Landlord determines are necessary to cover the costs
of such increased use of water, including, but not limited to, the cost of
installation, monitoring, maintenance and repair of any check meter or other
instrument necessary to measure the use of additional water.
(d) Tenant agrees that Landlord shall not be liable for failure to supply
any heating, air conditioning, elevator, electrical, lighting or other services
during any period when Landlord uses reasonable diligence to supply such
services, or during any period Landlord is required to reduce or curtail such
services pursuant to any applicable laws, rules or regulations, now or hereafter
in force or effect, it being understood and agreed to by Tenant that Landlord
may discontinue, reduce or curtail such services, or any of them at such times
as it may be necessary by reason of accident, unavailability of employees,
repairs, alterations, improvements, strikes, lockouts, riots, acts of God,
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application of applicable laws, statutes, rules and regulations, or due to any
other happening beyond the reasonable control of Landlord. In the event of any
such interruption, reduction or discontinuance of Landlord's services, Landlord
shall not be liable for damages to persons or property as a result thereof, nor
shall the occurrence of any such event in any way be construed as an eviction of
Tenant or cause or permit an abatement, reduction or setoff of rent, or operate
to release Tenant from any of Tenant's obligations hereunder; provided Landlord
shall use its best efforts to restore service if the interruption is in lines or
pipes controlled by Landlord and the cause of the interruption was caused or
controlled by Landlord.
(e) Whenever heat generating machines or equipment are used by Tenant in
the Premises which affect the temperature otherwise maintained by the air
conditioning system, Landlord reserves the right to install supplementary air
conditioning units in the Premises in the event Landlord's independent
consulting engineer determines same are necessary as a result of Tenant's use of
lights or equipment which generate heat loads in excess of those for which the
HVAC system is designed and the cost therefor, including the cost of
installation, operation and maintenance thereof, shall be paid by Tenant to
Landlord upon demand by Landlord.
(f) If Tenant has any special or additional electrical or mechanical
requirements related to its use of the Premises, any such electrical or
mechanical equipment must be located within the Premises. The foregoing shall in
no way be construed as granting to Tenant additional rights to use any such
special or additional electrical or mechanical equipment in its Premises without
the prior written consent of Landlord. Any additional cost or expense related to
or resulting from such electrical or mechanical requirements shall be the sole
obligation of Tenant.
(g) If Tenant requires HVAC service beyond the ordinary business hours set
forth above (hereafter After Hours Usage), such service must be requested from
the Building manager at least twenty-four (24) hours prior thereto. Tenant shall
reimburse Landlord, as Additional Rent, for all costs and expenses for After
Hours Usage in accordance with rates reasonably promulgated by Landlord from
time to time. Notwithstanding the foregoing, if in Landlord's reasonable
determination, Tenant's demand for After Hours Usage is or becomes excessive or
sufficiently frequent as to warrant the same, Landlord may install, at Tenant's
expense, separate meters to monitor or control Tenant's After Hours Usage, with
all costs for the installation, maintenance and repair of such meter to be paid
by Tenant.
7. Quiet Enjoyment: Subject to the provisions of this Lease, Landlord
covenants that Tenant on paying the rent and performing the covenants of this
Lease on its part to be performed shall and may peacefully and quietly have,
hold and enjoy the Premises for the term of this Lease. Landlord shall not be
responsible for the acts or omissions of any other tenant or third party not
under Landlord's control which may interfere with Tenant's use and enjoyment of
the Premises. In the event of any transfer or transfers of Landlord's interest
in the Premises or in the real property of which the Premises are a part, other
than a transfer for security purposes only, the transferor shall be
automatically relieved of any and all obligations and liabilities on the part of
Landlord accruing from and after the date of such transfer.
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8. Maintenance and Repairs:
(a) Prior to the Commencement Date of this Lease, Landlord shall, at its
expense (and without including the expense for same within the Operating
Expenses for the Building) upgrade the first level entry area and corridor with
new carpeting and wall coverings. Except as otherwise specifically provided for
herein, Landlord is under no obligation to make any other improvements or
alternations to the Building or the Premises prior to Tenant's occupancy.
(b) Notwithstanding any other provisions of this Lease, Landlord shall
repair and maintain in good condition the structural portions of the Building,
including the elevators, plumbing, air conditioning, heating and electrical
systems installed or furnished by Landlord, unless such maintenance and repairs
are caused in part or in whole by the act, neglect, fault or omission of Tenant,
its agents, servants, employees, licensees or invitees, in which case Tenant
shall pay to Landlord, on demand, the cost of such maintenance and repairs less
the amount of any insurance proceeds received by Landlord on account thereof, if
applicable. Landlord shall also maintain and keep in good order and repair the
Building roof; the curtain wall, including all glass connections at the
perimeter of the Building; all exterior doors, including any exterior plate
glass within the Building; the Building ventilating systems; elevators;
escalators; Building telephone and electrical closets; public portions of the
Building or Building Complex, including but not limited to any balconies,
landscaping, walkways, and upper floor lobbies and corridors, and interior
portions of the Building above and below grade which are not covered by leases.
Landlord, at its expense (which expense shall not be included in the Operating
Expenses for the Building), shall cause the Building to comply with the ADA.
Such obligation shall not extend to the Premises, it being the sole
responsibility of Tenant to satisfy the ADA with respect to the premises.
(c) Tenant, at Tenant's sole cost and expense, except for services
furnished by Landlord pursuant to Paragraph 6 hereof, shall maintain, in good
order, condition and repair, the Premises, including the interior surfaces of
the ceilings (if damaged or discolored due in whole or in part to the act,
neglect, omission or fault of Tenant), walls and floors, all doors, interior
glass partitions or glass surfaces (not exterior windows) and pipes, electrical
wiring, switches, fixtures and other special items, subject to the provisions of
Paragraph 14 hereof. Tenant shall provide all necessary cleaning and janitorial
services for the Premises. If Tenant fails to so maintain the Premises in good
order, condition and repair, Landlord shall give Tenant notice to do such acts
as are reasonably required to maintain the Premises. If Tenant fails to promptly
commence such work and diligently pursue it to completion, then Landlord shall
have the right, but shall not be required, to do such acts and expend such funds
at the expense of Tenant as are reasonably required to perform such work.
Landlord shall have no liability to Tenant for any damage, inconvenience or
interference with the use of the Premises by Tenant as a result of performing
any such work.
(d) Landlord and Tenant shall each do all acts required to comply with all
applicable laws, ordinances, regulations and rules of any public authority
relating to their respective maintenance obligations as set forth herein.
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9. Alterations and Additions:
(a) Tenant shall make no new alterations, additions or improvements to the
Premises or any part thereof without obtaining the prior written consent of
Landlord, which consent shall not be unreasonably withheld, delayed or denied.
Landlord may impose, as a condition to such consent, and at Tenant's sole cost,
such reasonable requirements as Landlord may deem necessary in its reasonable
judgment, including without limitation, the manner in which the work is done, a
right of approval of the contractor by whom the work is to be performed and the
times during which the work is to be accomplished, approval of all plans and
specifications and the procurement of all licenses and permits. Landlord shall
be entitled to post notices on and about the Premises with respect to Landlord's
non-liability for mechanics' liens and Tenant shall not permit such notices to
be defaced or removed. Tenant further agrees not to connect any apparatus,
machinery or device to the Building systems, including electric wires, water
pipes, fire safety, heating and mechanical systems, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld, delayed
or denied.
(b) All alterations, improvements and additions to the Premises, including,
by way of illustration but not by limitation, all counters, screens, grilles,
special cabinetry work, partitions, paneling, carpeting, drapes or other window
coverings and light fixtures, shall be deemed a part of the real estate and the
property of Landlord and shall remain upon and be surrendered with the Premises
as a part thereof without molestation, disturbance or injury at the end of the
Lease term, whether by lapse of time or otherwise, unless Landlord, by notice
given to Tenant no later than fifteen (15) days prior to the end of the term,
shall elect to have Tenant remove all or any of such alterations, improvements
or additions and in such event, Tenant shall promptly remove, at its sole cost
and expense, such alterations, improvements and additions and restore the
Premises to the condition in which the Premises were prior to the making of the
same, reasonable wear and tear excepted. Any such removal, whether required or
permitted by Landlord, shall be at Tenant's sole cost and expense, and Tenant
shall restore the Premises to the condition in which the Premises were prior to
the making of the same, reasonable wear and tear excepted. All movable
partitions, machines and equipment which are installed in the Premises by or for
Tenant, without expense to Landlord, and can be removed without structural
damage to or defacement of the Building or the Premises, and all furniture,
furnishings and other articles of personal property owned by Tenant and located
in the Premises (all of which are herein called Tenant's Property) shall be and
remain the property of Tenant and may be removed by it at any time during the
term of this Lease. However, if any of Tenant's Property is removed, Tenant
shall repair or pay the cost of repairing any damage to the Building or the
Premises resulting from such removal. All additions or improvements which are to
be surrendered with the Premises shall be surrendered with the Premises, as a
part thereof, at the end of the term or the earlier termination of this Lease.
(c) If Tenant utilizes persons other than Landlord to perform any
alterations, repairs, modifications or additions to the Premises, then prior to
the commencement of any such work, Tenant shall deliver to Landlord certificates
issued by insurance companies qualified to do business in the State of Minnesota
evidencing that workmen's compensation, public liability insurance and
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property damage insurance, all in amounts, with companies and on forms
satisfactory to Landlord, are in force and maintained by all such contractors
and subcontractors engaged by Tenant to perform such work. All such policies
shall name Landlord as an additional insured and shall provide that the same may
not be canceled or modified without thirty (30) days prior written notice to
Landlord.
(d) Tenant, at its sole cost and expense, shall cause any permitted
alterations, decorations, installations, additions or improvements in or about
the Premises to be performed in compliance with all applicable requirements of
insurance bodies having jurisdiction, and in such manner as not to interfere
with, delay, or impose any additional expense upon Landlord in the construction,
maintenance or operation of the Building, and so as to maintain harmonious labor
relations in the Building.
10. Entry by Landlord:
(a) Landlord and its agents shall have the right to enter the Premises at
all reasonable times and upon reasonable notice for the purpose of examining or
inspecting the same, to supply any services to be provided by Landlord
hereunder, to show the same to prospective purchasers of the Building, to make
such alterations, repairs, improvements or additions to the Premises or to the
Building as Landlord may deem necessary or desirable, and to show the same to
prospective tenants of the Premises. Subject to reasonable requirements
specified by Tenant in order to protect the confidentiality of Tenant's patients
and patient's medical records, Landlord and its agent may enter the Premises at
all times and without advance notice for the purpose of responding to an actual
or apparent emergency. If, during the last sixty (60) days of the term hereof,
Tenant shall have removed substantially all of its property from the Premises,
Landlord may immediately enter and alter, renovate and redecorate the Premises
without elimination or abatement of rent or incurring liability to Tenant for
any compensation.
(b) Tenant shall be entitled to two (2) sets of keys to the Premises.
11. Mechanic's Liens: Tenant shall pay or cause to be paid all costs for
work done by or on behalf of Tenant or caused to be done by or on behalf of
Tenant on the Premises of a character which will or may result in liens against
Landlord's interest in the Premises, Building or Building Complex and Tenant
will keep the Premises, Building and Building Complex free and clear of all
mechanic's liens and other liens on account of work done for or on behalf of
Tenant or persons claiming under Tenant. Tenant hereby agrees to indemnify,
defend and save Landlord harmless of and from all liability, loss, damages,
costs or expenses, including attorneys' fees, incurred in connection with any
claims of any nature whatsoever for work performed for, or materials or supplies
furnished to Tenant, including lien claims of laborers, materialmen or others.
Should any such liens be filed or recorded against the Premises, Building or
Building Complex with respect to work done for or materials supplied to or on
behalf of Tenant or should any action affecting the title thereto be commenced,
Tenant shall cause such liens to be released of record within ten (10) days
after notice thereof. If Tenant desires to contest any such claim of lien,
Tenant shall nonetheless cause such lien to be released of record by the posting
of adequate security with a court of competent
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jurisdiction as may be provided by Minnesota's mechanic lien statutes. If Tenant
shall be in default in paying any charge for which such a mechanic's lien or
suit to foreclose such a lien has been recorded or filed and shall not have
caused the lien to be released as aforesaid, Landlord may (but without being
required to do so) pay such lien or claim and any costs associated therewith,
and the amount so paid, together with reasonable attorneys' fees incurred in
connection therewith, shall be immediately due from Tenant to Landlord as
Additional Rent.
12. Damage to Property, Injury to Persons:
(a) Tenant, as a material part of the consideration to be rendered to
Landlord under this Lease, hereby waives all claims of liability that Tenant or
Tenant's legal representatives, successors or assigns may have against Landlord,
and Tenant hereby indemnifies and agrees to hold Landlord harmless from any and
all claims of liability for any injury or damage to any person or property
whatsoever: (1) occurring in, on or about the Premises or any part thereof; and
(2) occurring in, on, or about the Building Complex, when such injury or damage
is caused in part or in whole by the act, neglect, fault or omission of Tenant,
its agents, contractors, employees, licensees or invitees. Tenant further agrees
to indemnify and to hold Landlord harmless from and against any and all claims
arising from any breach or default in the performance of any obligation on
Tenant's part to be performed under the terms of this Lease, or arising from any
act or negligence of Tenant, or any of its agents, contractors, employees,
licensees or invitees. Such indemnities shall include by way of example, but not
limitation, all costs, reasonable attorneys' fees, expenses and liabilities
incurred in or about any such claim, action or proceeding.
(b) Landlord shall not be liable to Tenant for any damage by or from any
act or negligence of any co-tenant or other occupant of the Building Complex, or
by any owner or occupant of adjoining or contiguous property. Landlord shall not
be liable for any injury or damage to persons or property resulting in whole or
in part from the criminal activities of others. To the extent not covered by
normal fire and extended coverage insurance normally carried by a prudent
building owner, Tenant agrees to pay for all damage to the Building Complex, as
well as all damage to persons or property of other tenants or occupants thereof,
caused by the misuse, neglect, act, omission or negligence of Tenant or any of
its agents, contractors, employees, licensees or invitees.
(c) Neither Landlord nor its agents or employees shall be liable for any
damage to property entrusted to Landlord, its agents or employees, or employees
of the building manager, if any, nor for the loss or damage to any property
occurring by theft or otherwise, nor for any injury or damage to persons or
property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of the Building Complex
or from the pipes, appliances or plumbing works therein or from the roof, street
or subsurface or from any other place or resulting from dampness, or any other
cause whatsoever; provided, however, nothing contained herein shall be construed
to relieve Landlord from liability for any personal injury resulting from its
gross negligence. Neither Landlord nor its agents or employees shall be liable
for interference with the lights, view or other incorporeal hereditaments, nor
shall Landlord be liable for any latent defect in the Premises or in the
Building or Building Complex. Tenant shall give prompt notice to Landlord
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in case of fire or accidents in or about the Premises or the Building or of
defects therein or in the fixtures or equipment located therein.
(d) In case any claim, demand, action or proceeding is made or brought
against Landlord, its agents or employees, by reason of any obligation on
Tenant's part to be performed under the terms of this Lease, or arising from any
act or negligence of Tenant, its agents or employees, or which gives rise to
Tenant's obligation to indemnify Landlord, Tenant shall be responsible for all
costs and expenses, including but not limited to reasonable attorneys' fees
incurred in defending or prosecution of the same, as applicable.
13. Insurance:
(a) Landlord agrees to carry and maintain the following insurance during
the term of this Lease and any extension hereof: general public liability
insurance against claims for personal injury, including death and property
damage in or about the Premises and the Building or the Building Complex
(excluding Tenant's Property), such insurance to be in amounts sufficient to
provide reasonable protection for the Building Complex. Such insurance may
expressly exclude property paid for by tenants or paid for by Landlord for which
tenants have reimbursed Landlord located in or constituting a part of the
Building or the Building Complex. Such insurance shall afford coverage for
damages resulting from (a) fire, (b) perils covered by extended coverage
insurance, and (c) explosion of steam and pressure boilers and similar apparatus
located in the Building or the Building Complex. All such insurance shall be
procured from a responsible insurance company or companies authorized to do
business in Minnesota and may be obtained by Landlord by endorsement on its
blanket insurance policies.
(b) Tenant shall procure and maintain at its own cost at all times during
the term of this Lease and any extensions hereof, hazard, fire and extended
coverage on Tenant's property and the contents of the Premises, comprehensive
general liability insurance, including coverage for bodily injury, property
damage, personal injury (employee and contractual liability exclusions deleted),
products and completed operations, contractual liability, owner's protective
liability, host liquor legal liability and broad form property damage with the
following limits of liability: Five Million Dollars ($5,000,000.00) each
occurrence combined single limit for bodily injury, property damage and personal
injury; Five Million Dollars ($5,000,000.00) aggregate for bodily injury and
property damage for products and completed operations. All such insurance shall
be procured from a responsible insurance company or companies authorized to do
business in Minnesota, and shall be otherwise reasonably satisfactory to
Landlord. All such policies shall name Landlord as an additional insured, and
shall provide that the same may not be canceled or altered except upon thirty
(30) days prior written notice to Landlord. All insurance maintained by Tenant
shall be primary to any insurance provided by Landlord. If Tenant obtains any
general liability insurance policy on a claims-made basis, Tenant shall provide
continuous liability coverage for claims arising during the entire term of this
Lease, regardless of when such claims are made, either by obtaining an
endorsement providing for an unlimited extended reporting period in the event
such policy is canceled or not renewed for any reason whatsoever or by obtaining
new coverage with a retroactive
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date the same as or earlier than the expiration date of the canceled or expired
policy. Tenant shall provide certificate(s) of such insurance to Landlord upon
commencement of the Lease term and at least thirty (30) days prior to any annual
renewal date thereof and upon request from time to time and such certificate(s)
shall disclose that such insurance names Landlord as an additional insured, in
addition to the other requirements set forth herein. The limits of such
insurance shall not, under any circumstances, limit the liability of Tenant
hereunder.
(c) Each party agrees to use its best efforts to include in each of its
policies insuring against loss, damage or destruction by fire or other casualty
a waiver of the insurer's right of subrogation against the other party, or if
such waiver should be unobtainable or unenforceable (i) an express agreement
that such policy shall not be invalidated if the insured waives the right of
recovery against any party responsible for a casualty covered by the policy
before the casualty; or (ii) any other form of permission for the release of the
other party. If such waiver, agreement or permission shall not be, or shall
cease to be, obtainable without additional charge or at all, the insured party
shall so notify the other party promptly after learning thereof. In such case,
if the other party shall so elect and shall pay the insurer's additional charge
therefor, such waiver, agreement or permission shall be included in the policy,
or the other party shall be named as an additional insured in the policy. Each
such policy which shall so name a party hereto as an additional insured shall
contain, if obtainable, agreements by the insurer that the policy will not be
canceled without at least thirty (30) days prior notice to both insureds and the
act or omission of one insured will not invalidate the policy as to the other
insured. Any failure by either party, if named as an additional insured,
promptly to endorse to the order of the other party, without recourse, any
instrument for the payment of money under or with respect to the policy of which
the other party is the owner or original or primary insured, shall be deemed a
default under this Lease.
(d) Each party hereby releases the other party with respect to any claim
(including a claim for negligence) which it might otherwise have against the
other party for loss, damage or destruction with respect to its property
(including the Building, Building Complex, the Premises and rental value or
business interruption) occurring during the term of this Lease to the extent to
which it is insured under a policy or policies containing a waiver of
subrogation or permission to release liability or naming the above party as an
additional insured as provided above.
(e) Any Building employee to whom property shall be entrusted by or on
behalf of Tenant shall be deemed to be acting as Tenant's agent with respect to
such property and neither Landlord, the Building Manager, if any, nor their
respective agents, shall be liable for any damage to the property of Tenant or
others entrusted to employees of the Building, nor for the loss of or damage to
any property of Tenant by theft or otherwise and Tenant shall indemnify Landlord
of and from any loss or damages, costs or actions Landlord may suffer or incur
as a result of such loss or damage to Property.
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14. Damage or Destruction to Building:
(a) In the event that the Premises or the Building are damaged by fire or
other insured casualty and the insurance proceeds have been made available
therefor by the holder or holders of any mortgages or deeds of trust covering
the Building, the damage shall be repaired by and at the expense of Landlord to
the extent of such insurance proceeds available therefor, provided such repairs
and restoration can, in Landlord's reasonable opinion, be made within two
hundred seventy (270) days after the occurrence of such damage without the
payment of overtime or other premiums, and until such repairs and restoration
are completed, the Base Rent shall be abated in proportion to the part of the
Premises which is unusable by Tenant in the conduct of its business, as may be
reasonably determined by Landlord, (but there shall be no abatement of Base Rent
by reason of any portion of the Premises being unusable for a period equal to
one (1) day or less). Landlord agrees to notify Tenant within forty-five (45)
days after such casualty if it estimates that it will be unable to repair and
restore the Premises within said two hundred seventy (270) day period. Such
notice shall set forth the approximate length of time Landlord estimates will be
required to complete such repairs and restoration. Except as provided in this
Paragraph 14, there shall be no abatement of rent and no liability of Landlord
by reason of any injury to or interference with Tenant's business or property
arising from the making of any such repairs, alterations or improvements in or
to the Building, Premises or fixtures, appurtenances and equipment. Tenant
understands that Landlord will not carry insurance of any kind on Tenant's
Property, including furniture and furnishings, or on any fixtures or equipment
removable by Tenant under the provisions of this Lease, or any improvement
installed in the Premises by or on behalf of Tenant, and that Landlord shall not
be obligated to repair any damage thereto or replace the same.
(b) In case the Premises or the Building throughout shall be so injured or
damaged, whether by fire or otherwise (though the Premises may not be affected,
or if affected, cannot be repaired within said two hundred seventy (270) days),
then Landlord, within sixty (60) days after the happening of such injury, may
decide not to reconstruct or rebuild the Building. Thereupon, notwithstanding
anything contained herein to the contrary, upon notice in writing to that effect
given by Landlord to Tenant within said sixty (60) days, Tenant shall pay the
rent properly apportioned up to date of such casualty, this Lease shall
terminate from the date of delivery of said written notice, and both parties
hereto shall be released and discharged from all further obligations hereunder
(except those obligations which expressly survive termination of the Lease
term). A total destruction of the Building shall automatically terminate this
Lease.
15. Condemnation:
(a) If the whole of the Premises or so much thereof as to render the
balance unusable by Tenant for the proper conduct of its business shall be taken
under power of eminent domain or transferred under threat thereof, then this
Lease, at the option of either Landlord or Tenant exercised by either party
giving notice to the other of such election within thirty (30) days after such
conveyance or taking possession, whichever is earlier, shall forthwith cease and
terminate and the rent shall be duly apportioned as of the date of such taking
or conveyance. No award for any partial
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or entire taking shall be apportioned and Tenant hereby assigns to Landlord any
award which may be made in such taking or condemnation, together with any and
all rights of Tenant now or hereafter arising in or to the same or any part
thereof. Notwithstanding the foregoing, Tenant shall be entitled to seek,
directly from the condemning authority, an award for its removable trade
fixtures, equipment and personal property and relocation expenses, if any, to
the extent Landlord's award is not diminished. In the event of a partial taking
which does not result in a termination of this Lease, Base Rent shall be reduced
in proportion to the reduction in the size of the Premises so taken and this
Lease shall be modified accordingly. Promptly after obtaining knowledge thereof,
Landlord or Tenant, as the case may be, shall notify the other of any pending or
threatened condemnation or taking affecting the Premises or the Building.
(b) If all or any portion of the Premises shall be condemned or taken for
governmental occupancy for a limited period, this Lease shall not terminate and
Landlord shall be entitled to receive the entire amount of any such award or
payment thereof as damages, rent or otherwise. Tenant hereby assigns to Landlord
any award which may be made in such temporary taking, together with any and all
rights of Tenant now or hereafter arising in or to the same or any part thereof.
Tenant shall be entitled to receive an abatement of Base Rent in proportion to
the reduction in the size of the Premises so taken.
16. Assignment and Subletting: Tenant shall not permit any part of the
Premises to be used or occupied by any persons other than Tenant, its wholly
owned affiliated companies and their employees, nor shall Tenant permit any part
of the Premises to be used or occupied by any licensee or concessionaire or
permit any persons other than Tenant, its wholly owned affiliated companies and
their employees and invitees, to be upon the Premises. Tenant shall not
voluntarily, by operation of law, or otherwise, assign, transfer or encumber
this Lease or any interest herein nor sublet or part with possession of all or
any part of the Premises (any and all of which shall hereinafter be referred to
as Transfer) without Landlord's prior written consent, which shall be in
Landlord's sole discretion. Any Transfer without the prior written consent of
Landlord shall constitute a default hereunder and shall be void ab initio and
shall confer no rights upon any third party, notwithstanding Landlord's
acceptance of rent payments from any purported transferee. Notwithstanding the
foregoing, Tenant may, without Landlord's consent, assign this Lease to an
affiliate of Tenant (including any party to whom Tenant has sold the majority of
its assets) or the entity resulting from a merger with Tenant provided, in the
first instance Tenant remains principally liable hereunder and, in the second
instance, the new entity specifically assumes in writing for the benefit of
Landlord all of Tenants liability hereunder.
17. Estoppel Certificate: Tenant further agrees at any time and from time
to time on or before ten (10) days after written request by Landlord, to
execute, acknowledge and deliver to Landlord an estoppel certificate certifying
(to the extent it believes the same to be true) that this Lease is unmodified
and in full force and effect (or if there have been modifications, that the same
is in full force and effect as modified, and stating the modifications), that
there have been no defaults thereunder by Landlord or Tenant (or if there have
been defaults, setting forth the nature thereof), the date to which the rent and
other charges have been paid, if any, that Tenant claims no present
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charge, lien, claim or offset against rent, the rent is not prepaid for more
than one month in advance and such other matters as may be reasonably required
by Landlord, Landlord's mortgagee, or any potential purchaser of the Building,
it being intended that any such statement delivered pursuant to this Paragraph
may be relied upon by any prospective purchaser of all or any portion of
Landlord's interest herein, or a holder of any mortgage or deed of trust
encumbering any portion of the Building Complex. Tenant's failure to deliver
such statement within such time shall be a default under this Lease.
Notwithstanding the foregoing, in the event that Tenant does not execute the
statement required by this paragraph, Tenant hereby grants to Landlord a power
of attorney coupled with an interest to act as Tenant's attorney in fact for the
purpose of executing such statement or statements required by this Paragraph.
18. Hazardous Materials: As to the Premises and the Building Complex Tenant
shall not (either with or without negligence) cause or permit, except as
specifically permitted by law, the escape, disposal or release of any hazardous
substances, or materials. Tenant shall not allow the storage or use of such
substances or materials in any manner not sanctioned by law or by the highest
standards prevailing in the industry for the storage and use of such substances
or materials, nor allow to be brought into the Premises any such materials or
substances except to use in the ordinary course of Tenant's business. Tenant
shall, prior to the Commencement Date of the Lease, deliver to Landlord a list
of all such materials and substances then expected by Tenant to be used in the
ordinary course of Tenant's business on the Leased Premises, and such evidence
of compliance with applicable laws and/or such prevailing standards pertaining
to such materials and substances on Tenant's list or thereafter present on the
Leased Premises as Landlord may reasonably request, within ten (10) days after
receipt of Landlord's written demand therefore. Without limitation, hazardous
substances and materials shall include those described in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et. seq., the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et. seq., any applicable state or local laws and
the regulations adopted under these acts. If Landlord and/or any lender or
governmental agency shall ever require testing to ascertain whether or not there
has been any release of hazardous materials, then the reasonable costs thereof
shall be reimbursed by Tenant to Landlord upon demand as additional charges if
such requirement applies to the Leased Premises. In all events, Tenant shall
indemnify and hold Landlord harmless in the manner elsewhere provided in this
Lease from any costs, damages, expenses, fines, or any other liability of any
type or nature arising from or related to: (i) any release of hazardous
materials on the Leased Premises occurring while Tenant is in possession, or
elsewhere if caused by Tenant or persons acting under Tenant; (ii) the release
of hazardous materials on the Leased Premises subsequent to the term of this
Lease, if such hazardous materials were placed on the Leased Premises by Tenant
or persons acting under Tenant; and (iii) the removal, cleanup, restoration, or
remediation of any hazardous materials placed on the Leased Premises by Tenant
or by those acting under Tenant's control. The within covenants shall survive
the expiration or earlier termination of the Term of this Lease.
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19. Default:
(a) The following events (herein referred to as an Event of Default) shall
constitute a default by Tenant hereunder;
(1) Tenant shall fail to pay when due any installment of Base Rent,
Additional Rent or any other amounts payable hereunder;
(2) This Lease or the estate of Tenant hereunder shall be transferred
to or shall pass to or devolve upon any other person or party in violation
of the provisions of this Lease, except as permitted herein;
(3) This Lease or the Premises or any part thereof shall be taken upon
execution or by other process of law directed against Tenant, or shall be
taken upon or subject to any attachment at the instance of any creditor or
claimant against Tenant, and said attachment shall not be discharged or
disposed of within fifteen (15) days after the levy thereof;
(4) Tenant shall file a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the United
States or under any insolvency act of any state, or shall voluntarily take
advantage of any such law or act by answer or otherwise, or shall be
dissolved or shall make an assignment for the benefit of creditors;
(5) Involuntary proceedings under any such bankruptcy law or
insolvency act or for the dissolution of Tenant shall be instituted against
Tenant, or a receiver or trustee shall be appointed of all or substantially
all of the property of Tenant, and such proceedings shall not be dismissed
or such receivership or trusteeship vacated within thirty (30) days after
such institution or appointment;
(6) Tenant shall fail to take possession of the Premises within thirty
(30) days of the Commencement Date;
(7) Tenant shall fail to perform any of the other agreements, terms,
covenants or conditions hereof on Tenant's part to be performed, and such
nonperformance shall continue for a period of fifteen (15) days after
notice thereof by Landlord to Tenant; provided, however, that if Tenant
cannot reasonably cure such nonperformance within fifteen (15) days, Tenant
shall not be in default if it commences cure within said fifteen (15) days
and diligently pursues the same to completion, with completion occurring in
all instances within sixty (60) days;
(8) Tenant shall fail to obtain a release of any mechanic's lien, as
required herein;
(9) All or any part of the personal property of Tenant is seized,
subject to levy or attachment, or similarly repossessed or removed from the
Premises.
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(b) Upon the occurrence of an event of default, Landlord shall have the
right, at its election, then or at any time thereafter and while any such event
of default shall continue, either:
(1) To give Tenant written notice of Landlord's intention to terminate
this Lease on the date such notice is given or on any later date specified
therein, whereupon, on the date specified in such notice, Tenant's right to
possession of the premises shall cease and this Lease shall thereupon be
terminated; provided however, all of Tenant's obligations, including but
not limited to, the amount of Base Rent and other obligations reserved in
this Lease for the balance of the term hereof, shall immediately be
accelerated and due and payable, discounted by an amount equal to the then
current interest rate on U.S. Treasury Bills having a maturity date which
coincides with the expiration date of the then current term of this Lease
had Tenant not defaulted.
(2) To re-enter and take possession of the Premises or any part
thereof and repossess the same as Landlord's former estate and expel Tenant
and those claiming through or under Tenant, and remove the effects of both
or either, using such force for such purposes as may be reasonably
necessary, without being liable for prosecution thereof, without being
deemed guilty of any manner of trespass and without prejudice to any
remedies for arrears of rent or preceding breach of covenants or
conditions. Should Landlord elect to re-enter the Premises as provided in
this Paragraph 19(b)(2) or should Landlord take possession pursuant to
legal proceedings or pursuant to any notice provided for by law, Landlord
may, from time to time, without terminating this Lease, relet the Premises
or any part thereof in Landlord's or Tenant's name, but for the account of
Tenant, for such term or terms (which may be greater or less than the
period which would otherwise have constituted the balance of the term of
this Lease) and on such conditions and upon such other terms (which may
include concessions of free rent and alteration and repair of the Premises)
as Landlord, in its discretion, may determine, and Landlord may collect and
receive the rents therefor. Landlord shall in no way be responsible or
liable for any failure to relet the Premises or any part thereof or for any
failure to collect any rent due upon such reletting. No such re-entry or
taking possession of the Premises by Landlord shall be construed as an
election on Landlord's part to terminate this Lease unless a written notice
of such intention be given to Tenant. No notice from Landlord hereunder or
under a forcible entry and detainer statute or similar law shall constitute
an election by Landlord to terminate this Lease unless such notice
specifically so states. Landlord reserves the right following any such
re-entry and/or reletting, to exercise its right to terminate this Lease by
giving Tenant such written notice, in which event, this Lease will
terminate as specified in said notice.
(c) In the event that Landlord does not elect to terminate this Lease as
permitted in Paragraph 19(b)(1) hereof, but on the contrary, elects to take
possession as provided in Paragraph 19(b)(2), Tenant shall pay to Landlord (i)
the rent and other sums as herein provided, which would be payable hereunder if
such repossession had not occurred, less (ii) the net proceeds, if any, of any
reletting of the Premises after deducting all Landlord's expenses in connection
with such reletting, including but without limitation, all repossession costs,
brokerage commissions, legal expenses, attorneys' fees, expenses of employees,
alteration and repair costs and expenses of preparation for such reletting. If,
in connection with any reletting, the new lease term extends beyond the existing
term, or the premises covered thereby include other premises not part of the
Premises, a fair
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apportionment of the rent received from such reletting and the expenses incurred
in connection therewith as provided aforesaid will be made in determining the
net proceeds from such reletting. Tenant shall pay such rent and other sums to
Landlord monthly on the days on which the rent would have been payable hereunder
if possession had not been retaken.
(d) In the event this Lease is terminated, Landlord shall be entitled to
recover forthwith against Tenant as damages for loss of the bargain and not as a
penalty, an aggregate sum which, at the time of such termination of this Lease,
represents the excess, if any, of the aggregate of the rent and all other sums
payable by Tenant hereunder that would have accrued for the balance of the term
over the aggregate rental value of the Premises (such rental value to be
computed on the basis of a tenant paying not only a rent to Landlord for the use
and occupation of the Premises, but also such other charges as are required to
be paid by Tenant under the terms of this Lease) for the balance of such term,
both discounted to present worth at the rate of eight percent (8%) per annum.
Alternatively, at Landlord's option, Tenant shall remain liable to Landlord for
damages in an amount equal to the rent and other sums arising under the Lease
for the balance of the term had the lease not been terminated, less the net
proceeds, if any, from any subsequent reletting, after deducting all expenses
associated therewith and as enumerated above. Landlord shall be entitled to
receipt of such amounts from Tenant monthly on the days on which such sums would
have otherwise been payable.
(e) Suit or suits for the recovery of the amounts and damages set forth
above may be brought by Landlord, from time to time, at Landlord's election and
nothing herein shall be deemed to require Landlord to await the date whereon
this Lease or the term hereof would have expired had there been no such default
by Tenant or no such termination, as the case may be.
(f) After an event of default by Tenant, Landlord may sue for or otherwise
collect all rents, issues and profits payable under all subleases on the
Premises, including those past due and unpaid.
(g) After an event of default by Tenant, Landlord may without terminating
this Lease, enter upon the Premises, with force if necessary, without being
liable for prosecution of any claim for damages, without being deemed guilty of
any manner of trespass and without prejudice to any other remedies, and do
whatever Tenant is obligated to do under the terms of this Lease. Tenant agrees
to reimburse Landlord on demand for any expenses which Landlord may incur in
effecting compliance with the Tenant's obligations under this Lease; further,
Tenant agrees that Landlord shall not be liable for any damages resulting to
Tenant from effecting compliance with Tenant's obligations under this
subparagraph caused by the negligence of Landlord or otherwise.
(h) No failure by Landlord to insist upon the strict performance of any
agreement, term, covenant or condition hereof or to exercise any right or remedy
consequent upon a breach thereof, and no acceptance of full or partial rent
during the continuance of any such breach, shall constitute a waiver of any such
breach of such agreement, term, covenant or condition. No agreement, term,
covenant or condition hereof to be performed or complied with by Tenant, and no
breach thereof, shall be waived, altered or modified except by written
instrument executed by Landlord. No waiver
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of any breach shall affect or alter this Lease, but each and every agreement,
term, covenant and condition hereof shall continue in full force and effect with
respect to any other then existing or subsequent breach thereof. Notwithstanding
any unilateral termination of this Lease, this Lease shall continue in force and
effect as to any provisions hereof which require observance or performance of
Landlord or Tenant subsequent to termination.
(i) Nothing contained in this Paragraph shall limit or prejudice the right
of Landlord to prove and obtain as liquidated damages in any bankruptcy,
insolvency, receivership, reorganization or dissolution proceeding, an amount
equal to the maximum allowed by any statute or rule of law governing such
proceeding and in effect at the time when such damages are to be proved, whether
or not such amount be greater, equal to or less than the amounts recoverable,
either as damages or rent, referred to in any of the preceding provisions of
this Paragraph.
(j) Any rents or other amounts owing to Landlord hereunder which are not
paid within ten (10) days of the date they are due, shall thereafter bear
interest from the due date at the rate of eighteen percent (18%) per annum or
the highest rate allowed by law, whichever is lower (Interest Rate) until paid.
Similarly, any amounts paid by Landlord to cure any default of Tenant or to
perform any obligation of Tenant, shall, if not repaid by the Tenant within five
(5) days of demand by Landlord, thereafter bear interest from the date paid by
Landlord at the Interest Rate until paid. In addition to the foregoing, Tenant
shall pay to Landlord whenever any Base Rent, Additional Rent or any other sums
due hereunder remain unpaid more than ten (10) days after the due date thereof,
a late charge equal to five percent (5%) of the amount due. Further, in the
event of default by Tenant, in addition to all other rights and remedies,
Landlord shall be entitled to receive from Tenant all sums, the payment of which
may previously have been waived or abated by Landlord, or which may have been
paid by Landlord pursuant to any agreement to grant Tenant a rental abatement or
other monetary inducement or concession, including but not limited to any tenant
finish allowance or moving allowance, together with interest thereon from the
date or dates such amounts were paid by Landlord or would have been due from
Tenant but for the abatement, at the Interest Rate, until paid; it being
understood and agreed that such concession or abatement was made on the
condition and basis that Tenant duly perform all obligations and covenants under
the Lease for the entire term.
(k) Each right and remedy provided for in this Lease shall be cumulative
and shall be in addition to every other right or remedy provided for in this
Lease now or hereafter existing at law or in equity or by statute or otherwise,
including, but not limited to, suits for injunctive or declaratory relief and
specific performance. The exercise or commencement of the exercise by Landlord
of any one or more of the rights or remedies provided for in this Lease now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or subsequent exercise by Landlord of any or all other
rights or remedies provided for in this Lease, or now or hereafter existing at
law or in equity or by statute or otherwise. All costs incurred by Landlord in
connection with collecting any amounts and damages owing by Tenant pursuant to
the provisions of this Lease or to enforce any provision of this Lease,
including by way of example, but not limitation, reasonable attorneys' fees from
the date any such matter is turned over to an attorney, shall also be
recoverable by Landlord from Tenant. Landlord and Tenant agree that any action
or proceeding arising out of
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this Lease shall be heard by a court sitting without a jury and thus hereby
waive all rights to a trial by jury.
20. As-Is-Condition: Except as provided for in Section 36 hereof, Landlord
shall have no obligation for the completion of any tenant improvements to the
Premises, and Tenant accepts the Premises in its "as is" condition on the
Commencement Date. Landlord shall not have any obligation for the repair or
replacement of any portions of the interior of the Premises, including but not
limited to carpeting, draperies, window coverings, wall coverings or painting,
which are damaged or wear out during the term hereof, regardless of the cause
therefor, except as may otherwise be specifically set forth in this Lease.
21. Removal of Tenant's Property: All movable furniture and personal
effects of Tenant not removed from the Premises upon the vacation or abandonment
thereof or upon the termination of this Lease for any cause whatsoever shall
conclusively be deemed to have been abandoned and may be appropriated, sold,
stored, destroyed or otherwise disposed of by Landlord without notice to Tenant
and without obligation to account therefor, and Tenant shall reimburse Landlord
for all expenses incurred in connection with the disposition of such property.
22. Holding Over: Should Tenant, with Landlord's written consent, hold over
after the termination of this Lease and continue to pay rent, Tenant shall
become a tenant from month to month only upon each and all of the terms herein
provided as may be applicable to such month to month tenancy and any such
holding over shall not constitute an extension of this Lease. During such
holding over, Tenant shall pay monthly rent equal to one hundred seventy-five
percent (175%) of the last monthly rental rate and the other monetary charges as
provided herein. Such tenancy shall continue until terminated by Landlord, as
provided by law, or until Tenant shall have given to Landlord at least thirty
(30) days written notice prior to the last day of the calendar month intended as
the date of termination of such month to month tenancy.
23. Parking and Common Areas: Landlord shall have the right, without
obligation, and from time to time, to change the number, size, location, shape
and arrangement of parking areas and other common areas, restrict parking of
tenants or their guests to designated areas, designate loading or handicap
loading areas, change the level or grade of parking and to charge for all
parking or any portion thereof. The parking lot located on the south side of the
Building (the South Parking Lot) is for the exclusive use of other tenants and
this Lease confers no rights to Tenant to use or occupy the South Parking Lot.
Subject to the foregoing, all other parking areas, together with easements for
parking on parcels adjacent to the parcel on which the Building is located,
access roads, courtyards and other areas, facilities or improvements furnished
by Landlord are for the general and nonexclusive use in common of all tenants of
the Building, including Tenant, and those persons invited upon the land upon
which the Building is situated and shall be subject to the exclusive control and
management of Landlord, and Landlord shall have the right, without obligation,
to establish, modify and enforce such rules and regulations which the Landlord
may deem reasonable and/or necessary. Unless as otherwise provided, Tenant's use
of the parking areas, as herein set forth, shall be in common with other tenants
of the Building and any other parties permitted by
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Landlord to use the parking area. The parking rights herein granted shall not be
deemed a lease but shall be construed as a license granted by Landlord to Tenant
for the term of this Lease. In addition to the general non-exclusive parking
rights granted to Tenant herein, Landlord shall specifically reserve and post
with signage six (6) parking spaces for short-term use by Tenant's visitors and
two (2) parking spaces for delivery vehicles serving Tenant, all at locations
reasonably determined from time to time by Landlord.
24. Surrender and Notice: Upon the expiration or earlier termination of
this Lease, Tenant shall promptly quit and surrender to Landlord the Premises
broom clean in good order and condition, ordinary wear and tear and loss by fire
or other casualty excepted and Tenant shall remove all of its movable furniture
and other effects and such alterations, additions and improvements as Landlord
shall require Tenant to remove pursuant to Paragraph 10 hereof. In the event
Tenant fails to so vacate the Premises on a timely basis as required, Tenant
shall be responsible to Landlord for all costs and damages, including but not
limited to, any amounts required to be paid to third parties who were to have
occupied the Premises, incurred by Landlord as a result of such failure, plus
interest thereon at the Interest Rate on all amounts not paid by Tenant within
five (5) days of demand, until paid in full.
25. Subordination and Attornment:
(a) This Lease, and all rights of Tenant hereunder, are and shall be
subject and subordinate in all respects to all present and future ground leases,
overriding leases and underlying leases and/or grants of term of the real
property and/or the Building or the Building Complex now or hereafter existing
and to all deeds of trust, mortgages and building loan agreements, including
leasehold mortgages and building loan agreements, which may now or hereafter
affect the Building or the Building Complex or any of such leases, whether or
not such deeds of trust or mortgages shall also cover other lands or buildings,
to each and every advance made or hereafter to be made under such deeds of trust
or mortgages, and to all renewals, modifications, replacements and extension of
such leases, deeds of trust and mortgages. The provisions of this Paragraph
shall be self-operative and no further instrument of subordination shall be
required. However, in confirmation of such subordination, Tenant shall promptly
execute and deliver to Landlord (or such other party so designated by Landlord)
at Tenant's own cost and expense, within ten (10) days after request from
Landlord, an instrument, in recordable form if required, that Landlord, the
lessor of any such lease or the holder of any such deed of trust or mortgage or
any of their respective successors in interest or assigns may request evidencing
such subordination. Failure by Tenant to comply with the requirements of this
Paragraph shall be a default hereunder. Notwithstanding the foregoing, in the
event that Tenant does not execute such documents as may be required to confirm
the subordination set forth in this Paragraph or fails to state its objections
in writing to the form of subordination within said ten (10) day period and
within seven (7) days after a second request by Landlord, Tenant hereby grants
to Landlord the right to execute whatever documents are necessary to evidence
such subordination. The leases to which this Lease is, at the time referred to,
subject and subordinate pursuant to this Paragraph are hereinafter
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<PAGE>
sometimes called "superior leases" and the deeds of trust or mortgages to which
this Lease is, at the time referred to, subject and subordinate are hereinafter
sometimes called "superior deeds of trust" or "superior mortgages." The lessor
of a superior lease or the beneficiary of a superior deed of trust or superior
mortgage or their successors in interest or assigns are hereinafter sometimes
collectively referred to as a "superior party." Notwithstanding the foregoing,
Tenant may condition its execution of a subordination instrument upon such
superior party granting to Tenant a non-disturbance agreement in the form then
being used by such superior party for such purposes, providing that Tenant,
notwithstanding a default by Landlord, shall be entitled to remain in possession
of the Premises in accordance with the terms of this Lease for so long as Tenant
shall not be in default of any term, condition or covenant of this Lease.
Further, Tenant shall attorn to such superior party.
(b) Tenant shall take no steps to terminate this Lease without giving
written notice to such superior party, and a reasonable opportunity to cure
(without such superior party being obligated to cure), any default on the part
of Landlord under this Lease.
(c) If holder of any superior mortgage or a ground lease, or anyone
claiming by, through or under such holder, shall become the lessee under the
ground lease as a result of foreclosure of such superior mortgage, or by reason
of an assignment of the lessee's interest under the ground lease and the giving
of a deed to the Building or the Building Complex in lieu of foreclosure, there
shall be no obligation on the part of such person succeeding to the interest of
the lessee under the ground lease to comply with, observe or perform any
obligations as sublessor, tenant or landlord under any superior lease.
(d) If, in connection with the procurement, continuation or renewal of any
financing for which the Building or the Building Complex or of which the
interest of the lessee therein under a superior lease represents collateral in
whole or in part, a lender shall request reasonable modifications of this Lease
as a condition of such financing, Tenant will not unreasonably withhold its
consent thereto provided that such modifications do not increase the obligations
of Tenant under this Lease or adversely affect any rights of Tenant or decrease
the obligations of Landlord under this Lease.
26. Payments after Termination: No payments of money by Tenant to Landlord
after the termination of this Lease, in any manner, or after giving of any
notice (other than a demand for payment of money) by Landlord to Tenant, shall
reinstate, continue or extend the term of this Lease or affect any notice given
to Tenant prior to the payment of such money, it being agreed that after the
service of notice of the commencement of a suit or other final judgment granting
Landlord possession of the Premises, Landlord may receive and collect any sums
of rent due or any other sums of money due under the terms of this Lease or
otherwise exercise its rights and remedies hereunder. The payment of such sums
of money, whether as rent or otherwise, shall not waive said notice or in any
manner affect any pending suit or judgment theretofore obtained.
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27. Authorities for Action and Notice:
(a) Except as otherwise provided herein, Landlord may, for any matter
pertaining to this Lease, act by and through its building manager or any other
person designated in writing from time to time.
(b) All notices or demands required or permitted to be given to Landlord
hereunder shall be in writing, and shall be deemed duly served when received, if
hand delivered, or five (5) days after deposited in the United States mail, with
proper postage prepaid, certified or registered, return receipt requested,
addressed to Landlord at 700 Meadow Lane North, Minneapolis, MN 55422, Attn:
Director of Asset Management.
All notices or demands required to be given to Tenant hereunder shall be in
writing, and shall be deemed duly served when received, if hand delivered, or
five (5) days after deposited in the United States mail, with proper postage
prepaid, certified or registered, return receipt requested, addressed to Tenant
subsequent to the Lease Commencement Date at the Premises, Attn: Chief Financial
Officer. Prior to the Lease Commencement Date, notices to the Tenant shall be
addressed to Tenant at 4131 Highway 52 North, Suite G-111, Rochester, Minnesota,
55901-3144, Attn: Chief Financial Officer.
Either party shall have the right to designate in writing, served as above
provided, a different address to which notice is to be provided.
(c) All notices given hereunder by either party shall also be given to New
York Life Insurance Company, Attention: Mortgage Finance Department, 51 Madison
Avenue, New York, New York, 10010.
28. Liability of Landlord: Landlord's liability under this Lease shall be
limited to Landlord's estate and interest in the Building (or to the proceeds
thereof) and no other property or other assets of Landlord shall be subject to
levy, execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this Lease, the relationship of Landlord and
Tenant hereunder or Tenant's use and occupancy of the Premises. Nothing
contained in this Paragraph shall be construed to permit Tenant to offset
against rents due a successor landlord, a judgment (or other judicial process)
requiring the payment of money by reason of any default of a prior landlord,
except as otherwise specifically set forth herein.
29. Brokerage: Tenant represents and warrants that it has dealt only with
Hamilton Real Estate (Hamilton) in the negotiation of this Lease. Landlord shall
pay any leasing commission or similar fee owing to Hamilton as a result of this
Lease. Tenant hereby agrees to indemnify and hold the Landlord harmless of and
from any and all loss, costs, damages or expenses (including, without
limitation, all attorneys' fees and disbursements) by reason of any claim of or
liability to any other representative, broker or person claiming through Tenant
and arising out of or in connection with the negotiation, execution and delivery
of this Lease. Additionally, Tenant acknowledges and agrees
27
<PAGE>
that Landlord shall have no obligation for payment of any other representative
fee, brokerage fee or similar compensation to any person with whom Tenant has
dealt or may In the future deal with respect to leasing of any additional or
expansion space in the Building or renewals or extensions of this Lease. In the
event any claim shall be made against Landlord by any other broker per person
who shall claim to have negotiated this Lease on behalf of Tenant or to have
introduced Tenant to the Building or to Landlord, Tenant shall be liable for
payment of all reasonable attorneys' fees, costs and expenses incurred by
Landlord in defending against the same, and in the event such broker shall be
successful in any such action, Tenant shall, in addition, make payment to such
broker. Landlord similarly indemnifies and agrees to hold Tenant harmless for
brokerage claims asserted by other parties claiming through Landlord.
30. Rights Reserved to Landlord:
(a) Except to the extent otherwise provided in this Lease, including those
rights granted to Tenant in Section 6(f) hereof, all portions of the Building
are reserved to Landlord except the Premises and the inside surfaces of all
walls, windows and doors bounding in the Premises, but including exterior
building walls, core corridor walls and doors and any core corridor entrance.
Landlord also reserves any space in or adjacent to the Premises used for shafts,
stacks, pipes, conduits, fan rooms, ducts, electric or other utilities, sinks or
other building facilities, and the use thereof, as well as the right to access
thereto through the Premises for the purposes of operation, maintenance and
repair, upon written notice of not less than twenty-four (24) hours, except in
the event of emergencies or apparent emergencies, when no prior notice shall be
required.
(b) Landlord shall have the following rights without liability to Tenant
for damage or injury to property, person or business (all claims for damage
being hereto waived and released), and without effecting an eviction or
disturbance of Tenant's use or possession of the Premises or giving rise to any
claim for setoffs or abatement of rent:
(1) To enter the Premises as more fully provided in this Lease.
(2) To install and maintain signs on the exterior and interior of the
Building, except within the Premises, provided the signs do not block
either completely or partially the exterior windows of the Premises.
(3) To have pass keys to the Premises.
(4) To decorate, remodel, repair, alter or otherwise prepare the
Premises for re-occupancy during the last six (6) months of the term hereof
if, during or prior to such time, Tenant has vacated the Premises, or at
any time after Tenant abandons the Premises.
(5) To have access to all mail chutes according to the rules of the
United States Postal Service.
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(6) To do or permit to be done any work in or about the exterior of
the Building or any adjacent or nearby building, land, street or alley,
provided such work shall not prevent Tenant's access to the Premises or
unreasonably restrict such access.
(7) To grant to anyone the exclusive right to conduct any business or
render any service in the Building, provided such exclusive right shall not
operate to exclude Tenant from the use expressly permitted by this Lease.
31. Force Majeure Clause: Wherever there is provided in this Lease a time
limitation for performance by Landlord of any obligation, including but not
limited to obligations related to construction, repair, maintenance or service,
the time provided for shall be extended for as long as and to the extent that
delay in compliance with such limitation is due to an act of God, governmental
control or other factors beyond the reasonable control of Landlord.
32. Signage: Except for the signage specifically approved in writing by
Landlord, no sign, advertisement or notice shall be inscribed, painted or
affixed on any part of the inside or outside of the Building and there shall be
no obligation or duty on Landlord to allow any sign, advertisement or notice to
be inscribed, painted or affixed on any part of the inside or outside of the
Building. A directory in a conspicuous place, with the names of Tenant shall be
provided by Landlord. Any necessary revision to such directory shall be made by
Landlord, at Tenant's expense, within a reasonable time after written notice
from Tenant of the change making the revision necessary. Notwithstanding the
foregoing, subject to Landlord's reasonable written approval with respect to
size, shape, color, content and appearance, Tenant may, at its expense, install
and maintain identifying signage outside of the interior space comprising the
Premises. Landlord shall have the right to remove all nonpermitted signs without
notice to Tenant and at the expense of Tenant. In addition to the forgoing,
conditioned upon Landlord obtaining approval for same from all applicable
governmented authorities, Landlord shall make available one-sixth (1/6) of the
available area of space on the Building's existing pylon sign to Tenant for
Tenant's use, at Tenant's expense and subject in all respects to Landlord's
reasonable requirements regarding the use, contents and appearance of the pylon
signs.
33. Attorneys' Fees: In the event of any dispute hereunder, or any default
in the performance of any term or condition of this Lease, the prevailing party
shall be entitled to recover all costs and expenses associated therewith,
including reasonable attorneys' fees.
34. Miscellaneous:
(a) The rules and regulations attached hereto as Exhibit D, as well as such
rules and regulations as may hereafter be adopted by Landlord for the safety,
care and cleanliness of the Premises and the Building and the preservation of
good order thereon, are hereby expressly made a part hereof, and Tenant agrees
to obey all such rules and regulations. The violation of any of such rules and
regulations by Tenant shall be deemed a breach of this Lease by Tenant affording
Landlord
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all the remedies set forth herein. Landlord shall not be responsible to Tenant
for the nonperformance by any other tenant or occupant of the Building of any of
said rules and regulations.
(b) The term "Landlord" as used in this Lease, so far as covenants or
obligations on the part of Landlord are concerned, shall be limited to mean and
include only the owner or owners of the Building at the time in question, and in
the event of any transfer or transfers of the title thereto, Landlord herein
named (and in the case of any subsequent transfers or conveyances, the then
grantor) shall be automatically released from and after the date of such
transfer or conveyance of all liability in respect to the performance of any
covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed and relating to events occurring thereafter; provided
that any funds in the hands of Landlord or the then grantor at the time of such
transfer in which Tenant has an interest shall be turned over to the grantee,
and any amount then due and payable to Tenant by Landlord or the then grantor
under any provisions of this Lease shall be paid to Tenant.
(c) As used in this Lease, the term "ordinary business hours" shall mean
the hours from 7:00 a.m. to 7:00 p.m., Monday through Saturday, except for New
Year's Day, Presidents' Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving, Christmas, and any other national or state holiday as may be
established from time to time (Holidays).
(d) This Lease shall be construed as though the covenants herein between
Landlord and Tenant are independent and not dependent and Tenant shall not be
entitled to any setoff of the rent or other amounts owing hereunder against
Landlord, if Landlord fails to perform its obligations set forth herein, except
as herein specifically set forth; provided, however, the foregoing shall in no
way impair the right of Tenant to commence a separate action against Landlord
for any violation by Landlord of the provisions hereof so long as notice is
first given to Landlord and any holder of a mortgage or deed of trust covering
the Building Complex or any portion thereof whose address Tenant has been
notified in writing and so long as an opportunity has been granted to Landlord
and such holder to correct such violation as provided in Paragraph 41 (h)
hereof.
(e) If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws effective during the term of this
Lease, then and in that event, it is the intention of the parties hereto that
the remainder of this Lease shall not be affected thereby, and it is also the
intention of the parties to this Lease that in lieu of each clause or provision
of this Lease that is illegal, invalid or unenforceable, there shall be added as
a part of this Lease a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and be legal,
valid and enforceable, provided such addition does not increase or decrease the
obligations of or derogate from the rights or powers of either Landlord or
Tenant.
(f) The captions of each paragraph are added as a matter of convenience
only and shall be considered of no effect in the construction of any provision
or provisions of this Lease.
(g) Except as herein specifically set forth, all terms, conditions and
covenants to be observed and performed by the parties hereto shall be applicable
to and binding upon their respective
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heirs, administrators, executors, successors and assigns. The terms, conditions
and covenants hereof shall also be considered to be covenants running with the
land.
(h) Except as otherwise specifically provided herein, in the event Landlord
shall fail to perform any of the agreements, terms, covenants or conditions
hereof on Landlord's part to be performed, and such non-performance shall
continue for a period of twenty (20) days after written notice thereof, from
Tenant to Landlord, or if such performance cannot be reasonably had within such
twenty (20) day period, and Landlord shall not in good faith have commenced such
performance within such twenty (20) day period and proceed therewith to
completion within a reasonable period of time, it shall be considered a default
of Landlord under this Lease. Tenant shall give written notice to Landlord in
the matter herein set forth and shall afford Landlord a reasonable opportunity
to cure any such default. In addition, Tenant shall send notice of such default
by certified or registered mail, with proper postage prepaid, to the holder of
any mortgages or deeds of trust covering the Building Complex or any portion
thereof of whose address Tenant has been notified in writing and shall afford
such holder a reasonable opportunity to cure any alleged default on Landlord's
behalf.
(i) No act or thing done by Landlord or Landlord's agent during the term
hereof, including but not limited to any agreement to accept surrender of the
Premises or to amend or modify this Lease, shall be deemed to be binding upon
Landlord unless such act or things shall be by an officer of Landlord or a party
designated in writing by Landlord as so authorized to act. The delivery of keys
to Landlord, or Landlord's agent, employees or officers shall not operate as a
termination of this Lease or a surrender of the Premises. No payment by Tenant
or receipt by Landlord of a lesser amount than the monthly rent herein
stipulated shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
available to Landlord.
(j) Landlord, during the entire term of this Lease, shall have the right to
change the number and name of the Building at any time without liability to
Tenant.
(k) Tenant acknowledges and agrees that it has not relied upon any
statements, representations, agreements or warranties, except such as are
expressed in this Lease.
(l) Notwithstanding anything to the contrary contained herein, Landlord's
liability under this Lease shall be limited to its interests in this building.
(m) Time is of the essence hereof.
(n) Tenant and Landlord and the party executing this Lease on behalf of
each of them represent to each other that such party is authorized to do so by
requisite action of the board of
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directors or partners, as the case may be, and agree upon request to deliver to
each other a resolution or similar document to that effect.
(o) This Lease shall be governed by and construed in accordance with the
laws of the State of Minnesota.
(p) This Lease, together with the exhibits attached hereto, contains the
entire agreement of the parties and may not be amended or modified in any manner
except by an instrument in writing signed by both parties.
(q) This Lease may not be recorded. The parties shall execute a Memorandum
of Lease to be placed of record.
35. Loading Dock: Tenant shall have the nonexclusive right to use the
loading dock (the Loading Dock) located on the second floor of the Building and
in space leased by the Landlord to the Mayo Foundation (Mayo). Tenant's use of
the Loading Dock shall be limited to moving in and out of the Building and
periodically receiving large items, but it is expressly acknowledged by Tenant
that the Loading Dock shall not be used on a daily basis by Tenant. Tenant shall
also comply with such reasonable rules and procedures for the use and available
hours of the Loading Dock as Mayo may imposes from time to time.
36. Tenant Improvements; Planning Allowance and Tenant Improvement
Allowance: Lessor shall construct certain tenant improvements (the Tenant
Improvements) to the Leased Premises pursuant to plans and specifications (the
Plans) agreed to by Lessor and Tenant and which will be attached hereto as
Exhibit E and incorporated herein by reference. Lessor and Tenant shall approve
the Plans and attach the Plans as Exhibit E on or before November 24, 1998 (the
Plan Approval Date). Provided that the Plans are approved on or before the Plan
Approval Date, Lessor shall substantially complete the Tenant Improvements prior
to the Commencement Date, subject to force majeure delays and delays caused by
the actions of Tenant. For purposes of this Lease, the date the Tenant
Improvements are "substantially complete" shall mean the date when a certificate
of occupancy has been issued for the Leased Premises by the City of Rochester.
As part of the approval of the Plans, Lessor and Tenant shall agree as to
the costs of the Tenant Improvements (the Construction Cost) include the agreed
Construction Cost as part of the Plans. Upon the substantial completion of the
Tenant Improvements and prior to Tenant taking possession of the Leased
Premises, Tenant shall pay to Lessor the Construction Cost of the Tenant
Improvements. Notwithstanding the foregoing, provided (i) Tenant is not in
default under the terms and conditions of the Lease and (ii) Tenant has accepted
the Tenant Improvements. Lessor shall grant Tenant a tenant improvement
allowance (the Tenant Improvement Allowance) in an amount not to exceed
$329,250.00 to be applied against the amounts owed to the Lessor for the
Construction Cost. Notwithstanding any other term or condition of this Lease to
the contrary, Tenant shall have no right to apply the Tenant Improvement
Allowance to any other costs or expenses not included within the Construction
Cost without the Lessor's prior written consent.
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Tenant may, at its option, make modifications to the Plans (Construction
Changes). Each Construction Change shall be documented by a written change order
(a Change Order) executed by Lessor and Tenant at the time the Construction
Change is ordered. Each Change Order, in addition to specifying the nature of
the Construction Change, shall specify any extension to the completion date of
the Tenant Improvements necessitated by the Construction Change and the
Commencement Date and the Expiration Date shall be so extended. Additionally,
each Change Order shall specify the cost of completing each Construction Change
and the corresponding increase (or decrease, if applicable) to the total
Construction Cost of the Tenant Improvements. Except as otherwise provided for
herein, Lessor is not obligated to make any other tenant improvements or
alterations to the Leased Premises and Tenant shall take possession of the
Leased Premises in an "as-is" condition.
Provided Tenant is not in default under the terms and conditions of this
Lease, Landlord grants to Tenant a space planning allowance (the "Space Planning
Allowance") in an amount not to exceed $2,500.00 to be used exclusively to pay
the costs of Tenant's space planning fees with respect to the Tenant
Improvements. Provided Tenant is not in default hereunder and upon presentation
to Landlord of reasonable evidence of the costs incurred by Tenant for space
planning services, Landlord will reimburse Tenant for such costs in an amount to
exceed the Space Planning Allowance.
37. Right of First Refusal for Expansion Space: If, at any time during the
Term, any space in the Building becomes available for lease (excluding space
which is subject to renewal options by the tenant thereof), which space Landlord
intends to make available for lease ("Available Space"), then Landlord shall
notify Tenant in writing (the "Availability Notice") of the existence of the
Available Space and the terms and conditions upon which Landlord intends to
offer the lease of the Available Space to third parties. Tenant shall have
twenty (20) days after receipt of the Availability Notice to accept Landlord's
offer in writing and upon such acceptance, Tenant shall be obligated to lease
the Available Space upon the same terms and conditions as are contained in
Availability Notice. If Tenant does not accept Landlord's offer in writing
within said twenty (20) days period, then Landlord may negotiate with third
parties for the lease of the Available Space upon such terms and conditions as
Landlord can obtain. Subsequently, if Landlord receives a bona fide offer from a
third party for the lease of the Available Space, which offer Landlord desires
to accept (an "Offer"), then Landlord shall deliver a true and correct copy of
the Offer to Tenant. Delivery of the Offer by Landlord to Tenant (the "Offer
Notice") shall constitute an offer on the part of Landlord to lease the
Available Space to Tenant pursuant to the same terms and conditions as are
contained in the Offer. Tenant shall have twenty (20) days after receipt of the
Offer Notice to accept Landlord's offer in writing and upon such acceptance,
Tenant shall be obligated to lease the Available Space upon the same terms and
conditions as are contained in the Offer Notice. If Tenant does not accept
Landlord's offer in writing within said twenty (20) day period, then all of
Tenant's rights contained in this Section 37 with respect to the Available Space
shall lapse and terminate and Landlord may then lease the Available Space to
third parties upon such terms and conditions as Landlord can obtain.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the day
and year first above written.
LANDLORD:
MORTENSON PROPERTIES, INC.
By: /s/ Peter Conzemius
--------------------------------
Peter Conzemius
Its: Treasurer
TENANT:
SHOWCASE CORPORATION
By: /s/ Craig W. Allen
--------------------------------
Its: CFO
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EXHIBIT 10.5
Exhibit A
ROCHESTER SOFTWARE CONNECTION, INC.
EMPLOYMENT AGREEMENT
WITH KEN HOLEC
THIS AGREEMENT is entered into effective as of the 22 day of November
1993, by and between ROCHESTER SOFTWARE CONNECTION, INC., a Minnesota
corporation (the "Company"), and Ken Holec, a Minnesota resident, ("Employee").
WHEREAS, the Company desires to engage Employee in the position of
President and Chief Executive Officer;
WHEREAS, Employee possesses certain unique skills, talents, contacts,
judgment and knowledge of the Company's businesses, strategies, ethics and
objectives; and
WHEREAS, Employee desires to be employed by the Company as its
President and Chief Executive Officer and to be assured of reasonable tenure and
terms and conditions of employment with the Company; and
WHEREAS, both parties recognize the critical importance to the
Company, its employees and investors, of preserving the confidentiality of the
Company's trade secrets and confidential information and of protecting the
Company against competition from former executives or other key employees of the
Company following their separation from the Company;
NOW, THEREFORE, in consideration of the foregoing premises and the
parties' mutual covenants and undertakings contained in this Agreement, the
sufficiency of which is hereby acknowledged, the Company and the Employee agree
as follows:
1. Employment and Term. Subject to the terms and conditions herein
provided, the Company hereby hires Employee, and Employee hereby accepts
employment by the Company for a term commencing as of the date hereof and
continuing for a minimum of one (1) year thereafter. The employment term shall
automatically extend for an additional one (1) year following the expiration of
each employment year (November 22 through November 21) unless, on or before
October 21 of each year, one party has notified the other party in writing that
this Agreement will not be extended for an additional year. In the event of such
a notification, the employment term of Employee will expire at the expiration of
the initial one (1) year employment term, or any extended term hereunder as the
case may be, without further obligation for either party, except as described
elsewhere in this agreement or in any stock option agreements then in effect
between the Company and Employee. In addition, the Company may terminate the
employment of Employee upon thirty (30) days notice, without cause, provided
Company pays Employee severance pay as described in paragraph 3(c) of this
Agreement.
<PAGE>
Notwithstanding the foregoing, Company may terminate Employee's employment
for cause without notice and without further obligation of any kind to Employee.
For purpose of this Agreement, "cause" means (a) an act or acts of personal
dishonesty taken by Employee and intended to result in substantial personal
enrichment of Employee at the expense of the Company, (b) repeated violations by
Employee of his obligations which are demonstrably willful and deliberate on
Employee's part and which are not remedied within a reasonable period after
Employee's receipt of written notice of such violations from the Company, (c)
the willful engaging by Employee in illegal conduct that is materially and
demonstrably injurious to the Company, (d) sexual harassment by Employee of any
other employee of the Company, as determined by a court of competent
jurisdiction, or (e) excessive use of intoxicating beverages or chemical abuse,
following at least one written warning. No act, or failure to act, on
Executive's part shall be considered "dishonest", "willful" or "deliberate"
unless done, or omitted to be done, by Executive in bad faith and without
reasonable belief that Executive's action or omission was in the best interest
of the Company. Any act, or failure to act, based upon authority given pursuant
to a resolution duly adopted by the Board or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by Executive in good faith and in the best interests of the Company.
It is further agreed that the term of Employee's employment under this
Agreement shall automatically terminate in the event of Employee's death. In the
event Employee becomes mentally or physically disabled during the term of
employment hereunder, his employment under this Agreement shall terminate as of
the date such disability is established. As used in this subparagraph, the term
"disabled" means suffering from any mental or physical condition, other than the
use of alcohol or illegal use of narcotics, which renders Employee unable to
perform substantially all of Employee's duties and services under this Agreement
in a satisfactory manner (an "impaired condition") for a period of ninety (90)
consecutive days. The date that Employee's disability is established shall be
the ninety-first (91st) day upon which such impaired condition exists. Upon
termination for disability, Employee shall be entitled to receive continuation
of his base salary (as herein defined) for a period of one hundred eighty (180)
days after the date of such termination. If Company maintains a disability
policy covering Employee, then the amount of payments to be made by Company to
Employee pursuant to this provision shall be reduced by any amounts so paid to
Employee under any such insurance policy.
2. Duties and Representations of Employee. During Employee's employment
hereunder, he shall serve as Company's President and Chief Executive Officer and
will have the day-to-day responsibility for making decisions relating to all
aspects of the Company's affairs, including purchasing, marketing, sales and
service programs, and personnel assignment and management, and shall have
authority to and shall perform such functions and exercise such powers and
duties as are customary for such position, subject always to the control of the
Company's Board of Directors. Employee shall devote his full, time, attention,
knowledge and skill exclusively to the loyal service of Company and shall
perform all duties reasonably assigned to him by said Board of Directors.
Additionally, Employee shall do such traveling as may reasonably be required by
the Company in connection with the performance of his duties
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and responsibilities. Employee represents and warrants to the Company that (a)
his acceptance of employment under this Agreement and his performance of the
duties contemplated herein are not in conflict with any obligation, undertaking
or agreement between Employee and any third party including' without limitation,
any of Employee's former employers, and (b) he has not and will not, during the
course of his employment with the Company, disclose or utilize without
permission, any confidential or proprietary information, trade secrets,
materials, documents, or property owned by any third party including, without
limitation, any of Employee's former employers. The Company acknowledges the
existence and conditions of a December 4, 1986 Employee Invention, Nondisclosure
and Noncompetition Agreement between Employee, and a Covenant Not To Compete
clause contained in a March 24, 1986 Agreement for the Purchase of Capital Stock
of Lawson Associates, Inc.
3. Compensation. The Company shall pay to Employee the following
compensation beginning November 22, 1993:
a. Base Salary. The Company shall pay to Employee an annual base salary of
One Hundred Seventy-Five Thousand Dollars ($175,000.00) payable in periodic
installments in accordance with the standard payroll practices of Company in
effect from time to time. Employee's base salary shall be reviewed for potential
adjustment on the basis of performance from time to time.
b. Bonuses. Bonuses shall be paid to Employee as the Board of Directors of
the Company may determine in its discretion from time to time. For the Company's
1995 fiscal year, Employee's bonus target shall be 25% of base salary for such
year, but shall be tied to achievement of business plan and other objectives
established by the Company's Board of Directors.
c. Severance Pay. In the event the Company gives notice to the Employee
that this Agreement will not be extended or upon termination of the Employee's
employment by the Company, other than for cause as defined in paragraph 1, the
Employee shall be entitled to receive his then current base salary for an
additional six months following the date of termination, to be paid as though
the employee had remained in the employ of the Company. If, at the end of such
six month period, Employee is not employed on a full-time basis, the Company
will continue to pay Employee his monthly base salary until the earlier of
twelve months after the date of termination or the date that Employee commences
full-time employment. The severance pay shall be in lieu of any other
compensation of any other kind otherwise payable to the Employee under this
Agreement. Employee shall not be entitled to severance pay if the Employee
voluntarily terminates employment with the Company or gives notice of
non-renewal pursuant to paragraph 1 above; provided, however, that Employee
shall not be precluded from receiving severance pay pursuant to this paragraph
if he terminates his employment with the Company following a "change of control"
of the Company (defined to mean the acquisition by a person not currently a
shareholder of the Company of shares of Company stock representing more than
fifty percent (50%) of the voting power of the outstanding shares) which results
in a
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substantial change in the scope of Employee's employment responsibilities or job
relocation. Employee's entitlement to severance pay following six months after
the termination date shall be conditioned upon Employee making good faith
efforts to locate full-time employment at compensation and responsibility levels
consistent with his employment, with the Company.
d. Stock Option Plan. Employee and Company have entered into a separate
Incentive Stock Option Agreement dated November 22, 1993, whereby Employee is
granted an Incentive Stock Option to purchase shares of Company's common stock,
which Agreement is attached hereto as Exhibit "A" and by this reference
incorporated herein.
g. Advance Bonus. On the first day of his employment by the Company
pursuant to this Agreement, Employee shall be paid an advance bonus of
Twenty-Five Thousand Dollars ($25,000.00). As an additional advance bonus, the
Company will pay, up to a total of Four Thousand Two Hundred Dollars ($4,200),
the initiation fees for Employee to join the Rochester Country Club and
Employee's 1994 membership dues to such country club, so that such facility may
be available for employee and customer meetings and for customer and prospect
entertainment relating to the Company's business.
h. Relocation Expense Reimbursement. The Company will reimburse Employee
for up to $35,000 of out-of-pocket moving and relocation expenses relating to
the relocation of Employee's personal residence from Burnsville, Minnesota to
Rochester, Minnesota, including real estate brokers' fees, closing costs
relating to the purchase and sale of personal residences and house-hunting
expenses. In addition, the Company will reimburse Employee for any income tax
costs incurred by Employee as a result of the nondeductability of any of the
expenses for which he receives reimbursement from the Company pursuant to this
paragraph.
i. Bridge Loan. In the event that Employee's Burnsville residence is not
sold prior to the closing of the purchase by Employee of a new personal
residence in Rochester, the Company shall, at Employee's request, make a loan to
Employee in an amount necessary to find the down payment on the Rochester
residence. Any such loan will bear interest at prime rate, will be repaid in
full within ten days after the closing of the sale of Employee's Burnsville
residence and shall be secured by a mortgage on the Burnsville residence.
4. Additional Benefits. Employee shall be entitled to those additional
Company benefits and perquisites which may be customarily made available to
other executive employees of the Company. Without limiting the foregoing,
Employee shall be eligible to participate in any executive bonus plan which may
be offered, pension plan, or group life, health or accident insurance, or any
other such plan or policy which may presently be in effect or which may
hereafter be adopted by Company for the benefit of its executive employees and
corporate officers generally. Furthermore, Employee shall be entitled to the
following additional benefits:
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a. Expense Reimbursement. During the term of Employee's employment under
this Agreement, the Company shall bear reasonable and ordinary business expenses
incurred by Employee in performing his duties, including travel and living
expenses while away from home on business in the service of the Company, long
distance home telephone expenses, provided that Employee accounts promptly for
such expenses to the Company in the manner reasonably prescribed from time to
time by the Company.
b. Vacation. During the term of Employee's employment under this Agreement,
Employee shall be entitled to take up to two (2) weeks of vacation per year with
pay, at such times as shall be mutually convenient to Company and Employee.
Vacation time must be used within the applicable employment year and may not be
accumulated.
c. Professional and Personal Development. During the term of the Employee's
employment under this Agreement, Employee shall be entitled to take two weeks
per year to attend seminars, professional meetings, conventions, personal
development, and educational or recreational courses as he may in his sole
discretion elect to utilize. The Company shall pay for that portion of the
expenses for such seminars or meetings which are allocable to Company purposes,
if any.
5. Confidentiality. Employee hereby agrees to sign the Company's
Confidentiality and Inventions Agreement, a copy of which is attached hereto as
Exhibit "B" and by this reference incorporated herein. All of Company's trade
secrets, and all other confidential information, including, but not limited to,
any patents, copyrights, processes, technology, machines, equipment, material,
ideas, concepts, techniques, conditions of operation, or customer lists,
relating to the business of Company shall be the sole property of Company, and
Company shall have exclusive rights to such property, and the Employee
acknowledges and agrees that any information or data Employee has received
concerning such trade secrets and/or confidential information was received by
Employee in confidence and as a fiduciary of Company. Employee shall not divulge
to any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, or use in any manner, directly or indirectly, for any
purpose whatsoever, any of the trade secrets or confidential information of
Company, except in Company's best interest. In addition, Employee will use
reasonable and prudent care to safeguard, protect and prevent the unauthorized
use and disclosure of confidential information. The obligations contained in
this paragraph will survive for as long as the Company in its sole judgment
considers the information to be confidential information.
6. Return of Proprietary Property. Employee agrees that all property in
Employee's possession belonging to Company, including without limitation, all
documents, reports, manuals, memoranda, computer print-outs, customer lists,
credit cards, keys, identification, products, access cards and all other
property relating in any way to the business of the Company are the exclusive
property of the Company, even if Employee authored, created or assisted in
authoring or creating such property. Employee shall return to the Company all
such
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documents and property immediately upon termination of employment or at such
earlier time as the Company may reasonably request.
7. Key-Man Insurance. Employee agrees that Company may add additional
"Key-Man" life and/or disability insurance on his life. Company will pay
premiums and be the beneficiary. In addition, Employee agrees to submit to the
usual and customary medical examination and otherwise to cooperate with Company
in connection with the procurement of any such insurance, and any claims
thereunder. The Key-Man life insurance policy upon the life of Employee to be
procured by the Company shall provide for a Two Hundred Fifty Thousand Dollar
($250,000.00) benefit payable to beneficiaries designated by Employee, with all
additional benefits thereunder payable to the Company.
8. Restrictive Covenant. Employee acknowledges that the Company needs to be
protected against the potential for unfair competition and impairment of the
Company's goodwill by Employee's use of the Company's training, assistance,
confidential information and trade secrets in direct competition with the
Company. Employee therefore agrees that for the greater of (a) six months, or
(b) the period of time that Employee is entitled to receive severance pay from
the Company pursuant to paragraph 3(c) of this Agreement, Employee shall not
operate, join, control, be employed by or participate in ownership, management,
operation or control of, or be connected in any manner as an independent
contractor, consultant or otherwise, with any person or organization engaged in
any business activity which is the same as, similar to, or competitive with any
business of the Company or any successor of the Company as of the expiration or
termination date within the states of the United States of America. Employee
expressly agrees the provisions of this paragraph 8 shall survive the expiration
or the termination of this Agreement, whether such termination be voluntary or
involuntary or with or without cause. In the event Company maintains an action,
either at law, equity, or both, to enforce this non-competition covenant against
Employee, Employee waives any right to maintain any of the following defenses:
(a) That this restrictive covenant is not necessary for the protection of
the business or the goodwill of Company;
(b) That this restrictive covenant is unreasonable, unconscionable,
illegal, in restraint of trade, or in violation of any right granted
by the state or federal constitution;
(c) That there has been no damage to Company;
(d) That Company has an adequate remedy at law; or
(e) That this restrictive covenant is not supported by adequate
consideration.
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Employee agrees that in addition, but not to the exclusion of any other
available remedy, Company shall have the right to enforce the provisions of this
non-competition agreement by applying for and obtaining temporary and permanent
restraining orders or injunctions from a court of competent jurisdiction without
the necessity of filing a bond therefor. In any such court action, the
prevailing party shall be entitled to recover its reasonable attorneys' fees and
costs from the other party.
9. Covenant Not to Recruit. Employee recognizes that Company's work force
constitutes an important and vital aspect of its business. Employee agrees that
for a period of two (2) years following the expiration or termination of this
Agreement for any reason whatsoever, he shall not solicit, or assist anyone else
in the solicitation of, any of the Company's then current employees to terminate
their employment with the Company, and to become employed by any business
enterprise with which the Employee may then be associated or connected, whether
as an owner, employee, partner, agent, investor, consultant, contractor or
otherwise.
10. Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company. The Employee may not assign this Agreement nor any
rights hereunder. Any purported or attempted assignment or transfer by Employee
of this Agreement or any of Employee's duties, responsibilities or obligations
hereunder shall be void.
11. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing, shall be deemed to have been duly given on
the date of service if personally served on the parties to whom notice is to be
given, or on the second day after mailing if mailed to the parties to whom
notice is given, by first class mail, postage prepaid, and properly addressed as
follows:
To Company at: Rochester Software Connection, Inc.
4909 Highway 52 North
Rochester, Minnesota 55901
To Employee at: 14009 Frontier Lane
Burnsville, Minnesota 55337
Any party may change the address for the purpose of this paragraph by
giving the other written notice of the new address in the manner set forth
above.
12. Construction and Severability. The validity, interpretation,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Minnesota. In the event any provision of this Agreement shall be
held illegal or invalid for any reason, said illegality or invalidity shall not
in any way affect the legality or validity of any other provision
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hereof. It is the intention of the parties hereto that Company be given the
broadest possible protection respecting its confidential information and trade
secrets and respecting competition by Employee following his separation from the
Company.
13. Arbitration. Except as provided in sub-paragraph b below, any claims or
disputes of any nature between the parties arising from or related to the
performance, breach, termination, expiration, application or meaning of this
Agreement shall be resolved exclusively by arbitration before the American
Arbitration Association in Rochester, Minnesota pursuant to the Association's
rules for commercial arbitration.
a. The decision of the arbitrator(s) shall be final and binding upon both
parties. Judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. In the event of submission of any dispute to
arbitration, each party shall, not later than thirty (30) days prior to the date
set for hearing, provide to the other party and to the arbitrator(s) a copy of
all exhibits upon which the party intends to rely at the hearing and a list of
all persons whom each party intends to call as witnesses at the hearing.
b. This section shall have no application to claims by the Company
asserting violation of or seeking to enforce, by injunction or otherwise, the
terms of paragraphs 5, 6, 8 and 9 above. Such claims may be maintained by the
Company in a lawsuit subject to the terms of paragraph 14 below.
14. Venue. Any action at law, suit in equity or judicial proceeding arising
directly, indirectly or otherwise in connection with, out of, related to or from
this Agreement or any provision hereof shall be litigated only in the courts of
the State of Minnesota, County of Olmsted. Employee waives any right Employee
may have to transfer or change the venue of any litigation brought against
Employee by the Company.
15. Entire Agreement. This Agreement sets forth the entire agreement
between Company and Employee with respect to his employment by the Company and
there are no undertakings, covenants or commitments other than as set forth
herein. This Agreement may not be altered or amended, except by a writing
executed by the party against whom such alteration or amendment is to be
enforced. This Employment Agreement supersedes any and all prior understandings
or agreements between the parties.
16. Counterparts. This Agreement may be simultaneously executed in any
number of counterparts, and such counterparts executed and delivered, each as an
original, shall constitute but one in the same instrument.
17. Captions and Headings. The captions and paragraph headings used in this
Agreement are for convenience of reference only, and shall not affect the
construction or interpretation of this Agreement or any of the provisions
hereof.
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18. Survival. The parties expressly acknowledge and agree that the
provisions of this Agreement which by their express or implied terms extend
beyond the expiration of this Agreement or the termination of Employee's
employment hereunder, shall continue in full force and effect, notwithstanding
Employee's termination of employment hereunder or the expiration of this
Agreement.
19. Waivers. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right or remedy granted hereby or by any related document or by law.
20. Reliance by Third Parties. This Agreement is intended for the sole and
exclusive benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and permitted assigns, and
no other person or entity shall have any right to rely on this Agreement or to
claim or derive any benefit therefrom absent the express written consent of the
party to be charged with such reliance or benefit.
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IN WITNESS WHEREOF, the Company has caused this instrument to be executed
and the Employee has hereunto set his name as of the day and year first above
written.
EMPLOYEE ROCHESTER SOFTWARE
CONNECTION, INC.
- ----------------------------------- By
Ken Holec -------------------------------
Its
------------------------------
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EXHIBIT 10.6
SERVICE AGREEMENT
THIS AGREEMENT is made this 17th day of March 1998 by and between.
SHOWCASE (UK) LIMITED, a limited liability company incorporated under the laws
of England, having its principal address at Boundary House, The Pines Business
Park, Broad Street, Guildford, Surrey GU3 3BH ("the Company"),
and
PATRICK DAUGA, a French national residing at 12, old Manon Court 40-42, Abbey
Road, London WW8 0AR United Kingdom ("the Executive")
IT IS HEREBY AGREED as follows:
1. Appointment
The Company hereby engages the Executive and the Executive agrees to serve the
Company as its Vice President of European Operations (including Europe, the
Middle East and Africa) or in such other capacity that the parties may mutually
agree.
2. Term
2.1 This Agreement shall be deemed to have commenced as of October 1, 1997 and
shall continue until terminated by the Company or by the Executive as provided
for in section 15 hereof. Notwithstanding the foregoing, this Agreement is
intended to be for an initial term of less than three years. Prior to September
30, 2000, unless the parties mutually agree to continue this Agreement, the
Company shall transfer all its rights and obligations under this Agreement to
another Affiliated Company.
2.2 The Executive's continuous employment with the Company for the purposes of
the Employment Rights Act 1996 commenced on October 1, 1997. None of the
Executive's employment with any previous employer shall count as part of the
Executive's continuous period of employment with the Company for the purposes of
applicable law.
3. Powers, duties and working hours
The Executive shall devote such time as is necessary to perform the duties
assigned to him and shall in any event, unless prevented by ill health or
accident or holiday, devote a minimum of 8 hours per working day and a minimum
of 20 working days per month to carrying out his duties hereunder. For the
purpose of this Agreement, "working day" means Monday to Friday inclusive except
bank or other public holidays.
<PAGE>
3.2 The Executive shall carry out his duties in a proper and efficient manner
and use his best endeavours to promote and maintain the interests and reputation
of the Company, provided that the Board may at any time require the Executive to
cease performing and exercising all or any of his duties;
3.3 The Executive shall exercise such powers and perform such duties in relation
to the business of the Company and any Affiliated Company as may from time to
time be vested in or assigned to him by the Board; and
3.4 The Executive may be required in pursuance of his duties hereunder:
(a) to perform services not only for the Company but also for any
Affiliated Company (as defined in Clause 16.1 of this
Agreement) whose principal place of business is in or outside
the United Kingdom and without further remuneration (except as
otherwise agreed) to accept such offices in any such companies
as the Company may from time to time reasonably require;
(b) to work in connection with the business of such companies in
the United Kingdom at such place or places as may be required
by the Company and elsewhere in the world as the Company may
require; and
(c) to travel to such places by such means and on such occasions
as the Company may from time to time require.
3.5 In the performance of this duties under this Agreement the Executive shall
be required to spend a minimum of 18 working days per month outside the United
Kingdom in relation to matters involving Affiliated Companies outside the United
Kingdom.
4. Reporting
The Executive shall report to the chairman of the Board and shall at all times
keep him fully informed of his activities.
5. Remuneration
5.1 During the continuance of his employment hereunder the Executive shall be
paid a salary at the rate of US$ 14,500 per month or at such other rate as may
be agreed between the parties from time to time. Such salary shall accrue from
day to day and be paid in arrears on the last business day of each month or if
that is not a working day the immediately preceding working day.
5.2 The Company shall be entitled to deduct from the Executive's remuneration
(including salary, pay in lieu of notice, commission, bonus, holiday pay and
sick pay) all sums from time to time owing from the Executive to the Company.
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5.3 The Executive shall be entitled to receive a commission and bonus upon
meeting various targets pursuant to the terms of a bonus and commission plan to
be established by the Company no later than April 30 of each year with respect
to the next financial year of the Company. During any financial year, the
targets and formula for determining the commissions and bonus to be paid
pursuant to the plan established for said financial year may adjusted at the
discretion of the Company upon providing the Executive with not less than 90
days notice. The commission and bonus plan for the period from the commencement
of employment through March 31, 1998, pursuant to which the Executive may earn a
total commission and bonus of not less than $35,000 upon achievement of the
financial targets set forth therein, is attached hereto as schedule A.
5.4 The Company shall be entitled to consider 10% of all remuneration to be paid
to the Executive hereunder as arising from his duties performed in the United
Kingdom, which percentage shall be adjusted periodically based on the number of
days the Executive actually performs duties within the United Kingdom. The
Company shall pay all remuneration due to the Executive for services performed
outside the United Kingdom to such bank account of the Executive outside the
United Kingdom as indicated by the Executive in writing.
5.5 The Executive agrees that he will indemnify the Company and any Affiliated
Company on demand against any liability of the Company or any Affiliated Company
arising from any failure by any such company to withhold or deduct income tax or
social charges (whether arising in or outside the United Kingdom and including
United Kingdom employee national insurance contributions) which may be payable
by the Company or any Affiliated Company with respect to the remuneration paid
to the Executive outside the United Kingdom, together with any cost or expenses
and any penalty, fine or interest accrued or payable by the Company or any
Affiliated Company in connection with or in consequence of any such liability.
The Company may at its option (whether for itself or on behalf of any Affiliated
Company) satisfy such indemnity (in whole or in part) by way of deduction from
payments to be made by the Company under this Agreement.
5.6 All amounts to be paid to the Executive for services within the United
Kingdom shall be paid in UK pounds sterling using the U.S. dollar/U.K. pound
sterling exchange rate in effect on October 1, 1997 as quoted by the Company's
bank [and thereafter using the exchange rate in effect on April 1 for the
following twelve month period]; all amounts to be paid to the Executive for
services outside the United Kingdom shall be paid in US Dollars and/or French
francs as indicated by the Executive from time to time in writing.
6. Fringe Benefits
6.1 The Company shall provide to Executive supplemental private medical and
hospitalization insurance covering the Executive and his spouse and children as
well as a supplemental private pension contract provided that the cost of such
supplemental benefits, together with any mandatory employer national insurance
contributions or other similar or released charges imposed on the Company with
respect to any remuneration paid to the Executive under this agreement, shall
not exceed US$50,000 per annum.
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6.2 The Executive agrees that he will indemnify the Company on demand against
any liability or expense with respect to such supplemental medical and
hospitalisation insurance, supplemental pension and mandatory employer national
insurance contribution or similar or related charges to the extent that the
total of such liabilities and expenses exceeds US$50,000 per annum, and the
Company may at its option satisfy such indemnity (in whole or in part) by way of
deduction from payments to be made by the Company under this agreement.
7. Expenses
The Company shall reimburse to the Executive all reasonable travelling, hotel,
entertainment and other out-of-pocket expenses properly incurred by him in the
proper performance of his duties subject to his compliance with the Company's
then current guidelines relating to expenses, to production of receipts vouchers
and reports, and to the overall limitation of such expenses as set forth in the
annual budgets of the Company.
8. Company Automobile
The Company shall provide to the Executive an automobile for his business and
personal use and will pay all road taxes, insurance premiums, maintenance and
repairs, lease or rental payments, petrol and oil and other operating expenses
thereof. The Executive shall immediately upon suspension or termination or this
Employment Agreement return the automobile, its keys and all documents relating
to it to the Company.
9. Holidays
9.1 In addition to United Kingdom bank or other public holidays, the Executive
shall be entitled to 10 days paid holiday for the remainder of calendar year
1997 and to a total of 25 days paid holiday in every calendar year thereafter.
Holiday time shall not be transferrable to the following year, unless agreed on
a case-by-case basis with the Board of the Company in view of significant
business or personal reasons that any outstanding holiday leave may be taken
during the first three months of the following year. The Executive shall not be
entitled to compensation for any holiday leave not taken in accordance with this
paragraph.
9.2 Holiday entitlement shall accrue pro rata per month. In the event of the
determination of his employment hereunder and of the Executive not continuing to
be employed thereafter under this Agreement and of the Executive having taken
more or less than his holiday entitlement in the year of determination, a
proportionate adjustment will be made by way of addition to or deduction from
(as appropriate) his final gross pay calculated on a pro rata basis.
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10. Sickness and Incapacity
10.1 The Executive shall inform the Company of any sickness and its expected
duration as soon as possible. If the Executive is absent from work due to
illness or accident duly notified, the Company shall pay to Executive his full
remuneration for up to an aggregate of 90 working days absence and half his
remuneration for up to a further 90 working days absence in any period of twelve
months and thereafter such remuneration (if any) as the Company shall in its
discretion approve.
10.2 The remuneration paid under Clause 10.1 shall include any Statutory Sick
Pay payable and when this is exhausted shall be reduced by the amount of any
Social Security Sickness Benefit or other benefits recoverable by the Executive
(whether or not recovered).
10.3 The Company may at its expense at any time whether or not the Executive is
then incapacitated require the Executive to submit to such medical examinations
and tests by doctor nominated by the Company and the Executive hereby authorises
such doctor to disclose to and discuss with the Company and its medical
adviser(s) the results of such examinations and tests.
11. Confidentiality
11.1 For the purposes of this Agreement "Confidential Information" means all
information relating to the Company and its Affiliated Companies and
their business operations which is recorded or stored in any form or
media including but not limited to trade secrets, know-how, drawings,
techniques, computer programs in human or machine readable code,
business and marketing plans, arrangements and agreements with third
parties, customer information including names of suppliers, advertisers
and customers, formulae, ideas whether reduced to a material form or
otherwise, designs, plans and models.
11.2 The Executive agrees not to use, divulge or communicate to any person,
without the Company's prior written consent, any Confidential
Information and shall not disclose it to any third party unless:
11.2.1 the Executive obtains the prior written consent of the Company; or
11.2.2 it is already in the public domain or comes into the public domain for
reasons other than a breach of this Agreement; or
11.2.3 the Executive is required to disclose Confidential Information pursuant
to an order of a court; or
11.2.4 the Executive knows the Confidential Information prior to execution of
this Agreement and the Executive is able to establish as much by
documentary records, provided such
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Confidential Information had not been provided to the Executive by the
Company and any Affiliated Company.
11.3 The Executive warrants and undertakes not to:
11.3.1 use Confidential Information for any purpose other than for the benefit
of the Company during or after the term of this Agreement;
11.3.2 appropriate, copy, memorize or in any way reproduce or reverse engineer
any Confidential Information.
11.4 The Executive will comply with all and any instructions given to him by
the Company during the term of this Agreement concerning the treatment
of the Confidential Information.
11.5 The provisions of Clauses 11.2 and 11.3 above shall continue after
termination or expiry of this Agreement, however caused.
11.6 On termination of this Agreement, however caused, the Executive will
return immediately to the Company any and all Confidential Information
including all copies however recorded, stored or embodied (including
any magnetic media).
12. Intellectual Property
12.1 All Intellectual Property and all Intellectual Property Rights therein
shall to the fullest extent permitted by law belong to, vest in and be the
absolute sole and unencumbered property of the Company and the Executive
warrants that there are no Intellectual Property Rights made or written at any
time by him which are not now wholly legally and beneficially owned by the
Company.
12.2 The Executive:
(a) acknowledges for the purposes of the Patents Act 1977 that
because of the nature of his duties and the particular
responsibilities arising from the nature of his duties he has
and at all times during his employment will have a special
obligation to further the interests of the undertakings of the
Company and of any Affiliated Company (as defined in Clause
16.1 of this Agreement);
(b) undertakes to notify and disclose to the Company in writing
full details of all Intellectual Property forthwith upon the
production of the same, and promptly whenever requested by the
Company and in any event upon the determination of his
employment with the Company deliver up to the Company all
correspondence and other documents, papers and records, and
all copies thereof in his possession, custody and power
relating to any Intellectual Property;
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<PAGE>
(c) undertakes to hold upon trust for the benefit of the Company
any Intellectual Property and the Intellectual Property Rights
therein to the extent the same may not be and until the same
are vested absolutely in the Company;
(d) hereby assigns to the Company all of his present and future
right title and interest throughout the world in Intellectual
Property produced, invented or discovered by the Executive
either alone or with any other person at any time now or
thereafter during the continuance in force of this Agreement,
whether or not in the course of his employment hereunder;
(e) acknowledges (for the avoidance of doubt), that in
consideration of his rights, responsibilities and remuneration
and all inventions, discoveries and designs created during the
term of the Agreement shall be deemed to have been created in
the course of the Executive's normal duties and to be capable
of assignment to the Company under Clause 12.2(d) above;
(f) acknowledges that by virtue of the Company's exclusive
ownership of the Confidential Information and the Intellectual
Property Rights assigned to it pursuant to this Clause 12.2,
that the Executive may not now or at any time in the future
use or exploit the Confidentiality Information or the
Intellectual Property without the written permission of the
Company, except in the performance of his obligations under
this Agreement;
(g) acknowledges that save as provided by law no further
remuneration or compensation other than that provided for
herein is or may become due to the Executive in respect of the
performance of his obligations under this Clause; and
(h) undertakes at the expense of the Company to execute all such
documents, make such applications, give such assistance and do
such acts and things as may in the opinion of the Company be
necessary or desirable to vest in the Company the ownership
and registration of all Intellectual Property Rights and
otherwise to protect and maintain the Intellectual Property
and the Industrial Property Rights therein.
12.3 The assignment of Intellectual Property Rights pursuant to Clause 12.2
shall be deemed and construed to include the right to sue for any
infringement or threatened infringement of any Intellectual Property
Right, whether or not such infringement or threatened infringement
occurs prior to or after the execution of this Agreement.
12.4 The provisions of Clauses 12.2(f), 12.2(g), 12.2(h) and 12.3 above
shall survive termination or expiry of this Agreement, however caused.
12.5 For purposes of this section 12, the following words and expressions
shall have the following meanings:
(a) "Intellectual Property" includes inventions, discoveries and
designs (whether or not registrable as designs or patents),
processes, formulae, notation, improvements, know-how,
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<PAGE>
goodwill, reputation, moulds, get up, logos, devices, plans,
models and all or any Copyright Works as defined in the
Copyright Designs and Patents Act 1988 (and all like rights
throughout the world) of the kind produced by the Company or
any Affiliated Company (as defined in Clause 17.1 of this
Agreement) or related directly or indirectly to the business
of the Company or which may in the opinion of the Company be
capable of being used or adapted for use therein or in
connection therewith;
(b) "Intellectual Property Rights": all or any rights in the
Intellectual Property, including patents, registered and
unregistered design right, trademarks, tradenames, goodwill,
copyrights, and all other forms of industrial or intellectual
property and all applications for registration thereof;
(c) "Production": (and consonant expressions) used in relation to
Intellectual Property includes the invention, creation,
discovery, design, research, development and manufacture
thereof.
13. Restrictions during Employment
For the duration of his employment, the Executive shall not, without the prior
consent in writing of the Company, either alone or jointly with or on behalf of
others and whether directly or indirectly and whether as principal, partner,
agent, shareholder, director, Executive or otherwise howsoever engage in, carry
on or be interested or concerned in any business which competes with the Company
PROVIDED THAT nothing in this Clause shall preclude the Executive from holding
or acquiring directly or indirectly not more than 5% in nominal value of the
issued shares or other securities of any class of any other company which are
listed or dealt in on any recognized stock exchange by way of bona fide
investment only.
14. Post-Termination Obligation
14.1 In this Clause 14 the following expressions have the following meanings:
"Critical Person" means (i) any person who was an employee, agent, director,
consultant or independent contractor employed, appointed or engaged by the
Company or any Relevant Affiliated Company (as defined below) at any time within
twelve months immediately before the Termination Date (other than ex-employees
of ComShare Limited or any affiliated company of ComShare Limited who became
employees of the Company or any Affiliated Company in Europe between August 1,
1997 and March 31, 1998) who by reason of such employment, appointment or
engagement and in particular his/her seniority and expertise or knowledge of
trade secrets or confidential information of the Company or any of its
Affiliated Companies or knowledge of or influence over the customers or
suppliers of the Company or any of its Affiliated Companies is likely to be able
to assist or benefit a business in or proposing to be in competition with the
Company or any Relevant Affiliated Company with whom the Executive was directly
concerned or connected during the period of twelve months preceding the
Terminate Date in the course of his employment hereunder;
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<PAGE>
"Relevant Affiliated Company" means any Affiliated Company (as defined in Clause
17.1 of this Agreement) of the Company (other than the Company) for which the
Executive has performed services under this Agreement or for which he has had
management responsibility at any time during the twelve month period immediately
preceding the Termination Date.
"Termination Date" means the date on which the Executive's employment under this
Agreement terminates and references to "from the Termination Date" mean from and
including the date of termination;
14.2 The Executive will not without the prior written consent of the Company
directly or indirectly and whether alone or in conjunction with or on behalf of
any other person and whether as a principal, shareholder, director, employee,
agent, consultant, partner or otherwise for a period of twelve months from the
Termination Date solicit, induce or entice away from the Company or any Relevant
Affiliated Company or, in connection with any business in or proposing to be in
competition with the Company or any Relevant Affiliated Company, employ, engage
or appoint or in any way cause to be employed, engaged or appointed a Critical
Person whether or not such person would commit any breach of his or her contract
of employment or engagement by leaving the service of the Company or any
Relevant Affiliated Company;
14.3 If the restriction set forth in clause 14.2 is held to be unreasonably wide
but would be valid if part of the wording (including in particular but without
limitation the defined expressions referred to in Clause 14.1) were deleted,
such restriction will apply with so much of the wording deleted as may be
necessary to make it valid.
14.4 The Company reserves the right to apply to any court for injunctive relief
in order to compell the Executive to comply with the provisions of this Clause
14 and to seek damages.
14.5 For the purpose of this Clause 14 and Clause 11 the Company has entered
into this Agreement as agent for and trustee of all Relevant Affiliated
Companies.
14.6 If the Executive applies for or is offered a new employment, appointment or
engagement, before entering into any related contract the Executive will bring
the terms of this Clause 14 and Clauses 2, 3, 11 and 12 to the attention of a
third party proposing directly or indirectly to employ, appoint or engage him.
15. Grievance Procedure
If the Executive wishes to seek redress of any grievance relating to his
employment he should refer such grievance to the chairman of the Board and if
the grievance is not resolved by discussion with him, it will be referred for
resolution to the Board of Directors of the Company.
16. Termination
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16.1 This Agreement may be terminated by the Company or the Executive giving the
other party at least three months' notice in writing; however, until August 31,
1998 the Company shall provide the Executive twelve months' notice in writing if
the Company terminates this Agreement as a direct result of (a) the sale of the
Company or the Company's parent company ShowCase Corporation, (b) a change in
Chief Executive Officer of ShowCase Corporation or (c) the expense budget for
the Company and all Affiliated Companies in Europe, the Middle East and Africa
being reduced to less than US$ 1,500,000 in any calendar quarter. After August
31, 1998, this Agreement may be terminated by the Company only upon giving
twelve months' notice in writing unless the Company terminates due to the
Executive committing any act of dishonesty whether relating to the Company, any
Affiliated Company or otherwise; or the Executive being guilty of substantial
and persistent failure to perform services on a daily basis at the normal level
of activity reasonably required of an employee at Executive's level of
responsibility.
16.2 The Company shall be entitled to terminate this Agreement immediately and
pay to the Executive base salary, and targeted commissions and bonus and fringe
benefits (as defined in clause 6.1) in lieu of the notice required in Clause
16.1 above.
16.3 Notwithstanding Clause 2.1 above, if the Executive is or becomes
incapacitated from any cause whatsoever from efficiently performing his duties
pursuant to this agreement, for 180 working days in aggregate in any period of
twelve months, THEN the Company shall be entitled to terminate his employment
under this Agreement without notice whereupon the Executive shall have no claim
against the Company for damages or otherwise by reason of such determination.
16.4 Upon the termination of the Executive's employment for whatever reason the
Executive shall deliver to the Company without delay all documents (including
copies), and all keys, credit cards, books and other property of or relating to
the Company or any Affiliated Company (including without limitation all
documents prepared by him or which may have come into his possession in the
course of his employment hereunder) then in his possession.
16.5 After the termination of the Executive's employment he shall not at any
time thereafter represent himself as being in any way connected with or
interested in the business of or employed by the Company or any Affiliated
Company, or use for trade or other purposes the name of the Company or any
Affiliated Company or any name capable of confusion therewith, unless entitled
to do so under the terms of a separate employment agreement with an Affiliated
Company.
16.6 The termination of the Executive's employment for whatever reason shall not
affect those terms of this Agreement which are expressed to have effect
thereafter and shall be without prejudice to any accrued rights or remedies of
the parties.
17. Miscellaneous
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17.1 The term "Affiliated Company" in relation to the Company shall mean another
company which is a subsidiary of, or a holding company of, or another subsidiary
of a holding company of, the Company.
17.2 This Agreement is the entire agreement between the Parties in relation to
its subject matters and supercedes all previous agreements which may have been
executed by the Company or any Affiliated Company and the Executive. Additional
agreements regarding the subject matter of this Agreement do not exist. Changes
and additions to this Agreement, including this Clause, must be made in writing
in order to be legally binding on the parties.
17.3 If any provision of this Agreement is determined to be invalid, the
validity of the remainder of this Agreement shall remain unaffected. The parties
agree to replace, to the extent possible, any invalid provision with a valid
provision that comes as close as possible to the parties' original economic
intent.
17.4 This Agreement shall be governed by and construed in accordance with
English law and the parties agree to submit to the non-exclusive jurisdiction of
English courts as regards any claim or matter arising in respect of this
Agreement.
IN WITNESS WHEREOF this Agreement has been duly executed the day and year first
above written.
The Company The Executive
/s/ Ken Holec /s/ Patrick Dauga
- --------------------------- ----------------------------
Ken Holec Patrick Dauga
Director
Schedule A - Bonus and Commission Plan
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<PAGE>
SCHEDULE A
Commission and Bonus Plan
Executive: Patrick Dauga
Company: ShowCase (UK) Limited
Period: October 1, 1997 through March 31, 1998
Territory: Europe, Middle East, Africa and South America
Revenue Quota: $3,800,000 in net product, service and maintenance revenue booked
from October 1, 1997 thru March 31, 1998 as per the following
schedule in thousands:
- --------------------------------------------------------------------------------
Oct-
March
Oct Nov Dec Jan Feb Mar total
- --------------------------------------------------------------------------------
Product 360 360 480 495 495 660 2850
- --------------------------------------------------------------------------------
Services 48 48 64 66 66 88 380
- --------------------------------------------------------------------------------
Support 72 72 96 99 99 132 570
- --------------------------------------------------------------------------------
Total 480 480 640 660 660 880 3800
- --------------------------------------------------------------------------------
QTR
Total 1600 2200
- --------------------------------------------------------------------------------
Compensation
Target: $140,000 for the 6 month period, including base salary
Bonus
Guarantee: Guaranteed bonus of $8,833 per month through November 30,1997
Gross Margin: Bonus target of $10,000. Fiscal year end bonus paid at the rate
of $5,000 if gross margin exceeds 10%, $10,000 if gross margin exceeds 15%, or
$15,000 if gross margin exceeds 20%. "Gross margin"' is defined as booked
revenue arising from customers in the Territory, less all direct costs and cost
of sales inclusive of physical product delivery expense and third party
royalties. For the fiscal year ending March 31, 1998, the gross margin
definition excludes costs for Corporate and European marketing, European client
support and European finance & administration.
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<PAGE>
Commission: Target of $25,334 based on December 1997 through March 1998
revenues in the Territory of $2,840,000. This commission plan will apply
effective with the close of business in November 1977 with the first payment to
occur on December 31, 1997. Commissions paid at the rate of .4% when trailing 3
months quota performance is below 80%, .9% when trailing 3 months quota
performance is between 80-120%, and 1.4% when trailing 3 months quota
performance is over 120%. Commission shall be determined on a rolling 3 month
basis by using the two prior months and the month just completed to determine
the commission rate to apply to the just completed month's revenue. For the
purpose of calculating the Commission due for the month of November, the actual
ShowCase Revenue of $695,000 shall also be used as the quota for the month of
September.
"Revenue" is defined as net product revenue booked after payment of sales and/or
finders fees to third parties, services revenues recognized for work performed
by ShowCase personnel plus the net of any third party service revenues invoiced
by ShowCase after deducting the third party charges for the services rendered in
the generation of such revenues, plus all maintenance/support fees recognized.
Miscellaneous: All interpretations of this plan are to be made by the Chairman
of the Company. The Company retains the right to change this plan at any time
should inaccuracies or errors be discovered that are inconsistent with the
intent of the Company to pay bonuses consistent with performance achievement.
Bonus payments may be withheld or debited in the event that ShowCase is unable
to collect payment from the customer within a reasonable time frame. Similarly,
bonus payments may be withheld or debited in the event the Executive fails to
apply sound ethical judgement and good business practice in any transaction,
including compliance with pre-authorised levels or discount and fair
representation of product attributes.
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EXHIBIT 10.7
[Letterhead of ShowCase Corporation]
August 23, 1996
Mr. Kevin R. Potrzeba
25933 North Arrowhead Drive
Mundelein, IL 60060
Dear Kevin,
On behalf of the ShowCase Corporation Management Team, it is with great pleasure
that I extend to you the following Offer of Employment with ShowCase Corporation
(ShowCase).
I would like to offer you the position of Vice President of Sales, reporting to
Ken Holec, President and CEO of ShowCase Corporation, in our Chicago office.
This position shall begin on September 3, 1996. Your starting base salary shall
be $5,416.66 per pay period. As the Vice President of Sales for ShowCase
Corporation, you will also be entitled to participate in ShowCase's Vice
President of Sales Compensation Plan for FY97 as outlined in the attached
document. ShowCase employees are paid semi-monthly on the 15th and last day of
each month, twenty-four (24) times per year. You will receive your first
paycheck on September 15, 1996.
For the first ninety (90) days of employment with ShowCase Corporation, all new
employees work under a probationary status. At the conclusion of this
probationary period, your performance shall be reviewed. Your next performance
review shall take place following nine (9) months of completed service with
ShowCase and each year on that date thereafter.
As a full-time ShowCase employee, you will be entitled to participate in
ShowCase's cafeteria style benefits program. You will be eligible for life
(required) and, if elected, dental, disability, voluntary term life and health
coverage (optional). If selected, your benefits coverage shall begin on October
1, 1996. Currently ShowCase contributes $335 per month towards your selection of
health, dental, life and disability insurance coverage(s). Should any sum remain
of this contribution after your benefits payment, this may be contributed to
ShowCase's 401(k) program.
Beginning October 1, 1996, you shall be eligible to participate in ShowCase's
401(k) program. All insurance elections and 401(k) contributions are handled on
a full or partial pre-tax basis. In addition, you may elect to have certain
other medical, dental, or child care expenses run through the plan on a pre-tax
basis. The pre-tax handling of these expenses can result in meaningful tax
savings and an increase in take-home pay.
<PAGE>
August 23, 1996
Kevin R. Potrzeba
Page 2
In the event that ShowCase terminates your employment for any reason other than
for cause, as defined by ShowCase policy, you will be entitled to receive salary
continuance, equal to your base salary, for a period of six (6) months following
your date of termination or until you have secured permanent employment
elsewhere, which ever occurs first. If, at the conclusion of this six (6) month
period, you have been unable to secure employment elsewhere and it is ShowCase's
opinion that you have made a good faith effort to do so, ShowCase will continue
to provide you with salary continuance for an additional six (6) month period or
until you have secured full-time employment elsewhere. You shall not be entitled
to salary continuance should you voluntarily terminate your employment with
ShowCase Corporation for any reason other than following a "change of control"
of ShowCase. "Change of Control" is defined as the acquisition by a person, not
currently a shareholder of the Company, of shares of ShowCase stock representing
more than 50% of the voting power of the outstanding shares and which results in
a substantial change in the scope of your employment responsibilities or job
location.
Should you accept employment with ShowCase Corporation, Federal law requires you
to produce documents establishing your identity and right to work authorization.
Our company cannot legally hire you if you do not produce such verification
within three (3) days of your start date. Such documentation could include a
drivers license plus either an original social security card, a birth
certificate, or a passport.
Enclosed with this Offer of Employment, you shall find ShowCase Corporations
Policy Handbook detailing ShowCase Corporations major policies and standards of
employment. Please read this handbook carefully. By signing the enclosed Letter
of Acceptance, you are acknowledging your understanding of these policies and
standards and agreeing to abide by them. In addition, you will also find
enclosed the ShowCase Confidentiality, Inventions and Restrictive Covenant
Agreement. Please sign and return these documents with your signed Letter of
Acceptance.
Should you have any questions regarding ShowCase Corporation or this Offer of
Employment, please do not hesitate to contact me. Should you choose to do so,
please sign and return the enclosed Letter of Acceptance by August 28, 1996.
Sincerely,
/s/ Eric Schultz
Eric Schultz
Director of Human Resources
ShowCase Corporation
<PAGE>
EXHIBIT 10.8
[Letterhead of ShowCase Corporation]
July 31, 1998
Mr. Roger Bottum
839 Locust Street
Winnetka, IL 60093
Dear Roger:
On behalf of the ShowCase Corporation Management Team, it is with great pleasure
that I extend to you the following Offer of Employment with ShowCase Corporation
(ShowCase).
Compensation
I would like to offer you the position of Vice President of Marketing, reporting
to Ken Holec, President and CEO of ShowCase Corporation. You will be based at
our ShowCase Corporation office at Rosemont, Illinois. This position shall begin
on August 17, 1998. Your annual base salary shall be $175,000.00, plus a
targeted bonus of $62,500. ShowCase employees are paid semi-monthly on the 15th
and last day of each month, twenty-four (24) times per year. You will receive
your first paycheck on August 31, 1998. As the Vice President of Marketing for
ShowCase Corporation, you will also be entitled to participate in ShowCase's
Executive Compensation Plan as outlined on the attached document.
Severance Pay
Should ShowCase terminate your employment for any reason other than for cause
(as defined by ShowCase policy), you will be entitled to receive salary
continuance equal to your base salary for six (6) months, or until you have
secured permanent employment elsewhere, whichever occurs first. If the
termination occurs during the first six (6) months of employment, the salary
continuation shall be increased by an additional six months less the number of
months worked. The first month of salary continuance would begin the month
following your termination date. To be eligible for the salary continuation you
must have made a good faith effort to secure alternate employment. You shall not
be entitled to salary continuance should you voluntarily terminate your
employment with ShowCase Corporation for any reason other than following a
"change of control" of ShowCase. "Change of Control is defined as the
acquisition by a person, not currently a shareholder of the Company, of shares
of ShowCase stock representing more than 50% of the voting power of the
outstanding shares and which results in a substantial change in the scope of
your employment responsibilities or job location."
Stock Option Plan
You will also be eligible to receive 135,000 shares of ShowCase Corporation at
the price of $2.00 per share. 90,000 shares will vest at 1/60th per month over
five years, and the other 45,000 shares will cliff at 9 years and 11 months,
accelerating retroactively to the five year schedule upon either
<PAGE>
Mr. Roger Bottum
July 31, 1998
Page 2
being promoted to COO or achievement of an alternative objective mutually agreed
upon by you and the ShowCase Corporation Board or Directors.
SSA Bonus
If starting with ShowCase Corporation on August 17, 1998 would prevent you from
receiving a $11,250 bonus from SSA that is due to you after September 1,
ShowCase Corporation will reimburse you for this amount. If SSA does pay you the
$11,250 bonus, ShowCase Corporation is under no obligation to pay this amount to
you.
Insurance Programs
As a full-time ShowCase employee, you will be entitled to participate in
ShowCase's cafeteria style benefits program. You will receive $50,000 life
insurance paid for by ShowCase Corporation and, if elected, medical, disability,
voluntary term life and dental coverage. Your insurance benefits coverage shall
begin on September 1, 1998, Currently ShowCase contributes $350 per month
towards the cafeteria style benefits program. In addition, you may elect to
participate in the Non-reimbursed Medical Account and Dependent Care Account on
a pre-tax basis.
401 (k) Plan
Beginning October 1, 1998, you shall be eligible to participate in ShowCase's
401(k) Plan. All insurance elections and 401(k) contributions are handled on a
full or partial pre-tax basis
Acceptance acknowledgment
Enclosed with this offer to Employment, you shall find ShowCase Corporations
Policy Handbook detailing ShowCase Corporation's major policies and standards of
employment. Please read this handbook carefully. By signing the enclosed Letter
of Acceptance, you are acknowledging your understanding of these policies and
standards and agreeing to abide by them. In addition, you will also find
enclosed the ShowCase Confidentiality, Inventions and Restrictive Covenant
Agreement. Please sign and return these documents with your signed letter of
acceptance.
Should you have any questions regarding ShowCase Corporation or this Offer of
Employment, please do not hesitate to contact me. Should you choose to do so,
please sign and return the enclosed Letter of Acceptance by July 31, 1998.
Sincerely,
/s/ Ken Holec
Ken Holec
President and CEO
KH:pw
<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.
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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 (*) ,
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.
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<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
<PAGE>
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
(*) provided that (*) is then a reseller of the Essbase
Software. If (*) 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 (*) 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.
(*) 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. 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 (*) . 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 (*) 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 (*) , 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 (*) months from the
effective date of the agreement between ShowCase and (*) , but in any
case no later than (*). 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.
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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 $(*) . 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 $(*) .
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 $(*) . 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 $(*) . 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 $(*) . 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.
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<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 $(*) . 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.
Page 10 of 17
<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.
Page 11 of 17
<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.
Page 12 of 17
<PAGE>
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 (*)
provided that (*) is then a reseller of the Essbase Software. If (*) 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 (*) 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
-------------------------------- --------------------------------
(*) 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 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 (*)
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
(*) 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. 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 (*) 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 (*) 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 (*) 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 (*) 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 (*) in order to add the ShowCase
AS/400 Port as a licensed work under the (*), 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 (*) to list price or a similar term
with respect to the calculation of royalties, shall refer to
ShowCase's applicable list price; 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>
(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
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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 (*) 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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<PAGE>
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.
-11-
<PAGE>
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.
-12-
<PAGE>
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
-------------------------- --------------------------------
-13-
<PAGE>
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
-14-
<PAGE>
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.
-15-
<PAGE>
EXHIBIT 10.12
Amendment to AppSource/ShowCase License Agreement
This amendment is entered into by and between ShowCase Corporation ("Licensee")
and AppSource Corporation ("AppSource") sometimes collectively referred to as
"the Parties", effective as of March 7, 1997. In consideration of the ongoing
beneficial business relationship between the parties, Licensee and AppSource
hereby agree that the agreement between the parties dated January 4, 1996 as
amended to date (the "Agreement") shall be further amended as follows:
1. Add Section 1.b to read as follows: Wired for the WEB. The product,
documentation and Licensee product which relate to this Agreement are
in Exhibit A attached to this Agreement.
2. Section 3 first paragraph to be labeled 3.a.
3. Add Section 3.b to read as follows: AppSource agrees to deliver to
Licensee with a copy of WIRED for the WEB under the following schedule:
- ------------------------- --------------- ------------------------------------
Deliverable Date Due Description
- ------------------------- --------------- ------------------------------------
Based Wired Server Code (*) Base 8000 lines of code
written in Borland Delphi
used to construct the
foundation layer of the wired
Server.
- ------------------------- --------------- ------------------------------------
Completed Wired Server (*) All code associated with the
Code-Beta Version Wired Server written in
Borland Delphi against the
Microsoft NT Operating
System
- ------------------------- --------------- ------------------------------------
Completed Wired for The (*) Completed front end code
Web capable for running in either
- - Java Beta Version Microsoft Internet Explorer
v3.0 or greater or Netscape
Navigator v3.0 or greater.
Additional enhancements will
be made in April-May.
- ------------------------- --------------- ------------------------------------
4. Add Section 3.c to read as follows: User interface for Wired For The
Web will include the following capabilities:
(*) 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.
<PAGE>
o The ability to work with views already built using Wired For
OLAP client/server addition. Views supported will initially
include Reports and Charts, but not Forms or Pinboards. Any
functions available in a completed Wired For OLAP view built
using the client/server version, will be supported in the
Wired For The Web software with the exception of fonts. The
ability to modify existing views or build new views will be
supported.
o The ability to graph existing views will be supported.
Graphics will be a sub- set of the current charting
capabilities in Wired For OLAP including: changing chart
types, legends, titles, drill-down aware and swap-pivot.
5. Add Section 4.a-1 to read as follows: Licensee shall maintain
non-exclusive rights to market WIRED for the WEB in conjunction with
IBM AS/400 midrange computers.
6. 4.b-1 to read as follows: Licensee shall have the right anytime after a
one (1) year period commencing on the GA date of the Product to
purchase the source code for the Product for use only in conjunction
with IBM AS/400 midrange computer for a price equal to (*). In the
event that AppSource is acquired, Licensee may purchase the source code
for the Product for a price equal to (*). Licensee will own the rights
to the source code at no fee in the event of insolvency or bankruptcy.
7. Add Section 5.c to read as follows: Licensee shall translate the WIRED
Server code to C++ for use only in conjunction with the AS/400.
AppSource still owns the rights to this code and will have the right at
any time to purchase the C++ code back from Licensee for (*)
8. Add Section 8.a-1 to read as follows: Licensee will pay a fee equal to
(*) as specified in Section 8.b-1 below for an unlimited distribution
right of WIRED for the WEB for a period of one year following the
general availability of the product by Licensee or eighteen (18) months
after delivery of the code, as specified in section 3.b above, by
AppSource to Licensee whichever comes first. Licensee may renew the
unlimited distribution right of WIRED for the Web on an annual basis
according to the following payment schedule: Year 2 $(*); Year 3 $(*);
Year 4 $(*); Year 5 $(*). Licensee has the option to pay (*) of
AppSource's list price of the Product and not pay the annual licensee
fee in years two through five.
9. Add Section 8.b-1 to read as follows: Royalty payments for WIRED for
the WEB will be made in four (4) installments in the following order:
(*) upon the signing of this agreement by both parties, (*) sixty (60)
days after delivery of the product to Licensee or when Licensee makes
the product general available whichever is earlier, (*) three (3)
months after the second payment, (*) six (6) months after the previous
payment, for a total royalty payment of (*).
(*) 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>
10. Add Section 8.b-2 to read as follows: A $(*) late delivery fee will be
assessed for each 30 day period in which AppSource fails to deliver the
product as specified in Section 3.b above. Said late fee will come in
the form of the reduction of the royalty due AppSource under section
8.b-1 above.
11. Exhibit A will be modified as follows:
o Underneath Section 1 - Product, add WIRED for the WEB.
o Add Section 2.B to read WIRED for the WEB manual in its
existing form as delivered to AppSource clients.
o Change Section 3 to Section 3.A to read ShowCase Analyzer for
Microsoft Windows which incorporates the product.
o Section 3. B to read Analyzer for the WEB for Microsoft
Windows which incorporates the product.
o Change Section 5 - Specifications, to 5.A to read WIRED for
OLAP runs under Windows 3.1 or higher minimum 8mb of RAM,
minimum 486 based processor.
o Add Section 5.B to read as follows: WIRED for the WEB runs
under Windows '95 or higher minimum 8mb of RAM, minimum 486
based processor.
12. Add Section 14m to read as follows: AppSource acknowledges that
Licensee may develop software relating to the Internet and that nothing
in this Agreement shall prevent Licensee from developing or marketing
such software so long as such software does not infringe the copyrights
on the Product.
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
---------------------- -------------------------------
Richard Daley John Freund
President Vice President, Marketing
March 7, 1997 March 7, 1997
(*) 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 10.13
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
---------------------------- -----------------------------
Page 1
<PAGE>
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.
Page 2
<PAGE>
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.
Page 3
<PAGE>
December 9, 1998
License Agreement
2.04 SHOWCASE will provide to IBM (*), 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, (*) 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.
Page 4
<PAGE>
December 9, 1998
License Agreement
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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<PAGE>
December 9, 1998
License Agreement
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 (*) by adding the
Essbase AS/400 Port as a Licensed Work under the (*). 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 (*) for the Licensed Works thereunder
licensed on other platforms, with a minimum OTC royalty
established by (*); 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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December 9, 1998
License Agreement
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 (*); and (*) 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.
(*) 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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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 (*) 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.
(*) 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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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 (*) 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 (*) for
upgrade copies received by customers under such Software Subscription offering.
SHOWCASE (*) 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 (*). (*). 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 (*).
6.06 IBM has (*) 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, (*), 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 (*) to SHOWCASE unless IBM, IBM
Subsidiaries, or Distributors license the Product to such customer for full
productive use.
6.08 IBM may request (*) for the Licensed Work (*). If SHOWCASE agrees, both
parties will sign a letter specifying the licensing transaction and (*). 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
(*) 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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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 (*) (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).
(*) 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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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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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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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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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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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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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
----------------------------------- ------------------------------
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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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Outbound License Agreement
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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Outbound License Agreement
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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Outbound License Agreement
a. modify, in agreement with IBM, that certain (*) by adding the Essbase
AS/400 Port as a Licensed Work under the (*). 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 (*) for the Licensed Works thereunder
licensed on other platforms, with a minimum OTC royalty established by
(*); 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) (*) 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.
(*) 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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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 (*) 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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Outbound License Agreement
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, (*), 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 (*) to IBM unless
SHOWCASE, SHOWCASE Subsidiaries, or Distributors license the Product to
such customer for full productive use.
4.4 SHOWCASE may request (*) for the Licensed Work (*). If IBM agrees, both
parties will sign a letter specifying the licensing transaction and (*).
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
(*) 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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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
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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
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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.
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Attachment
Maintenance and Support Page 1 of 1
1.0 IBM has no maintenance or support obligations
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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.
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EXHIBIT 10.15
IBM
Software Vendor Marketing Partnerships
- --------------------------------------------------------------------------------
Marketing Relationship Agreement
This is a Marketing Relationship Agreement ("MRA") between ShowCase Corporation
("You") and International Business Machines Corporation ("IBM"). The complete
Agreement between the parties consists of this MRA and the following Attachments
and Exhibits:
a) Attachment - Reseller
b) Attachment - Cooperative Marketing
c) Attachment -- Public Sector Terms
d) Attachment - Certificate of Originality
e) Exhibit - Your End User License
Both parties accept the terms of this Agreement and identified Attachments and
Exhibits by signing below. If there is a conflict among the terms of this MRA
and any of its Attachments, the terms of the MRA prevail unless the Attachment
expressly indicates that particular terms within the Attachment prevail.
This Agreement supersedes and terminates Software Vendor Marketing Programs
Agreement No. VMP-575, dated January 15, 1997, and all other prior oral or
written communications between the parties relating to the subject matter
hereof. 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. This Agreement may only be modified by a writing signed
by both parties.
AGREED TO: AGREED TO:
International Business Machines ShowCase Corporation
Corporation
By: /s/ J. W. Mason By: /s/ Craig W. Allen
---------------------------- ------------------------------
J. W. Mason Craig W. Allen
----------------------------
Print Name
General Manager, Solution
Developer Marketing CFO
- ------------------------------- ---------------------------------
Title
5/28/97 5/23/97
- ------------------------------- ---------------------------------
Date Date
===============================================================================
1. Definitions
Capitalized terms in this Agreement have the following meanings:
Affiliates are Subsidiaries, wholesalers, dealers, distributors, agents and
other entities either party separately uses to perform its obligations under
this Agreement. For IBM, some Affiliates may also be called IBM Business
Partners or Business Associates.
Application Template(s) are application specific screens created using the
Products and do not require any modifications to the Products Code.
Code is computer programming code including both Object Code and Source Code:
a) Object Code is computer programming code in substantially binary form, and
includes header files of the type necessary for use or interoperation with other
computer programs. It is directly executable by a computer after processing or
linking, but without compilation or assembly.
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b) Source Code is computer programming code that may be displayed in a form
readable and understandable by a programmer of ordinary skill. It includes
related source code level system documentation, comments and procedural code and
all "Error" corrections and "Enhancements". Source Code does not include Object
Code.
Enhancements are changes or additions to the Products:
a) Basic Enhancements are all Enhancements, other than Major Enhancements,
including those that support new releases of operating systems and devices, and
correct Errors.
b) Major Enhancements provide substantial additional value and are normally
offered to customers for an additional charge.
Error is a) any mistake, problem or defect that causes a Product to malfunction
or to fail to meet its specifications; or b) any incorrect or incomplete
statement or diagram in the related documentation that causes a Product to be
materially inaccurate or inadequate.
Maintenance Support is the Service provided when a customer identifies an Error.
There are three levels:
a) Level 1 is the Service provided in response to the customer's initial contact
identifying an Error.
b) Level 2 is the Service provided to reproduce and attempt to correct the
Error, or to find that the Service provider cannot reproduce the Error.
c) Level 3 is the Service provided to isolate the Error at the component level
of the Products. The Service provider distributes the Error correction or
circumvention, or gives notice if no correction or circumvention is found.
Marketing Materials are Product brochures, manuals, technical specification
sheets, demonstration presentations, Product education and training materials,
Product descriptions used in electronic online services, and other marketing
sales literature provided by you to IBM for IBM's use in performance of
marketing activities. IBM's use of Marketing Materials may include transmission
of them through electronic marketing services.
New Products include a) all Major Enhancements to your Products; b) any of your
other software products that render your existing Products downlevel or
obsolete; and c) any of your other software products you make generally
available that perform functions similar to your existing Products.
Preload is the installation of a single copy of the Product(s) onto a
non-volatile storage device which is functionally integrated into a computer
system and shipped as part of the computer system by IBM.
Products are your computer programs in Object Code form, including
documentation, related materials, maintenance modifications, Basic Enhancements
and any security devices or "locks" that are listed in this Agreement.
Services are activities associated with the Products, such as Maintenance
Support. Services includes all three levels of Maintenance Support unless stated
otherwise.
Subsidiary is an entity that is owned or controlled directly or indirectly (by
more than 50% of its voting stock, or if not voting stock, decision-making
power) by you or IBM.
2. Product Marketing
2.1 IBM may, at its sole discretion, elect to either: a) acquire your Products
from you at the IBM Rate established herein and market and resell such Products
for licensing to customers (directly or through distribution channels) and at
prices established by IBM (the terms of the Reseller Attachment shall apply to
all such transactions); or b) request to assist you, for a fee, in the marketing
of your Products to customers at prices established by you (the terms of the
Cooperative Marketing Attachment shall apply to all such transactions).
2.2 IBM customers may include agencies or other units of the Federal Government,
or third parties under contract with the Federal Government ("Public Sector").
In the event IBM desires to market your Products to Public Sector customers, the
"Public Sector Attachment" (attached) shall be considered part of this
Agreement.
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2.3 IN NO EVENT SHALL IBM BOTH RESELL AND COOPERATIVELY MARKET YOUR PRODUCTS TO
A SPECIFIC CUSTOMER AT THE SAME TIME; THEREFORE, EITHER THE TERMS OF THE
RESELLER ATTACHMENT OR THE COOPERATIVE MARKETING ATTACHMENT SHALL GOVERN AND IN
NO EVENT SHALL BOTH BE IN EFFECT AT THE SAME TIME FOR A SPECIFIC CUSTOMER.
3. Territory
The territory for this Agreement shall consist of the United States and Puerto
Rico.
4. License Grant
4.1 To enable IBM to effectively market your Products and Services to customers,
you grant IBM certain non-exclusive rights and licenses. These rights and
licenses include the ability for IBM to use, copy, translate, reproduce,
display, perform, Preload, market and distribute, in any medium or distribution
technology whatsoever, whether known or unknown, the Products, trade marks and
tradenames, and associated Marketing Materials internally and to customers for
purposes of promoting the products, training IBM employees and IBM Affiliates on
the Products, and in some cases, providing additional services for the Products
to customers, including but not limited to the manufacturing or having
manufactured copies of your Products on separate media or Preloading them onto
computer systems.
4.2 IBM customers may include agencies or other units of a federal government,
or third parties under contract with a federal government ("Public Sector"). In
the event IBM desires to market your Products to Public Sector customers, the
terms and conditions contained in the "Public Sector Attachment" (attached)
shall be considered part of this Agreement.
4.3 You authorize us to use Your trademarks, trade names and copyrighted
materials for the Products solely for marketing them under this Agreement.
Except as provided for in section 3 of the Cooperative Marketing Attachment,
entitled "IBM Business Partner Emblem," you will not use our trademarks or trade
names without our prior written approval.
4.4 To further enhance IBM's ability to market the Products and Services, you
hereby grant to IBM a worldwide, non-exclusive right and license to use the
Products for creation of Application Templates. This right and license includes
the ability for IBM to make, have made, use, have used, execute, reproduce,
display, perform, prepare and distribute Application Templates in any medium or
distribution technology whatsoever, whether known or unknown. IBM has all right,
title and interest (including ownership of copyright) in such Application
Templates prepared by or on behalf of IBM. IBM will not owe you any additional
payments for this Application Templates license or for Application Templates IBM
markets and distributes to its customers in conjunction with the marketing of
the Products. You are not responsible for support of the Application Templates
or their associated maintenance.
4.5 These license grants include the right for IBM to authorize its Affiliates
to do some or all of the foregoing. This Agreement does not grant IBM any
ownership to any of the copyright rights in the Products.
5. End User License:
Except in sublicensing situations as set forth in the Reseller Attachment, IBM
will license the Products to customers under the terms of your End User License.
You will include a copy of your End User License with each Product before you
ship it to IBM's customer. It must be packaged so the customer has the
opportunity to review your End User License before use of the Product. IBM will
obtain the customer's signature on the End User License, if their signature is
required. IBM is not a party to the End User License and does not assume any
obligation for violations of it. You agree to modify your End User License, if
necessary, to comply with the terms and conditions of this agreement. The terms
of this Agreement, including its Attachments, and your End User License provide
specific legal rights; however, other rights may apply or may vary from
jurisdiction to jurisdiction. You agree to modify your End User License as
appropriate to comply with the law of each country(s) in the territory in which
IBM or an IBM Affiliate is actively marketing your Products. You further agree
to provide a reasonable number of copies of your End User License to IBM at no
additional charge, written in the local language(s) of each country in the
territory in which IBM or an IBM Affiliate is actively marketing your Products.
6. New Products/Withdrawal from Marketing
You represent that the Products available to IBM under this Agreement are always
the most current release or version that is available to your customers. If you
make New Products available to your customers, IBM may offer such New Products
to its customers under the terms of this Agreement. You will give IBM at least
six months notice prior to withdrawing any Product (including any version) from
marketing or support.
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7. Market Support:
You agree to provide the following market support activities to IBM and its
Affiliates at no additional charge during the term of this Agreement. All of
your personnel providing market support will have sufficient Product knowledge
and skills to adequately perform the support Services requested. Such personnel
will have at least the same level of Product knowledge and skills as your
personnel providing similar Services to your customers.
o Marketing Events: You agree to participate in trade shows, executive
conferences, and other marketing events, on dates and at locations
mutually agreed to by the parties.
o Telephone Support: You agree to provide telephone consulting services
during your normal business hours to address technical questions
related to demonstration, marketing, operation, use and installation
of the Products.
o Pre-sales Support: You agree to provide pre-sales technical support
services and demonstration assistance for the Products to IBM on dates
and at locations mutually agreed to by the parties.
o On-Line Services: IBM often markets software products via an online
service provider. In the event IBM decides to market your Products
electronically, you agree, if requested by IBM, to obtain a user id
(at your expense) from the on-line service provider for purposes of
participating in interactive areas wherein actual and potential IBM
customers of your Products may seek to exchange information and ask
questions relative to your Products. While IBM may also participate in
such interactive areas and respond to inquiries, there may be
inquiries to which we cannot appropriately respond. Therefore, within
two (2) business days of IBM's request, you agree to use your best
efforts to furnish IBM with an appropriate response.
8. Training:
You agree to provide the following training at no charge to IBM or its
Affiliates. All training shall be conducted on dates and at locations mutually
agreed to by the parties:
o During each 12-month period during the term of this Agreement, you
shall conduct (*) marketing training classes related to the
demonstration and marketing of the Products.
o During each 12-month period during the term of this Agreement, you
shall conduct (*) technical training classes related to the
installation and use of the Products.
For any additional training classes IBM may request, you agree to provide such
training on dates and at locations mutually agreed to by the parties. For any
additional training classes that the parties may agree to, IBM will reimburse
your travel & living expenses in accordance with IBM's standard reimbursement
policy, a copy of which will be provided to you on request.
9. Billable Services:
"Billable Services" are other services above and beyond those specified in this
Agreement. If the parties agree that you will provide Billable Services to IBM,
you will furnish such services in a workmanlike manner in accordance with the
terms and conditions of a separate IBM Agreement to be negotiated in good faith
by the parties. Payment by IBM for Billable Services will be made to you in
accordance with the separate IBM Agreement or IBM purchase order authorizing
such Billable Services.
10. Most Favored Customer
If, during the term of this Agreement you enter into an agreement with a third
party for a relationship similar to the one set forth herein with terms that are
more advantageous to such third party than those specified in this Agreement,
then you shall promptly notify IBM in writing. IBM shall have the right within
30 days after receiving your notification to substitute such different terms for
those specified in this Agreement, effective as of the date of availability of
such terms to the third party. You shall return to IBM any payments IBM made
subsequent to such date which are in excess of the payments required under the
substituted terms.
(*) 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>
11. Warranty
11.1 Each party warrants to the other that it has the resources to perform its
obligations under this Agreement, and that it will comply with any applicable
laws, rules or regulations.
11.2 You represent and warrant on an ongoing basis that: (1) you have sufficient
rights to the Products (including associated marks and names) to grant IBM the
rights specified in this Agreement, and to grant customers the rights specified
in your End User License or IBM's license agreement; (2) the Products conform to
their specifications and any representations made by you to IBM or customers;
(3) the Products (including but not limited to Marketing Materials) do not
infringe any patent, copyright, trademark or trade secret or any other
intellectual property rights of any third party, and do not contain any virus or
other harmful code; (4) all information you supply regarding the Products and
Services, including the information you provide in the Marketing Materials, is
accurate; and (5) the Products, when used in accordance with their associated
documentation, are capable of correctly processing, providing and/or receiving
date data within and between the twentieth and twenty-first centuries, provided
that all products (for example, hardware, software and firmware) used with the
Products properly exchange accurate date data with the Products.
12. Indemnification
You will defend and indemnify IBM, its Affiliates, customers and its and their
end users, if a third party makes a claim against them, whether actual or
alleged, based on your breach of any of the warranties contained in the Section
entitled "Warranty." If an infringement claim of any type appears likely or is
made against IBM, its Affiliates or customers, about a Product, you will obtain
the necessary rights for IBM, its Affiliates and customers to continue
exercising all rights granted under this Agreement, or you will modify the
Product or its name so that it is non-infringing, or replace it with a Product
that is functionally equivalent. In addition to any remedies specified in this
Agreement, IBM may pursue any other remedy it may have in law or in equity. You
will pay any settlement amounts you authorize and all costs, damages and
attorneys' fees that a court finally awards if IBM promptly provides you notice
of the claim, and allows you to control and cooperates with you in the defense
of the claim and settlement negotiations. IBM may participate in the proceedings
at its option and expense.
13. Limitation of Liability
Except for claims arising under the Section entitled "Indemnification," neither
party shall be liable to the other for any economic consequential damages
(including lost profits or savings) or incidental damages, even if advised that
they may occur. IBM's total liability is limited to payments due to you under
this Agreement.
14. Term and Termination
14.1 This Agreement shall be effective when signed by both parties and shall
remain in effect unless terminated as set forth below.
14.2 IBM may terminate this Agreement for convenience on 90 days prior written
notice to you. In recognition of the initial costs associated with IBM's
marketing efforts for your Products, you may not terminate this Agreement for
convenience during the first 12 months after its execution. After the first 12
months you may terminate this Agreement for convenience with 90 days prior
written notice to IBM. The effective date of termination will be specified in
such prior written notice.
14.3 Either party may terminate this Agreement if the other materially breaches
its obligations. The termination must be by written notice specifically
identifying the breach upon which it is based and will become effective 90 days
after the notice, unless the breach is corrected during the 90 days.
14.4 At the end of the Agreement IBM will either pay you for, return to you, or
destroy, any copies of the Products which IBM has in its inventory. IBM may
continue marketing any Products in its inventory and distribution channels at
the time of termination. Any terms of this Agreement which by their nature
extend beyond the day this Agreement ends remain in effect until fulfilled, and
apply to respective successors and assignees. Except as otherwise provided in a
related agreement, upon termination of this Agreement, all rights and licenses
granted by you to IBM shall cease, except IBM shall continue to have all
necessary rights and licenses to perform the following activities: (a) IBM and
its Affiliates may sell, lease, license and distribute any inventory of
Products, (b) IBM and its Affiliates may continue to exercise the rights and
licenses granted under this Agreement for up to six months after termination to
fill
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<PAGE>
customer orders IBM receives before the termination date, (c) for as long as
necessary to provide maintenance and support to IBM customers. Any payment
obligations by either party shall survive and continue. All rights and licenses
granted to IBM's customers and to IBM for internal use shall survive and
continue and shall in no way be affected by the termination of this Agreement.
15. Information
All information exchanged under this Agreement is non-confidential. Neither
party shall disclose the terms of this Agreement to any third party without the
other party's prior written consent, except to the extent necessary to establish
each party's rights hereunder, or, as required by applicable law or regulations.
You agree not to issue press releases or other publicity regarding this
Agreement or the relationship under it without IBM's prior written approval.
16. Taxes
Each party is responsible for complying with the collection, payment, and
reporting of all taxes imposed by any governmental authority applicable to its
activities in connection with the sale, lease, delivery or license of the
Products under this Agreement. Neither party is responsible for taxes that may
be imposed n the other party. Situations may arise where governmental
authorities require IBM to withhold from amounts payable to you. In such cases,
IBM may withhold the amount of taxes due from payments to be made to you under
this Agreement and remit the taxes withheld to the governmental authority.
17. Notice
Any notice required or permitted under this Agreement will be sent to the
representative named below, and shall be effective upon receipt as demonstrated
by reliable written confirmation (for example, certified mail receipt, courier
receipt br facsimile receipt confirmation sheet.) Each party will notify the
other if their coordinator changes.
For IBM: For you:
International Business Machines Corporation ShowCase Corporation
3200 Windy Hill Road - WG9A 4131 Highway 52 North, Ste. G111
Atlanta, GA 30339 Rochester, MN 55901
Attention: Robert A. Kramich Attention: John Freund
(770) 835-9349 (507) 288-5922
18. General
18.1 Neither party guarantees the success of any marketing effort it engages in
for the Products. IBM may independently develop, acquire, and market materials,
equipment, or programs that may be competitive with (despite any similarity to)
the Products or Services. Each party is responsible for its own costs, including
all business, travel and living expenses incurred by the performance of this
Agreement.
18.2 Neither party has relied on any promises, inducements or representations by
the other, except those expressly stated in this Agreement. This Agreement is
not to be construed as a commitment or obligation, express or implied, on the
part of IBM that IBM will market, sell, purchase, license or sublicense any
Products under this Agreement.
18.3 You may not assign, sell, transfer or subcontract any obligations under
this Agreement without IBM's permission. Any act to do so is considered null and
void. You will promptly notify IBM of any significant change to your business
structure or operating environment.
Upon such notification, IBM may terminate this Agreement immediately.
18.4 Neither party will bring a legal action against the other more than two
years after the cause of action arose. Each party waives a jury trial in any
dispute. Failure by either party to demand strict performance or to exercise a
right does not prevent either party from doing so later.
18.5 The parties are independent contractors. Personnel you supply are deemed
your employees and are not for any purpose considered employees or agents of
IBM. Each party assumes full responsibility for the actions of its personnel
while performing its obligations under this Agreement and is solely responsible
for their direction and compensation. The parties agree that use of the Products
by IBM does not create any obligations for IBM in any way limiting or
restricting the assignment of its employees. IBM and its employees are free to
use any information, processing ideas, concepts or techniques disclosed in the
Products for any purpose whatsoever, subject to your statutory patent and
copyright riqhts.
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18.6 The laws of New York govern this Agreement. The United Nations' Convention
on the International Sale of Goods does not apply.
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IBM
Reseller Attachment
- --------------------------------------------------------------------------------
This Reseller Attachment sets forth the additional terms under which we may
acquire the Products at the IBM Rate set forth herein and market and license
such Products to our customers at prices to the customer established by IBM.
This Reseller Attachment is invoked when IBM makes the unilateral election to
market and license Your Products to a customer. IBM will notify you of our
election to act as a reseller of your Products to a specific customer by sending
you an IBM order as set forth in the Section below entitled, "Delivery," by
mail, fax, or electronic means.
1. Additional License Grants
To enable IBM to market and license your Products and Services to customers, you
grant to IBM the non-exclusive rights and licenses set forth in this Section 1
in addition to the rights and licenses granted in the Agreement.
1.1 You grant IBM a non-exclusive right and license to use, copy, translate,
reproduce, display, perform, market and distribute, in any medium or
distribution technology whatsoever, whether known or unknown, the Products and
Services to customers. Each time IBM provides a Product to a customer for
productive use, IBM will pay you a royalty in accordance with the terms stated
in this Agreement.
1.2 The license grant in 1.1 above allows IBM to resell and distribute your
Products and Services to customers either alone or in combination with other IBM
and/or non-IBM machines and/or software programs for the purpose of
manufacturing or having manufactured copies of your Products on separate media
or Preloading them onto computer systems, license the Products to customers
under the terms of your end user license agreement ("End User License"), allow
customers to evaluate them free of charge (limited to 60 days of trial use), and
in some cases provide maintenance and support or additional services for the
Products.
1.3 In certain situations or in certain geographies it may be advantageous to
allow IBM to provide the Products and Services to customers under an IBM end
user license agreement. Therefore, you hereby authorize IBM and its Affiliates
to sublicense the Products to customers under the terms of an IBM end user
license agreement. IBM is responsible for all licensing terms offered to its
customers when IBM sublicenses the Products under its end user license.
Hereafter, every reference in this Agreement regarding IBM's right to license
the Products shall also include IBM's right to sublicense the Products. You
warrant the accuracy of all statements in the attached completed Certificate of
Originality. You agree to complete a new Certificate of Originality before
adding any New Products to this Agreement.
1.4 These license grants include the right for IBM to authorize its Affiliates
to do some or all of the foregoing. This Agreement does not grant IBM any
ownership to any of the copyright rights in the Products.
2. Your Responsibilities
2.1 Delivery You agree to deliver the Products specified by IBM in an order, and
will use your best efforts to meet IBM's requested delivery dates and
quantities. You will notify IBM within 5 working days of IBM's order if you can
not meet IBM's request, and will include a proposed delivery schedule that you
agree to meet. IBM can accept your proposed delivery schedule or cancel the
order without liability. If requested by IBM, you agree to electronically
confirm to IBM within one working day the date your Product shipped to IBM's
customer. You will pay all transportation charges required for the shipment of
the Products to the location IBM specifies.
2.2 Support: You agree to offer warranty, maintenance, and end user support
Services to IBM customers that are at least as favorable as those you generally
offer to your own customers for the Products. This offer shall be available to
IBM customers during the term of this Agreement and for at least one year after
delivery of each Product licensed to an IBM customer under your End User
License. If a Product does not comply with its warranties, you agree to correct
the problem without charge and in a timely manner.
2.3 Product Masters: You will provide IBM two (2) complete machine readable
master copies of each of the Products listed in Section 4.0 of this Attachment,
entitled "Royalties," in magnetic or optical media in a form suitable for use in
manufacturing or preloading of such Products on computer systems. You agree to
deliver such items within fifteen (15) days after the effective date of this
Agreement.
2.4 Returns: You agree to give IBM a refund for any monies it paid for Products
that contain an Error that, in IBM's reasonable judgement, render the Product
unsuitable for marketing.
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2.5 Error Correction: You will use commercially reasonable efforts to correct
reproducible Errors in the Products and associated documentation. If you are
unable after such efforts to correct the Errors, you agree to replace the
Products not meeting your warranty.
IBM will either return the defective Products to you, or destroy them, at your
direction.
2.6 Marketing Materials: You agree to provide to IBM and its Affiliates at no
additional charge: 1) a mutually agreed to number copies on an annual basis; and
2) camera ready artwork, suitable for use in manufacturing, of the Marketing
Materials related to the Products in the local language of each country in the
territory in which IBM or an IBM Affiliate is actively marketing your Products.
IBM and its Affiliates may make unlimited copies of the Marketing Materials to
provide to potential or actual customers. You authorize IBM to alter the
Marketing Materials to indicate that IBM has the authority to market, price,
license and provide services for the Products. IBM shall submit for your prior
written approval all Marketing Materials which IBM prepares for marketing your
Products to customers. Your consent to use all information included in such
Marketing Materials, including but not limited to, content, descriptions,
technical information and usage of trademarks, trade names and copyrighted
materials shall not be unreasonably withheld. You shall respond in a timely
manner to IBM for all such submissions. You also agree to provide to IBM a
reasonable number of copies of your Products for demonstration purposes, as
provided for in this Agreement.
3. IBM's Responsibilities
3.1 Marketing Activities: IBM will use reasonable efforts to develop and
implement a market support plan for the Products. The market support plan may
include, at IBM's sole discretion, the following marketing activities for the
Products:
o identify and qualify customers for the Products;
o as appropriate, demonstrate the Products to customers;
o develop sales proposals;
o advertise your Products in various trade magazines and other
publications;
o include your Products in trade shows, executive conferences, and other
marketing events;
o implement telemarketing or direct mail campaigns;
o electronically publish information about your Products.
3.2 Activities: IBM is responsible for ordering, billing and accounts receivable
activities related to the Products it licenses to customers.
4. Royalties
4.1 IBM will pay you the royalty amount set forth in the following table ("IBM
Rate") 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 not to charge IBM
higher rates than those you charge to others who have a similar relationship
with you. IBM is not obligated to license 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. With the exception of the IBM Rate (subject to any withholding
requirements plus any applicable transaction based taxes), 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 United
States and Puerto Rico.
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Product
Type Product Name IBM Rate
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Products ShowCase Strategy Promotion #1((*) workstations)(1) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Strategy Promotion #2 ((*) workstations)(2) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Server/Query ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Server/Query ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Server/Query ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Server/Query ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Server/Query ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Server/Query ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Server/Query ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
(*)
- -------------------------------------------------------------------------------------------------------------------
Products ShowCase Report Writer(3) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Report Writer(3) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Report Writer(3) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Report Writer(3) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Report Writer(3) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Report Writer(3) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Report Writer(3) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
(*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Analyzer(4) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Analyzer(4) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Analyzer(4) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Analyzer(4) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Analyzer(4) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Analyzer(4) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Analyzer(4) ((*) workstations) (*)
- --------------------------------------------------------------------------------------------------------------------
(*)
- --------------------------------------------------------------------------------------------------------------------
Products ShowCase Distributor(5) (*)
- --------------------------------------------------------------------------------------------------------------------
Products Essbase/400 Server (*)
- --------------------------------------------------------------------------------------------------------------------
Products Essbase/400 Port(6) (concurrent Ports) (*)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) ShowCase Strategy Promotion #1 is good through 7/31/97 and includes ShowCase
Server/Query, ShowCase Report Writer and ShowCase Distributor.
(2) ShowCase Strategy Promotion #2 is good through 7/31/97 and includes ShowCase
Server/Query, ShowCase Report Writer, ShowCase Analyzer, ShowCase Distributor,
Essbase/400 Server and Essbase/400 Port.
(3) Report Writer requires Server.
(4) Analyzer will support Essbase/400 only.
(5) Distributor connection shall mean a line between two or more AS/400's.
(6) Minimum initial order of 5 ports required.
4.2 In the event IBM finds it necessary to offer a customer a special discount,
then on a case by case basis IBM may request a lower IBM Rate for such
transaction. If you agree to such lower IBM Rate, the parties will sign an
amendment specifying the lower amount.
4.3 IBM has no royalty obligation for Products used for the following purposes:
o for manufacturing copies of your Products on separate media or
Preloading them onto computer systems;
o preparation of Application Templates by IBM (including third parties
under contract with IBM);
o marketing, demonstrations, customer evaluations and trial use;
o Product training and education of IBM and IBM Affiliate employees;
o Product maintenance and support;
(*) 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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o backup and archival purposes;
o Basic Enhancements and Error corrections, or
o warranty replacement copies of the Products
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
invoices a customer for a 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. Payments based on foreign revenue will be converted to U.S. dollars at
the rate of exchange published by Reuters Financial Service on approximately the
same day each quarter.
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IBM
Cooperative Marketing Attachment
- --------------------------------------------------------------------------------
In the event IBM makes the unilateral election to assist you, for a fee, in
marketing of your Products to customers in the United States and Puerto Rico and
under the terms of your End User License and at prices to the customer
established by you, the provisions set forth in this Cooperative Marketing
Attachment shall apply to all such transactions. IBM will notify you of its
election to provide marketing assistance by sending to you a prospect
registration letter.
1. Appointment
You agree to accept or reject the prospect registration letter and sign and
return it to IBM within ten (10) business days of receipt. Any rejection of the
prospect registration letter by you must be accompanied by a statement
indicating the basis of rejection. By accepting the prospect registration
letter, you thereby designate and appoint IBM to act as your non-exclusive
representative for the marketing of your Products to the customer identified
therein for a period of six months following its effective date unless extended
by mutual agreement. In such event, you will inform your personnel that IBM has
elected to cooperatively market the Products to this customer.
2. Expiration/Termination of the prospect registration letter
IBM may immediately commence reselling activities for a customer upon the
earlier of expiration of the term of the prospect registration letter or upon
notifying you that the customer identified therein has acquired the Products as
a result of cooperative marketing activities. IBM may terminate a prospect
registration letter for a customer by providing written notification to you. You
agree to confirm in writing to IBM your receipt of any such notification and
your understanding that IBM is prohibited from commencing reselling activities
to that specific customer for a period of six months. IBM may commence reselling
activities for the customer for which IBM is terminating the prospect
registration letter. 1) immediately, if IBM has not commenced cooperative
marketing activities or if you have rejected the prospect registration letter,
or 2) six months after IBM's notice of termination in the event IBM has
commenced cooperative-marketing activities. In the event of your rejection of a
prospect registration letter, IBM may immediately commence reselling activities
for the customer identified therein.
3. IBM Business Partner Emblem
IBM hereby grants you the use of the IBM Business Partner emblem ("Emblem") in
your advertising and promotional materials for the Products in the United States
and Puerto Rico. You shall not use the Emblem prior to IBM's initial
announcement of the availability of the Products. Any use must comply with the
instructions set forth in guidelines issued by IBM from time to time entitled
"IBM Advertising and Promotion Guidelines" ("Guidelines").
A copy of the Guidelines shall be provided to you and is incorporated herein by
reference. You may not use the IBM logotype other than as part of the Emblem.
Except for your press releases and as otherwise specified in the Guidelines, you
do not need to provide to IBM for IBM's prior review and approval your
advertising materials incorporating trademarks or trade names of IBM or that
which refers to you as a participant in the IBM Software Vendor Marketing
Program if such use complies with the Guidelines. You must provide to IBM for
IBM's prior review and approval your press releases if such release makes any
reference to the IBM Software Vendor Marketing Program. You shall make no
reference to IBM, IBM equipment and IBM products that may be misleading. You
agree to change, at your expense, any advertising materials which IBM, in its
sole judgment, determines to be inaccurate, objectionable, misleading, or a
misuse of IBM trademarks or trade names. You, on written demand by IBM, shall
immediately cease the use of any materials that IBM deems to be in violation of
this section. The authorization granted in this section shall terminate
immediately upon the termination or expiration of this Agreement. IBM reserves
the right to modify or revoke the authorization granted to you hereunder
effective upon thirty (30) days written notice. Such revocation shall be
effective immediately upon written notice in the event of any violation by you
of the Guidelines or breach of this Agreement. Upon revocation of the rights
granted in this section or upon termination or expiration of this Agreement, you
shall cease using the Emblem, and shall destroy any and all advertising
materials.
4. Your Additional Responsibilities
4.1 Pricing - Notwithstanding anything contained herein, you shall retain full
and absolute freedom and flexibility in pricing your Products, and in
establishing the terms and conditions under which they may be offered to
customers under the terms of this Cooperative Marketing Attachment.
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4.2 Marketing Package - "Marketing Package" means materials provided by you to
IBM for use in performing cooperative marketing activities. You agree to provide
a Marketing Package to the IBM marketing representative identified in each
prospect registration letter accepted by you. The Marketing Package shall
include the following:
o Software Vendor Marketing Programs Notice - an IBM supplied
description of IBM's responsibilities to prospects with respect to the
Product(s);
o Marketing Materials;
o Order Form - an IBM supplied form on which orders for the Product(s)
may be taken for you;
o Price Schedule - a written statement supplied by you of your retail
prices for the Product(s), including discounts offered, if any;
o System Requirements Statement - a written statement supplied by you
that identifies each Product's software and hardware dependencies and
prerequisites;
o Your End User License.
IBM shall have the right to review the materials supplied by you in the
Marketing Package and, except for your Price Schedule, to request reasonable
modifications.
You shall give IBM forty-five (45) days prior written notice should you elect to
change any materials supplied by you in the Marketing Package and shall provide
IBM with a complete copy of the revised Marketing Package at least thirty days
prior to the effective date of the changes. IBM shall have the right to review
all changes to the Marketing Package and, except for your Price Schedule, to
request reasonable modifications.
You shall at all times during the term of this Agreement ensure that the
Marketing Package completely and accurately represents the Products and shall
provide reasonable quantities of the most current Marketing Package to IBM upon
request.
4.3 Marketing Support - You shall cooperate with IBM in the marketing of the
Products. Such cooperation shall include the reasonable provision of technical
support services and training to IBM (including, but not limited to, telephone
support), and reasonable participation and assistance with sales calls to
prospects, trade shows and conferences. In addition, you shall, in a manner
reasonably consistent with industry practice, promote the Products through
national and local advertising.
4.4 Customer Qualification - You shall promptly review the qualifications of
each customer that has signed your End User License. If you determine that you
are unwilling to accept an End User License, you shall so notify IBM in writing
prior to notifying the customer. Your notice to IBM shall identify the reason
for such rejection.
4.5 Shipment - You shall ship or deliver the Products no later than the
requested shipment date contained in the order confirmation notice, as described
herein, or within 7 days of receipt said notice, unless a different date is
specified on your End User License. If such shipment date is not reasonably
possible, you shall promptly notify the customer and IBM of your projected
shipment date and shall ship, deliver or provide the Products at the earliest
possible date.
4.6 Invoicing and Payment - You shall invoice and use reasonable efforts to
collect all amounts payable under each End User License accepted by you. You
shall pay to IBM the compensation set forth in the Section entitled, "Payment to
IBM," and shall provide IBM with documentation and maintain records as provided
therein. You shall timely notify IBM when a customer's signature on an End User
License is independently obtained by you and payment is due IBM.
4.7 Order Confirmation - IBM may provide you with order confirmation notices
identifying Products licensed by customers. You shall confirm in writing within
ten (10) working days from date of receipt, the Products licensed by a customer,
the dollar value of the related End User License(s) and the estimated date you
will pay to IBM the associated fees as described in the Section entitled,
"Payment to IBM."
5. IBM'S Additional Responsibilities
5.1 Marketing Support Activities - IBM will, at its sole cost, undertake the
following Marketing Support Activities for the Products:
Page 13
<PAGE>
o provide to you the Emblem as described in the Section entitled, "IBM
Business Partner Emblem" of this Agreement; and
o issue an availability notice to the marketing force that describes the
Products and announces that the marketing force may solicit and obtain
orders for the Products on your behalf,
o make available to you a registration process whereby you may accept or
reject a customer; and
o include Your Products (identified as Software Vendor Marketing
Programs offerings) in IBM National Solution Center database.
5.2 Marketing Activities - In addition, IBM may at its sole discretion and cost,
undertake some or all of the following Marketing Activities for the Products:
o identify a customer for the Products;
o qualify the customer;
o participate in joint sales calls with you, including marketing
presentations and/or Product demonstrations;
o proposal support;
o solicit and obtain orders from customers on the Order Form and obtain
the customer's signature on your End User License and forward or
facilitate the forwarding of the same to you;
o in a manner and amount that IBM deems appropriate, compensate the
marketing force based upon fees received by IBM from you under this
Agreement.
6. PAYMENT TO IBM
6.1 IBM FEE - in consideration for the Marketing Support Activities and
Marketing Activities provided by IBM as described herein, you shall owe IBM a
fee ("IBM Fee"), listed in the table below, equal to the applicable percentage
of the total revenue received by you for Products under:
o (a) Your End User License agreements with customers obtained as a
result of Marketing Activities (with or without an order confirmation
notice and/or with or without a prospect registration); and
o (b) Your End User License agreements with customers rejected by you
under the Subsection entitled "Customer Qualification": provided,
however, that you subsequently accept a signed End User License
agreement for the Products from such customers during the term of this
Agreement and for six (6) months after IBM's withdrawal of the
Products from marketing; and
o (c) Additional End User License agreements for Products issued to
customers by you during the term of this Agreement and six (6) months
after IBM's withdrawal of the Products from marketing which are a
direct or follow-on result of IBM's Marketing Activities; and
o (d) Your End User License agreements with customers obtained as a
result of IBM's Marketing Activities initiated before IBM's withdrawal
of the Products from marketing and three (3) months following said
withdrawal.
- -------------------------------------------------------------------------------
Product Type Product Name IBM Fee
- -------------------------------------------------------------------------------
Products Showcase Strategy (*) of Your Revenue for Products
- -------------------------------------------------------------------------------
6.2 Payment Obligation - The IBM Fee for Marketing Activities shall accrue when
the customer's license fee for the Products becomes payable to you.
(*) 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 14
<PAGE>
6.3 Remittance - Your payment of the IBM Fee shall be made to IBM within thirty
(30) days after the close of each calendar month in which you receive payment
from a customer for Products. Your payment of the IBM Fee shall be accompanied
by an activity report summarizing the basis for the payment to IBM, and shall
include: the name, quantity, and unit price of each Product licensed by each
customer, the order confirmation control number, the IBM feature and/or program
number, the total due you from each customer, the total customer payments
received by you, the total fee due to IBM, the total fees paid to date to IBM
under each of your End User License(s), and the fee amount due for the reporting
month. For months in which no payment is due IBM, you will send an activity
report so stating. In addition, in the event: (a) you reject a customer-signed
End User License agreement; (b) a customer cancels its order prior to making
payment to you; or (c) you grant a customer a refund, the activity report shall
contain detailed information identifying the reasons for and amounts of any
resulting adjustment in payment due IBM.
6.4 Payments - Any payments due IBM under this Agreement shall be separate from,
and in addition to, any due IBM under any other agreement between the parties.
Your payments to IBM under this Agreement shall be sent to:
IBM Corporation
Vendor Marketing Programs Control Desk
Department BAR (WG09A)
3200 Windy Hill Road
Atlanta, GA 30339
6.5 IBM Fee Dispute - In the event IBM determines that additional payment is
due, IBM will issue an invoice for such additional amount with supporting
documentation. Except for disputed fees, you agree to pay such invoice within 30
days of receipt. In the event a dispute arises over fees due to IBM, IBM and you
agree to work in good faith toward a mutually agreeable resolution of the
dispute.
Page 15
<PAGE>
IBM
Public Sector Attachment
- --------------------------------------------------------------------------------
This Public Sector Attachment is considered part of the Agreement. It
establishes additional terms and conditions under which IBM may, at its sole
discretion, market and/or license your Products and Services to Public Sector
customers under your End User License. Public Sector customers include federal
government, federal government owned or affiliated (or sponsored) corporations
or other organizations involved in federal government procurement activities,
including but not limited to organizations that are authorized to procure using
IBM's General Services Agreement (GSA) Schedule Contract, or equivalent
documentation, and prime contractors and subcontractors who are engaged in
federal government procurement opportunities. Though actual usage of the
Products may occur outside the geographical boundaries of the Public Sector
customer's home country, such as embassies, the end user will be bound by the
end user license agreed to by the Public Sector's home country.
If the terms of this Attachment conflict with any terms of the MRA, the terms of
this Attachment will prevail.
1. Cooperative Marketing
When IBM elects to assist you for a fee in marketing your Products and Services
to Public Sector customers as set forth in the Cooperative Marketing Attachment,
you will contract directly with the Public Sector customer.
You shall 1) promptly disclose to all Public Sector customers the existence of
this Agreement, including the existence of the contingent fee payment
arrangement in effect with IBM that would apply to the Public Sector customer's
acquisition of the Product(s), 2) promptly, completely, and accurately execute
any certifications, representations, and disclosure documents that may be
required by any Public Sector customers to comply with federal regulations
requiring certification and disclosure of contingent fee arrangements applicable
to the acquisition of the Product(s).
2. Product Reselling
When IBM resells your Products for licensing to Public Sector customers, the
following additional terms apply:
1. Any limited license, limited preview, trial or demonstration use of the
Product(s) may be offered to Public Sector customers under the terms of the IBM
Agreement for Trial or Loan - Federal, or a similar IBM agreement, rather than
your End User License or your Trial License Agreement.
2. Once the Public Sector customer decides to procure your Products, IBM will
attempt to have the Public Sector customer directly execute your End User
License. In the event the Public Sector customer insists on one contracting
party, you authorize IBM to offer your End User License to the Public Sector
customer such that IBM and the customer will be the parties to the license. In
such cases, you agree that the license terms are inapplicable to IBM, but rather
govern the Public Sector customer's use of your Product(s).
3. You agree that your End User License terms may be modified as directed by the
procurement rules and regulations of the Public Sector customer or as otherwise
appropriate.
4. Specifically for Public Sector customers in the United States whose
procurement is governed by the Federal Acquisition Regulation ("FAR"), you
agree:
o (a) the minimum rights granted to such customers is that specified in
the Restricted Rights Notice (JUN 1987);
Page 16
<PAGE>
o (b) the Products IBM is authorized to market and license to Public
Sector customers are published copyrighted commercial computer
software meeting the definition of "restricted computer software" as
defined in FAR 52.227-14 (JUN 1987). Such Products also meet the
definition of Commercial item as defined in FAR 2.101 (AUG 1996).
o (c) you agree to the following clauses which must be contained in all
IBM subcontracts:
- (i) FAR 52.226-26, Equal Opportunity
- (ii) FAR 52.222-36, Affirmative Action for Handicapped Workers;
- (iii) FAR 52.222-35, Affirmative Action for Special Disabled and
Vietnam Era Veterans; and
- (iv) FAR 52.247-64, Preference for Privately Owned U.S. Flagged
Commercial Vessels.
o (d) You agree to accurately notify IBM whether your Products are
domestic end products for purposes of the Buy American Act (BAA), the
Trade Agreements Act (TAA) and related Public Sector statutes and
regulations. For purposes of this subparagraph, a domestic end product
which is software consists of Products as to which the country of
media replication, the country of printing of publications for such
Products, and the final assembly of such media and related
publications into the Products, completely occurs in the United
States.
5. Insofar as disputes are concerned, you agree that IBM may resolve disputes
with Public Sector customers in accordance with those customers' own disputes
resolution procedures.
6. In addition to the warranties set forth in this Agreement, you hereby
represent and warrant that you have all the rights to allow IBM to market and
license your Products to Public Sector customers. You warrant that you are not
suspended or debarred from doing business with any Public Sector customer.
7. To the extent required by regulation or statute, you agree to provide
supporting data including that with respect to your Product(s)' pricing,
location of manufacture, and commerciality.
<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 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 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 21.1
LIST OF SUBSIDIARIES
Name Jurisdiction
---- ------------
ShowCase Benelux N.V. Belgium
ShowCase Deutschland GmbH Germany
ShowCase France SARL France
ShowCase International, Inc. Delaware
ShowCase U.K. Limited United Kingdom
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS AND REPORT ON SCHEDULES
The Board of Directors
ShowCase Corporation:
The audits referred to in our report dated May 15, 1998 included the related
consolidated financial statement schedule as of March 31, 1998 and for each of
the years in the three-year period ended March 31, 1998 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
April 28, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF SHOWCASE CORPORATION & SUBSIDIARIES AS OF MARCH
31, 1997 AND 1998 AND AS OF DECEMBER 31, 1998 AND THE CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR EACH OF THE YEARS IN THE
THREE-YEAR PERIOD ENDED MARCH 31, 1998 AND FOR THE NINE MONTH PERIODS ENDED
DECEMBER 31, 1997 AND 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR 9-MOS 9-MOS
<FISCAL-YEAR-END> MAR-31-1996 MAR-31-1997 MAR-31-1998 MAR-31-1998 MAR-31-1999
<PERIOD-START> APR-01-1995 APR-01-1996 APR-01-1997 APR-01-1997 APR-01-1998
<PERIOD-END> MAR-31-1996 MAR-31-1997 MAR-31-1998 DEC-31-1997 DEC-31-1998
<CASH> 0 2,989 5,404 0 7,464
<SECURITIES> 0 0 443 0 173
<RECEIVABLES> 0 5,191 6,662 0 9,128
<ALLOWANCES> 0 300 500 0 675
<INVENTORY> 0 0 0 0 0
<CURRENT-ASSETS> 0 9,176 13,632 0 17,286
<PP&E> 0 2,674 3,677 0 3,921
<DEPRECIATION> 0 1,161 1,486 0 1,972
<TOTAL-ASSETS> 0 11,400 16,315 0 19,546
<CURRENT-LIABILITIES> 0 8,116 12,053 0 16,677
<BONDS> 0 682 1,157 0 751
0 0 0 0 0
0 5 14 0 14
<COMMON> 0 39 40 0 45
<OTHER-SE> 0 2,558 3,051 0 2,059
<TOTAL-LIABILITY-AND-EQUITY> 0 11,400 16,315 0 19,546
<SALES> 13,278 18,027 23,755 16,751 25,262
<TOTAL-REVENUES> 13,278 18,027 23,755 16,751 25,262
<CGS> 0 0 0 0 0
<TOTAL-COSTS> 2,341 3,527 6,222 4,174 6,717
<OTHER-EXPENSES> 10,111 14,464 21,135 15,197 19,298
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 97 97 123 109 139
<INCOME-PRETAX> 964 50 (3,059) (2,113) (699)
<INCOME-TAX> 150 0 175 125 135
<INCOME-CONTINUING> 814 50 (3,234) (2,238) (834)
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 814 50 (3,234) (2,238) (834)
<EPS-PRIMARY> .21 .01 (.82) (.57) (.19)
<EPS-DILUTED> .13 .01 (.82) (.57) (.19)
</TABLE>
