<PAGE>
As filed with the Securities and Exchange Commission on November 12, 1999
Registration No. 333-89879
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
AMENDMENT NO. 2
to
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
PHONE.COM, INC.
(Exact Name of Registrant as Specified in Its Charter)
----------------
<TABLE>
<S> <C> <C>
Delaware 3661 94-3219054
(State or Other
Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or
Organization) Classification Code Number) Identification Number)
</TABLE>
----------------
800 Chesapeake Drive
Redwood City, California 94063
(650) 562-0200
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
----------------
Alain Rossmann
Chairman and Chief Executive Officer
Phone.com, Inc.
800 Chesapeake Drive
Redwood City, California, 94063
(650) 562-0200
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
----------------
Copies to:
Mark A. Medearis Mark A. Bertelsen
Edward Y. Kim Jose F. Macias
Anita Vasudevan Jon Avina
Venture Law Group Elise Brinck
A Professional Corporation Wilson Sonsini Goodrich & Rosati
2775 Sand Hill Road Professional Corporation
Menlo Park, CA 94025 650 Page Mill Road
Palo Alto, CA 94304
----------------
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, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this 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 SOLE PURPOSE OF THIS AMENDMENT NO. 2 IS TO FILE CERTAIN EXHIBITS TO THE
REGISTRATION STATEMENT, AS SET FORTH BELOW IN ITEM 16 OF PART II.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of common stock being registered. All amounts are estimates
except the SEC registration fee and the NASD filing fee and the Nasdaq
National Market listing fee.
<TABLE>
<CAPTION>
Amount
to be Paid
----------
<S> <C>
SEC registration fee................................................ $ 219,675
NASD filing fee..................................................... 30,500
Nasdaq National Market listing fee.................................. 17,500
Printing and engraving expenses..................................... 250,000
Legal fees and expenses............................................. 400,000
Accounting fees and expenses........................................ 400,000
Blue Sky qualification fees and expenses............................ 5,000
Transfer Agent and Registrar fees................................... 10,000
Miscellaneous fees and expenses..................................... 67,325
----------
Total............................................................. $1,400,000
==========
</TABLE>
Item 14. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities, including reimbursement for expenses
incurred, arising under the Securities Act of 1933, as amended. Our amended
and restated certificate of incorporation provides for indemnification of our
directors and officers to the maximum extent permitted by the Delaware General
Corporation Law, and our bylaws provide for indemnification of our directors,
officers, employees and other agents to the maximum extent permitted by the
Delaware General Corporation Law. In addition, we have entered into
indemnification agreements with our directors and officers containing
provisions which are in some respects broader than the specific
indemnification provisions contained in the Delaware General Corporation Law.
The indemnification agreements may require us, among other things, to
indemnify our directors against certain liabilities that may arise by reason
of their status or service as directors, other than liabilities arising from
willful misconduct of culpable nature, to advance their expenses incurred as a
result of any proceeding against them as to which they could be indemnified,
and to obtain directors' insurance if available on reasonable terms. Reference
is also made to Section 7 of the underwriting agreement contained in Exhibit
1.1 hereto, indemnifying our officers and directors against certain
liabilities.
Item 15. Recent Sales of Unregistered Securities
(a) Since June 30, 1996, we have issued and sold, without payment of any
selling commission to any person, except as noted below, the following
unregistered securities (the following amounts are adjusted to reflect the
stock splits described in paragraph (1) below):
(1) Prior to completion of our initial public offering, we effected a
two-for-three reverse stock split of our outstanding convertible
preferred and common stock in which each three outstanding shares
of convertible preferred stock was split into two shares of
convertible preferred stock and each three outstanding shares of
common stock was split into two shares of common stock. In October
1999 we announced a two-for-one stock split of our outstanding
common stock, to be effected through a stock dividend payable on or
about November 12, 1999, to stockholders of record as of October
29, 1999.
II-1
<PAGE>
(2) In October 1996, we issued and sold shares of Series C preferred
stock convertible into an aggregate of 5,077,532 shares of common
stock to six venture capital funds and three strategic partners for
an aggregate purchase price of $9,674,983.
(3) In January and February 1998, we issued and sold shares of Series D
preferred stock convertible into an aggregate of 12,889,754 shares
of common stock to 19 venture capital funds, five strategic
partners and two individuals for an aggregate purchase price of
$32,748,354. Deutsche Morgan Grenfell acted as placement agent in
connection with this sale, for which it received usual and
customary placement agent fees.
(4) In March 1999, we issued and sold shares of Series E preferred
stock convertible into an aggregate of 4,917,086 shares of common
stock to a total of one venture capital fund, five strategic
partners and one individual investor for an aggregate purchase
price of $17,799,114. Credit Suisse First Boston Corporation acted
as placement agent in connection with this sale, for which it
received usual and customary placement agent fees.
(5) As of September 30, 1999, 3,488,922 shares of common stock had been
issued to our employees and consultants upon exercise of options or
pursuant to restricted stock purchase agreements and 9,783,420
shares of common stock were issuable upon exercise of outstanding
options under our 1995 and 1996 stock plans.
(6) In October 1999 we issued an aggregate of 2,393,026 shares of
common stock to 13 former shareholders of APiON Telecoms Ltd. in
connection with our acquisition of the outstanding share capital
of APiON.
(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).
The issuance described in Item 15(a)(1) was exempt from registration under
Section 2(3) of the Securities Act on the basis that such transaction did not
involve a "sale" of securities. The issuances described in Items 15(a)(2)
through 15(a)(4) and 15(a)(6) to be exempt from registration under the
Securities Act in reliance upon Section 4(2) thereof as transactions by an
issuer not involving any public offering. The issuances described in Items
15(a)(5) were deemed to be exempt from registration under the Securities Act in
reliance upon 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, as provided by Rule 701. In
addition, such issuances were deemed to be exempt from registration under
Section 4(2) of the Securities Act as transactions by an issuer not involving
any public offering. The recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends where affixed to the securities issued in such
transactions. All recipients had adequate access, through their relationships
with us, to information about Phone.com.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
3.3 (2) Amended and Restated Bylaws of the Registrant.
3.5 (2) Amended and Restated Certificate of Incorporation of Registrant.
4.1 (2) Form of the Registrant's Common Stock Certificate.
5.1 Opinion of Venture Law Group, a Professional Corporation.
10.1 (2) Form of Indemnification Agreement.
10.2 (2) 1995 Stock Plan, as amended, and form of stock option agreement and
restricted stock purchase agreement.
10.3 (2) 1996 Stock Plan and form of stock option agreement and restricted
stock purchase agreement.
10.4 (2) 1999 Employee Stock Purchase Plan and form of subscription agree-
ment.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.5 (2) 1999 Directors' Stock Option Plan and form of stock option
agreement.
10.6 (2) Fourth Amended and Restated Investor Rights Agreement dated
March 12, 1999.
10.7 (2) Voting Agreement dated January 23, 1998 and amendment thereto.
10.8 (2) Lease Agreement dated March 10, 1998 for offices at 800 Chesa-
peake by and between Registrant and Seaport Centre Associates,
LLC.
10.9 (2) Form of Change of Control Severance Agreement between the Reg-
istrant and the Registrant's Named Executive Officers.
10.10 (2) Relocation Agreement dated December 23, 1996 between the
Registrant and Charles Parrish.
10.11 (2) Warrant Agreements to Purchase Series C Preferred Stock dated
May 29, 1997 and July 17, 1997 by and between the Registrant
and Comdisco, Inc.
10.12 (2) Letter Agreement dated August 18, 1997 with Malcolm Bird.
10.13 (2) Incentive Compensation Plan for Malcolm Bird dated January 27,
1999.
10.14 (2) (3) OEM Master License Agreement with RSA Data Security dated De-
cember 2, 1996.
10.15 (2) Incentive Compensation Plan for Maurice Jeffery dated March
19, 1999.
10.16 (2) (3) Software License and Support Agreement dated as of May 1,
1996, with AT&T Wireless Services, Inc., as amended.
10.17 (2) (3) Client License Agreement dated as of January 1, 1999,
with Matsushita Communication Industrial Co., Ltd.
10.18 (4) First Amendment to Lease Agreement dated June 17, 1999, by and
between Registrant and Seaport Centre Associates, LLC.
10.19 (5) Agreement by and between Registrant and the former sharehold-
ers of APiON Telecoms Ltd. dated as of October 11, 1999.
10.20 (5) Registration Rights Agreement by and between Registrant and
the former shareholders of APiON Telecoms Ltd. dated as of Oc-
tober 26, 1999.
Lease dated July 9, 1999, between Merit Investments & Proper-
10.21 ties Limited and APiON Limited.
10.22 Letter Agreement between Registrant and Michael Mulica
21 (6) Subsidiaries of the Registrant.
23.1 Consent of KPMG LLP, Independent Accountants.
23.2 Consent of PricewaterhouseCoopers.
23.3 Consent of Counsel (included in Exhibit 5.1).
24.1 (6) Power of Attorney (see page II-5).
27.1 (6) Financial Data Schedule.
</TABLE>
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(1) To be filed by amendment.
(2) Incorporated herein by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (Commission File No. 333-75219).
(3) Confidential treatment has been granted by the Securities and Exchange
Commission with respect to certain information in these exhibits.
(4) Incorporated herein by reference to the exhibit filed with the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1999.
(5) Incorporated herein by reference to the exhibit filed with the Company's
Form 8-K filed on November 3, 1999.
(6) Previously filed.
(b) Financial Statement Schedules
Financial statement schedules are omitted because the information called
for is not required or is shown either in the consolidated financial
statements or the notes thereto.
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.
II-3
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") 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 Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1), or (4), or
497(h) under the Act shall be deemed to be a part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and
this 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 undersigned
Registrant has duly caused this Amendment to Registration Statement on Form S-
1 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Redwood City, State of California, on November 12, 1999.
Phone.Com, Inc.
/s/ Alan Black
By: _________________________________
Alan Black
Vice President, Finance and
Administration,
Chief Financial Officer and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement on Form S-1 has been signed by the following persons
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman and Chief Executive November 12, 1999
____________________________________ Officer (Principal
Alain Rossmann Executive Officer)
/s/ Alan Black Vice President, Finance and November 12, 1999
____________________________________ Administration, Chief
Alan Black Financial Officer and
Treasurer (Principal
Financial and Accounting
Officer)
* Director November 12, 1999
____________________________________
Roger Evans
* Executive Vice President and November 12, 1999
____________________________________ Director
Charles Parrish
* Director November 12, 1999
____________________________________
Reed Hundt
* Director November 12, 1999
____________________________________
David Kronfeld
* Director November 12, 1999
____________________________________
Andrew Verhalen
</TABLE>
/s/ Alan Black
* By: _________________________
Attorney-in-Fact
II-5
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.
3.3 (2) Amended and Restated Bylaws of the Registrant.
3.5 (2) Amended and Restated Certificate of Incorporation of Registrant.
4.1 (2) Form of the Registrant's Common Stock Certificate.
5.1 Opinion of Venture Law Group, a Professional Corporation.
10.1 (2) Form of Indemnification Agreement.
1995 Stock Plan, as amended, and form of stock option agreement
10.2 (2) and restricted stock purchase agreement.
1996 Stock Plan and form of stock option agreement and
10.3 (2) restricted stock purchase agreement.
1999 Employee Stock Purchase Plan and form of subscription
10.4 (2) agreement.
1999 Directors' Stock Option Plan and form of stock option
10.5 (2) agreement.
Fourth Amended and Restated Investor Rights Agreement dated
10.6 (2) March 12, 1999.
10.7 (2) Voting Agreement dated January 23, 1998 and amendment thereto.
Lease Agreement dated March 10, 1998 for offices at 800
Chesapeake by and between Registrant and Seaport Centre
10.8 (2) Associates, LLC.
Form of Change of Control Severance Agreement between the
10.9 (2) Registrant and the Registrant's Named Executive Officers.
Relocation Agreement dated December 23, 1996 between the
10.10 (2) Registrant and Charles Parrish.
Warrant Agreements to Purchase Series C Preferred Stock dated
May 29, 1997 and July 17, 1997 by and between the Registrant and
10.11 (2) Comdisco, Inc.
10.12 (2) Letter Agreement dated August 18, 1997 with Malcolm Bird.
Incentive Compensation Plan for Malcolm Bird dated January 27,
10.13 (2) 1999.
OEM Master License Agreement with RSA Data Security dated
10.14 (2) (3) December 2, 1996.
Incentive Compensation Plan for Maurice Jeffery dated March 19,
10.15 (2) 1999.
Software License and Support Agreement dated as of May 1, 1996.
10.16 (2) (3) with AT&T Wireless Services, Inc., as amended.
Client License Agreement dated as of January 1, 1999.
10.17 (2) (3) with Matsushita Communication Industrial Co., Ltd.
First Amendment to Lease Agreement dated June 17, 1999, by and
10.18 (4) between Registrant and Seaport Centre Associates, LLC.
Agreement by and between Registrant and the former shareholders
10.19 (5) of APiON Telecoms Ltd. dated as of October 11, 1999.
Registration Rights Agreement by and between Registrant and the
former shareholders of APiON Telecoms Ltd. dated as of October
10.20 (5) 26, 1999.
Lease dated July 9, 1999, between Merit Investments & Properties
10.21 Limited and APiON Limited.
10.22 Letter Agreement between Registrant and Michael Mulica.
21 (6) Subsidiaries of the Registrant.
23.1 Consent of KPMG LLP, Independent Accountants.
23.2 Consent of PricewaterhouseCoopers.
23.3 Consent of Counsel (included in Exhibit 5.1).
24.1 (6) Power of Attorney (see page II-5).
27.1 (6) Financial Data Schedule.
</TABLE>
- --------
(1) To be filed by amendment.
(2) Incorporated herein by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (Commission File No. 333-75219).
(3) Confidential treatment has been granted by the Securities and Exchange
Commission with respect to certain information in these exhibits.
(4) Incorporated herein by reference to the exhibit filed with the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1999.
(5) Incorporated herein by reference to the exhibit filed with the Company's
Form 8-K filed on November 3, 1999.
(6) Previously filed.
<PAGE>
Exhibit 1.1
DRAFT - SUBJECT TO NEGOTIATION
6,600,000 Shares
PHONE.COM, INC.
Common Stock, par value $0.001 per share
UNDERWRITING AGREEMENT
----------------------
November ___, 1999
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
BancBoston Robertson Stephens Inc.
Hambrecht & Quist LLC
U.S. Bancorp Piper Jaffray Inc.
Banc of America Securities LLC,
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Phone.com, Inc., a Delaware corporation ("Company")
proposes to issue and sell 2,000,000 shares of its common stock ("Securities")
and the stockholders listed in Schedule A hereto ("Selling Stockholders")
propose severally to sell an aggregate of 4,600,000 outstanding shares of the
Securities (such 6,600,000 shares of Securities being hereinafter referred to as
the "Firm Securities"). The Company also proposes to sell to the Underwriters,
at the option of the Underwriters, an aggregate of not more than _______________
additional shares of its Securities and certain of the Selling Stockholders also
propose to sell to the Underwriters, at the option of the Underwriters, an
aggregate of not more than _______________ additional outstanding shares of the
Company's Securities, as set forth below (such 990,000 additional shares being
hereinafter referred to as the "Optional Securities"). The Firm Securities and
the Optional Securities are herein collectively called the "Offered Securities".
The Company and the Selling Stockholders hereby agree with the several
Underwriters named in Schedule B hereto ("Underwriters") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company and Alain Rossmann and Alan Black (the "Senior
Management") represent and warrant to, and agree with, the several Underwriters
that:
(i) A registration statement (No. 333-89879) relating to the Offered
Securities, including a form of prospectus, has been filed with the Securities
and Exchange Commission ("Commission") and either (A) has been declared
effective under the Securities Act of 1933 ("Act") and is not proposed to be
amended or (B) is proposed to be amended by amendment or post-effective
amendment. If such registration statement (the "initial registration statement")
has been declared effective, either (A) an additional registration statement
(the "additional registration statement") relating to the Offered Securities may
have been filed with the Commission pursuant to Rule 462(b) ("Rule 462(b)")
under the Act and, if so filed, has become effective upon filing pursuant to
such Rule and the Offered Securities
<PAGE>
all have been duly registered under the Act pursuant to the initial registration
statement and, if applicable, the additional registration statement or (B) such
an additional registration statement is proposed to be filed with the Commission
pursuant to Rule 462(b) and will become effective upon filing pursuant to such
Rule and upon such filing the Offered Securities will all have been duly
registered under the Act pursuant to the initial registration statement and such
additional registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration statement has
been filed and the Company does not propose to amend it, and if any post-
effective amendment to either such registration statement has been filed with
the Commission prior to the execution and delivery of this Agreement, the most
recent amendment (if any) to each such registration statement has been declared
effective by the Commission or has become effective upon filing pursuant to Rule
462(c) ("Rule 462(c)") under the Act or, in the case of the additional
registration statement, Rule 462(b). For purposes of this Agreement, "Effective
Time" with respect to the initial registration statement or, if filed prior to
the execution and delivery of this Agreement, the additional registration
statement means (A) if the Company has advised the Representatives that it does
not propose to amend such registration statement, the date and time as of which
such registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (B) if the Company has advised the Representatives
that it proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such registration
statement, as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. If an additional registration
statement has not been filed prior to the execution and delivery of this
Agreement but the Company has advised the Representatives that it proposes to
file one, "Effective Time" with respect to such additional registration
statement means the date and time as of which such registration statement is
filed and becomes effective pursuant to Rule 462(b). "Effective Date" with
respect to the initial registration statement or the additional registration
statement (if any) means the date of the Effective Time thereof. The initial
registration statement, as amended at its Effective Time, including all
information contained in the additional registration statement (if any) and
deemed to be a part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all information (if
any) deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is
hereinafter referred to as the "Initial Registration Statement". The additional
registration statement, as amended at its Effective Time, including the contents
of the initial registration statement incorporated by reference therein and
including all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule 430A(b), is
hereinafter referred to as the "Additional Registration Statement". The Initial
Registration Statement and the Additional Registration Statement are herein
referred to collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in accordance
with Rule 424(b) ("Rule 424(b)") under the Act or (if no such filing is
required) as included in a Registration Statement, is hereinafter referred to as
the "Prospectus". No document has been or will be prepared or distributed in
reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective Date
of the Initial Registration Statement, the Initial Registration Statement
conformed in all respects to the requirements of the Act and the rules and
regulations of the Commission ("Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
(B) on the Effective Date of the Additional Registration Statement (if any),
each Registration Statement conformed or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not include, or
will not include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) on the date of
this Agreement, the Initial Registration Statement and, if the Effective Time of
the Additional Registration Statement is prior to the execution and delivery of
this Agreement, the Additional Registration Statement each conforms, and at the
time of filing of the Prospectus pursuant to Rule 424(b) or (if no such filing
is required) at the Effective Date of the Additional Registration Statement in
which the Prospectus is included, each Registration Statement and the Prospectus
will conform, in all respects to the requirements of the Act and the Rules and
Regulations, and neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state any material fact
required to be stated therein or necessary to make the
-2-
<PAGE>
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement and the Prospectus will conform in all respects
to the requirements of the Act and the Rules and Regulations, neither of such
documents will include any untrue statement of a material fact or will omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and no Additional Registration Statement has
been or will be filed. The two preceding sentences do not apply to statements in
or omissions from a Registration Statement or the Prospectus based upon written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information is that described as such in Section 7(c) hereof.
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus; and the Company is duly qualified to do
business as a foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business requires
such qualification and the failure to be so qualified would have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(iv) Each subsidiary of the Company has been duly incorporated and
is an existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and each
subsidiary of the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such qualification
and the failure to be so qualified would have a material adverse effect on the
Company and its subsidiaries taken as a whole; all of the issued and outstanding
capital stock of each subsidiary of the Company has been duly authorized and
validly issued and is fully paid and nonassessable; and the capital stock of
each subsidiary owned by the Company, directly or through subsidiaries, is owned
free from liens, encumbrances and defects.
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all outstanding shares
of capital stock of the Company are, and, when the Offered Securities have been
delivered and paid for in accordance with this Agreement on each Closing Date
(as defined below), such Offered Securities will have been, validly issued,
fully paid and nonassessable and will conform to the description thereof
contained in the Prospectus; and the stockholders of the Company have no
preemptive rights with respect to the Securities.
(vi) The Offered Securities have been approved for listing on The
Nasdaq Stock Market's National Market, subject to notice of issuance.
(vii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would give
rise to a valid claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with this offering.
(viii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities registered pursuant to a Registration Statement or in any securities
being registered pursuant to any other registration statement filed by the
Company under the Act which have not been validly satisfied or waived.
(ix) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required to be made or
obtained by the Company for the consummation of the transactions contemplated by
this Agreement in connection with the issuance and sale of the Offered
Securities by the Company or
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Senior Management, except such as have been obtained and made under the Act and
such as may be required under state securities laws.
(x) The execution, delivery and performance of this Agreement, and
the issuance and sale of the Offered Securities will not result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any statute, any rule, regulation or order of any governmental agency or body or
any court, domestic or foreign, having jurisdiction over the Company or any
subsidiary of the Company or any of their properties, or any agreement or
instrument to which the Company or any such subsidiary is a party or by which
the Company or any such subsidiary is bound or to which any of the properties of
the Company or any such subsidiary is subject, or the charter or by-laws of the
Company or any such subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement.
(xi) This Agreement has been duly authorized, executed and delivered
by the Company.
(xii) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and all other
properties and assets owned by them, in each case free from liens, encumbrances
and defects that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by them; and except as
disclosed in the Prospectus, the Company and its subsidiaries hold any leased
real or personal property under valid and enforceable leases with no exceptions
that would materially interfere with the use made or to be made thereof by them.
(xiii) The Company and its subsidiaries possess all material
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate have
a material adverse effect on the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries taken as
a whole ("Material Adverse Effect").
(xiv) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that might
have a Material Adverse Effect.
(xv) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property, including applications licensed directly from third
parties (collectively, "intellectual property rights") necessary to conduct the
business now operated by them, or presently employed by them, and have not
received any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect. The discoveries, inventions,
products or processes of the Company referred to in the Prospectus do not, to
the Company's knowledge, infringe or conflict with any intellectual property
right of any third party, where such infringement or conflict could have a
Material Adverse Effect.
(xvi) Except as disclosed in the Prospectus, neither the Company nor
any of its subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, "environmental
laws"), owns or operates any real property contaminated with any substance that
is subject to any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any claim
relating to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to such a
claim.
(xvii) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if determined
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adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement, or which are otherwise material in the context of the sale of the
Offered Securities; and no such actions, suits or proceedings are threatened or,
to the Company's knowledge, contemplated.
(xviii) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates shown and their
results of operations and cash flows for the periods shown, and, except as
otherwise disclosed in the Prospectus, such financial statements have been
prepared in conformity with the generally accepted accounting principles in the
United States applied on a consistent basis and the schedules included in each
Registration Statement present fairly the information required to be stated
therein; and the assumptions used in preparing the pro forma financial
statements included in each Registration Statement and the Prospectus provide a
reasonable basis for presenting the significant effects directly attributable to
the transactions or events described therein, the related pro forma adjustments
give appropriate effect to those assumptions, and the pro forma columns therein
reflect the proper application of those adjustments to the corresponding
historical financial statement amounts.
(xix) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has been no
material adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries taken as
a whole, and, except as disclosed in or contemplated by the Prospectus, there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(xx) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940.
(xxi) Except for the shares of capital stock of each of the
subsidiaries owned by the Company and its subsidiaries, neither the Company nor
any such subsidiary owns any shares of stock or any other equity securities of
any corporation or has any equity interest in any firm, partnership, association
or other entity, except as described in or contemplated by the Prospectus. [The
Company does not have any significant subsidiaries, as defined in paragraph (w)
of Rule 1-02 of Regulation S-X promulgated by the Commission].
(xxii) The (i) Agreement between the Several Persons as Vendors and
the Company as Purchaser; (ii) the Supplemental Agreement between the Several
Persons as Vendors and the Company as Purchaser; (iii) the Registration Rights
Agreement between the Several Persons and the Company; and (iv) any and all side
letters and other documentation issued in connection with the acquisition of
APiON Telecoms Ltd. ("APiON") and the related spin-off of Apeon (collectively,
the "Acquisition Agreements"), were duly authorized, executed and delivered by
the Company, and each such agreement constitutes a valid and binding agreement
of the Company.
(xxiii) Except as described in the Prospectus, all applicable
consents, authorizations, approvals, orders, certificates and permits of and
from, and all applicable declarations and filings with, all foreign, federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals having jurisdiction over the
Company or its subsidiaries required in connection with the acquisition of APiON
have been obtained or filed, except to the extent that the failure to obtain or
file would not, singly or in the aggregate, have a material adverse effect on
the Company and its subsidiaries, taken as a whole; and the execution and
delivery by the Company of, and the performance by the Company of its obligation
under, the Acquisition Agreements does not contravene any provision of
applicable law or the certificate of incorporation or bylaws of the Company or
any subsidiary or any agreement or other instrument binding upon the Company or
any subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any of its subsidiaries.
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<PAGE>
(xxiv) The consummation of the acquisition of APiON and the related
spin-off of Apeon complies in all material respects with the Act and the
applicable rules and regulations of the Commission thereunder.
(xxv) The offer, sale and issuance of the shares of capital stock in
the acquisition of APiON and the related spin-off of Apeon, constitute
transactions exempt from the registration requirements of Section 5 of the Act.
amended.
(b) Each Selling Stockholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(i) Such Selling Stockholder has and on each Closing Date
hereinafter mentioned will have valid and unencumbered title to the Offered
Securities to be delivered by such Selling Stockholder on such Closing Date and
full right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver the Offered Securities to be delivered by such
Selling Stockholder on such Closing Date hereunder; and upon the delivery of and
payment for the Offered Securities on each Closing Date hereunder the several
Underwriters will acquire valid and unencumbered title to the Offered Securities
to be delivered by such Selling Stockholder on such Closing Date.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective Date
of the Initial Registration Statement, the Initial Registration Statement
conformed in all respects to the requirements of the Act and the Rules and
Regulations and did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed, or will conform, in all respects to the requirements of the Act and
the Rules and Regulations did not include, or will not include, any untrue
statement of a material fact and did not omit, or will not omit, to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (C) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional Registration
Statement is prior to the execution and delivery of this Agreement, the
Additional Registration Statement each conforms, and at the time of filing of
the Prospectus pursuant to Rule 424(b) or (if no such filing is required) at the
Effective Date of the Additional Registration Statement in which the Prospectus
is included, each Registration Statement and the Prospectus will conform, in all
respects to the requirements of the Act and the Rules and Regulations, and
neither of such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. If
the Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the Prospectus
will conform in all respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue statement of a
material fact or will omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. With respect
to (A) the Senior Management, the two preceding sentences do not apply to
statements in or omissions from a Registration Statement or the Prospectus based
upon written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information is that described as such in Section 7(c); and
(B) all Selling Stockholders other than the Senior Management, the two preceding
sentences apply only to the extent that any statements in or omissions from a
Registration Statement or the Prospectus are based on written information
furnished to the Company by such Selling Stockholder specifically for use
therein.
(iii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between such Selling Stockholder and any person
that would give rise to a valid claim against such Selling Stockholder or any
Underwriter for a brokerage commission, finder's fee or other like payment in
connection with this offering.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and each Selling Stockholder
agree, severally and not jointly, to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
each Selling Stockholder, at a purchase price of $_______ per share, that number
of Firm Securities (rounded up or down, as determined by Credit Suisse First
Boston Corporation ("CSFBC") in
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<PAGE>
its discretion, in order to avoid fractions) obtained by multiplying 2,200,000
Firm Securities in the case of the Company and the number of Firm Securities set
forth opposite the name of such Selling Stockholder in Schedule A hereto, in the
case of a Selling Stockholder, in each case by a fraction the numerator of which
is the number of Firm Securities set forth opposite the name of such Underwriter
in Schedule B hereto and the denominator of which is the total number of Firm
Securities.
Certificates in negotiable form for the Offered Securities to be sold by
the Selling Stockholders hereunder have been placed in custody, for delivery
under this Agreement, under Custody Agreements made with U.S. Stock Transfer
Corporation as custodian ("Custodian"). Each Selling Stockholder agrees that
the shares represented by the certificates held in custody for the Selling
Stockholders under such Custody Agreements are subject to the interests of the
Underwriters hereunder, that the arrangements made by the Selling Stockholders
for such custody are to that extent irrevocable, and that the obligations of the
Selling Stockholders hereunder shall not be terminated by operation of law,
whether by the death of any individual Selling Stockholder or the occurrence of
any other event, or in the case of a trust, by the death of any trustee or
trustees or the termination of such trust. If any individual Selling
Stockholder or any such trustee or trustees should die, or if any other such
event should occur, or if any of such trusts should terminate, before the
delivery of the Offered Securities hereunder, certificates for such Offered
Securities shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such death or other event or termination had
not occurred, regardless of whether or not the Custodian shall have received
notice of such death or other event or termination.
The Company and the Custodian will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, at the office of CSFBC,
Eleven Madison Avenue, New York, New York 10010-3629, against payment of the
purchase price in Federal (same day) funds by official bank check or checks or
wire transfer to an account at a bank acceptable to CSFBC drawn to the order of
the Company in the case of 2,000,000 shares of Firm Securities and to the order
of the Custodian in the case of 4,600,000 shares of Firm Securities, at the
office of Venture Law Group, a Professional Corporation, 2800 Sand Hill Road,
Menlo Park, California 94025 at 10:00 A.M., New York time, on November ____,
1999, or at such other time not later than seven full business days thereafter
as CSFBC and the Company determine, such time being herein referred to as the
"First Closing Date". The certificates for the Firm Securities so to be
delivered will be in definitive form, in such denominations and registered in
such names as CSFBC requests and will be made available for checking and
packaging at the above office of CSFBC in New York at least 24 hours prior to
the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and the
Selling Stockholders from time to time not more than 30 days subsequent to the
date of the Prospectus, the Underwriters may purchase all or less than all of
the Optional Securities at the purchase price per Security to be paid for the
Firm Securities. The Company and the Selling Stockholders agree, severally and
not jointly, to sell to the Underwriters the respective numbers of Optional
Securities obtained by multiplying the number of Optional Securities specified
in such notice by a fraction the numerator of which is ______ in the case of the
Company and the number of shares set forth opposite the names of such Selling
Stockholders in Schedule A hereto under the caption "Number of Optional
Securities to be Sold" in the case of the Selling Stockholders and the
denomination of which is the total number of Optional Securities (subject to
adjustment by CSFBC to eliminate fractions). Such Optional Securities shall be
purchased from the Company and each Selling Stockholder for the account of each
Underwriter in the same proportion as the number of Firm Securities set forth
opposite such Underwriter's name bears to the total number of Firm Securities
(subject to adjustment by CSFBC to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC to the Company and the Selling Stockholders.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company and the
Custodian
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will deliver the Optional Securities being purchased on each Optional Closing
Date to the Representatives for the accounts of the several Underwriters, at the
above office of CSFBC in New York, against payment of the purchase price
therefor in Federal (same day) funds by official bank check or checks or wire
transfer to an account at a bank acceptable to CSFBC drawn to the order of the
Company in the case of Optional Securities to be sold by the Company and to the
order of the Custodian in the case of Optional Securities to be sold by the
Selling Stockholders, at the above office of Venture Law Group, a Professional
Corporation. The certificates for the Optional Securities being purchased on
each Optional Closing Date will be in definitive form, in such denominations and
registered in such names as CSFBC requests and will be made available for
checking and packaging at the above office of CSFBC in New York at a reasonable
time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. The
Company agrees with the several Underwriters and the Selling Stockholders that:
(a) If the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement, the Company will file the
Prospectus with the Commission pursuant to and in accordance with subparagraph
(1) (or, if applicable and if consented to by CSFBC, subparagraph (4)) of Rule
424(b) not later than the earlier of (A) the second business day following the
execution and delivery of this Agreement or (B) the fifteenth business day after
the Effective Date of the Initial Registration Statement. The Company will
advise CSFBC promptly of any such filing pursuant to Rule 424(b). If the
Effective Time of the Initial Registration Statement is prior to the execution
and delivery of this Agreement and an additional registration statement is
necessary to register a portion of the Offered Securities under the Act but the
Effective Time thereof has not occurred as of such execution and delivery, the
Company will file the additional registration statement or, if filed, will file
a post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time, on the
date of this Agreement or, if earlier, on or prior to the time the Prospectus is
printed and distributed to any Underwriter, or will make such filing at such
later date as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to amend or
supplement the initial or any additional registration statement as filed or the
related prospectus or the Initial Registration Statement, the Additional
Registration Statement (if any) or the Prospectus and will not effect such
amendment or supplementation without CSFBC's consent (which consent shall not be
unreasonably withheld); and the Company will also advise CSFBC promptly of the
effectiveness of each Registration Statement (if its Effective Time is
subsequent to the execution and delivery of this Agreement) and of any amendment
or supplementation of a Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of a
Registration Statement and will use its best efforts to prevent the issuance of
any such stop order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered Securities
is required to be delivered under the Act in connection with sales by any
Underwriter or dealer, any event occurs as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Company will promptly notify CSFBC of such event and will
promptly prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither CSFBC's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date (as
defined below), the Company will make generally available to its securityholders
an earnings statement covering a period of at least 12 months beginning after
the Effective Date of the Initial Registration Statement (or, if later, the
Effective Date of the Additional Registration Statement) which will satisfy the
provisions of Section 11(a) of the Act. For the purpose of the preceding
sentence,
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"Availability Date" means the 45th day after the end of the fourth fiscal
quarter following the fiscal quarter that includes such Effective Date, except
that, if such fourth fiscal quarter is the last quarter of the Company's fiscal
year, "Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (six of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a prospectus
relating to the Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case in such quantities as
CSFBC requests. The Prospectus shall be so furnished on or prior to 3:00 P.M.,
New York time, on the business day following the later of the execution and
delivery of this Agreement or the Effective Time of the Initial Registration
Statement. All other documents shall be so furnished as soon as available. The
Company and the Selling Stockholders will pay the expenses of printing and
distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC designates and
will continue such qualifications in effect so long as required for the
distribution.
(g) During the period of five years hereafter, the Company will furnish
to the Representatives and, upon request, to each of the other Underwriters, as
soon as practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to the
Representatives (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Securities Exchange Act of 1934 or mailed to stockholders, and (ii) from time to
time, such other information concerning the Company as CSFBC may reasonably
request.
(h) The Company and each Selling Stockholder agree with the several
Underwriters that the Company and such Selling Stockholder will pay all expenses
incident to the performance of the obligations of the Company and such Selling
Stockholder, as the case may be, under this Agreement, for any filing fees and
other expenses (including fees and disbursements of counsel) incurred in
connection with qualification of the Offered Securities for sale under the laws
of such jurisdictions as CSFBC designates and the printing of memoranda relating
thereto, for the filing fee incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. of the Offered Securities,
for any travel expenses of the Company's officers and employees and any other
expenses of the Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities, for any transfer taxes on the
sale by the Selling Stockholders of the Offered Securities to the Underwriters
and for expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters.
(i) Each Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group on or prior to the First Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
(j) For a period of 90 days after the date of the initial public offering
of the Offered Securities, the Company will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement under the Act relating to, any additional
shares of its Securities or securities convertible into or exchangeable or
exercisable for any shares of its Securities, or publicly disclose the intention
to make any such offer, sale, pledge, disposition or filing, without the prior
written consent of CSFBC, except issuances of Securities pursuant to the
conversion or exchange of convertible or exchangeable securities or the exercise
of warrants or options, in each case outstanding on the date hereof, grants of
employee stock options or the issuance of other Securities pursuant to the terms
of a Plan in effect on the date hereof, or issuances of Securities pursuant to
the exercise of such options.
(k) Each Selling Stockholder agrees, for a period of 90 days after the
date of the public offering of the Offered Securities, not to offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, any
additional
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shares of the Securities of the Company or securities convertible into or
exchangeable or exercisable for any shares of Securities, or publicly disclose
the intention to make any such offer, sale, pledge or disposition, without the
prior written consent of CSFBC.
(l) The Company agrees to use its best efforts to cause (i) each of its
directors, officers and stockholders and (ii) each person who acquires
Securities of the Company pursuant to the exercise of any option or other rights
granted under the Plans to sign an agreement that restricts such person from
selling, making any short sale of, granting any option for the purchase of, or
otherwise transferring or disposing of, any of such Securities, or any such
securities convertible into or exercisable or exchangeable for Securities, for a
period of 90 days after the date of the Prospectus without the prior written
consent of CSFBC; and the Company will issue and impose a stop-transfer
instruction with the Company's transfer agent in order to enforce the foregoing
lock-up agreements.
(m) The Company will (i) enforce the terms of each Lock-up Agreement, and
(ii) issue stop-transfer instructions to the transfer agent for the Securities
with respect to any transaction or contemplated transaction that would
constitute a breach of or default under the applicable Lock-up Agreement. In
addition, except with the prior written consent of CSFBC, the Company agrees (i)
not to amend or terminate, or waive any right under, any Lock-up Agreement, or
take any other action that would directly or indirectly have the same effect as
an amendment or termination, or waiver of any right under any Lock-up Agreement,
that would permit any holder of Securities, or any securities convertible into,
or exercisable or exchangeable for, Securities, to make any short sale of, grant
any option for the purchase of, or otherwise transfer or dispose of, any such
Securities or other securities, prior to the expiration of the 90 days after the
date of the Prospectus and (ii) not to consent to any sale, short sale, grant of
an option for the purchase of, or other disposition or transfer of shares of
Securities, or securities convertible into or exercisable or exchangeable for
Securities, subject to a Lock-up Agreement.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall be on
or prior to the date of this Agreement (but in no event earlier than the
Effective Time) or, if the Effective Time of the Initial Registration Statement
is subsequent to the execution and delivery of this Agreement, shall be prior to
the filing of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to such Effective Time), of KPMG LLP
confirming that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder and
stating to the effect that:
(i) in their opinion the financial statements examined by them and
included in the Registration Statements comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim financial
information as described in Statement of Auditing Standards No. 71, Interim
Financial Information, on the unaudited financial statements (including each of
the quarters presented) included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii) above, a
reading of the latest available interim financial statements of the Company,
inquiries of officials of the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing came to their
attention that caused them to believe that:
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(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the related published
Rules and Regulations or any material modifications should be made to such
unaudited financial statements for them to be in conformity with generally
accepted accounting principles;
(B) the unaudited consolidated total revenues, operating loss,
net loss and net loss per share amounts for the three-month periods ended
December 31, 1997, March 31, 1998, June 30, 1998, September 30, 1998, December
31, 1998, March 31, 1999, June 30, 1999 and September 30, 1999 included in the
Prospectus do not agree with the amounts set forth in the unaudited consolidated
financial statements for those same periods or were not determined on a basis
substantially consistent with that of the corresponding amounts in the audited
statements of income;
(C) at the date of the latest available balance sheet read by
such accountants, or at a subsequent specified date not more than three business
days prior to the date of such letter, there was any change in the capital stock
or any increase in short-term indebtedness or long-term debt of the Company and
its consolidated subsidiaries or, at the date of the latest available balance
sheet read by such accountants, there was any decrease in consolidated total
current assets, total assets, or total stockholders' equity, as compared with
amounts shown on the latest balance sheet included in the Prospectus;
(D) for the period from the closing date of the latest income
statement included in the Prospectus to the closing date of the latest available
income statement read by such accountants there were any decreases, as compared
with the corresponding period of the previous year and with the corresponding
period of the prior quarter, in consolidated total revenues or increases, as
compared with the corresponding period of the previous year and with the
corresponding period of the prior quarter, in consolidated net operating loss,
or in the total or per share amounts of consolidated net loss;
(E) at a date not more than three business days prior to the
date of such letter, there was any change in the capital stock or any increase
in short-term indebtedness or long-term debt of the Company and its consolidated
subsidiaries or, at such date, there was any decrease in consolidated total
current assets, total assets or total stockholders' equity, as compared with
amounts shown on the latest balance sheet included in the Prospectus; or
(F) for the period from the date after the closing date of the
latest available income statement read by such accountants to a date not more
than three business days prior to the date of such letter, there were any
decreases, as compared with the corresponding period of the previous year and
with the corresponding period of the prior quarter in consolidated total
revenues or increases, as compared with the corresponding period of the previous
year and with the corresponding period of the prior quarter, in consolidated net
operating loss, or in the total or per share amounts of consolidated net loss,
except in all cases set forth in clauses (C), (D), (E) and (F) above
for changes, increases or decreases which the Prospectus discloses have occurred
or may occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained in
the Registration Statements (in each case to the extent that such dollar
amounts, percentages and other financial and statistical information are derived
from the general accounting records of the Company and its subsidiaries subject
to the internal controls of the Company's accounting system or are derived
directly from such records by analysis or computation) with the results obtained
from inquiries, a reading of such general accounting records and other
procedures specified in such letter and have found such dollar amounts,
percentages and other financial and statistical information to be in agreement
with such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as
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proposed to be amended by the amendment or post-effective amendment to be filed
shortly prior to its Effective Time, (ii) if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this Agreement
but the Effective Time of the Additional Registration Statement is subsequent to
such execution and delivery, "Registration Statements" shall mean the Initial
Registration Statement and the additional registration statement as proposed to
be filed or as proposed to be amended by the post-effective amendment to be
filed shortly prior to its Effective Time, and (iii) "Prospectus" shall mean the
prospectus included in the Registration Statements.
(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of this
Agreement or such later date as shall have been consented to by CSFBC. If the
Effective Time of the Additional Registration Statement (if any) is not prior to
the execution and delivery of this Agreement, such Effective Time shall have
occurred not later than 10:00 P.M., New York time, on the date of this Agreement
or, if earlier, the time the Prospectus is printed and distributed to any
Underwriter, or shall have occurred at such later date as shall have been
consented to by CSFBC. If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Prospectus shall have been filed with the Commission in accordance with the
Rules and Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Stockholder, the Company or the
Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Company and its subsidiaries taken as one
enterprise which, in the judgment of a majority in interest of the Underwriters
including the Representatives, is material and adverse and makes it impractical
or inadvisable to proceed with completion of the public offering or the sale of
and payment for the Offered Securities; (ii) any downgrading in the rating of
any debt securities of the Company by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under surveillance or
review its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any material
suspension or material limitation of trading in securities generally on the New
York Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market; (iv) any banking moratorium declared
by U.S. Federal or New York authorities; or (v) any outbreak or escalation of
major hostilities in which the United States is involved, any declaration of war
by Congress or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the Underwriters
including the Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment for
the Offered Securities.
(d) The Representatives shall have received an opinion, dated such Closing
Date, of Venture Law Group, a Professional Corporation, counsel for the Company,
to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business as
described in the Prospectus; and the Company is duly qualified to do business as
a foreign corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires such
qualification and the failure to be so qualified would have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(ii) The Offered Securities delivered on such Closing Date and all
other outstanding shares of the capital stock of the Company (including without
limitation those shares of capital stock that the Company has issued and/or will
issue in connection with the acquisition of APiON and the related spin-out of
[Aepona]) have been duly
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authorized and validly issued, are fully paid and nonassessable and conform to
the description thereof contained in the Prospectus; and the stockholders of the
Company have no preemptive rights with respect to the Securities;
(iii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings known to such counsel between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act;
(iv) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940.
(v) No consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required to be made by the
Company or any Selling Stockholder or obtained by the Company or any Selling
Stockholder for the consummation of the transactions contemplated by this
Agreement in connection with the issuance or sale of the Offered Securities by
the Company, except such as have been obtained and made under the Act and such
as may be required under state securities laws;
(vi) The execution, delivery and performance of this Agreement and
the issuance and sale of the Offered Securities will not result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any statute, any rule, regulation or order of any governmental agency or body or
any court having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, or any agreement or instrument to which the Company
or any such subsidiary is a party or by which the Company or any such subsidiary
is bound or to which any of the properties of the Company or any such subsidiary
is subject, or the charter or by-laws of the Company or any such subsidiary, and
the Company has full power and authority to authorize, issue and sell the
Offered Securities as contemplated by this Agreement;
(vii) The Initial Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the Additional
Registration Statement (if any) was filed and became effective under the Act as
of the date and time (if determinable) specified in such opinion, the Prospectus
either was filed with the Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or was included in the
Initial Registration Statement or the Additional Registration Statement (as the
case may be), and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of a Registration Statement or any part thereof has
been issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of their respective
effective or issue dates, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations; such counsel have no
reason to believe that any part of a Registration Statement or any amendment
thereto, as of its effective date or as of such Closing Date, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; or that the Prospectus or any amendment or supplement thereto, as of
its issue date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; the descriptions in the Registration Statements and
Prospectus of statutes, legal and governmental proceedings and contracts and
other documents are accurate and fairly present the information required to be
shown; and such counsel do not know of any legal or governmental proceedings
required to be described in a Registration Statement or the Prospectus which are
not described as required or of any contracts or documents of a character
required to be described in a Registration Statement or the Prospectus or to be
filed as exhibits to a Registration Statement which are not described and filed
as required; it being understood that such counsel need express no opinion as to
the financial statements or other financial data contained in the Registration
Statements or the Prospectus;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company; and
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(ix) The offer, sale and issuance of the shares of capital stock in
the APiON acquisition and the related spin-off of Apeon, constitute transactions
exempt from the registration requirements of Section 5 of the Act.
(e) The Representatives shall have received the opinion contemplated in
the Power of Attorney executed and delivered by each Selling Stockholder and an
opinion, dated such Closing Date of Orrick, Herrington & Sutcliffe LLP, counsel
for the Selling Stockholders, to the effect that:
(i) Each Selling Stockholder had valid and unencumbered title to the
Offered Securities delivered by such Selling Stockholder on such Closing Date
and had full right, power and authority to sell, assign, transfer and deliver
the Offered Securities delivered by such Selling Stockholder on such Closing
Date hereunder; and the several Underwriters have acquired valid and
unencumbered title to the Offered Securities purchased by them from the Selling
Stockholders on such Closing Date hereunder;
(ii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be obtained or
made by any Selling Stockholder for the consummation of the transactions
contemplated by the Custody Agreement or this Agreement in connection with the
sale of the Offered Securities sold by the Selling Stockholders, except such as
have been obtained and made under the Act and such as may be required under
state securities laws;
(iii) The execution, delivery and performance of the Custody
Agreement and this Agreement and the consummation of the transactions therein
and herein contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court having
jurisdiction over any Selling Stockholder or any of their properties or any
agreement or instrument to which any Selling Stockholder is a party or by which
any Selling Stockholder is bound or to which any of the properties of any
Selling Stockholder is subject, or the charter or by-laws of any Selling
Stockholder which is a corporation;
(iv) The Power of Attorney and related Custody Agreement with
respect to each Selling Stockholder has been duly authorized, executed and
delivered by such Selling Stockholder and constitute valid and legally binding
obligations of each such Selling Stockholder enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles; and
(v) This Agreement has been duly authorized, executed and delivered
by each Selling Stockholder.
(f) The Representatives shall have received from Wilson Sonsini Goodrich &
Rosati, Professional Corporation, counsel for the Underwriters, such opinion or
opinions, dated such Closing Date, with respect to the incorporation of the
Company, the validity of the Offered Securities delivered on such Closing Date,
the Registration Statements, the Prospectus and other related matters as the
Representatives may require, and the Selling Stockholders and the Company shall
have furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(g) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal financial
or accounting officer of the Company in which such officers, to the best of
their knowledge after reasonable investigation, shall state that: the
representations and warranties of the Company in this Agreement are true and
correct; the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of subparagraphs (1)
and (3) of Rule 462(b) was filed pursuant to Rule 462(b), including payment of
the applicable filing fee in accordance with Rule 111(a) or (b) under the Act,
prior to the time the Prospectus was printed and distributed to any Underwriter;
and, subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse
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change, nor any development or event involving a prospective material adverse
change, in the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole except as set
forth in or contemplated by the Prospectus or as described in such certificate.
(h) The Representatives shall have received a letter, dated such Closing
Date, of KPMG LLP which meets the requirements of subsection (a) of this
Section, except that the specified date referred to in such subsection will be a
date not more than three days prior to such Closing Date for the purposes of
this subsection. In addition, the Representatives shall have received a letter,
dated such Closing Date, of PricewaterhouseCoopers LLP which meets the
requirements of subsection (a)(i) with respect to the financial statements of
APiON.
The Selling Stockholders and the Company will furnish the
Representatives with such conformed copies of such opinions, certificates,
letters and documents as the Representatives reasonably request. CSFBC may in
its sole discretion waive on behalf of the Underwriters compliance with any
conditions to the obligations of the Underwriters hereunder, whether in respect
of an Optional Closing Date or otherwise.
7. Indemnification and Contribution.
(a) The Company and each of the Senior Management, jointly and severally,
will indemnify and hold harmless each Underwriter, its partners, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below; provided, that the
liability of the Senior Management pursuant to this subsection (a) shall be
limited to an amount equal to the aggregate net proceeds (before deducting
expenses) to such Senior Management from the sale of Securities by such Senior
Management.
(b) Each of the Selling Stockholders (other than Senior Management),
jointly and severally, will indemnify and hold harmless each Underwriter, its
partners, directors and officers and each person who controls such Underwriter
within the meaning of Section 15 of the Act, against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Selling Stockholder (other than Senior Management) expressly for
use therein; and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that such Selling Stockholder will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
in or omission or alleged omission from any of such documents in reliance upon
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and in conformity with written information furnished to the Company by an
Underwriter through the Representatives specifically for use therein, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in subsection (c)
below; and provided, further, that the liability of a Selling Stockholder
pursuant to this subsection (b) shall be limited to an amount equal to the
aggregate net proceeds (before deducting expenses) to such Selling Stockholder
from the sale of Securities by such Selling Stockholder.
In addition, the Company and each of the Underwriters agree with each of
the Selling Stockholders (including Senior Management) that any claim of such
Underwriter against such Selling Stockholders for indemnification, reimbursement
or advancement of expenses pursuant to this Section 7 or for breach of any
representation or warranty in Section 2 hereof shall first be sought by such
Underwriter to be satisfied in full by the Company and shall be satisfied by the
Selling Stockholders only to the extent that such claim has not been satisfied
in full by the Company for any reason within the 30-day period following the
date requested for payment in accordance with the terms of this Agreement. The
Company and the Selling Stockholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible,
including, without limitation, allocating between the Company and the Selling
Stockholders the liability resulting from a breach of the representations and
warranties of the Company and the Selling Stockholders hereunder. The indemnity
provided for in this Section 7 shall be in addition to any liability which such
Selling Stockholder may otherwise have. No Selling Stockholder will, without
the prior written consent of the Representatives, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not any such Representatives or any person who controls any such
Representatives is a party to such claim, action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional release of all
of the Underwriters and such controlling persons from all liability arising out
of such claim, action, suit or proceeding.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any who
controls the Company within the meaning of Section 15 of the Act, and each
Selling Stockholder against any losses, claims, damages or liabilities to which
the Company or such Selling Stockholder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein, and will reimburse any
legal or other expenses reasonably incurred by the Company and the Selling
Stockholder in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the following information in the Prospectus furnished on behalf of each
Underwriter: the concession and reallowance figures appearing in the fourth
paragraph under the caption "Underwriting" and the information contained in the
ninth paragraph under the caption "Underwriting."
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a), (b) or (c) above. In case any such action
is brought against any indemnified party and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in
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connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened action
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action and does not
include a statement as to, or an admission of, fault, culpability or a failure
to act by or on behalf of an indemnified party.
(e) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Senior Management and the Selling Stockholders on the one hand and
the Underwriters on the other from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, the
Senior Management and the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Senior Management and the Selling Stockholders on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company, the Senior Management and the Selling Stockholders bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Senior Management, the Selling Stockholders or the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (e). Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (e) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under this
Section shall be in addition to any liability which the Company and the Selling
Stockholders may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company and the Selling Stockholders for
the purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
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Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Stockholders for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any non-
defaulting Underwriter, the Company or the Selling Stockholders, except as
provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Stockholders shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
Stockholders, and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased hereunder the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 8 or the occurrence of any event specified
in clause (iii), (iv) or (v) of Section 6(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking Department--
Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 800 Chesapeake Drive, Redwood
City, California 94063, Attention: Alain Rossmann, or, if sent to the Selling
Stockholders or any of them, will be mailed delivered or telegraphed and
confirmed _____________________ to at ____________________ ; provided, however,
that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the officers and directors and controlling persons referred
to in Section 7, and no other person will have any right or obligation
hereunder.
12. Representation. The Representatives will act for the several
Underwriters in connection with this financing, and any action under this
Agreement taken by the Representatives jointly or by CSFBC on behalf of the
Representatives will be binding upon all the Underwriters. Alain Rossmann and/or
Alan Black will act for the Selling Stockholders in connection with such
transactions, and any action under or in respect of this Agreement taken by
Alain Rossmann and/or Alan Black will be binding upon all the Selling
Stockholders.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
-18-
<PAGE>
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
[Remainder of page intentionally left blank]
-19-
<PAGE>
DRAFT--SUBJECT TO NEGOTIATION
If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
PHONE.COM, INC.
By: __________________________________
Alain Rossmann
Chairman of the Board of Directors
and Chief Executive Officer
By: _________________________________
Name:
Title:
As Attorney-in-Fact acting on behalf of
each of the Selling Stockholders named
in Schedule A to this Agreement.
The foregoing Underwriting Agreement
is hereby Confirmed and accepted as
of the date first above written.
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
BancBoston Robertson Stephens Inc.
Hambrecht & Quist LLC
U.S. Bancorp Piper Jaffray Inc.
Acting on behalf of themselves and as the
Representatives of the several Underwriters
By Credit Suisse First Boston Corporation
By: ____________________________
William J.B. Brady III
Managing Director
<PAGE>
DRAFT--SUBJECT TO NEGOTIATION
SCHEDULE A
<TABLE>
<CAPTION>
Number of Number of
Selling Stockholder Firm Securities Optional Securities
To be Sold To be Sold
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
--------------- ----------------
Total.................................................. =============== ================
</TABLE>
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
Number of
Underwriter Firm Securities
----------- ---------------
<S> <C>
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
BancBoston Robertson Stephens Inc.
Hambrecht & Quist LLC
U.S. Bancorp Piper Jaffray Inc.
Banc of America Securities LLC
------------------------------
Total...........................................
==============================
</TABLE>
A-1
<PAGE>
EXHIBIT 5.1
November 9, 1999
Phone.com, Inc.
800 Chesapeake Drive
Redwood City, California 94063
Registration Statement on Form S-1 (File No. 333-89879)
-------------------------------------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 (File No. 333-
89879) (the "Registration Statement") filed by you, Phone.com, Inc., with the
----------------------
Securities and Exchange Commission on October 28, 1999, as amended, in
connection with the registration under the Securities Act of 1933, as amended,
of shares of your Common Stock (the "Shares"). As your counsel in connection
------
with this transaction, we have examined the proceedings taken and we are
familiar with the proceedings proposed to be taken by you in connection with the
sale and issuance of the Shares.
It is our opinion that upon completion of the proceedings being taken in
order to permit such transactions to be carried out in accordance with the
securities laws of the various states where required, the Shares when issued and
sold in the manner described in the Registration Statement will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and in any amendment thereto.
Very truly yours,
VENTURE LAW GROUP
A Professional Corporation
/s/ Venture Law Group
<PAGE>
EXHIBIT 10.21
LEASE
DATE: 9th July 1999
PARTIES:
(1) MERIT INVESTMENTS & PROPERTIES LIMITED of 58 Moneymore Road, Magherafelt
("Landlord") and
(2) APION LIMITED of Interpoint Building, 20/24 York Street, Belfast, BT15 1AQ
("Tenant")
1. DEFINITIONS
-----------
In this Lease:
1.1 "Property" means the whole of Charles House, 103/111 Donegall Street,
Belfast shown for the purposes of identification only edged red on the Plan
including:
1.1.1 any building or other structure that is now on the Property or
that is erected by way of replacement there during [illegible] ("Building")
1.1.2 the fences and walls that surround the Property
1.1.3 the Plant and fittings installed there by the Landlord
1.1.4 all Conducting Media on the Property that serve [illegible]
1.1.5 all additions and improvements and
1.1.6 all fixtures (whether or not fixed at the beginning of the term
except any installed by the Tenant that can be removed without defacing the
Property
1.2 "Term" means (subject to clause 17) the period of 15 years (fifteen
years) beginning on the date of this Lease and ending on 7th July 2014 subject
to the right of the Tenant to earlier termination provided in clause 17.
1.3 "Inherent or Latent Defect" means any defect shown to be reasonably
and directly attributable to the preparation of the site upon which the Building
is constructed or its design, supervision or construction or the workmanship or
materials used therein.
1.4 "Initial Rent" means in respect of the following periods the following
sums (each exclusive of VAT):
(a) from the Rent Commencement Date until the day before the first
anniversary of that date the sum of (Pounds)133,260 (One hundred and thirty-
three thousand, two hundred and sixty pounds) per year;
<PAGE>
(b) for the period from the first anniversary of the Rent Commencement
Date until the day before the second anniversary of that date the sum of
(Pounds)133,260 (One hundred and thirty-three thousand, two hundred and sixty
pounds) per year;
(c) for each of the subsequent three years of the Term and until the
first Review Date the sum of (Pounds)188,785 (One hundred and eighty eight
thousand, seven hundred and eighty five pounds) per year.
1.5 "Rent Commencement Date" means the date of this Lease.
1.6 "Insurance Commencement Date" means the date of this Lease.
1.7 "Review Dates" means 7th July in the years 2004, 2009 and 2014 and
every fifth anniversary of such date.
1.8 "Exterior Decorating Years" means each fifth year of the Term.
1.9 "Interior Decorating Years" means each fifth year of the Term.
1.10 "Permitted Use" means use of the Property as offices, workshops and
training rooms and any uses within Class 2 or Class 3 of the Schedule of the
Planning (Use Classes) (NI) Order 1989 ("the Use Classes Order").
1.11 Other definitions and interpretation provisions are set out in
clause 16.
2. LETTING
-------
The Landlord lets the Property to the Tenant for the Term
3. RENT
----
The Tenant COVENANTS with the Landlord to pay the Rent without any
deduction or set-off by equal quarterly payments in advance on the usual quarter
days (viz 1st February, 1st May, 1st August and 1st November) and:
3.1 the first payment is for the period beginning on the Rent Commencement
Date and ending on the day before the next quarter day
3.2 the first payment is due on the date of this Lease or on the Rent
Commencement Date whichever is the later
3.3 Rent for a period of less than a year is to be apportioned on a daily
basis
3.4 if required in writing by the Landlord the Tenant must make these
payments by banker's order or direct transfer to any bank and account in the
United Kingdom that the Landlord may nominate
-2-
<PAGE>
4. RENT REVIEW
-----------
4.1 Definitions
In this Lease:
4.1.1 "Review Date" means any of the Review Dates and "relevant
Review Date" means the Review Date on which the Review Period in question begins
4.1.2 "Review Period" means either the period beginning on a Review
Date and ending on the day before the next Review Date or the period beginning
on the last Review Date and ending on the expiry of the Term
4.1.3 "Assumptions" are the following assumptions at the relevant
Review Date:
4.1.3.1 that no work has been carried out on the Property by the
Tenant anyone deriving title under the Tenant or their predecessors in title
during the Term which has diminished the rental value of the Property
4.1.3.2 that if the Property has been destroyed or damaged it
has been fully restored
4.1.3.3 that the covenants contained in this Lease on the part
of the Landlord and the Tenant have been complied with
4.1.3.4 that the Property is available to let by a willing
landlord to a willing tenant by one lease without a premium from either party
and with vacant possession
4.1.3.5 that the lease by which the Property will be let
("hypothetical lease") contains the same terms as this Lease except the amount
of the Initial Rent and any rent-free period allowed to the Tenant
4.1.3.6 that the duration of the hypothetical lease is fifteen
years beginning on the relevant Review Date and that the rent is payable from
then but that the hypothetical lease has the same provisions for early
termination as those set out in this Lease.
4.1.3.7 that the hypothetical lease contains the provisions for
rent review included in this Lease and provides for the rent to be reviewed at
the same intervals as those in this Lease
4.1.3.8 that the hypothetical lease provides that the Tenant
must decorate the Property at the same intervals as those in this Lease
4.1.3.9 that VAT at the rate then prevailing will be payable on
the rent reserved by the hypothetical lease if (and only if) VAT is payable at
the relevant Review Date on the Rent payable under this Lease (but this
Assumption will apply only if at the relevant Review Date whether or not VAT is
payable on rent depends upon an act or omission of the Landlord)
-3-
<PAGE>
4.1.3.10 that the Property has previously been fitted out and
equipped by and at the expense of the incoming tenant (or its undertenants) so
that it is capable of being used by the incoming tenant (or its undertenants)
from the beginning of the hypothetical lease for all purposes required by the
incoming tenant or undertenants that would be permitted under this Lease (but on
the basis that the fitting-out and equipping that have in fact been carried out
by the Tenant are disregarded under clause 4.1.4.3)
4.1.3.11 that the incoming tenant proposes either to occupy the
whole of the Property or that undertenants are available for any parts that the
tenant does not intend to occupy who are willing and able to enter into
underleases on terms acceptable to the tenant and at the open market rent and
that the underleases will begin on the relevant Review Date and the open market
rent will be payable from that date
4.1.4 "Disregards" are the following matters at the relevant
Review Date that must be disregarded:
4.1.4.1 any effect on rent of the fact that the Tenant or anyone
deriving title under the Tenant or their predecessors in title have been in
occupation of the Property
4.1.4.2 any goodwill attached to the Property by the carrying on
at the Property of the business of the Tenant or anyone deriving title under the
Tenant or by the predecessors in that business
4.1.4.3 any increase in rental value of the Property
attributable at the relevant Review Date to any improvement to the Property
carried out:
4.1.4.3.1 during the Term or during the period immediately
before the beginning of the Term
4.1.4.3.2 by the Tenant anyone deriving title under the
Tenant or their predecessors in title with the consent of the Landlord (where
required) or carried out by the Landlord at the expense of the Tenant or
4.1.4.3.3 not in pursuance of an obligation to the Landlord
and in disregarding this no allowance will be made for loss of use during any
notional period while the improvement is being carried out
4.2 Review
4.2.1 For each Review Period the Rent will be the greater of:
4.2.1.1 the Rent payable immediately before the relevant Review
Date or if payment of Rent has been suspended the Rent which would have been
payable had there been no suspension
4.2.1.2 the revised rent ascertained in accordance with this
clause
-4-
<PAGE>
4.2.2 The revised rent will be the rent at which the Property might
reasonably be expected to be let in the open market at the relevant Review Date
making the Assumptions and disregarding the Disregards
4.2.3 The revised rent for any Review Period may be agreed in writing
at any time between the parties or in the absence of agreement will be
determined (but not earlier than the relevant Review Date) by an arbitrator
4.2.4 The arbitral proceedings shall be conducted in accordance with
the Arbitration Act 1996 and the Landlord and Tenant hereby agree that -
4.2.4.1 the proceedings shall be held in Northern Ireland;
4.2.4.2 the language to be used in the proceedings shall be
English and English translations of any relevant documents not originally
written in English shall be provided;
4.2.4.3 the award of the tribunal shall be in writing signed by
the arbitrator and shall contain the reasons for the award;
4.2.4.4 the parties shall be notified of the award of the
tribunal by a copy of the award being sent to each of them on the same day by
recorded delivery service post or communicated by such other means as the
parties shall agree in writing and shall be deemed to have been received 24
hours after the time of posting or such other means of communication; and
4.2.4.5 the date of the award of the tribunal shall be the date
on which the parties are deemed to have received a copy of the award.
4.2.5 The arbitrator will be appointed by agreement between the
parties or (in the absence of agreement) nominated by the then Chairman of the
Northern Ireland branch of the Royal Institution of Chartered Surveyors (or his
nominee) ("Chairman") on the application of either party may not earlier than
six months before the relevant Review Date
4.2.6 If the arbitrator declines to act becomes incapable of acting
or dies either party may apply to the Chairman to make another nomination
4.2.7 The Tenant must allow the arbitrator access to the Property to
do anything which the arbitrator considers necessary to carry out his function
4.2.8 If one party pays all the arbitrator's fees and disbursements
it may recover any part of them which the arbitrator awards against the other
party in the case of the Landlord as rent in arrears and in the case of the
Tenant by deduction from rent
4.2.9 When the revised rent has been determined in accordance with
this clause memoranda will be signed by or on behalf of the parties and annexed
to this Lease and its counterpart and the parties will bear their own costs of
doing this
-5-
<PAGE>
4.3 Arrangements pending revised rent
4.3.1 If the revised rent payable during any Review Period has not
been ascertained by the relevant Review Date the then current Rent will continue
to be payable on account of the Rent for that Review Period
4.3.2 If the revised rent is ascertained on or before the relevant
Review Date and that date is not a quarter day the Tenant must on that Review
Date pay to the Landlord the difference between the Rent due for that quarter
and the Rent already paid for it
4.3.3 If the revised rent payable during any Review Period has not
been ascertained by the relevant Review Date then on the date upon which it is
agreed or upon which the arbitrator's award is received by either party the
Tenant must pay to the Landlord:
4.3.3.1 any shortfall between the Rent which would have been paid if
the revised rent had been ascertained by the relevant Review Date and the
payments made on account and
4.3.3.2 interest at the base lending rate on the shortfall between
the amount that would have been paid if the revised rent had been ascertained by
the relevant Review Date and the payments made on account for the period
beginning on the day upon which each instalment was due and ending on the date
on which payment of the shortfall is made
4.4 Rent increase prevented
4.4.1 If at any Review Date the review of the rent or the recovery of
any increase is prohibited or limited by statute the Landlord may within six
months of the removal of that restriction (time being of the essence) give to
the Tenant notice invoking this clause
4.4.2 On the service of a notice under this clause the date upon
which the notice is served will be treated as a Review Date but this will not
vary any subsequent Review Date
4.4.3 Any increase in rent resulting from such a review may be
recovered from the date upon which the notice is served or (if later) the
earliest date permitted by law
5. REPAIR CLEANING AND DECORATION
------------------------------
The Tenant COVENANTS with the Landlord:
5.1 to repair the Property and keep it in repair but the Tenant need not
do so where the disrepair is due to an Inherent or Latent Defect or is caused by
a risk against which the Landlord has covenanted in this Lease to insure or by
any additional risk against which the Landlord has insured except where the
insurance money is irrecoverable through an act or omission of the Tenant or any
person deriving title under the Tenant
5.2 To ensure and procure that all repairs and maintenance to the Property
that are required are:
-6-
<PAGE>
5.2.1 conducted in a good and workmanlike manner;
5.2.2 in accordance with good building practice and using materials
of a good and serviceable quality and fit for their respective purposes;
5.2.3 (where they relate to the exterior and/or structure of the
Property) conducted only after discussion with the Landlord and the Landlord's
approval thereto (which shall not be unreasonably withheld or delayed); AND
5.2.4 after the Tenant has first given the Landlord the opportunity
of tendering for the work in question.
5.3 to:
5.3.1 replace any of the fixtures or Plant that become beyond repair
during the Term;
5.3.2 procure and ensure that all aspects of Plant are regularly
serviced and/or maintained and/or repaired at all times in accordance with the
manufacturer's or installer's guidelines or recommendations therefor.
5.4 to clean the Property and keep it clean and tidy
5.5 to clean both sides of the windows and window frames in the Property
at least once a month
5.6 to keep any part of the Property not built upon adequately surfaced
and in good condition, fair wear and tear excepted.
5.7 to keep all landscaped areas within the Property free from weeds and
properly cultivated
5.8 not to cause any area abutting the Property to be untidy
5.9 in each of the Exterior Decorating Years and in the last year of the
Term to redecorate the exterior of the Building removing any graffitti or other
defacement and repairing as necessary all other external surfaces and in each of
the Interior Decorating Years and in the last year of the Term to redecorate the
interior of the Building in both instances in a good and workmanlike way and
with appropriate materials of good quality to the reasonable satisfaction of the
Landlord
5.10 to obtain the Landlord's approval (such approval not to be
unreasonably withheld) of any change in the colours on each redecoration of both
the exterior and interior of the Building
5.11 where the use of Conducting Media boundary structures or other things
is common to the Property and other premises to be responsible for and to
indemnify the Landlord
-7-
<PAGE>
against all sums due from and to undertake all work that is the responsibility
of the owner lessee or occupier of the Property in relation to those things
6. ALTERATIONS
-----------
The Tenant COVENANTS with the Landlord:
6.1 not to erect any new building or structure on the Property or unite
the Property with any adjoining property
6.2 not to make any addition or alteration to the exterior of the Building
or to any load-bearing part of the Building or its roof or foundations
6.3 not to make any addition or alteration to the Property that is not
prohibited by the absolute prohibitions set out in the preceding clauses unless:
6.3.1 the consent of the Landlord has been obtained such consent not
to be unreasonably withheld but in considering an application for consent the
Landlord may take into account the effect that the addition or alteration may
have on Adjoining Premises
6.3.2 all necessary consents from any competent authority have been
obtained
6.3.3 the Landlord has been supplied with drawings and where
appropriate a specification in duplicate prepared by an architect or member of
some other appropriate profession who must supervise the work to completion
6.3.4 the proper fees of the Landlord any superior landlord or
mortgagee and their respective professional advisers have been paid in relation
to the application for consent
6.3.5 such covenants as the Landlord may reasonably require about the
carrying out of the additions and alterations have been entered into with the
Landlord
6.3.6 in the case of substantial work and where the Landlord requires
adequate security has been provided in the form of a deposit of money or a bond
as assurance to the Landlord that any work permitted by the Landlord is
completed
6.4 before installing any internal demountable partitions at the Property
to obtain the approval of the Landlord to the use of that type of partitioning
and the subsequent installation repositioning or removal of internal demountable
partitions of a style previously approved by the Landlord will not be a breach
of clause 6.3
6.5 at the expiry of the Term and if requested by the Landlord to remove
any demountable partitions and any addition or alteration made to the Property
and to make good any part of the Property damaged by the removal
-8-
<PAGE>
6.6 not to make any alteration or addition to the electrical installation
at the Property except in accordance with standards prescribed by the
Institution of Electrical Engineers and the supply authority or to connect any
apparatus to the installation that might endanger or overload it
6.7 not to connect with any Conducting Media which serve the Property
unless it has obtained the approval of the relevant authority and the Landlord
(the Landlord's approval not to be unreasonably withheld)
6.8 not to commit any waste at the Property unless it is permitted by
virtue of a consent under clauses 6.3 and 6.4
7. USE
---
The Tenant COVENANTS with the Landlord:
7.1 not to use the Property except for the Permitted Use and (for example)
not to use the Property or any part of it as residential accommodation or to
keep any animal on it
7.2 not to do any act or allow to remain upon the Property any substance
or article which might constitute a nuisance or which may cause inconvenience
disturbance injury or annoyance to the Landlord or the occupiers of the
Adjoining Premises or any nearby premises or cause damage to the Property the
Adjoining Premises or other nearby premises
7.3 not to use the Property for any dangerous noisy or offensive
occupation or for any illegal or immoral purpose
7.4 to use any part of the Property not built upon only for car parking or
for the purposes specified on the Plan and not to keep there any materials
equipment plant bins crates boxes or any skip or other receptacle for refuse or
any caravan or temporary building
7.5 not to discharge into any Conducting Media within or that serve the
Property any substance that may obstruct them or cause damage or danger or any
noxious poisonous or radioactive matter or anything likely to pollute or
contaminate
7.6 not to overload the Building
7.7 not to leave the Property continuously unoccupied for more than a
month without notifying the Landlord and providing such security arrangements as
the Landlord, the Compensation Agency and the insurers, or any other competent
body may require
7.8 not to play or use at the Property any instrument apparatus or
equipment that produces sound audible outside it
7.9 to ensure that there is no release from the Property into any
environmental medium of any substance that is capable of causing harm to the
health of man or other living organisms or to land surface or ground water or
ecology systems
-9-
<PAGE>
7.10 not to carry out on the Property any activity or keep on the Property
any substance or article for which any authorisation licence permit consent or
other approval is needed from a government department or local regulatory public
or other authority ("Official Approval") without having:
7.10.1 obtained the Landlord's consent
7.10.2 produced to the Landlord a copy of every application for
Official Approval
7.10.3 obtained the Official Approval and
7.10.4 produced to the Landlord a copy of the Official Approval
7.11 to comply with every Official Approval including any conditions to
which it is subject
8. PLANNING
--------
The Tenant COVENANTS with the Landlord:
8.1 not to commit any breach of planning control and to comply with the
Planning Acts in relation to the Property
8.2 not to make an application for planning permission in relation to the
Property or to serve any notices in respect of an application without the
approval of the Landlord such approval not to be unreasonably withheld
8.3 having obtained the Landlord's approval under the preceding clause to
apply for all planning permissions and to serve all notices required for
carrying out any operation or change of use on the Property which may constitute
development (as defined in the Planning Acts) and to pay all fees and any other
sums due in relation to every application
8.4 even if the Landlord has given its approval and granted whatever other
consents are needed under this Lease not to carry out any operation or change of
use on the Property until:
8.4.1 all necessary notices under the Planning Acts have been served
and copies produced to the Landlord
8.4.2 all necessary permissions under the Planning Acts have been
obtained and produced to the Landlord
8.4.3 the Landlord has acknowledged that every necessary planning
permission is acceptable to it (such acknowledgement not to be unreasonably
withheld) although the Landlord may refuse to acknowledge its acceptance of a
planning permission on the grounds that any condition contained in it or
anything omitted from it or the period referred to in it would be (or would be
likely to be) prejudicial to the Landlord's interest in the Property or the
interest of
-10-
<PAGE>
the Landlord or (where appropriate) a company within the Landlord's Group in
Adjoining Premises whether during or after the expiry of the Term
8.5 unless the Landlord otherwise directs to complete before the expiry of
the Term:
8.5.1 any works specified as having to be carried out by a date after
the expiry of the Term in a planning permission or in an agreement with the
planning or any other authority entered into as a condition to obtaining
planning permission
8.5.2 any development begun on the Property
8.6 in any case where a planning permission is granted subject to
conditions and if the Landlord reasonably requires to provide security for the
compliance with those conditions and not to implement the planning permission
until security has been provided
9. ALIENATION
----------
The Tenant COVENANTS with the Landlord:
9.1 except to the extent permitted under the subsequent provisions of this
clause not to:
9.1.1 part with possession of the Property or any part of it
9.1.2 permit another to occupy the Property or any part of it
9.1.3 share the occupation of the Property or any part of it or
9.1.4 hold the Property or any part of it on trust for another
but the Tenant may allow a company that is a member of the same group
as the Tenant (within the meaning of the 1996 Order Article 31) to occupy the
whole or part of the Property for so long as both companies remain members of
the same group and otherwise than in a manner that transfers or creates a legal
estate
9.2 not to:
9.2.1 assign or charge part only of the Property;
9.2.2 underlet part only of the Property unless:
(a) where the part underlet consists of the ground floor the
whole floor of the ground floor is underlet; and
(b) where the underletting is of a floor or floors other than
the ground floor, such underletting is of not less than 50% of the area of each
such floor with not more than two underlettings per floor; and
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(c) the Tenant has complied with the appropriate provisions of
clauses 9.4 to 9.7
9.3 not to assign underlet or charge the whole of the Property without the
consent of the Landlord such consent not to be unreasonably withheld where the
Tenant has complied with the appropriate provisions of clauses 9.4 to 9.7
9.4 to procure that any assignee enters into covenants with the Landlord
to observe all the Tenant's covenants and all the other provisions of this Lease
during the residue of the Term
9.5 on an assignment to a limited company and if the Landlord requires to
procure that at least two directors of the company or some other person or
persons acceptable to the Landlord (such acceptance not to be unreasonably
withheld) enter into covenants with the Landlord guaranteeing the performance of
the assignee in the form of clauses 18.1 and 18.2 or in such other form as the
Landlord reasonably requires
9.6 in relation to every underlease to ensure that:
9.6.1 it is granted without a fine or premium at a rent no lower than
the then open market rent approved by the Landlord (such approval not to be
unreasonably withheld)
9.6.2 the rent is payable in advance on the same days as rent is
payable under this Lease
9.6.3 it contains provisions approved by the Landlord (such approval
not to be unreasonably withheld):
9.6.3.1 for the upwards-only review of the rent on the basis set
out in clause 4 or in such other form as the Landlord reasonably requires or
approves
9.6.3.2 for the rent to be reviewed either on the Review Dates
or on such other dates approved by the Landlord by which the rent is reviewed no
less frequently
9.6.3.3 prohibiting the undertenant from doing or allowing any
act or thing in relation to the Property inconsistent with or in breach of the
provisions of this Lease
9.6.3.4 for re-entry by the underlandlord on breach of any
covenant by the undertenant
9.6.3.5 imposing an absolute prohibition against all dealings
with the Property other than an assignment or charge of the whole
9.6.3.6 prohibiting any assignment or charge of the whole of the
Property without the consent of the Landlord under this Lease
9.6.3.7 prohibiting the undertenant from parting with possession
or permitting another to share or occupy or hold on trust for another the
Property or any part of it
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9.6.3.8 imposing in relation to any permitted assignment the
same obligations for registration with the Landlord as are in this Lease in
relation to dispositions by the Tenant
9.7 in relation to any permitted underlease:
9.7.1 to enforce the performance by every undertenant of the
provisions of the underlease and not at any time to waive any breach of the
covenants or conditions on the part of any undertenant or assignee of any
underlease nor (without the consent of the Landlord such consent not to be
unreasonably withheld or delayed) to vary the terms of any underlease
9.7.2 not to agree any reviewed rent with the undertenant without the
approval of the Landlord such approval not to be unreasonably withheld or
delayed
9.7.3 not to agree with any appointment of a person as the third
party determining the revised rent without the approval of the Landlord such
approval not to be unreasonably withheld or delayed
9.7.4 to incorporate as part of its representations to that third
party representations required by the Landlord acting reasonably
9.7.5 to give the Landlord details of every rent review within
twenty-eight days of its outcome
9.8 within twenty-one days of any assignment charge underlease or any
transmission or other devolution relating to the Property to produce for
registration with the Landlord's solicitor a certified copy of any relevant
document and to pay the Landlord's solicitor's reasonable charges for
registration
10. TENANT'S OTHER COVENANTS
------------------------
The Tenant COVENANTS with the Landlord:
10.1 Outgoings
10.1.1 to pay and to indemnify the Landlord against:
10.1.1.1 all rates taxes assessments impositions duties levies
charges and outgoings of any type which now or during the Term are charged
assessed or imposed on the Property or on its owner lessor lessee or occupier
but excluding any tax imposed on the Landlord in respect of the receipt of Rent
or any other payment made by the Tenant under this Lease or on any disposition
or dealing with or the ownership of the reversion of this Lease ("outgoings")
10.1.1.2 the proportion properly attributable to the Property
(to be determined in the absence of agreement between the parties by the
Landlord's surveyor) of all Outgoings which now or during the Term are charged
assessed or imposed on the Property and other premises or on the owner lessor
lessee or occupier of the Property and other premises
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10.2 Supplies
10.2.1 where a separate supply is provided to the Property to pay the
supplier and to indemnify the Landlord against all charges for water electricity
telephone and other supplies consumed on the Property and to pay all equipment
rents
10.2.2 where supply charges are made in relation to the Property
and other premises (or upon the owner or occupier of the Property and other
premises) to pay the suppliers and to indemnify the Landlord against the
proportion of the charges properly attributable to the Property (or the owner or
occupier of the Property) to be determined in the absence of agreement by the
Landlord's surveyor
10.3 VAT
10.3.1 to pay and indemnify the Landlord against any VAT that may be
chargeable on the Rent or any other payment made by the Tenant under this Lease
in addition to the Rent or other payment (VAT being recoverable as if it were
rent where it is charged on Rent or on a payment that is either reserved as
additional rent or that this Lease provides is recoverable as if it were rent)
10.3.2 whenever the Tenant has agreed in this Lease to reimburse the
Landlord for a payment made by the Landlord to reimburse the Landlord in
addition for any VAT paid by the Landlord on that payment unless the VAT is
recovered by the Landlord
10.4 Access of Landlord and notice to repair
10.4.1 to permit the Landlord and all persons authorized by the
Landlord at reasonable times and on reasonable notice (except in an emergency)
to enter the Property
10.4.1.1 to establish if the provisions of this Lease have been
observed
10.4.1.2 to carry out any work to Adjoining Premises that cannot
reasonably be carried out without access to the Property
10.4.1.3 to take schedules and inventories
10.4.1.4 to exercise any right granted or reserved to the
Landlord by this Lease
10.4.1.5 for any purpose connected with the insurance of the
Property the review of the Rent or the renewal of this Lease
10.4.1.6 to view (and to open up floors and other parts of the
Property where that is reasonable) the condition of the Property and any work
being carried out at the Property and specifically (but without prejudice to the
foregoing generality) to allow the Landlord's agent access to the Property at
lease once in every three month period throughout the Term for this purpose
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10.4.1.7 to give the Tenant (or leave on the Property) a notice:
10.4.1.7.1 specifying any breach of covenant by the Tenant
10.4.1.7.2 specifying any work carried out in breach of the
provisions of this Lease or
10.4.1.7.3 requiring the Tenant immediately to remedy the
breach and to reinstate the Property including the making good of any opening-up
but any opening-up must be made good by or at the cost of the Landlord where it
reveals no breaches by the Tenant of the provisions of this Lease
10.4.2 where the Tenant has been in breach of the covenants contained
in this Lease to immediately to repair clean and decorate the Property or to
carry out other work as required by the notice referred to in the sub-clause
immediately above
10.4.3 to allow the Landlord and all persons authorized by the
Landlord to enter the Property to carry out the work that is needed to comply
with the notice and to pay to the Landlord the cost of doing so within fourteen
days of a written demand if:
10.4.3.1 within thirty days of service of the notice the Tenant
has not both begun and then continued the work referred to in the notice or
10.4.3.2 the Tenant fails to complete the work within sixty days
of service of the notice or
10.4.3.3 in the Landlord's reasonable opinion the Tenant is
unlikely to complete the work within sixty days of the service of the notice
10.5 Aerials signs and advertisements
10.5.1 not to erect any pole mast dish or wire on the Property
without the Landlord's consent, such consent not to be unreasonably withheld or
delayed
10.5.2 if requested by the Landlord to display a sign showing the
Tenant's trading name of a size and kind approved by the Landlord (such approval
not to be unreasonably withheld) at a point specified in writing by the Landlord
10.5.3 not to display any other sign which is visible from outside
the Property without first obtaining Landlord's consent, such consent not to be
unreasonably withheld or delayed
10.6 Statutes notices and orders
10.6.1 to comply with every statute and any notice or order from a
government department or local public or other authority or court that relates
to the Property activities carried
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out on the Property or any substance or article on the Property and whether
applicable to the Tenant or the owner lessor lessee or occupier of the Property
10.6.2 to produce immediately to the Landlord a copy of any notice or
order that is served on the Property or the Tenant and that relates to the
matters referred to in the preceding clause
10.6.3 at the request of the Landlord to make or join with the
Landlord in making any reasonable representations that the Landlord considers
appropriate or otherwise contesting any proposal of a government department or
local regulatory or other authority that relates to or includes the Property
10.7 Equipment
10.7.1 not to install or use on the Property any equipment which
causes noise or vibration detectable outside or damage to the Property
10.7.2 to keep all equipment on the Property properly maintained to
renew all parts when recommended or necessary and to ensure that the equipment
is properly operated
10.8 Defective Premises
10.8.1 to give notice immediately to the Landlord of any defect in
the Property which might give rise to a liability or duty on the Landlord
10.8.2 to display all notices which the Landlord may reasonably
require
10.9 Encroachments
10.9.1 not to stop up darken or obstruct any windows in the Building
10.9.2 to take all reasonable steps to prevent any encroachment or
easement being made or acquired over the Property and to give notice to the
Landlord immediately if any is attempted
10.10 Evidence of compliance
if required to produce to the Landlord such evidence as the Landlord
may reasonably require to satisfy itself that the provisions of this Lease have
been complied with
10.11 Indemnity
to be responsible for and to keep the Landlord indemnified against all
Losses resulting directly or indirectly from any breach by the Tenant of the
provisions of this Lease
10.12 Keyholders
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to ensure that at all times both the Landlord and the local police are
aware of the name home address and home telephone number of at least two
keyholders of the Property
10.13 Interest
10.13.1 to pay interest at a yearly rate of 3% above the base lending
rate from time to time on any Rent or other sum payable under this Lease that is
not paid on its due date
10.13.2 to pay this interest from the due date to the date of payment
(both before and after any judgment) calculated on a daily basis (the interest
to be compounded with rests on the usual quarter days) but nothing in this
clause entitles the Tenant to withhold or delay any payment or affects the
rights of the Landlord in relation to non-payment
10.14 Landlord's costs
10.14.1 to pay to the Landlord on an indemnity basis all reasonable
fees charges costs and other expenses properly incurred by the Landlord in
relation to:
10.14.1.1 every application made by the Tenant for consent
whether it is granted refused offered subject to any qualification or withdrawn
10.14.1.2 the preparation and service of a notice under the
Conveyancing and Law of Property Act 1881 section 14 or incurred in taking or
contemplating proceedings under that Act even if forfeiture is avoided otherwise
than by a court order
10.14.1.3 legal costs arising out of any legal proceedings
by the Landlord for the recovery of Rent or other sums due from the Tenant
10.14.1.4 e nforcing or requiring the Tenant to remedy a breach of the
provisions of this Lease
10.14.1.5 any reasonable steps taken in the preparation and
service of a Schedule of Dilapidations during and after the expiry of the Term
and in this respect the Landlord and the Tenant agree that they shall endeavour
to appoint mutually a suitably qualified person to prepare and serve such
Schedule of Dilapidations (whose determinations they mutually agree to be bound
by) the costs thereof being borne equally between the Landlord and the Tenant.
Save however in the event that the Landlord and Tenant are unable to agree to
mutually appoint a suitably qualified person then such Schedule of Dilapidations
as may be prepared and served by the Landlord and/or the Tenant shall be at the
cost of the party so preparing and serving such Schedule
10.14.2 where the Landlord could recover the cost of professional
advice or services under the preceding clause if they were undertaken by a third
party but these services or that advice are provided by the Landlord or by a
company within the Landlord's Group to pay to the Landlord (or that company) a
reasonable sum (plus VAT if payable) for such advice and
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services but not more than the amount payable by the Tenant if that advice or
service had been provided by a third party
10.15 Sale of reversion
to permit at reasonable times upon reasonable notice agents or
prospective buyers of any interest superior to the Lease to view the Property
provided they are authorised by the Landlord or its agent and to permit the
Landlord or any superior landlord to fix on the Property a notice or board
indicating that an interest superior to this Lease is available for sale
10.16 Re-letting
where the Tenant or the occupier of the Property will have no right to
renew this Lease under the 1996 Order or has lost that right to permit the
Landlord or its agent at any time during the last twelve months of the Term to
fix on the Property a notice or board indicating that the Property will be
available for letting and during that period to permit persons with the
authority of the landlord or its agent to view the Property
10.17 Criminal Damage
10.17.1 in the event of this Lease being determined under clause 12.5
of the Lease by either party forthwith to assign or otherwise transfer to the
Landlord the benefit of any claim the Tenant may have in respect of the Property
under the Criminal Damage (Compensation) (Northern Ireland) Order 1977 or
otherwise
10.17.2 to maintain in relation to the Property and the Building such
standards of vigilance and to take all such precautions as may from time to time
be reasonably necessary or recommended by the Royal Ulster Constabulary or the
Compensation Agency (or any agency or public department which in future may
exercise their functions) for the protection and security of the Property
against damage by fire, explosion or malicious damage and to comply with all
reasonable requests, directions or prohibitions of the Landlord for the
protection and security of the Property and the Building and to compensate the
Landlord for any loss caused by a breach of this covenant (including any
diminution of moneys received by the Landlord under any insurance policy or the
Criminal Damage (Compensation) (Northern Ireland) Order 1977.)
10.18 Yield up
at the expiry of the Term:
10.18.1 to yield up the Property with vacant possession decorated and
repaired in accordance with and in the condition required by the provisions of
this Lease
10.18.2 to give up all keys of the Property to the Landlord
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10.18.3 to remove the Tenant's fixtures and fittings (if requested by
the Landlord) and all signs erected by the Tenant on or near the Property and to
make good immediately any damage caused by the removal
11. LANDLORD'S COVENANTS
--------------------
The Landlord COVENANTS with the Tenant:
11.1 Quiet enjoyment
to permit the Tenant to hold the Property peaceably and without any
interruption by the Landlord or any person claiming under or in trust for the
Landlord
11.2 Exercising rights
in exercising the rights involving entry to the Property to cause (and
to ensure that those exercising the rights on its behalf cause) as little damage
as is reasonably practicable to the Property
12. INSURANCE
---------
12.1 Landlord's covenants
The Landlord COVENANTS with the Tenant:
12.1.1 to insure the Property in the full cost of reinstatement
(excluding any glass insured under clause 12.2.15) against damage caused by fire
lightning accidental explosion aircraft (or other aerial device) or articles
falling from them earthquake storm tempest flood bursting and overflowing of
water pipes tanks and other apparatus impact by mechanically propelled vehicles
and any other risks relating to the Property that the Landlord acting reasonably
may decide to cover PROVIDING ALWAYS THAT:
12.1.1.1 the obligation to insure against any particular is risk
is subject to insurance for that risk being ordinarily available from a
reputable insurer for the Property and
12.1.1.2 this insurance will be subject to any exclusions
conditions and excesses that the insurer requires
12.1.2 to effect this insurance with a reputable insurance company or
with reputable underwriters and through any agency that the Landlord may from
time to time decide
12.1.3 that this insurance will be for the full cost of reinstatement
including (for example):
12.1.3.1 temporarily making the Property safe and protecting any
adjoining structures
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12.1.3.2 debris removal demolition and site clearance
12.1.3.3 obtaining planning and all other statutory and other
consents
12.1.3.4 architects' surveyors and other fees incurred by the
Landlord in relation to the reinstatement
12.1.3.5 complying with the requirements of any statute or of
any local public regulatory or other authority
12.1.3.6 any VAT that may be payable on or in respect of any of
these costs and fees
12.1.4 to produce to the Tenant on demand reasonable evidence of the
terms of the policy and of payment of the last premium
12.1.5 to notify the Tenant of any change in the risks covered by the
policy
12.1.6 to procure that the interest of the Tenant is noted or
endorsed on the policy whenever this is permitted under the policy
12.2 Tenant's covenants
The Tenant COVENANTS with the Landlord:
12.2.1 to pay as rent to the Landlord within fourteen days of a
demand and (if so demanded) in advance of the date of renewal sums equal to:
12.2.1.1 the premiums paid or to be paid by the Landlord for
insuring the Property in accordance with its obligations in this Lease including
any increased premiums required as a result of the Tenant's use of the Property
or anything brought onto the Property
12.2.1.2 the premiums paid or to be paid by the Landlord for
insuring for three years' loss of rent under this Lease
12.2.1.3 the premiums paid or to be paid by the Landlord for any
third party liability (including public and property owner's and employer's
liability) in respect of the Property against which the Landlord may at any time
insure
12.2.1.4 any part of the premiums referred to above which the
Landlord is entitled to retain by way of commission
12.2.2 where in the case of any of the items referred to in the
preceding clauses the Landlord's policy includes the Property and other premises
to pay as rent to the Landlord on demand and (if so demanded) in advance of the
date of renewal the proportion of the premiums properly attributable to the
Property to be determined (in the absence of agreement) by the Landlord's
surveyor
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12.2.3 to pay the sums referred to in clauses 12.2.1 and 12.2.2 for
the period beginning on the Insurance Commencement Date and ending on the day
immediately before the new renewal date on the grant of this Lease or if later
on the Insurance Commencement Date or when demanded
12.2.4 to give notice to the Landlord of any matters (whether
existing or that arise during the Term) that a prudent insurer might treat as
material in deciding whether or on what terms to insure or to continue to insure
the Property
12.2.5 to comply with all the requirements and recommendations of the
insurer and the fire officer
12.2.6 not to do or omit anything that could cause the insurance
effected under clause 12.1 to become void or voidable wholly or in part
12.2.7 not to do or omit anything that could cause any additional or
increased premiums to become payable unless the Tenant has previously obtained
the approvals of the Landlord and the insurer (the Landlord's approval not to be
unreasonable withheld)
12.2.8 not to have on the Property anything which is explosive or
especially combustible
12.2.9 to keep the Property supplied with the equipment for the
detection and fighting of fire and with the fire alarm equipment that is
reasonably required by the Landlord or that the insurer or fire officer requires
and to maintain this equipment in working order and to the satisfaction of the
insurer or fire officer and to the reasonable satisfaction of the Landlord and
at least once every six months to have this equipment inspected by a competent
person
12.2.10 not to obstruct the access to any fire equipment or the means
of escape from the Property or to lock any fire door while the Property is
occupied
12.2.11 to give notice to the Landlord immediately any event happens
against which the Landlord may have insured under this Lease
12.2.12 if the Tenant is entitled to the benefit of any insurance in
relation to the Property to apply all money in making good the loss for which it
is received
12.2.13 to do nothing to prejudice any claim made by the Landlord or
to prevent or impede any reinstatement being carried out by the Landlord under
clause 12.4.1.4
12.2.14 to pay to the Landlord on demand the amount of any excesses
which may be deducted or deductible by the insurers on any claim made by the
Landlord under clause 12.4.1.1
12.2.15 to insure the glass of the Property with a reputable insurance
company or with reputable underwriters against breakage or damage for its full
reinstatement cost and when required to produce to the Landlord particulars of
this insurance and evidence of the payment of
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the premium and to reinstate any glass that is broken or damaged with new glass
of no less quality or thickness
12.2.16 to effect and maintain with a solvent and reputable insurance
company adequate insurance cover against all usual third party, occupier's and
employer's liability risks and to indemnify the Landlord against all claims
demands and liabilities of this type which may arise during the Term
12.3 Suspension of Rent
12.3.1 "Insured Damage" means that the Property is destroyed or
damaged by any risk against which the Landlord has covenanted in this Lease to
insure or by any additional risk against which the Landlord has insured and
payment of the insurance money is not refused wholly or in part as the result of
an act or omission of the Tenant or any person deriving title under the Tenant
12.3.2 "Criminal Damage" means that the Property is destroyed or
damaged in such a manner as to give rise to a claim under the Criminal Damage
(Compensation) (NI) Order 1977 ("the Order") and payment of the compensation is
not refused wholly or in part as the result of an act or omission of the Tenant
or any person deriving title under the Tenant.
12.3.3 Whenever Insured Damage and/or Criminal Damage occurs and the
Property or any part of it is unfit for use the Rent (or a fair proportion of it
according to the nature and extent of the damage) will not be payable until the
Property is (or the affected parts are) again fit for use or until three years
from the damage whichever is the shorter and the proportion and the period will
be determined (in the absence of agreement) by the Landlord's surveyor
12.3.4 When the preceding clause applies for part of a quarter and
the Rent for that quarter has already been paid in advance the Landlord must
refund to the Tenant the proportion of the Rent (apportioned on a daily basis)
attributable to the period during which the preceding clause applied.
12.4 Reinstatement
12.4.1 Whenever Insured Damage and/or Criminal Damage occurs the
Landlord COVENANTS with the Tenant:
12.4.1.1 immediately to notify the insurer and/or the
Compensation Agency (as the case may be) of the damage and to claim all sums due
under the insurance policy and/or under the Order
12.4.1.2 to use all reasonable endeavours to procure the payment
by the insurer and/or the Compensation Agency of all sums properly due under the
policy at the time and in the manner required by the policy and/or under the
Order
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12.4.1.3 to apply for and use all reasonable endeavours to
obtain all planning permissions building regulation consents and other consents
and licenses that are required to enable the Landlord to reinstate ("the
Permissions")
12.4.1.4 to apply all insurance money and Criminal Damage
Compensation received (except sums for loss of rent) in reinstating the Property
as soon as the Permissions have been obtained or immediately where no
Permissions are required.
12.4.2 The Landlord need not reinstate while prevented by any of the
following:
12.4.2.1 failure by the Landlord to obtain the Permissions
despite using all reasonable endeavours
12.4.2.2 the grant of any of the Permissions subject to a lawful
condition with which it would be unreasonable to expect the Landlord to comply
or the planning or highway authority's insistence that as a pre-condition to
obtaining any of the Permissions the Landlord must enter into an agreement with
the planning or highway authority that would contain a term with which it would
be unreasonable to expect the Landlord to comply
12.4.2.3 some defect in the site upon which the reinstatement is
to take place so that it could not be undertaken or undertaken only at excessive
cost
12.4.2.4 war act of God government action strike lock-ou or any
other similar circumstances beyond the control of the Landlord
12.5 Termination
Whenever Insurance Damage and/or Criminal Damage occurs and the
Property or any part of it is still unfit for use three years after the date
upon which it first became unfit either party may for so long as the Property or
part remains unfit at any time within six months of the expiry of that three-
year period serve on the other a notice referring to this clause whereupon this
Lease will immediately come to an end
13. FORFEITURE
----------
13.1 A "Forfeiting Event" is any of the following:
13.1.1 any Rent or sum regarded as rent for the purposes of this
Lease is outstanding for twenty-one days after becoming due whether formally
demanded or not
13.1.2 a breach by the Tenant of any of the provisions of this Lease
13.13 the Tenant is Insolvent
13.2 "Insolvent" for the purposes of this Lease means that the Tenant
(being an individual) becomes bankrupt or (being a company) enters into
liquidation whether compulsory or voluntary (save for the purpose of
amalgamation or reconstruction of a solvent company) or
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has a receiver appointed of its undertaking or (in either case) enters into an
arrangement or composition for the benefit of its creditors or suffers any
distress or execution to be levied on its goods
13.3 Whenever a Forfeiting Event exists the Landlord may enter the
Property (or any part of it) at any time even if a previous right of re-entry
has been waived and then the Term will end but without affecting any rights that
either party may have against the other including (for example) the breach under
which the re-entry is made
14. MISCELLANEOUS
-------------
14.1 Representations
The Tenant acknowledges that it has not entered into this Lease in reliance
on any representation made by or on behalf of the Landlord
14.2 Exclusion of use warranty
Nothing in this Lease or in any consent granted by the Landlord implies
that the Property may be used for any particular purpose
14.3 Disputes with adjoining owners
If any dispute arises between the Tenant and the occupiers of Adjoining
Premises about any right in connection with the use of the Property and of any
Adjoining Premises or about any boundary structures separating the Property from
the Adjoining Premises it will be determined by the Landlord's surveyor
14.4 Covenants relating to Adjoining Premises
Nothing contained in or implied by this Lease will give the Tenant the
benefit of or the right to enforce (or to prevent the release or modification
of) any covenant or condition entered into by any tenant of any Adjoining
Premises
14.5 Effect of waiver
Each of the Tenant's covenants will remain in force even if the Landlord
has waived or temporarily released that covenant or waived or released a similar
covenant in a lease of Adjoining Premises
14.6 Rights and easements
14.6.1 The only rights granted to Tenant are those expressly set out
in this Lease
14.6.2 The Tenant will not during the Term acquire or become entitled
to any easement over any Adjoining Premises
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14.6.3 Any easement exercised over any Adjoining Premises will be
regarded as being exercised by virtue of a determinable license from the
Landlord
14.7 Extension of Term
If after the expiry of the Term there is a period of holding over extension
or continuance (whether by agreement or operation of law):
14.7.1 the provisions of this Lease (including for example clause 18)
will apply to that period and the expression "Term" will be construed
accordingly and
14.7.2 all obligations of a periodical nature will apply at the same
intervals as those specified in this Lease
14.8 Perpetuity period
The perpetuity period applicable to this Lease is eighty years beginning on
the date of this Lease and whenever in this Lease either party is granted a
future interest it must vest within that period and if it has not will be void
for remoteness
14.9 Compensation
Any statutory right of the Tenant or claim compensation from the Landlord
on vacating the Property is excluded from this letting to the extent that the
law allows
14.10 Tenant's possessions
If after the Tenant has vacated the Property on the expiry of the Term any
of the Tenant's possessions remain on the Property and the Tenant fails to
remove them within seven days after being requested in writing by the Landlord
to do so or if the Landlord is unable to make such a request to the Tenant
within fourteen days from the first attempt:
14.10.1 the Landlord may as the agent of the Tenant sell the
possessions and the Tenant indemnifies the Landlord against any liability
incurred by it to any third party whose possessions have been sold by the
Landlord in the mistaken belief (which will be presumed unless the contrary is
proved) that the possessions belonged to the Tenant
14.10.2 if the Landlord having made reasonable efforts is unable to
locate the Tenant the Landlord may keep the proceeds of sale unless the Tenant
claims them within ninety days of vacating the Property
14.10.3 the Tenant will be responsible for and will indemnity the
Landlord against any damage caused to the Property by the possessions and any
Losses suffered by the Landlord as a result of the presence of the possessions
on the Property after the Tenant has vacated the Property on the expiry of the
Term
14.11 Landlord's surveyor
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Whenever this Lease provides for questions to be referred to or issues to
be determined by the Landlord's surveyor:
14.11.1 the term "in the absence of agreement" means in the absence
of agreement between the Landlord and the Tenant and does not require the
agreement of the Guarantor to have been sought
14.11.2 in making his determination he will be acting as an expert
and not as an arbitrator and the determination will be final and conclusive
14.11.3 his fees and disbursements for making the determination will
be paid as he directs as being fair and reasonable in the light of his
determination having regard to the nature of the question or issue referred to
him and the views of the part expressed to him prior to his determination
14.11.4 he must be an Associate or Fellow of either the Royal
Institution of Chartered Surveyors or the Incorporated Society of Valuers and
Auctioneers
14.11.5 he must not be an employee of the Landlord or of a company
within the Landlord's Group
15. NOTICES
-------
15.1 A notice under this Lease must be in writing and unless the receiving
party or its authorised agent acknowledges receipt is valid if (and only if) it:
15.1.1 is given by hand sent by registered post or recorded delivery
or sent by fax provided a confirmatory copy is on the same day given by hand or
sent by registered post or recorded delivery and
15.1.2 is served:
15.1.2.1 where the receiving party is a company incorporate
within the United Kingdom at its registered office or
15.1.2.2 where the receiving party is the Tenant and the Tenant
is not such a company at the Property or
15.1.2.3 where the receiving party is the Landlord or the
Guarantor and that party is not such a company at that party's address shown in
this Lease or at any address specified in a notice given by that party to the
other parties
15.2 Unless it is returned through the Post Office undelivered a notice
sent by registered post or recorded delivery is to be treated as served on the
third working day after posting whenever and whether or not it is received
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<PAGE>
15.3 A notice sent by fax is to be treated as served on the day upon which
it is sent or the next working day where the fax is sent after 4 pm or on a day
that is not a work day whenever and whether or not it or the confirmatory copy
is received unless the confirmatory copy is returned through the Post office
undelivered
15.4 The term "working day" means a day when the UK clearing banks are
open for business in the City of London
15.5 If the receiving party consists of more than one person a notice to
one of them is notice to all
15.6 In this clause "party" includes the Guarantor
16. INTERPRETATION
--------------
In this Lease:
16.1 "Adjoining Premises" means any nearby property in which the Landlord
(or where the Landlord is a company any company that is a member of the
Landlord's Group) has or acquires during the Term a freehold or leasehold
interest
16.2 "Conducting Media" includes all drains channels sewers flues conduits
ducts pipes wires cables watercourses gutters culverts soakaways and other
similar transmission media and installations and all fixings louvres cowls
covers and other ancillary apparatus and references to Conducting Media being
"in" or "on" include Conducting Media in on under or through
16.3 "Landlord" includes the person from time to time entitled to
possession of the Property when this Lease comes to an end
16.4 "Landlord's Group" means a group of companies of which the Landlord
is a member within the meaning of the 1996 Order Article 31
16.5 "this Lease" includes (except where the contrary is indicated) any
document supplemental or collateral to this document or entered into in
accordance with this document
16.6 "Losses" includes all liabilities incurred by the Landlord all damage
and loss suffered by it and all damages awarded against it all claims demands
actions and proceedings made or brought against it and all costs disbursements
and expenses incurred by it
16.7 "1996 Order" means the Business Tenancies (Northern Ireland) Order
1996 to which clause 16.15.1 applies)
16.8 "Other Buildings" means by building or other structure now erected on
the Adjoining Premises or erected on the Adjoining Premises during the Term
16.9 "Plan" means the plan or plans annexed to this Lease
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<PAGE>
16.10 "Planning Acts" means the Planning (Northern Ireland) Order 1991 and
clause 16.15.1 applies
16.11 "Plant" means all apparatus machinery and equipment installed by the
Landlord in the Property including (for example) lifts lift shafts standby
generators boilers items relating to mechanical ventilation heating and cooling
and closed circuit television systems
16.12 "Rent" means the Initial Rent or the rent agreed or determined under
clause 4
16.13 "Tenant" includes the person from time to time in whom the tenant's
interest under this Lease is vested
16.14 "VAT" means value added tax and any tax of a similar nature
substituted for it or in addition to it
16.15 references
16.15.1 to a particular statute or part of it ("statutory reference")
include (except where the contrary is indicated) any relevant derivative
legislation and refer to that statutory reference as it may have been extended
modified amended or re-enacted by the date upon which its construction is
relevant for the purposes of this Lease and not as originally enacted or as at
the date of this Lease
16.15.2 generally to "statute" or "statutes" include derivative
legislation any Order in Council or statutory instrument and any regulation or
other legislation of the European Community that is directly applicable in the
United Kingdom and include existing statutes and those that come into effect
during the Term
16.15.3 to "parties" or "party" mean the Landlord and the Tenant or
either of them but in the absence of a specific provision to the contrary do not
include the Guarantor
16.15.4 to the expiry of the Term or to the last year of the Term are
(subject to clause 14.7) to the end of the Term and the last year of the Term
however the Term comes to an end whether by effluxion of time or in any other
way including(for example) determination by forfeiture
16.15.5 to the base lending rate are to the base lending rate or
Ulster Bank Limited or if that rate has been abolished to the equivalent rate
that has replaced it or if none to the rate of interest most comparable with the
base lending rate determined in the absence of agreement between the parties by
the Landlord's surveyor
16.16 any consent of the Landlord must be in writing and signed by or on
its behalf if it is to be effective under this Lease
16.17 where the consent of the Landlord is required it may be given
subject to any necessary further consent being obtained from a superior landlord
and nothing in this Lease implies that this further consent may not be
unreasonably withheld
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<PAGE>
16.18 whenever the Landlord or the Tenant or any Guarantor consists of
more than one person any obligation of or to that party is of or to those
persons separately all together or in any combination
16.19 words importing one gender include all genders
16.20 any covenant by the Tenant not to do any act or thing includes an
obligation not to allow that act or thing to be done
16.21 the headings are for locating references in the text and are not to
be taken into account in interpretation
17. TENANT'S RIGHT TO BREAK
-----------------------
If at any time before 8 January 2009 the Tenant serves a notice to
terminate this Lease on 7 July 2009 and if the Tenant pays the Rent and all
other sums due under this Lease up to 7 July 2009 this Lease will come to an end
at 12 noon on 7 July 2009 (Rent and all other payments of a periodical nature
being payable for all that day) but the termination will not affect any claim
that the Landlord may have for breaches by the Tenant of the provisions of this
Lease
18. GUARANTOR
---------
18.1 Guarantor's covenants
The Guarantor COVENANTS with the Landlord named in this Lease and
(without the need for any express assignment) with all of its successors in
title:
18.1.1 if the Tenant does not pay the Rent or any other sum due under
this Lease to pay to the Landlord on demand the Rent or other sum and the
expression "other sum" includes (for example) any sum that the Tenant is ordered
to pay in any proceedings arising out of this Lease (except proceedings under
the 1996 Order to renew this lease) or agrees to pay by way of settlement of
those proceedings
18.1.2 if the Tenant is in breach of any provision of this Lease to
remedy that breach on demand and to indemnify and keep indemnified the Landlord
against all Losses suffered by the Landlord as a result (directly or indirectly)
of that breach
18.1.3 in addition to the obligations set out in clauses 18.1.1 and
18.1.2 and if this Lease is disclaimed by the Tenant's trustee in bankruptcy or
liquidator:
18.1.3.1 to pay to the Landlord on demand an amount equal to the
Rent and other sums of a recurring nature that would have been payable under
this Lease for the period beginning on the date of disclaimer and ending on the
earliest of:
18.1.3.1.1 the date upon which the Property is relet
18.1.3.1.2 the expiry of the Term
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<PAGE>
18.1.3.1.3 the expiry of the period of one year
beginning on the date of the disclaimer
18.1.3.2 if requested by the Landlord within ninety days of
disclaimer to take from the Landlord a lease of the Property from the date of
disclaimer for the residue of the Term at the Rent payable at the time of
disclaimer (or where a rent review is pending at the time of disclaimer at the
Rent that is subsequently agreed or determined under clause 4 to have been
payable at the time of disclaimer) and upon the same terms as those contained in
this Lease with all provisions of a periodical nature (including for example
those relation to review of the Rent) expressed to apply on the actual dates
that would have applied if this Lease had not been disclaimed
18.1.3.3 to pay the costs of the Landlord incurred in relation
to the disclaimer and where appropriate the grant of the lease to the Guarantor
18.2 When covenants apply
The obligations of the Guarantor set out in clause 18.1 will continue
to apply even if:
18.2.1 the Landlord grants any time or indulgence to the Tenant or
fails to enforce payment of the Rent or other sum or the performance of the
terms of this Lease
18.2.2 the Landlord refuses to accept the Rent tendered when the
Landlord was entitled (or would after the service of a notice under the
Conveyancing and Law of Property Act 1881 section 14 be entitled) to re-enter
the Property
18.2.3 the terms of this Lease are varied except that where a
variation increases an obligation of the Tenant (other than the obligation to
pay a revised Rent referred to in clause 18.2.4) or imposes a new obligation on
the Tenant the Guarantor will not be liable in respect of that variation but
will be liable on the terms of this Lease without that variation
18.2.4 a revised Rent has been agreed or determined under clause 4
including any stepped rent phased rent or other rental formula that may be
agreed
18.2.5 the Tenant surrenders part of the Property and where this
happens the liability of the Guarantor under this Lease continues for the part
of the Property not surrendered after making any necessary apportionments
18.2.6 the Guarantor would have been released by any other event
18.3 Tenant's covenants
The Tenant COVENANTS with the Landlord:
18.3.1 to give notice to the Landlord within fourteen days if the
Guarantor (or if more than one person is included in this term any of them) or
any person who has entered into
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covenants with the Landlord under clause 9.5 or 18.3.2 becomes Insolvent (as
defined in clause 13.2) or dies
18.3.2 if required by the Landlord following the service of a notice
under the preceding clause to procure that within fourteen days of the request
some other person reasonably acceptable to the Landlord enters into covenants
with the Landlord in the form of clauses 18.1 to 18.3 inclusive or in such other
form as the Landlord reasonably requires
WE CERTIFY that there is no Agreement for Lease to which this Lease gives
effect
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IN WITNESS whereof this Lease has been executed by the parties hereto the
day and year first herein written.
SEALED with the Common Seal of
MERIT INVESTMENTS & PROPERTIES LIMITED
in the presence of:
/s/ TILLIE CONWAY
Tilly Conway, Director
/s/ TREVOR SIMPSON
Trevor Simpson, Director
SEALED with the Common Seal of
APION LIMITED
in the presence of:
/s/ DAVID MEGAN
David Megan, Director
/s/ LAURENCE QUINN
Laurence Quinn, Director
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<PAGE>
WE, the Northern Bank Limited having its registered office at Donegall
Square West, Belfast, BT1 6JS CONSENT to the creation of the within-written
Lease.
Dated the 29th day of September 1999
SIGNED: /s/ JILLIAN W. GILLESPIE
------------------------
For and on behalf of the Northern Bank Limited by an authorised signatory
<PAGE>
[DIAGRAM OF LEASED PROPERTY]
<PAGE>
PERSONAL AND PRIVATE
EXHIBIT 10.22
October 4, 1999
Mr. Michael C. Mulica
2324 Lincolnwood Avenue
Evanston, IL 60201
Dear Mike:
I am delighted to confirm our offer to you to join Phone.com, Inc. Each person
at Phone.com, Inc. will help shape our values and direction; each person will
add his or her unique strengths and perspectives, and we are certainly looking
forward to your contributions to our growing company.
The offer is for you to join us as a Senior Vice President, Worldwide Sales,
Support and Consulting reporting to myself. Your monthly salary will be
$18,333.33 per month or $220,000 on an annualized basis, and your annual target
compensation will be $380,000, with the bonus based upon your performance in
achieving defined objectives in your position as Senior Vice President,
Worldwide Sales, Support and Consulting. For the first nine months of your
employment, you will receive a non-recoverable draw equal to your incentive
bonus. From that point on your incentives will be governed by the plan
provisions which include a 50% recoverable draw. As an employee, you are also
eligible to receive our standard employee benefits.
Subject to the approval of the Board of Directors of Phone.com, Inc. you will be
granted an option to purchase:
1. 175,000 shares of Common Stock at an exercise price equal to the fair market
value of the Common Stock at the date of grant. The shares will vest over
four years with a one year cliff, meaning that one fourth of your shares will
be vested one year from your hire date and the remaining shares will vest
monthly after your first year of employment, for the following three years.
2. 25,000 shares of Common Stock at an exercise price equal to half of the
closing price of the Common Stock on the date of grant. Vesting for this
grant will commence on the date of grant, and the shares will vest on a
monthly basis over a period of four years. Note these options will be
considered non-qualified stock options (NSO's) and will be subject to
taxation at the time of exercise.
3. Two blocks of 50,000 options which may be granted along with the first grant
of 175,000 options or on the first day of the following two quarters,
whichever you choose. However, you must state your preference on your date
of hire. The shares will vest over four years with
<PAGE>
a one year cliff, meaning that one fourth of your shares will be vested one
year from your hire date and the remaining shares will vest monthly after
your first year of employment, for the following three years.
Vesting will, of course, depend on your continued employment with Phone.com,
Inc. You will be offered to sign a "double trigger" agreement, which calls for
accelerated vesting of your stock if you are terminated within an 18 month
period after the Company is acquired.
As we have discussed, we are extending additional financial support for your
relocation to the Bay Area. The relocation benefits available to you are
described below:
1. Moving of typical and customary household goods to your primary residence in
California, including two automobiles.
2. Storage of household goods for up to 30 days.
3. Reimbursement for real estate sales commissions on the sale of your existing
residence in Evanston as well as your second home in Wisconsin up to a
maximum of $80,000 in total for both. It is expected that you will make
every effort to minimize these costs through negotiated real estate sales
commissions.
4. You may have the option to secure a one-time low-interest loan which will be
secured against your primary California residence. The amount of this loan
will be negotiated separately dependent on the specifics of your real estate
transaction, with the interest and repayment terms of this loan being set
forth in a separate loan agreement. It is understood that both you and
Phone.com will be reasonable in the negotiation of this loan arrangement.
5. On the purchase of your primary residence in California, payment of closing
costs that are typical for a buyer in the California area that are non-
recurring and not negotiable or negotiated up to one percent (1%) of the
purchase price.
6. Temporary living accommodations for a period of up to 180 days at
accommodations selected by Phone.com
7. Substitute transportation for a period of up to 30 days or until your
personal vehicle arrives, whichever is sooner.
8. Payment of expenses related to two house-hunting trips to the Bay Area with
your spouse. This would include coach round trip airfare, rental car and per
diem meal expenses.
9. Use of local relocation counseling services as selected by the Company.
Any amounts received by you for relocation expenses will be reported as taxable
income to you in the year received as required by applicable tax law. Income
taxes which result from Company payments under this agreement are your
responsibility. You may wish to consult a tax advisor to clarify the tax
implications to you. Relocation must be completed and associated expenses must
be submitted to Phone.com, Inc. by not later than one year from your employment
date.
-2-
<PAGE>
You should be aware that your employment with Phone.com, Inc. is for no
specified period and constitutes "at will" employment. As a result, you are
free to resign at any time, for any reason or for no reason. similarly,
Phone.com is free to conclude its employment relationship with you at any time,
with or without cause. However, should your employment be terminated except
"for cause" during the first 24 months of employment, you will be eligible to
receive a severance package equal to 12 months of target pay and benefits,
excluding the further vesting of options. After 24 months of employment, this
severance package will be equal to six months of target pay and benefits again
excluding the further vesting of options.
[Cause "shall mean (i) gross negligence or willful misconduct in the performance
of the Employee's duties to the Company; (ii) repeated unexplained or
unjustified absence from the Company; (iii) a material and willful violation of
any federal or state law; (iv) refusal or failure to act in accordance with any
specific direction or order of the Company; (v) commission of any act of fraud
with respect to the Company; or (vi) conviction of a felony or a crime involving
moral turpitude causing material harm to the standing and reputation of the
Company, in each case as determined by the Board of Directors of the Company.]
You are invited to attend Day One Orientation on your first day of work during
which you will learn more about UP's business, culture and benefits.
Orientation will be held from 9:00 AM to 11:00 AM in the Human Resources
Department. For purposes of Federal Immigration Law, you will be required to
provide to the Company documentary evidence of your identity and eligibility for
employment in the United States. Such documentation must be provided to us
within three (3) business days of your date of hire, or our employment
relationship with you may be terminated.
Upon joining Phone.com, Inc. you will be required to sign a confidentiality and
invention agreement in which you will be asked to protect the company's
confidential information and to assign to the company any inventions produced in
the course of your work.
This letter together with the confidentiality agreement sets forth the terms of
your employment with Phone.com, Inc. and supercedes any prior representations or
agreements, whether written or oral. This letter may not be modified or amended
except by a written agreement signed by Phone.com, Inc. and you. Please review
these terms to make sure they are consistent with your understanding. If so,
send back to me this signed offer letter no later than Wednesday, October 6,
1999. As we have discussed, your expected start date is on or before November
1, 1999.
Your acceptance of this offer represents a unique opportunity for Phone.com,
Inc. both to grow and to succeed. I want to thank you for the commitment you
have made to our common vision and look forward to working with you.
Accepted by:
/s/ Alain Rossman /s/ Michael C. Mulica
- ----------------- ---------------------
Alain Rossmann Michael C. Mulica
Chairman and CEO
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<PAGE>
EXHIBIT 23.1
CONSENT OF KPMG LLP, INDEPENDENT ACCOUNTANTS
The Board of Directors
Phone.com Inc.:
We consent to the use of our report included herein and to the references to
our firm under the headings "Experts" and "Selected Consolidated Financial
Data" in the Prospectus.
KPMG LLP
Mountain View, California
November 3, 1999
<PAGE>
Exhibit 23.2
CONSENT OF PRICEWATERHOUSECOOPERS
The Board of Directors
Phone.com, Inc.:
We hereby consent to the use in this Registration Statement on Form S-1 of
Phone.com, Inc. of our report dated 26 October 1999 relating to the financial
statements of the WAP Business of APiON which appears in the Registration
Statement. We also consent to the reference to us under the heading "Experts"
in such Registration Statement.
PricewaterhouseCoopers
3 November 1999
Belfast, United Kingdom
