<PAGE>
As filed with the Securities and Exchange Commission on April 6, 2000
Registration No. 333-94801
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------
GoAmerica, Inc.
(Exact name of registrant as specified in its charter)
--------------
Delaware 4812 22-3693371
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
401 Hackensack Avenue,
Hackensack, New Jersey 07601
201-996-1717
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------
Aaron Dobrinsky
President and Chief Executive Officer
GoAmerica, Inc.
401 Hackensack Avenue
Hackensack, New Jersey 07601
201-996-1717
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------
Copies to:
David J. Sorin Scott M. Freeman
Andrew P. Gilbert Sidley & Austin
Buchanan Ingersoll Professional 875 Third Avenue
Corporation New York, New York 10022
650 College Road East (212) 906-2000
Princeton, New Jersey 08540
(609) 987-6800
--------------
Approximate date of commencement of the proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the 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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus is not complete and may be +
+changed. We may not sell these securities until the registration statement +
+filed with the Securities and Exchange Commission is effective. This +
+preliminary prospectus is not an offer to sell these securities and it is not +
+soliciting an offer to buy these securities in any state where the offer or +
+sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 6, 2000
PROSPECTUS
10,000,000 Shares
[LOGO OF GOAMERICA]
Common Stock
-----------
This is an initial public offering of shares of common stock of GoAmerica, Inc.
We are selling the 10,000,000 shares of common stock offered under this
prospectus.
There is currently no public market for our shares. We currently estimate that
the initial public offering price will be between $14.00 and $16.00 per share.
Our common stock has been approved for listing on the Nasdaq National Market
under the symbol "GOAM."
See "Risk Factors" beginning on page 6 to read about risks that you should
consider before buying shares of our common stock.
Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
-----------
<TABLE>
<CAPTION>
Per
Share Total
----- -----
<S> <C> <C>
Public offering price............................................... $ $
Underwriting discount............................................... $ $
Proceeds, before expenses, to us.................................... $ $
</TABLE>
-----------
The underwriters may purchase up to an additional 1,500,000 shares of common
stock from us at the initial public offering price less the underwriting
discount to cover over-allotments.
The underwriters expect to deliver the shares against payment in New York, New
York on , 2000.
-----------
Bear, Stearns & Co. Inc.
Chase H&Q
U.S. Bancorp Piper Jaffray
Wit SoundView
-----------
DLJdirect Inc.
-----------
The date of this prospectus is , 2000
<PAGE>
GOAMERICA, INC.
[Graphic appears here. The graphic depicts a businessman working on a wirelessly
enabled personal computer. The Company's logo appears across the top of the
graphic. The word "go" appears in the upper lefthand section and the words
"innovation" and "connectivity" appear in the foreground.]
[Description of Artwork]
[Graphic appears here. This graphic is a two page gatefold with the Company's
logo appearing across the top. The words "Goamerica provides wireless access..."
appear under the logo followed by four boxes aligned from left to right. The
first box includes the text "Email, the Web and corporate intranets" and has an
accompanying photograph of the globe. The second box includes the text "Secure,
reliable network operations center" and has an accompanying photograph of
computer technology. The third box contains the text "Allows use on various
network carriers" and has an accompanying photograph of various networks. The
fourth box contains the text "Using GoAmerica software, enables use of a variety
of mobile devices" and has an accompanying photograph of various mobile devices.
In the background are various pictures of business persons and certain wording
including the words "independent access," "internet architecture," "devices,"
"corporate intranets," "wireless connectivity" and "networks."]
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary does not contain all the information that you should consider
before investing in our common stock. You should read the entire prospectus
carefully, especially "Risk Factors" beginning on page 6 and our financial
statements and related notes.
GoAmerica, Inc.
Our Company
We are a nationwide wireless Internet services provider. We enable our
individual and business subscribers to access remotely the Internet, email and
corporate intranets in real time through a wide variety of mobile computing and
communications devices. Through our Wireless Internet Connectivity Center, we
offer our subscribers comprehensive and flexible mobile data solutions for
wireless Internet access by providing wireless network services, mobile
devices, software and subscriber service and support. We have a limited
operating history and have incurred operating losses since our inception. We
expect to continue to incur increasing operating and net losses for at least
the next several quarters.
Our Go.Web technology and Wireless Internet Connectivity Center enable our
subscribers to access a wide variety of Internet content, such as business and
financial data, news, sports, travel, entertainment, personal contact and other
information. Our subscribers can conduct ecommerce transactions, such as
shopping, reservations and stock trading, to the extent permitted by their
mobile device of choice. Our subscribers can also customize their personal Web
site or "personal portal," www.mygoweb.com, to access their favorite Web sites
quickly. In addition, we offer a variety of email solutions which allow our
subscribers to access their email at their existing Internet and business email
accounts as well as a GoAmerica email address.
We provide our subscribers with flexible and reliable wireless Internet
services across a number of wireless networks and mobile device platforms. To
provide our subscribers with nationwide access, we have established strategic
relationships with many leading wireless network carriers. Our subscribers are
able to use our wireless Internet services with their choice of a wide variety
of leading mobile devices, including Palm operating system-based computing
devices, Research In Motion's interactive pagers, laptop computers, Microsoft
Windows CE-based computers and wirelessly-enabled smart phones. We also have
engineered our wireless Internet services to operate with new versions of many
wireless devices. We seek to enhance our offerings with value-added services
and additional functionality to expand our subscriber base and increase our
recurring revenues.
Our Opportunity
We believe that the growth of the Internet, email and mobile wireless
communications has created a significant market opportunity for service
providers capable of efficiently delivering wireless Internet and email
services over wireless communication networks. While the wireless data services
market is developing rapidly, widespread adoption of wireless data services has
been hindered by a number of challenges, including limited wireless data
service coverage areas, incompatible mobile devices and wireless networks, and
slow wireless data transmission speeds. We believe that adoption of wireless
data applications that serve specific industries, such as financial services,
or enterprise solutions, such as sales force automation, have shown the
greatest penetration to date. However, the rapid development of the Internet,
with the resulting nearly unlimited access to content and to corporate
intranets, has created the opportunity for rapid adoption of wireless devices
for large scale applications, including messaging, email connectivity, personal
information management (address and calendar) connectivity, and access to the
Internet. As a result, we believe that a significant opportunity exists for
wireless Internet service providers that are capable of offering individuals
and businesses easy-to-use, cost-effective and reliable wireless data service.
<PAGE>
The Offering
<TABLE>
<C> <S>
Common Stock offered by us.............. 10,000,000 shares
Common Stock to be outstanding after
this offering.......................... 47,136,760 shares
Use of proceeds......................... We expect to use the net proceeds
from this offering to expand sales
and marketing initiatives, expand
customer service and support systems
and capabilities, build a redundant
network operating center, acquire and
implement new operational and
financial systems, increase working
capital and for possible future
acquisitions.
Proposed Nasdaq National Market symbol.. GOAM
</TABLE>
The number of shares of common stock to be outstanding after this offering
include 13,222,760 shares of common stock to be issued upon automatic
conversion of all outstanding shares of our preferred stock upon completion of
this offering. The shares of common stock to be outstanding after this offering
exclude:
. 10,716,000 shares of common stock authorized for issuance under our
stock option plans and employee stock purchase plan, of which 2,440,008
shares were subject to outstanding options as of December 31, 1999 at a
weighted average exercise price of $0.92; and
. 1,276,800 shares of common stock issuable upon exercise of outstanding
warrants as of December 31, 1999 at a weighted average exercise price of
$1.17.
----------------
Except as otherwise noted, the information in this prospectus reflects a
2,000-for-one split of our outstanding shares of common stock on May 28, 1998
and an eight-for-one split of our outstanding shares of common stock on
February 25, 2000 and assumes (1) the conversion of all outstanding shares of
preferred stock into shares of common stock prior to the closing of this
offering and (2) no exercise of the underwriters' overallotment option.
GoAmerica Communications Corp. was incorporated in Delaware in 1996. In
December 1999, GoAmerica, Inc. was incorporated in Delaware and each of the
security holders of GoAmerica Communications Corp. exchanged all their
outstanding securities for newly issued securities of GoAmerica, Inc. with
equivalent rights and preferences. As a result, GoAmerica Communications Corp.
became a wholly-owned subsidiary of GoAmerica, Inc. See "Description of Capital
Stock." Our principal offices are located at 401 Hackensack Avenue, Hackensack,
New Jersey 07601, and our telephone number is (201) 996-1717.
We maintain a Web site at http://www.goamerica.net. The information
contained at our Web site is not incorporated into and does not constitute part
of this prospectus, and the only information that you should rely on in making
your decision whether to invest in our common stock is the information
contained in this prospectus.
2
<PAGE>
SUMMARY FINANCIAL DATA
The following summary statement of operations data for the period from
August 6, 1996, our date of inception, to December 31, 1996 and for the years
ended December 31, 1997, 1998 and 1999 are derived from our audited financial
statements. The pro forma statement of operations data presented below give
effect to the conversion of all of our Series A Preferred Stock into an
aggregate of 8,038,304 shares of common stock upon the closing of this
offering, as if such conversion had occurred at the dates of issuance. The pro
forma balance sheet data reflects the conversion of our Series A Preferred
Stock described above and the issuance and sale of 648,057 shares of our Series
B Preferred Stock after December 31, 1999 for total net proceeds of
approximately $25.2 million; the issuance of 226,816 shares of common stock in
connection with the Series B Preferred Stock financing; and the conversion of
all of our Series B Preferred Stock into an aggregate of 5,184,456 shares of
common stock. The pro forma as adjusted balance sheet data further reflects the
sale of the 10,000,000 shares of common stock offered by us in this offering at
an assumed initial public offering price of $15.00 per share, after deducting
the underwriting discount and estimated offering expenses payable by us. You
should read the selected financial data together with our financial statements
and the sections of this prospectus entitled "Capitalization" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
3
<PAGE>
<TABLE>
<CAPTION>
Period from
August 6,
1996 (date of Years Ended
inception) to December 31,
December 31, --------------------------
1996 1997 1998 1999
------------- ------- ------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenue:
Subscriber......................... $ -- $ 115 $ 360 $ 1,183
Equipment.......................... -- 33 449 1,341
Other.............................. -- 25 18 207
------ ------- ------- --------
Total revenue........................ -- 173 827 2,731
Costs and expenses:
Cost of subscriber revenue......... -- 88 304 4,051
Cost of equipment revenue.......... -- 15 532 1,648
Sales and marketing................ 43 243 909 3,283
General and administrative......... 175 841 1,549 4,810
Depreciation and amortization...... 3 32 124 275
Settlement costs................... -- -- -- 297
Interest income.................... -- -- (14) (165)
------ ------- ------- --------
Net loss............................. $ (221) $(1,046) $(2,577) $(11,468)
Beneficial conversion feature and
accretion of redemption value of
mandatorily redeemable convertible
preferred stock..................... -- -- -- (10,464)
------ ------- ------- --------
Net loss applicable to common
stockholders........................ $ (221) $(1,046) $(2,577) $(21,932)
====== ======= ======= ========
Basic net loss per share applicable
to common stockholders.............. $(0.02) $ (0.07) $ (0.14) $(1.02)
Diluted net loss per share applicable
to common stockholders.............. $(0.02) $ (0.06) $ (0.14) $(1.00)
====== ======= ======= ========
Weighted average shares used in
computation of basic net loss per
share applicable to common
stockholders........................ 13,947 16,083 18,391 21,590
Weighted average shares used in
computation of diluted net loss per
share applicable to common
stockholders........................ 14,382 16,518 18,826 22,025
Pro forma basic net loss per share... $ (0.45)
Pro forma diluted net loss per
share............................... $ (0.45)
========
Weighted average shares used in
computation of pro forma basic net
loss per share...................... 25,258
Weighted average shares used in
computation of pro forma diluted net
loss per share...................... 25,693
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1999
-------------------------------
Pro Forma As
Actual Pro Forma Adjusted
------- --------- ------------
(in thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.................... $ 6,344 $31,534 $169,684
Working capital.............................. 2,426 27,616 165,766
Total assets................................. 9,757 34,947 173,097
Series A redeemable convertible preferred
stock....................................... 20,755 -- --
Series B redeemable convertible preferred
stock....................................... -- -- --
Stockholders' equity (deficit)............... (16,658) 29,287 167,437
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Period from
August 6,
1996 (date of
inception) to Years Ended December 31,
December 31, --------------------------
1996 1997 1998 1999
------------- ---------------- --------
(in thousands)
<S> <C> <C> <C> <C>
Other Financial Data:
Cash provided by (used in):
Operating activities............. $ (338) $ (803) $ (2,215) $ (6,745)
Investing activities............. (74) (180) (498) (643)
Financing activities............. 1,000 415 4,654 11,771
</TABLE>
Recent Developments
On January 17, 2000, we executed a binding stock purchase agreement with
Dell USA L.P., Impact Venture Partners, L.P., Carousel Capital Partners, L.P.
and Forstmann Little & Co. Equity Partnership-VI, L.P. On January 28, 2000, we
completed this transaction and issued and sold an aggregate of 648,057 shares
of Series B Preferred Stock and issued 226,816 shares of common stock for net
proceeds of approximately $25.2 million. Each share of Series B Preferred Stock
will convert into eight shares of common stock upon completion of this
offering, or an aggregate of 5,184,456 shares.
In connection with the issuance and sale of the Series B Preferred Stock in
January 2000, assuming an initial public offering price of $15.00 per share, we
would expect to incur a non-cash, non-recurring charge to net loss applicable
to common stockholders in the amount of approximately $22 million in the first
quarter of 2000.
5
<PAGE>
RISK FACTORS
Investing in our common stock involves a high degree of risk. You should
carefully consider the following risks together with the other information
contained in this prospectus before deciding to buy our common stock. If any
of the following risks or uncertainties actually occur, our business,
financial condition and operating results could be significantly and adversely
affected. If that happens, the price of our common stock could decline, and
you could lose all or part of your investment.
Risks Particular To GoAmerica
We have historically incurred losses and these losses will increase in the
foreseeable future.
We have never earned a profit. We had net losses of $1.0 million, $2.6
million and $11.5 million for the years ended December 31, 1997, 1998 and
1999, respectively. Since our inception, we have invested significant capital
to build our wireless network operations and customer support centers as well
as our customized billing system. Recently, we have invested additional
capital in the development of our software application Go.Web. We plan to
acquire and implement new operational and financial systems, continue to
invest in our network operations and customer support centers, and expand our
sales and marketing efforts. We also provide and expect to continue to provide
mobile devices made by third parties to our customers at prices below our
costs for such devices. In addition, our costs of subscriber revenue,
consisting principally of our purchase of wireless airtime from network
carriers, have historically exceeded our subscriber revenue and we expect such
negative margins to continue until at least March 2000. Further, we have
experienced and expect to continue to experience negative overall gross
margins, which consist of margins on our subscriber revenues, equipment sales
and other revenue. As a result, we have incurred operating losses since our
inception and expect to continue to incur increasing operating losses for at
least the next several quarters. Therefore, we will need to generate
significant revenue to become profitable and sustain profitability on a
quarterly or annual basis.
We may not achieve or sustain our revenue or profit goals, and our ability
to do so depends on the factors specified elsewhere in "Risk Factors" as well
as on a number of factors outside of our control, including the extent to
which:
. our competitors announce and develop, or lower the prices of, competing
services;
. wireless network carriers, data providers and manufacturers of mobile
devices dedicate resources to selling our services; and
. prices for our services decrease as a result of reduced demand or
competitive pressures.
As a result, we may not be able to increase revenue or achieve
profitability on a quarterly or annual basis.
We have only a limited operating history, which makes it difficult to evaluate
an investment in our common stock.
We have only a limited operating history on which you can evaluate our
business, financial condition and operating results. We face a number of risks
encountered by early stage technology companies that participate in new
technology markets, including our ability to:
. manage our dependence on wireless data services which have only limited
market acceptance to date;
. expand our marketing, sales, engineering and support organizations, as
well as our distribution channels;
. negotiate and maintain favorable usage rates with telecommunications
carriers;
. retain and expand our subscriber base at profitable rates;
. recoup our expenses associated with the wireless devices we resell to
subscribers;
6
<PAGE>
. manage expanding operations, including our ability to expand our systems
if our subscriber base grows substantially;
. attract and retain management and technical personnel; and
. anticipate and respond to market competition and changes in technologies
such as wireless data protocols and wireless devices.
We may not be successful in addressing or mitigating these risks and
uncertainties, and if we are not successful our business could be significantly
and adversely affected.
To generate increased revenue we will have to increase substantially the number
of our subscribers, which may be difficult to accomplish.
We will have to increase substantially the number of our subscribers in
order to achieve our business plan. In addition to increasing our subscriber
base, we will have to limit our churn, or the number of subscribers who
deactivate our service. Adding new subscribers will depend to a large extent on
the success of our direct and indirect marketing campaigns, and there can be no
assurance that they will be successful. Limiting our churn rate will require
that we provide our subscribers with a favorable experience in using our
wireless service. Our subscribers' experience may be unsatisfactory to the
extent that our service malfunctions or our customer care efforts, including
our Web site and 800 number customer service efforts, do not meet or exceed
subscriber expectations. In addition, factors beyond our control, such as
technological limitations of certain of the current generation of wireless
devices, which may cause our subscribers' experience with our service to not
meet their expectations, could increase our churn rate and adversely affect our
revenues. Because a significant minority of our subscribers have low or no
usage rates for our services, our churn rates could increase in the future.
We need to improve our systems to monitor our wireless airtime costs more
effectively.
We seek to reduce our wireless airtime costs by periodically matching our
subscribers airtime usage needs to the most appropriate, lowest cost wireless
carrier plans. It is possible for a small number of subscribers, if we do not
assign them to the proper airtime pricing plan, to significantly increase our
costs. The current systems that we use to monitor the airtime charges that we
incur from our wireless carriers do not permit us to timely and effectively
respond to changes in volume and geographic location of subscriber usage, which
directly impact our costs of subscriber revenue. We currently use a manual
system to track such costs and monitor wireless plan usage. We cannot assure
you that we will be able to acquire or develop automated control systems or, if
implemented, that our systems will be able to monitor all subscriber usage or
improve our gross margins.
We have experienced and may continue to experience negative gross margins on
our subscriber revenue.
We intend to pass through to our subscribers all the airtime charges that we
incur from our wireless carriers; however, we have not always been and will not
always be able to pass through such charges because the pricing plans offered
to us by our wireless carriers and to which we assign our subscribers may not
allow us to always cover our subscriber costs. For example, many of our
subscribers have contracted for our Go.Unlimited Plan, which provides for
unlimited nationwide wireless Internet service for a fixed monthly fee. If we
assign those subscribers to a carrier plan that charges us an increasing fee as
subscriber usage increases, then as subscriber usage and our related airtime
costs increase, our margins on subscriber revenues would decrease and may
become negative. Our airtime costs also increase substantially when subscribers
use our services outside of their pre-determined geographic area, which results
in roaming charges to us by the carriers that we do not pass on to our
subscribers. We do not have and may not be able to develop the automated
systems necessary to monitor our subscribers' usage and roaming patterns and
quickly switch our subscribers to a more appropriate, lower cost airtime plan.
In addition, while we continually seek to negotiate better pricing of wireless
airtime plans with our carriers, we cannot assure you that we will be
successful in that regard.
7
<PAGE>
We subsidize the mobile devices that we resell which results in negative gross
margins on our equipment revenue.
In order to facilitate the sale of our wireless Internet services, the sales
prices of the mobile devices manufactured by third parties that we sell to our
subscribers are generally below our costs for such devices. Additionally, we
have also provided many of our resellers and marketing partners with
complimentary mobile devices and GoAmerica service during a trial period in
order to facilitate additional sales of our services. As a result, we have
experienced, and expect to continue to experience, negative gross margins on
the mobile devices that we resell.
We have limited resources and we may be unable to support effectively our
anticipated growth in operations.
We have begun aggressively expanding our operations in anticipation of an
increase in the number of our subscribers. The number of our employees
increased from 23 on December 31, 1998 to 49 on December 31, 1999. We intend to
use a portion of the net proceeds of this offering to hire a significant number
of additional employees. We also intend to use a portion of the net proceeds
from this offering to acquire a state-of-the-art accounting and business
process software package to replace our current manual systems which must be
updated. Additionally, we must continue to develop and expand our systems and
operations as the number of subscribers and the amount of information they wish
to receive, as well as the number of services we offer, increases. This
development and expansion has placed, and we expect it to continue to place,
significant strain on our managerial, operational and financial resources. We
may be unable to develop and expand our systems and operations for one or more
of the following reasons:
. we may not be able to locate or hire at reasonable compensation rates
qualified engineers and other employees necessary to expand our capacity
on a timely basis;
. we may not be able to obtain the hardware necessary to expand the
subscriber capacity of our systems on a timely basis;
. we may not be able to expand our customer service, billing and other
related support systems; and
. we may not be able to obtain sufficient additional capacity from
wireless carriers on a timely basis.
If we cannot manage our growth effectively, our business and operating
results will suffer. Additionally, any failure on our part to develop and
maintain our wireless data services if we experience rapid growth could
significantly adversely affect our reputation and brand name which could reduce
demand for our services and adversely affect our business, financial condition
and operating results.
Our business prospects depend in part on our ability to maintain and improve
our services as well as to develop new services.
We believe that our business prospects depend in part on our ability to
maintain and improve our current services and to develop new services on a
timely basis. Our services will have to achieve market acceptance, maintain
technological competitiveness and meet an expanding range of customer
requirements. As a result of the complexities inherent in our service
offerings, major new wireless data services and service enhancements require
long development and testing periods. We may experience difficulties that could
delay or prevent the successful development, introduction or marketing of new
services and service enhancements. Additionally, our new services and service
enhancements may not achieve market acceptance.
If we do not respond effectively and on a timely basis to rapid technological
change, our business could suffer.
The wireless and data communications industries are characterized by rapidly
changing technologies, industry standards, customer needs and competition, as
well as by frequent new product and service
8
<PAGE>
introductions. Our services are integrated with wireless handheld devices and
the computer systems of our corporate customers. Our services must also be
compatible with the data networks of wireless carriers. We must respond to
technological changes affecting both our customers and suppliers. We may not be
successful in developing and marketing, on a timely and cost-effective basis,
new services that respond to technological changes, evolving industry standards
or changing customer requirements. Our success will depend, in part, on our
ability to accomplish all the following in a timely and cost-effective manner:
. effectively use and integrate new technologies;
. continue to develop our technical expertise;
. enhance our wireless data, engineering and system design services;
. develop applications for new wireless networks and services;
. develop services that meet changing customer needs;
. advertise and market our services; and
. influence and respond to emerging industry standards and other changes.
We depend upon wireless carriers' networks. If we do not have continued access
to sufficient capacity on reliable networks, our business will suffer.
Our success partly depends on our ability to buy sufficient capacity on the
networks of wireless carriers such as AT&T Wireless Services, American Mobile,
Bell Atlantic Mobile and BellSouth Mobile Data and on the reliability and
security of their systems. We depend on these companies to provide
uninterrupted and "bug free" service and would be adversely affected if they
failed to provide the required capacity or needed level of service. In
addition, although we have some forward price protection in our existing
agreements with certain carriers, we could be adversely affected if wireless
carriers were to increase the prices of their services. Our existing agreements
with the wireless carriers generally have one-to-three year terms. Some of
these wireless carriers are, or could become, our competitors.
We depend on third parties for sales of our services which could result in
variable and unpredictable revenues.
We rely substantially on the efforts of others to sell many of our wireless
data communications services. While we monitor the activities of our resellers,
we cannot control how those who sell and market our service perform and we
cannot be certain that their performance will be satisfactory. If the number of
customers we obtain through these efforts is substantially lower than we expect
for any reason, this would have an adverse effect on our business, operating
results and financial condition.
Our goal of building the GoAmerica brand is likely to be difficult and
expensive and our inability to do so could adversely affect our business.
We believe that a quality brand identity will be essential if we are to
increase our number of subscribers and our revenues. We intend to use a
significant portion of the proceeds of the offering to increase substantially
our marketing budget as part of our efforts to build the GoAmerica brand. Our
sales and marketing expenses were approximately $909,000 and $3.3 million for
the years ended December 31, 1998 and 1999, respectively. In 2000, we expect
our sales and marketing expenses to substantially exceed our 2000 revenues. If
our marketing efforts cost more than anticipated, if we cannot increase our
brand awareness or if the GoAmerica brand is not well received by our existing
and potential subscribers, our losses will increase and our business will be
adversely affected.
9
<PAGE>
We depend on our key management and on recruiting and retaining key personnel.
The loss of our key employees could adversely affect our business.
We are particularly dependent on Aaron Dobrinsky and Joseph Korb, our
chairman, chief executive officer and president, and our executive vice
president, respectively, for most of our strategic, managerial and marketing
initiatives. The unexpected loss of such officers would likely have an adverse
effect on our business. In addition, because of the technical nature of our
services and the dynamic market in which we compete, our performance depends on
attracting and retaining other key employees. Competition for qualified
personnel in the wireless data, communications and software industries is
intense and finding and retaining such qualified personnel with experience in
such industries is even more difficult. We believe there are only a limited
number of individuals with the requisite skills to serve in many of our key
positions, and it is becoming increasingly difficult to hire and retain these
persons. Competitors and others may attempt to recruit our employees. A major
part of our compensation to our key employees is in the form of stock option
grants. A prolonged depression in our stock price could make it difficult for
us to retain our employees and recruit additional qualified personnel. We
currently maintain and are the beneficiary of key person life insurance
policies on the lives of Aaron Dobrinsky and Joseph Korb. We do not maintain
insurance policies for any of our other employees.
Wireless data systems failures could harm our business by injuring our
reputation or lead to claims of liability for delayed, improper or unsecured
transmission of data.
A significant barrier to the growth of ecommerce and wireless data services
has been the need for secure and reliable transmission of confidential
information. Our existing wireless data services are dependent on real-time,
continuous feeds from various sources. The ability of our subscribers to access
data in real-time requires timely and uninterrupted connections with our
wireless network carriers. Any significant disruption from our backup landline
feeds could result in delays in our subscribers' ability to receive such
information. In addition, our systems could be disrupted by unauthorized
access, computer viruses and other accidental or intentional actions. We may
incur significant costs to protect against the threat of security breaches or
to alleviate problems caused by such breaches. If a third party were able to
misappropriate our subscribers' personal or proprietary information or credit
card information, we could be subject to claims, litigation or other potential
liabilities that could adversely impact our business. There can be no assurance
that our systems will operate appropriately if we experience a hardware or
software failure. A failure in our systems could cause delays in transmitting
data, and as a result we may lose customers or face litigation that could
adversely affect our business.
An interruption in the supply of products and services that we obtain from
third parties could cause a decline in sales of our services.
In designing, developing and supporting our wireless data services, we rely
on wireless carriers, mobile device manufacturers, content providers and
software providers. These suppliers may experience difficulty in supplying us
products or services sufficient to meet our needs or they may terminate or fail
to renew contracts for supplying us these products or services on terms we find
acceptable. Any significant interruption in the supply of any of these products
or services could cause a decline in sales of our services, unless and until we
are able to replace the functionality provided by these products and services.
We also depend on third parties to deliver and support reliable products,
enhance their current products, develop new products on a timely and cost-
effective basis and respond to emerging industry standards and other
technological changes.
We may face increased competition which may negatively impact our prices for
our services or cause us to lose business opportunities.
The market for our services is expected to become increasingly competitive.
The widespread adoption of industry standards in the wireless data
communications market may make it easier for new market entrants and existing
competitors to introduce services that compete against ours. We developed our
solutions using standard industry development tools. Many of our agreements
with wireless carriers, wireless handheld device manufacturers and data
providers are non-exclusive. Our competitors may use the same products and
services
10
<PAGE>
in competition with us. With time and capital, it would be possible for
competitors to replicate our services and offer similar services at a lower
price. We expect that we will compete primarily on the basis of the
functionality, breadth, quality and price of our services. Our current and
potential competitors include:
. Emerging wireless Internet services providers, including OmniSky,
Wireless Knowledge, a joint venture of Microsoft and Qualcomm,
Incorporated, and Infospace.com which recently acquired Saraide.com and
those, such as Aether Systems, Inc., focusing on specific industries
such as on-line financial trading;
. Wireless device manufacturers, such as 3Com, Motorola and Research in
Motion;
. Wireless network carriers, such as AT&T Wireless Services, Bell Atlantic
Mobile, BellSouth Wireless Data, Sprint PCS and Nextel Communications,
Inc.; and
. Wireline internet service providers and portals, such as America Online
and Yahoo!.
Many of our existing and potential competitors have substantially greater
financial, technical, marketing and distribution resources than we do.
Additionally, many of these companies have greater name recognition and more
established relationships with our target customers. Furthermore, these
competitors may be able to adopt more aggressive pricing policies and offer
customers more attractive terms than we can. In addition, we have established
strategic relationships with many of our potential competitors. In the event
such companies decide to compete directly with us, such relationships would
likely be terminated, which might have an adverse effect on our business and
reduce our market share or force us to lower prices to unprofitable levels.
We may not have adequately protected our intellectual property rights.
Our success substantially depends on our ability to sell services for which
we may not have intellectual property rights. We currently do not have patents
on any of our intellectual property. We have filed for a patent on certain
aspects of our Go.Web technology. We cannot assure you we will be successful in
protecting our intellectual property through patent law. In addition, although
we have applied for U.S. federal trademark protection, we do not have any U.S.
federal trademark registrations for the marks "GoAmerica", "Go.Web", "Law on
the Go" or certain of our other marks and we may not be able to obtain such
registrations due to conflicting marks or otherwise. We rely primarily on trade
secret laws, patent law, copyright law, unfair competition law and
confidentiality agreements to protect our intellectual property. To the extent
that our technology is not adequately protected by intellectual property law,
other companies could develop and market similar products or services which
could adversely affect our business.
We may be sued by third parties for infringement of their proprietary rights
and we may incur defense costs and possibly royalty obligations or lose the
right to use technology important to our business.
The telecommunications and software industries are characterized by the
existence of a large number of patents and frequent litigation based on
allegations of patent infringement or other violations of intellectual property
rights. As the number of participants in our market increases, the possibility
of an intellectual property claim against us could increase. Any intellectual
property claims, with or without merit, could be time consuming and expensive
to litigate or settle and could divert management attention from administering
our business. A third party asserting infringement claims against us or our
customers with respect to our current or future products may adversely affect
us by, for example, causing us to enter into costly royalty arrangements or
forcing us to incur settlement or litigation costs. Please refer to "Business--
Intellectual Property Rights" for information relating to claims we have
received.
We may be subject to liability for transmitting information, and our insurance
coverage may be inadequate to protect us from this liability.
We may be subject to claims relating to information transmitted over systems
we develop or operate. These claims could take the form of lawsuits for
defamation, negligence, copyright or trademark infringement or other actions
based on the nature and content of the materials. Although we carry general
liability insurance,
11
<PAGE>
our insurance may not cover potential claims of this type or may not be
adequate to cover all costs incurred in defense of potential claims or to
indemnify us for all liability that may be imposed.
We may acquire or make investments in companies or technologies that could
cause loss of value to our stockholders and disruption of our business.
We intend to explore opportunities to acquire companies or technologies in
the future. Entering into an acquisition entails many risks, any of which could
adversely affect our business, including:
. failure to integrate the acquired assets and/or companies with our
current business;
. the price we pay may exceed the value we eventually realize;
. loss of share value to our existing stockholders as a result of issuing
equity securities as part or all of the purchase price;
. potential loss of key employees from either our current business or the
acquired business;
. entering into markets in which we have little or no prior experience;
. diversion of management's attention from other business concerns;
. assumption of unanticipated liabilities related to the acquired assets;
and
. the business or technologies we acquire or in which we invest may have
limited operating histories and may be subject to many of the same risks
we are.
Our quarterly operating results are subject to significant fluctuations and, as
a result, period-to-period comparisons of our results of operations are not
necessarily meaningful.
Our quarterly operating results may fluctuate significantly in the future as
a result of a variety of factors. These factors include:
. the demand for and market acceptance of our services;
. downward price adjustments by our competitors on services they offer
that are similar to ours;
. changes in the mix of services sold by our competitors;
. technical difficulties or network downtime affecting wireless
communications generally;
. the ability to meet any increased technological demands of our
customers; and
. economic conditions specific to our industry.
Therefore, our operating results for any particular quarter may differ
materially from our expectations or those of security analysts and may not be
indicative of future operating results. The failure to meet expectations may
cause the price of our common stock to decline substantially.
We may need additional funds which, if available, could result in an increase
in our interest expense or additional dilution to stockholders. If additional
funds are needed and are not available, our business could be negatively
impacted.
We currently anticipate that our available cash resources combined with the
net proceeds from this offering will be sufficient to fund our operating needs
for at least the next 24 months, including the expansion of our sales and
marketing program. Thereafter, we may require additional financing. At this
time, we do not have any bank credit facility or other working capital credit
line under which we may borrow funds for working capital or other general
corporate purposes. If our plans or assumptions change or are inaccurate, we
may be required to seek additional capital sooner than anticipated. We may need
to raise such capital through public or private debt or equity financing.
12
<PAGE>
If funds are raised through the issuance of equity securities, the
percentage ownership of our then-current stockholders will be reduced and the
holders of new equity securities may have rights, preferences or privileges
senior to those of the holders of our common stock. If additional funds are
raised through a bank credit facility or the issuance of debt securities, the
holder of such indebtedness would have rights senior to your rights and the
terms of such indebtedness could impose restrictions on our operations. If we
need to raise additional funds, we may not be able to do so on terms favorable
to us, or at all. If we cannot raise adequate funds on acceptable terms, we may
not be able to continue to fund our operations.
Risks Particular To Our Industry
The market for our services is new and highly uncertain.
The market for wireless data services is still emerging and continued growth
in demand for and acceptance of these services remains uncertain. Current
barriers to market acceptance of these services include cost, reliability,
functionality and ease of use. We cannot be certain that these barriers will be
overcome. If the market for our services does not grow or grows slower than we
currently anticipate, our business, financial condition and operating results
could be adversely affected.
New laws and regulations that impact our industry could adversely affect our
business.
We are not currently subject to direct regulation by the Federal
Communications Commission or any other governmental agency, other than
regulations applicable to businesses in general. However, in the future, we may
become subject to regulation by the FCC or another regulatory agency. In
addition, the wireless carriers who supply us airtime are subject to regulation
by the FCC and regulations that affect them could adversely affect our
business. Our business could suffer depending on the extent to which our
activities or those of our customers or suppliers are regulated.
Risks Particular To The Offering
Our stock price, like that of many technology companies, may be volatile and it
is difficult to predict whether a market for our common stock will develop.
We expect that the market price of our common stock will fluctuate as a
result of variations in our quarterly operating results. These fluctuations may
be exaggerated if the trading volume of our common stock is low. In addition,
due to the technology-intensive and emerging nature of our business, the market
price of our common stock may rise and fall in response to a variety of
factors, including:
. announcements of technological or competitive developments;
. acquisitions or strategic alliances by us or our competitors;
. the gain or loss of a significant customer or order;
. changes in estimates of our financial performance or changes in
recommendations by securities analysts regarding us or our industry; or
. general market or economic conditions.
This risk may be heightened because our industry is new and evolving,
characterized by rapid technological change and susceptible to the introduction
of new competing technologies or competitors.
In addition, equity securities of many technology companies have experienced
significant price and volume fluctuations. These price and volume fluctuations
often have been unrelated to the operating performance of the affected
companies. Volatility in the market price of our common stock could result in
securities class action litigation. This type of litigation, regardless of the
outcome, could result in substantial costs and a diversion of management's
attention and resources.
13
<PAGE>
We cannot predict the extent to which investor interest in our common stock
will lead to the development of a trading market or how liquid that market
might become. As discussed earlier, our financial results are difficult to
predict and could fluctuate significantly.
Upon completion of this offering, you will experience dilution.
Our tangible assets are readily identified assets like property, equipment,
cash, securities and accounts receivable. The value of these assets on a pro
forma as adjusted basis minus the value of our liabilities equals $3.55 per
share, assuming the offering is completed. The offering price exceeds this
amount by $11.45 per share, assuming an initial public offering price of $15.00
per share. Therefore, you will be paying more for a share of stock than the
value reflected in our accounts of tangible assets for that share. If we were
forced to sell all our assets and distribute all the proceeds, you would not
recover the amount you paid for shares unless we can sell the assets for more
than the value we report for our tangible assets. We also have outstanding a
large number of stock options and warrants to purchase common stock with
exercise prices significantly below the price of shares in this offering. You
will experience further dilution to the extent these options or warrants are
exercised.
We have anti-takeover defenses that could delay or prevent an acquisition and
could adversely affect the price of our common stock.
Provisions of our certificate of incorporation and bylaws and provisions of
Delaware law could delay or prevent an acquisition or change of control of
GoAmerica or otherwise adversely affect the price of our common stock. For
example, our certificate of incorporation authorizes 4,351,943 shares of
undesignated preferred stock which our board of directors can designate and
issue without further action by our stockholders, establishes a classified
board of directors, eliminates the rights of stockholders to call a special
meeting of stockholders, eliminates the ability of stockholders to take action
by written consent, and requires stockholders to comply with advance notice
requirements before raising a matter at a stockholders' meeting. As a Delaware
corporation, we are also subject to the Delaware anti-takeover statute
contained in Section 203 of the Delaware General Corporation Law. Please refer
to "Description of Capital Stock" for a more detailed discussion of these
provisions.
Future sales of our common stock may negatively affect our stock price.
All the shares sold by us in this offering will be freely tradable.
Following this offering, a large number of other outstanding shares of our
common stock will be available for resale beginning at various points in time
in the future. The market price of our common stock could decline as a result
of sales of a large number of shares of our common stock in the market
following this offering, or the perception that such sales could occur. These
sales also might make it more difficult for us to sell equity securities in the
future at a time and at a price that we deem appropriate. For more information,
see "Shares Eligible for Future Sale." Our directors, executive officers, and
other stockholders, who collectively hold a total of 37,204,808 shares of
common stock, have agreed not to dispose of any shares of common stock, subject
to limited exceptions, for a period of 180 days after the date of this
prospectus, without the prior written consent of Bear, Stearns & Co. Inc., on
behalf of the underwriters.
We will retain broad discretion in using the net proceeds from this offering
and may spend a substantial portion in ways in which you do not agree.
Our management will retain broad discretion to allocate the proceeds of this
offering. The proceeds may be spent in ways with which you and other
stockholders may not agree. Management's failure to spend the proceeds
effectively could have an adverse affect on our business, results of operation
and financial condition.
Because we do not intend to pay any cash dividends on our shares of common
stock, our stockholders will not be able to receive a return on their shares
unless they sell them.
We have never paid or declared any cash dividends on our common stock or
other securities and intend to retain any future earnings to finance the
development and expansion of our business. We do not anticipate
14
<PAGE>
paying any cash dividends on our common stock in the foreseeable future. Unless
we pay dividends, our stockholders will not be able to receive a return on
their shares unless they sell them. See "Dividend Policy."
We make certain forward-looking statements in this prospectus that are not
based on historical facts, but discuss our future expectations. The words
"may," "would," "could," "will," "expect," "anticipate," "believe," "intend,"
"plan," "estimate" and similar expressions are meant to identify such forward-
looking statements. Actual results may differ materially from those expressed
or implied by such forward-looking statements. Factors that could cause actual
results to differ materially include, but are not limited to, those set forth
above. Readers are cautioned not to place undue reliance on these forward-
looking statements which reflect our views only as of the date of this
prospectus.
15
<PAGE>
USE OF PROCEEDS
We estimate that our net proceeds from the sale of the 10,000,000 shares of
common stock that we are offering will be approximately $138.2 million,
assuming an initial public offering price of $15.00 per share, after deducting
the underwriting discount and estimated offering expenses. The net proceeds are
estimated to be approximately $159.1 million if the underwriters fully exercise
their right to purchase additional shares of common stock to cover over-
allotments.
Our primary uses of the proceeds of this offering will be to:
. expand our sales and marketing initiatives (approximately $40.0
million);
. expand our customer service and support systems and capabilities
(approximately $5.0 million);
. build our planned redundant network operating center (approximately $5.0
million);
. acquire and implement new automated subscriber airtime monitoring
systems and new accounting and financial software (approximately $10.0
million); and
. increase our working capital.
We may also use a portion of the net proceeds to finance acquisitions that
complement our business. Although we have discussions in the ordinary course of
our business with potential acquisition targets, we currently do not have any
binding commitments or agreements with respect to any acquisitions. Pending
application of the net proceeds for the purposes described above, we intend to
invest such funds in short-term, investment-grade, interest bearing securities.
See "Risk Factors--We may acquire or make investments in companies or
technologies that could cause loss of value to our stockholders and disruption
of our business." and "--We will retain broad discretion in using the net
proceeds from this offering and may spend a substantial portion in ways in
which you do not agree."
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently anticipate that we will retain any future earnings to fund the growth
and development of our business and, therefore, do not anticipate paying any
cash dividends in the foreseeable future. Payment of future dividends, if any,
will be at the discretion of our board of directors after taking into account
various factors, including our earnings, financial condition, operating results
and current and anticipated cash needs, as well as any economic conditions the
board of directors may deem relevant. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources."
16
<PAGE>
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
capitalization as of December 31, 1999. This unaudited information is
presented:
. on an actual basis;
. on a pro forma basis to give effect to: the issuance and sale of 648,057
shares of our Series B Preferred Stock in January 2000 for net proceeds
of approximately $25.2 million and 226,816 shares of common stock issued
in connection therewith; the increase in authorized shares of common
stock to 200,000,000 shares; and the conversion of our Series A and
Series B Preferred Stock into an aggregate of 13,222,760 shares of
common stock; and
. on a pro forma as adjusted basis to give further effect to the sale by
us of 10,000,000 shares of common stock offered by this prospectus,
assuming an initial public offering price of $15.00 per share, after
deducting the underwriting discount and estimated offering expenses
payable by us.
You should read this information together with "Selected Financial Data,"
our historical financial statements, and the notes relating to those financial
statements, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" which appear elsewhere in this prospectus.
<TABLE>
<CAPTION>
As of December 31, 1999
-------------------------------
Pro Pro Forma as
Actual Forma Adjusted
------- -------- ------------
(in thousands,
except share and per share
data)
<S> <C> <C> <C>
Cash and cash equivalents..................... $ 6,344 $ 31,534 $169,684
======= ======== ========
Series A redeemable convertible preferred
stock, $.01 par value, authorized: 10,500
shares actual, none pro forma and pro forma
as adjusted; issued and outstanding: 10,500
shares actual and none pro forma and pro
forma as adjusted; $10,500,000 liquidation
preference................................... $20,755 $ -- $ --
Series B redeemable convertible preferred
stock, $.01 par value, authorized: none
actual, pro forma and pro forma as adjusted;
issued and outstanding: none actual, pro
forma and pro forma as adjusted; $26,000,000
liquidation preference....................... -- -- --
Stockholders' equity (deficit):
Preferred Stock, $.01 par value, authorized;
5,000,000 shares actual, 4,351,943 pro
forma and pro forma as adjusted; issued and
outstanding: none actual, pro forma and pro
forma as adjusted.......................... -- -- --
Common Stock, $.01 par value, authorized:
100,000,000 shares actual, 200,000,000 pro
forma and pro forma as adjusted; issued and
outstanding: 23,687,184 actual, 37,136,760
pro forma and 47,136,760 shares pro forma
as adjusted, respectively ................. 237 371 471
Additional paid-in capital.................. 5,484 51,295 189,345
Deferred employee compensation.............. (7,067) (7,067) (7,067)
Accumulated deficit......................... (15,312) (15,312) (15,312)
------- -------- --------
Total stockholders' equity (deficit)...... (16,658) 29,287 167,437
------- -------- --------
Total capitalization...................... $ 4,097 $ 29,287 $167,437
======= ======== ========
</TABLE>
The number of shares as adjusted for this offering excludes:
. 10,716,000 shares of common stock authorized for issuance under our
stock option plans and employee stock purchase plan, of which 2,440,008
shares were subject to outstanding options as of December 31, 1999 at a
weighted average exercise price of $0.92; and
. 1,276,800 shares of common stock issuable upon exercise of outstanding
warrants as of December 31, 1999 at a weighted average exercise price of
$1.17.
17
<PAGE>
DILUTION
You will experience immediate and substantial dilution in the net tangible
book value per share of your common stock.
Our pro forma net tangible book value as of December 31, 1999, was $29.3
million, or $0.79 per share of common stock. Pro forma net tangible book value
per share is determined by dividing our tangible net worth (tangible assets
less liabilities), by the number of shares of common stock outstanding, after
giving effect to the conversion of our Series A and Series B Preferred Stock
into shares of common stock.
After giving effect to the sale of the shares of common stock offered by us
hereby, at an assumed initial public offering price of $15.00 per share, and
after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us, our pro forma net tangible book value as of
December 31, 1999 was $3.55 per share of common stock. This represents an
immediate increase in such net tangible book value of $2.76 per share to our
existing investors and immediate dilution of $11.45 per share to new investors
purchasing shares in this offering. The following table illustrates the per
share dilution.
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............... $15.00
Pro forma net tangible book value per share as of December
31, 1999................................................... $0.79
Increase per share attributable to this offering............ 2.76
-----
Pro forma net tangible book value per share after this
offering..................................................... 3.55
------
Dilution per share to new investors in this offering.......... $11.45
======
</TABLE>
The following table summarizes, on a pro forma basis as of December 31,
1999, the total number of shares of common stock purchased from us, the total
consideration paid and the average consideration per share paid by existing
investors and by new investors purchasing shares offered by us hereby, at an
assumed initial public offering price of $15.00 per share. Underwriting
discounts and commissions and offering expenses have not been deducted.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------ -------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing investors.... 37,136,760 78.8% $ 44,731,595 23.0% $ 1.20
New investors......... 10,000,000 21.2 150,000,000 77.0 15.00
---------- ----- ------------ -----
Total............... 47,136,760 100.0% $194,731,595 100.0%
========== ===== ============ =====
</TABLE>
The calculations above exclude from the number of outstanding shares of
common stock:
. 10,716,000 shares of common stock authorized for issuance under our
stock option plans and employee stock purchase plan, of which 2,440,008
shares were subject to outstanding options as of December 31, 1999 at a
weighted average exercise price of $0.92; and
. 1,276,800 shares of common stock issuable upon exercise of outstanding
warrants as of December 31, 1999 at a weighted average exercise price of
$1.17.
To the extent that such options and warrants are exercised, there will be
further dilution to new investors.
18
<PAGE>
SELECTED FINANCIAL DATA
The following selected statement of operations data for the period from
August 6, 1996, our date of inception, to December 31, 1996 and for the years
ended December 31, 1997, 1998 and 1999 and the following selected balance sheet
data as of December 31, 1996, 1997, 1998 and 1999 are derived from our audited
financial statements.
The pro forma statement of operations data presented below give effect to
the conversion of all of our Series A Preferred Stock into an aggregate of
8,038,304 shares of common stock upon the closing of this offering, as if such
conversion had occurred at the dates of issuance. The pro forma balance sheet
data reflects the conversion of our Series A Preferred Stock discussed above
and the issuance and sale of 648,057 shares of our Series B Preferred Stock
after December 31, 1999 for total net proceeds of approximately $25.2 million;
the issuance of 226,816 shares of common stock in connection with the Series B
Preferred Stock financing; and the conversion of all of our Series B Preferred
Stock into an aggregate of 5,184,456 shares of common stock. The pro forma as
adjusted balance sheet data further reflects the sale of the 10,000,000 shares
of common stock offered by us in this offering at an assumed initial public
offering price of $15.00 per share, after deducting the underwriting discount
and estimated offering expenses payable by us. You should read the selected
financial data together with our financial statements and the sections of this
prospectus entitled "Capitalization" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
19
<PAGE>
<TABLE>
<CAPTION>
Period from
August 6, 1996 Years Ended December 31,
(date of inception) --------------------------
to December 31, 1996 1997 1998 1999
-------------------- ------- ------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenue:
Subscriber.................. $ -- $ 115 $ 360 $ 1,183
Equipment................... -- 33 449 1,341
Other....................... -- 25 18 207
------ ------- ------- --------
Total revenue................. -- 173 827 2,731
Costs and expenses:
Cost of subscriber revenue.. -- 88 304 4,051
Cost of equipment revenue... -- 15 532 1,648
Sales and marketing......... 43 243 909 3,283
General and administrative.. 175 841 1,549 4,810
Depreciation and
amortization............... 3 32 124 275
Settlement costs............ -- -- -- 297
------ ------- ------- --------
Total costs and expenses...... 221 1,219 3,418 14,364
------ ------- ------- --------
Loss from operations.......... (221) (1,046) (2,591) (11,633)
Interest income............... -- -- 14 165
------ ------- ------- --------
Net loss...................... $ (221) $(1,046) $(2,577) $(11,468)
====== ======= ======= ========
Beneficial conversion feature
and accretion of redemption
value of mandatorily
redeemable convertible
preferred stock.............. -- -- -- (10,464)
------ ------- ------- --------
Net loss applicable to common
stockholders................. $ (221) $(1,046) $(2,577) $(21,932)
====== ======= ======= ========
Basic net loss per share
applicable to common
stockholders................. $(0.02) $ (0.07) $ (0.14) $ (1.02)
====== ======= ======= ========
Diluted net loss per share
applicable to common
stockholders................. $(0.02) $(0.06) $(0.14) $(1.00)
====== ======= ======= ========
Weighted average shares used
in computation of basic net
loss per share applicable to
common stockholders.......... 13,947 16,083 18,391 21,590
Weighted average shares used
in computation of diluted net
loss per share applicable to
common stockholders.......... 14,382 16,518 18,826 22,025
Pro forma basic net loss per
share........................ $ (0.45)
========
Pro forma diluted net loss per
share........................ $ (0.45)
========
Weighted average shares used
in computation of pro forma
basic net loss per share..... 25,258
Weighted average shares used
in computation of pro forma
diluted net loss per share... 25,693
</TABLE>
<TABLE>
<CAPTION>
As of December 31,
------------------------------------------------
1999
------------------------------
Pro Forma
1996 1997 1998 Actual Pro Forma as Adjusted
---- ---- ------ ------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.... $587 $ 20 $1,961 $ 6,344 $31,534 $169,684
Working capital (deficit).... 700 (143) 1,476 2,426 27,616 165,766
Total assets................. 791 324 3,010 9,757 34,947 173,097
Series A redeemable
convertible preferred
stock....................... -- -- -- 20,755 -- --
Series B redeemable
convertible preferred
stock....................... -- -- -- -- -- --
Stockholders' equity
(deficit)................... 779 148 2,225 (16,658) 29,287 167,437
</TABLE>
<TABLE>
<CAPTION>
Period from Years Ended December
August 6, 1996 31,
(date of inception) ------------------------
to December 31, 1996 1997 1998 1999
-------------------- ----- ------- --------
(in thousands)
<S> <C> <C> <C> <C>
Other Financial Data:
Cash provided by (used in):
Operating activities........... $ (338) $(803) $(2,215) $ (6,745)
Investing activities........... (74) (180) (498) (643)
Financing activities........... 1,000 415 4,654 11,771
</TABLE>
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and
results of operations in conjunction with the financial statements and the
notes thereto included elsewhere in this prospectus. The results shown in this
prospectus are not necessarily indicative of the results we will achieve in any
future periods.
Overview
We provide nationwide wireless Internet services. We derive our revenue
primarily from the sale of wireless data services and the sale of related
mobile devices to our subscribers. During March 1997, we commenced offering our
services to individuals and businesses. Since our inception, we have invested
significant capital to build our wireless network operations and customer
support centers as well as our customized billing system. Recently, we have
invested additional capital in the development of our software application
Go.Web and other software applications. Our plan is to continue to invest in
our network operations and customer support centers, as well as to expand our
sales and marketing efforts. We provide and expect to continue to provide
mobile devices made by third parties to our customers at prices below our costs
for such devices. We also expect to continue to incur significant sales and
marketing, systems development and administrative expenses. We have incurred
operating losses since our inception and expect to continue to incur increasing
operating losses for at least the next several quarters. Therefore, we will
need to generate significant revenue to become profitable and sustain
profitability on a quarterly or annual basis. We will have to increase
substantially our subscriber base in order to achieve our business plan.
Our subscriber revenue primarily consists of monthly service fees, which we
recognize as services are provided to the subscriber. Subscriber revenue
accounted for approximately 43.5% and 43.3% of our total revenue during 1998
and 1999, respectively. We currently offer two types of mobile data service
plans. Our Go.Unlimited Plan provides unlimited data usage on any mobile device
for a fixed monthly fee, which is currently $59.95 for retail subscribers. Our
Go.Lite Plan provides a fixed amount of data usage on any mobile computing
device for a significantly lower base monthly fee, which is currently $9.95 for
retail subscribers. Under the Go.Lite Plan, subscribers incur additional
charges for data usage in excess of the predetermined volume. However, we do
not charge our subscribers any additional amounts for roaming, which is using a
mobile device outside of a designated geographical area. We also generally
charge a non-refundable activation fee upon initial subscription. We offer new
subscribers a 14-day trial period during which they can cancel our service
without any penalty, although we do not refund the pro-rated fee for that trial
period, which we include in our revenue. Subscribers to our plans are subject
to a six-month or one-year contract which provides for an early cancellation
fee.
We also typically sell third-party mobile devices in conjunction with a
service agreement to a new subscriber. Equipment revenue accounted for
approximately 54.3% and 49.1% of our total revenue during 1998 and 1999,
respectively. We recognize equipment revenue at the time of the shipment of the
mobile device to a subscriber. During 1999, approximately 90% of our
subscribers purchased a mobile device upon their initial subscription. Over
time, we expect that such percentage will decrease as mobile devices for data
transmission become more prevalent.
In addition to our subscriber and equipment revenue, we historically have
generated other revenue which consists of consulting services relating to the
development and implementation of wireless data systems for certain corporate
customers. We do not intend for consulting services to be a significant element
of our business in the future. Such consulting revenue is recognized as the
work is performed.
We have experienced negative overall gross margins, which consist of margins
on our subscriber revenue, equipment revenue and other revenue. We expect to
continue to experience negative overall gross margins
21
<PAGE>
primarily because of negative margins on our resale of equipment and on our
subscriber revenue. We believe that our gross margins on subscriber revenue
will improve during 2000. Our cost of subscriber revenue consists primarily of
wireless airtime costs. Our airtime costs are determined by agreements we have
with several wireless carriers. Typically, we have one to three-year contracts
to buy data network capacity either for an agreed amount of kilobytes per
subscriber at a flat fee or on a cents-per-kilobyte basis. We intend to pass
through to our subscribers all the airtime charges that we incur from our
wireless carriers; however, we have not always been and will not always be able
to pass through such charges because the pricing plans offered to us by our
wireless carriers and to which we assign our subscribers may not allow us to
always cover our subscriber costs. For example, if we assign our Go.Unlimited
Plan subscribers to a carrier plan that charges us an increasing fee as
subscriber usage increases, then as subscriber usage and our related airtime
costs increase, our margins on subscriber revenues would decrease and may
become negative. Our airtime costs also increase substantially when subscribers
use our services outside of their pre-determined geographic area, which results
in roaming charges to us by the carriers that we do not pass on to our
subscribers. Our cost of subscriber revenue in 1999 was approximately $4.1
million compared to subscriber revenue of $1.2 million for such period. Such
negative gross margin, which was a substantial increase over prior periods, was
due in part to our placement of subscribers in more expensive carrier plans and
to excessive usage by a few subscribers. We do not have and may not be able to
develop the automated systems necessary to monitor our subscribers' usage and
roaming patterns and quickly switch our subscribers to a more appropriate,
lower cost airtime plan. We intend to implement alternative automated systems
by mid-2000. In addition, while we continually seek to negotiate better pricing
of wireless airtime plans with our carriers, we cannot assure you that we will
be successful in that regard. See "Risk Factors" for a discussion of the risks
relating to our negative gross margins and our need to improve our systems.
We also have experienced, and expect to continue to experience, negative
gross margins on the mobile devices that we resell. We currently are exploring
an outsourcing arrangement with a third party computer hardware aggregator that
will serve as our primary source of mobile devices. We believe that if such
arrangement is implemented, we should be able to reduce our equipment costs and
inventory risks by taking advantage of such partner's volume discounts and
inventory protection programs offered to them by device manufacturers. We
cannot assure you that we will be able to consummate such outsourcing
arrangement on favorable terms, if at all. Further, such arrangement may not
result in positive gross margins on our equipment sales.
Our sales and marketing expenses consist primarily of advertising and
promotions, cash compensation and related costs for marketing personnel, travel
and entertainment and other related costs. In 2000, we expect our sales and
marketing expense to increase substantially as a percentage of our annual
revenues. Our general and administrative expenses consist primarily of cash
compensation and related costs for general corporate, business development and
technology development personnel, along with rent and other related costs. Our
costs of performing consulting services is recorded as general and
administrative expense. We expect general and administrative expenses to
decrease as a percentage of our annual revenues. Depreciation and amortization
expenses consist primarily of depreciation expenses arising from equipment
purchased for our network operations center and other property and equipment
purchases.
During 1999, we granted options to certain of our employees at exercise
prices deemed to be below the fair market value per share of our common stock.
Such grants resulted in non-cash employee compensation expenses which have been
recorded to account for the difference, on the date of grant, between the fair
market value and the exercise price of stock options granted to employees. The
resulting deferred employee compensation will be amortized over the vesting
periods of the grants. During 2000, we expect to incur an aggregate of $8.2
million in non-cash employee compensation expense as a result of stock option
grants during 1999 and the first quarter of 2000 which were granted at prices
below the deemed fair market value of our common stock.
Net interest income consists primarily of interest earned on cash and cash
equivalents.
22
<PAGE>
Results of Operations
The following table sets forth for the periods indicated certain financial
data as a percentage of revenue:
<TABLE>
<CAPTION>
Percentage of Revenue
-------------------------
Years Ended
December 31,
-------------------------
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Revenue:
Subscriber......................................... 66.3% 43.5% 43.3%
Equipment.......................................... 19.4 54.3 49.1
Other.............................................. 14.3 2.2 7.6
------- ------- -------
Total revenue.................................... 100.0 100.0 100.0
Costs and expenses:
Cost of subscriber revenue......................... 50.7 36.7 148.4
Cost of equipment revenue.......................... 8.7 64.4 60.4
Sales and marketing................................ 140.5 109.9 120.2
General and administrative......................... 486.9 187.4 176.1
Depreciation and amortization...................... 18.7 15.0 10.0
Settlement costs................................... -- -- 10.9
------- ------- -------
Total costs and expenses......................... 705.5 413.4 526.0
------- ------- -------
Loss from operations............................. 605.5 313.4 426.0
Interest income...................................... -- 1.7 6.0
------- ------- -------
Net loss......................................... 605.5% 311.7% 420.0%
======= ======= =======
</TABLE>
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Subscriber revenue. Subscriber revenue increased from $359,000 for the year
ended December 31, 1998 to $1.2 million for the year ended December 31, 1999.
The increase primarily was due to having a larger subscriber base in the year
ended December 31, 1999 than in the year ended December 31, 1998. Our increase
in subscriber revenue was offset in part by lower average revenue per
subscriber. Our subscriber base increased from 1,630 subscribers at December
31, 1998 to 5,859 subscribers at December 31, 1999. We expect the number of
our subscribers to increase as a result of our expanded sales and marketing
efforts.
Equipment revenue. Equipment revenue increased from $449,000 for the year
ended December 31, 1998 to $1.3 million for the year ended December 31, 1999.
This increase primarily was due to an increase in the number of the mobile
devices sold during the year ended December 31, 1999 compared to the year
ended December 31, 1998.
Other revenue. Other revenue increased from $18,000 for the year ended
December 31, 1998 to $206,000 for the year ended December 31, 1999. This
increase primarily was due to the performance of a single systems integration
consulting project for a third party during the year ended December 31, 1999
compared to the year ended December 31, 1998. Consulting services are not
expected to be a significant element of our business in the future.
Cost of subscriber revenue. Cost of subscriber revenue increased from
$303,000 for the year ended December 31, 1998 to $4.1 million for the year
ended December 31, 1999. This increase primarily was due to an increase in our
subscriber base and a related increase in airtime usage during the year ended
December 31, 1999 than in the year ended December 31, 1998. Our cost of
subscriber revenue consists primarily of wireless airtime costs. Our negative
gross margin for the year ended December 31, 1999 was a substantial increase
over prior periods and was due in part to our placement of subscribers in more
expensive carrier plans and to extensive usage by a few subscribers. We expect
the number of subscribers and related use of our services to increase which
will result in an increase in the cost of subscriber revenue.
23
<PAGE>
Cost of equipment revenue. Cost of equipment revenue increased from $532,000
for the year ended December 31, 1998 to $1.6 million for the year ended
December 31, 1999. This increase was primarily due to an increase in the number
of mobile devices sold during the year ended December 31, 1999 compared to the
year ended December 31, 1998.
Sales and marketing. Sales and marketing expenses increased from $909,000
for the year ended December 31, 1998 to $3.3 million for the year ended
December 31, 1999. This increase was primarily due to increased advertising
costs paid to third parties and the salaries and benefits, including stock-
based compensation, for the additional personnel performing sales and marketing
activities. We expect sales and marketing expenses to further increase as we
expand our advertising program to increase brand awareness and add personnel to
our sales and marketing department.
General and administrative. General and administrative expenses increased
from $1.5 million for the year ended December 31, 1998 to $4.8 million for the
year ended December 31, 1999. This increase was primarily due to the addition
of salaries and benefits, including stock-based compensation, for personnel
performing business development and general corporate activities. We expect
general and administrative expenses to increase as we add personnel and incur
additional expenses related to the anticipated growth of our business and costs
associated with our operation as a public company.
Settlement costs. Settlement costs for the year ended December 31, 1999
represents the non-cash charge resulting from the settlement of our obligations
arising from claims by certain stockholders relating to the sale of equity
securities. Such settlement costs represent the fair value of options and
warrants issued to such stockholders.
Interest income. Interest income increased from $14,000 for the year ended
December 31, 1998 to $165,000 for the year ended December 31, 1999. Such income
was primarily due to increased cash balances as a result of our private
placement financings completed in 1999.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Subscriber revenue. Subscriber revenue increased from $115,000 for the year
ended December 31, 1997 to $359,000 for the year ended December 31, 1998. The
increase in subscriber revenue was primarily due to having a larger subscriber
base in 1998 than in 1997. Our subscriber base increased from 531 subscribers
at December 31, 1997 to 1,630 subscribers at December 31, 1998.
Equipment revenue. Equipment revenue increased from $33,000 for the year
ended December 31, 1997 to $449,000 for the year ended December 31, 1998. The
increase in equipment revenue was primarily due to an increase in the number of
mobile devices sold during the year ended December 31, 1998 compared to the
year ended December 31, 1997.
Other revenue. Other revenue decreased from $25,000 for the year ended
December 31, 1997 to $18,000 for the year ended December 31, 1998.
Cost of subscriber revenue. Cost of subscriber revenue increased from
$88,000 for the year ended December 31, 1997 to $303,000 for the year ended
December 31, 1998. We began to incur costs of subscriber revenue in March 1997
as we launched our wireless services. The increase in the cost of subscriber
revenue from 1997 to 1998 was primarily due to an increase in our subscriber
base and related increase in airtime usage.
Cost of equipment revenue. Cost of equipment revenue increased from $15,000
for the year ended December 31, 1997 to $532,000 for the year ended December
31, 1998. We began to sell mobile devices in March 1997 in conjunction with the
launch of our wireless services. The increase in the cost of equipment revenue
from 1997 to 1998 was primarily due to an increase in the number of mobile
devices sold during the year ended December 31, 1998 compared to the year ended
December 31, 1997.
24
<PAGE>
Sales and marketing. Sales and marketing expenses increased from $243,000
for the year ended December 31, 1997 to $909,000 for the year ended December
31, 1998. This increase was primarily due to increased advertising costs paid
to third parties and the salaries and benefits for additional personnel
performing sales and marketing activities. We expect sales and marketing
expenses to increase as we expand our advertising program to increase brand
awareness and add personnel to our sales and marketing department.
General and administrative. General and administrative expenses increased
from $841,000 for year ended December 31, 1997, to $1.5 million for the year
ended December 31, 1998. This increase was primarily due to the salaries and
benefits for additional personnel performing business development and general
corporate activities. We expect general and administrative expenses to increase
as we add personnel and incur additional expenses related to the anticipated
growth of our business and costs associated with our operation as a public
company.
Interest income. There was no interest income earned for the year ended
December 31, 1997. Net interest income was $14,000 for the year ended December
31, 1998. The increase for the year ended December 31, 1998 was primarily due
to increased cash balances.
Liquidity and Capital Resources
Since our inception, we have financed our operations primarily through
private placements of our equity securities and our redeemable convertible
preferred stock, which have resulted in aggregate net proceeds of approximately
$18.4 million through December 31, 1999, of which approximately $12.3 million
was raised since June 1999. As of December 31, 1999, we had $6.3 million in
cash and cash equivalents and $2.4 million of working capital. Subsequent to
December 31, 1999, we issued and sold 648,057 shares of Series B Preferred
Stock for net proceeds of approximately $25.2 million.
Net cash used in operating activities was $803,000, $2.2 million and $6.7
million for the years ended December 31, 1997, 1998 and 1999, respectively. The
principal use of cash in each of these periods was to fund our losses from
operations.
Net cash used in investing activities was $180,000, $498,000 and $643,000
for the years ended December 31, 1997, 1998 and 1999, respectively. Cash used
in investing activities for the year ended December 31, 1997 and 1998 was for
purchases of property, equipment and leasehold improvements. For the year ended
December 31, 1999, we used cash in investment activities for purchases of
$387,000 of property, equipment and leasehold improvements and the purchase of
$256,000 of preferred stock in DataRover Mobile Systems, Inc.
Net cash provided by financing activities was $415,000, $4.7 million and
$11.8 million for the years ended December 31, 1997, 1998 and 1999,
respectively. Cash provided by financing activities in each of these periods
was primarily attributable to proceeds from additional private sales of our
equity securities.
As of December 31, 1999, our principal commitments consisted of obligations
outstanding under operating leases. As of December 31, 1999, future minimum
payments for non-cancelable operating leases having terms in excess of one year
amounted to $4.9 million, of which $931,000 is payable in 2000. Although we
have no material commitments for capital expenditures, we anticipate a
substantial increase in our capital expenditures and lease commitments
consistent with our anticipated growth in operations, infrastructure and
personnel, including the deployment of additional network equipment.
We have undertaken several operating initiatives which will require
significant use of our cash resources. For example, we intend to use a
significant portion of the proceeds of this offering to increase substantially
our marketing budget as part of our efforts to build the GoAmerica brand. If
our marketing efforts cost more than anticipated, if we cannot increase our
brand awareness or if the GoAmerica brand is not well received by our existing
and potential subscribers, our losses and cash needs will increase. In
addition, we are pursuing the
25
<PAGE>
acquisition and development of automated systems to track our airtime usage
costs and monitor subscribers' wireless plan usage. We also intend to acquire
new accounting and business process software and systems with a portion of the
net proceeds from this offering. We expect that the acquisition and
implementation of our automated subscriber usage monitoring systems and new
accounting and business process software will cost approximately $7.0 to $10.0
million over the next twelve months. We anticipate that our development costs
related to improving our service offerings will also increase as we respond to
technological changes in the wireless data industry and as new competitors
emerge. We expect that our development costs will be approximately $1.0 million
to $2.0 million for 2000 which will be funded primarily from our current cash
position. We may also use funds to complete any business acquisitions that we
may decide to pursue and to integrate such businesses, technologies and
personnel upon completion of any such transaction.
We currently anticipate that our available cash resources combined with the
net proceeds from this offering will be sufficient to fund our operating needs
for at least the next 24 months. Thereafter, we may require additional
financing. At this time, we do not have any bank credit facility or other
working capital credit line under which we may borrow funds for working capital
or other general corporate purposes. If our plans or assumptions change or are
inaccurate, we may be required to seek additional capital or to seek capital
sooner than anticipated. We may need to raise funds through public or private
debt or equity financing. In the event additional financing is not available,
we will be required to significantly reduce our expenses and substantially
curtail operations.
Recent Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivatives and Hedging Activities" (SFAS 133), which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. SFAS 133,
as amended, is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. As we do not currently intend to engage in derivatives or
hedging transactions, we do not anticipate that there will be any impact on our
results of operations, financial position or cash flows upon the adoption of
SFAS 133.
Quantitative and Qualitative Disclosures About Market Risk
We have limited exposure to financial market risks, including changes in
interest rates. At September 30, 1999, all of our available excess funds are
cash or cash equivalents whose value is not subject to changes in interest
rates. We currently hold no derivative instruments and do not earn foreign-
source income. We expect to invest our cash only in debt obligations issued by
the U.S. government or its agencies with maturities of less than one year.
Update on Year 2000 Computer Issues
We did not experience any computer or systems problems relating to the Year
2000. Upon review of our internal and external systems during 1999, we
determined that we did not have any material exposure to such computer problems
and that the software and systems required to operate our business and provide
our services were Year 2000 compliant. As a result, we did not incur, and do
not expect to incur, any material expenditures relating to Year 2000 systems
remediation.
26
<PAGE>
BUSINESS
Overview
We are a nationwide wireless Internet services provider. We enable our
individual and business subscribers to access remotely the Internet, email and
corporate intranets in real time through a wide variety of mobile computing and
communications devices. Through our Wireless Internet Connectivity Center, we
offer our subscribers comprehensive and flexible mobile data solutions for
wireless Internet access by providing wireless network services, mobile
devices, software and subscriber service and support.
Our Go.Web technology and Wireless Internet Connectivity Center enable our
subscribers to access a wide variety of Internet content, such as business and
financial data, news, sports, travel, entertainment, personal contact and other
information. Our subscribers can also conduct ecommerce transactions, such as
shopping, reservations and stock trading, to the extent permitted by their
mobile device of choice. Our subscribers can also customize their personal Web
site or "personal portal," www.mygoweb.com, to access their favorite Web sites
quickly. In addition, we offer a variety of email solutions which allow our
subscribers to access their email at their existing Internet and business email
accounts as well as a GoAmerica email address.
We provide our subscribers with flexible and reliable wireless Internet
services across a number of wireless networks and mobile device platforms. To
provide our subscribers with nationwide access, we have established strategic
relationships with many leading wireless network carriers, such as AT&T
Wireless Services, American Mobile, BellSouth Wireless Data and Bell Atlantic
Mobile. Our subscribers are able to use our wireless Internet services with
their choice of a wide variety of leading mobile devices, including Palm
operating system-based computing devices, Research In Motion's interactive
pagers, laptop computers, Microsoft Windows CE-based computers and wirelessly-
enabled smart phones. We also have engineered our wireless Internet services to
operate with new versions of many wireless devices.
Market Opportunity
We believe that the growth of the Internet, email and mobile wireless
communications creates a significant market opportunity for service providers
capable of delivering wireless Internet and email services over wireless
communication networks. We believe that the following trends contribute to this
market opportunity:
The Growth of the Internet and Ecommerce. The Internet and corporate
intranets are becoming an increasingly important global medium for
communications and commerce. The number of Internet users worldwide is
projected to increase from approximately 140 million at the end of 1998 to over
500 million by the end of 2003, according to International Data Corporation. In
addition, International Data Corporation estimates that the worldwide volume of
commerce conducted over the Internet was approximately $50 billion in 1998 and
will grow to approximately $1.3 trillion in 2003. Until recently, ecommerce has
been dependent upon wired computer access to the Internet, which we believe has
limited the overall demand and ability to conduct commercial transactions
electronically. The ability to access the Internet remotely through a variety
of wireless devices on a nationwide basis will, we believe, fuel the increasing
demand for ecommerce. We further believe that the growth of the Internet and
ecommerce will also increase the demand for wireless access to these services.
The Proliferation of Email. Email is becoming an increasingly important
means of communication, with both the number of email users and usage level per
individual projected to increase significantly. Forrester Research, Inc.
projects that daily Internet email traffic in the United States will increase
from 100 million email messages per day in 1996 to 1.5 billion per day in 2002.
We believe that as email becomes an increasingly important means of
communication, there will be an increasing desire for mobile access to email.
The Growth of Mobile Communications. International Data Corporation
forecasts that the remote and mobile workforce in the United States, defined as
employees spending more than 20% of their time away from the office, will grow
from 34 million individuals at the end of 1998 to 47 million at the end of
2003. As a
27
<PAGE>
result, we believe that individuals will increasingly use mobile devices for
convenience and to enhance productivity when away from their home or office. We
further believe that the number of individuals using mobile devices, such as
handheld personal organizers, notebook computers, pagers and mobile phones,
will grow as these devices become smaller, less expensive, more reliable
including longer battery life and have more features than earlier devices.
Jupiter Communications estimates that shipments of advanced pagers and personal
organizers capable of accessing the Internet will grow from 1.8 million devices
in 1998 to 9.4 million in 2002.
The Challenge
While the wireless data services market is developing rapidly, widespread
adoption of wireless data services has been hindered by a number of factors,
including:
. limited geographic coverage of digital communications services;
. incompatible mobile devices and wireless carrier networks;
. high costs associated with using wireless data networks;
. an inability to access and transmit data over wireless networks at
adequate speeds;
. data security concerns;
. a lack of personnel with the expertise to develop and operate wireless
data systems; and
. mobile devices with difficult-to-read user interfaces and features.
As a result of these challenges, a significant opportunity exists for
wireless Internet service providers that are capable of offering an easy-to-
use, cost-effective and reliable wireless service.
The GoAmerica Wireless Solution
We provide our subscribers with easy-to-use wireless access to the Internet,
email and corporate intranets. Through our Wireless Internet Connectivity
Center, we offer our subscribers comprehensive and flexible mobile data
solutions for wireless Internet access by providing wireless network services,
mobile devices, software and subscriber service and support. The following are
key components of our comprehensive wireless Internet solution:
Offer Easy-To-Use Wireless Internet Access, Ecommerce and Email. Through our
Go.Web technology, we provide our subscribers with easy-to-use access to the
Internet. Our subscribers can access Web sites to obtain a broad variety of
content, such as business and financial data, news, sports, travel,
entertainment, personal contact and other information. Our subscribers can also
conduct ecommerce transactions, such as shopping, reservations and stock
trading, to the extent permitted by their mobile device of choice. We also
offer our subscribers their own personal Web site, www.mygoweb.com, which each
subscriber can customize in order to access their favorite Web sites quickly.
In addition, we offer a variety of email solutions, which allow our subscribers
to access their email at their existing Internet and business email accounts as
well as a GoAmerica email account.
Provide Nationwide Services Across Multiple Wireless Networks. We have
established relationships with many of the leading wireless network carriers,
including AT&T Wireless Services, American Mobile, Bell Atlantic Mobile and
BellSouth Wireless Data, which enable our subscribers to access their
information on a nationwide basis. Our network carriers operate on a variety of
different network technologies, such as Cellular Digital Packet Data, or CDPD,
Mobitex, dataTAC, Code Division Multiple Access, or CDMA, and Global System for
Mobile telecommunications, or GSM, which allow us to offer our services through
a broad range of wireless devices. Our airtime agreements with wireless
carriers permit us to offer our subscribers a flat-rate pricing plan and a
variable pricing plan with rates which vary depending upon the level of data
traffic utilized
28
<PAGE>
by a subscriber. In addition, our relationships with wireless network carriers
enable us continually to adapt our existing solutions and develop new systems
to integrate with new technologies and platforms as they emerge for commercial
use.
Enable Wireless Services Through a Wide Variety of Mobile Devices. We
currently offer our services through a wide variety of wireless access devices
including Palm OS-based computing devices, Research-In-Motion's interactive
pagers, laptop computers, Windows CE-based computers and WAP-enabled smart
phones. We are able to provide service through these devices because we support
a range of wireless networks and utilize our own and third-party device
software. This capability enables us to offer service through devices that we
believe will achieve the greatest market acceptance and penetration.
Integrate Various Wireless Technologies and Networks to Provide Seamless
Internet Solutions. We deliver content across a broad range of wireless carrier
networks to a wide variety of mobile devices. We are able to do so through our
Wireless Internet Connectivity Center, which serves as a secure link between
broadband networks, such as the Internet, and narrowband wireless
communications networks. By using our own and third-party software, we compress
content from broadband sources to enable faster and more cost-effective data
delivery over wireless networks. We support leading wireless protocols, such as
wireless application protocol, or WAP. In addition, our Wireless Internet
Connectivity Center has the flexibility to format content automatically to meet
the requirements of a subscriber's wireless device. Our Wireless Internet
Connectivity Center is also scalable, enabling us to move quickly to meet the
demands of increased data traffic and expanding wireless network capabilities.
Offer Flexible Wireless Solutions for Corporate Customers. Businesses often
require wireless solutions that enable them to provide their customers and
employees with access to proprietary information, corporate services, the
Internet and email. However, many businesses do not have the financial and
administrative resources, internal information technology capabilities and size
required to develop and maintain wireless services on a cost-effective basis.
We provide corporate customers with a broad range of secure and reliable
wireless solutions by outsourcing our Wireless Internet Connectivity Center and
wireless networking expertise. Through our services, corporate customers can
enable employees and customers to access the Internet, intranets and Internet-
based email. Businesses can also enable wireless access to their internal
corporate databases and systems by securely interconnecting with our Wireless
Internet Connectivity Center.
Focus on Subscriber Service and Support. We strive to provide our
subscribers with easy-to-use wireless Internet services. This begins with
providing customers with flexible wireless solutions that include all the
necessary components to enable service. In addition, we provide our customers
with advice during their purchase decision process through our direct sales
representatives, dealers, resellers and Web site, in order to help them choose
the appropriate combination of device, carrier service and pricing plan. Once a
subscriber has initiated services, we offer extensive customer service and
support. We maintain toll free customer service phone lines Monday through
Friday, 8 a.m. to 8 p.m. Eastern time. Existing subscribers can inquire about
their accounts or receive technical support through the same toll free service.
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The following chart illustrates the wide variety of mobile devices and
communications networks that we provide to our subscribers to enable them to
seamlessly access the Internet and their corporate networks to obtain critical
information and conduct electronic transactions:
Graphic appears here. The graphic depicts four boxes aligned from left to
right.
.The first box, which is labelled "Content" includes the text "World Wide Web"
and "Corporate Intranets" with an accompanying photograph of the globe.
.The second box, which is labelled "GoAmerica Wireless Internet Connectivity
Center", includes the text "Go.Web Gateway" and "Go.Web formatting, encryption,
authentication, and compression architecture" and has an accompanying
photograph of computer technology.
.The third box, which is labelled "Wireless Networks", includes the text
"Cellular Digital Packet Data (CDPD)", "Code Division Multiple Access (CDMA)",
"Global System for Mobile Communications (GSM)", "Mobitex" and "Data TAC" and
has an accompanying photograph of a communications tower.
.The fourth Box, which is labelled "Mobile Devices", includes the text "Palm
Operating System", "Interactive Pagers", "Laptops", "Windows CE" and "Wireless
Application Protocol (WAP) Phones"
The GoAmerica Strategy
Our goal is to be the leading provider of nationwide wireless Internet
services and mobile data solutions for individuals and businesses. We seek to
enhance our offerings with value-added services and additional functionality to
expand our subscriber base and increase our recurring revenues. Our strategy
includes the following key elements:
Offer Comprehensive and Flexible Solutions. We continually improve our
subscribers' wireless experience by simplifying user interfaces, expanding the
features of the Go.Web services, and improving the ease with which our
subscribers can personalize the mygo.web menus. We also intend to complement
our Web-based service offerings by providing customized solutions that meet the
specific needs of our existing and potential subscribers. For example, we
recently entered into strategic arrangements that will provide our subscribers
with direct access to Avis Rent-A-Car's rental car reservations system and
Lexis-Nexis' legal libraries and related data. We also introduced one-way
paging services which we can provide as an added feature for our Internet and
email subscribers.
Capitalize on Marketing and Branding Initiatives. We market and advertise in
order to establish our brand name and create sales opportunities. With a
portion of the net proceeds from this offering we intend to expand
significantly our presence as a mass market provider of wireless Internet
access by making a significant investment in establishing and building the
GoAmerica brand. Through a combination of mass media advertising and Web
advertising, we seek to expand our subscriber base, strengthen our customer
relationships and capture significant market share. We supplement our existing
subscriber acquisition programs through value-added reseller and dealer co-
marketing programs and partner marketing programs such as our relationship
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with Lexis-Nexis. We have and will continue to target market segments and
geographic markets where we believe there is opportunity for substantial
subscriber penetration.
Expand Sales and Distribution Channels. We currently sell our services
through a combination of direct sales representatives, inbound telemarketers,
our Web site and through indirect channels such as value-added resellers and
dealers. In addition, we seek to generate sales from joint selling agreements
we have with third parties. As of January 31, 2000, we had two full-time direct
sales professionals who focus on small to mid-sized corporate subscriber
accounts and two full-time telemarketers who focus on our individual customers.
We intend to increase our dedicated sales force significantly during the next
twelve months. We have a four-tiered channel program that includes resellers,
master dealers, dealers and agents. We compensate our resellers and dealers
with commissions for each sale generated by them. As of January 31, 2000, we
had five channel manager professionals who supervise our four-tiered channel
program. We intend to expand significantly our indirect channel activities
during the next twelve months. We have partnered and seek to continue to
partner for joint selling purposes with other companies that have complementary
wireless data products or services such as manufacturers, application partners
and cellular and PCS carriers.
Provide Superior Customer Service and Technical Support. Because wireless
Internet access is an evolving and growing communications channel, subscribers
may face a number of potential problems. We believe that even sophisticated
subscribers periodically have questions or encounter problems as applications
designed for wireless data proliferate. Consequently, we focus on providing
high levels of customer service and technical support in an effort to achieve
maximum levels of customer satisfaction. We intend to offer our customer
service and support 24 hours a day, seven days a week. In addition, through our
planned automation system, subscribers will be able to manage their accounts
and troubleshoot 24 hours a day at our Web site. We believe that superior
customer service will help us minimize subscriber deactivations and promote
customer referrals.
Continue to Develop Solutions With Leading Wireless Technologies. We focus
our technology development efforts on applications and solutions which
integrate with and enable leading third-party mobile devices and wireless
networks. We also intend to continue to develop solutions that we expect will
allow our Go.Web service to operate on next generation protocols, devices and
networks. We believe that our relationships with leading device manufacturers
and wireless network carriers enhance our ability to continually adapt our
existing solutions and develop new systems to integrate with new technologies
and platforms as they emerge for commercial use.
Pursue Strategic Acquisitions. We intend to pursue acquisitions that we
believe will allow us to increase quickly the scale and scope of our resources.
In particular, we expect to seek acquisitions that will expand our subscriber
base or engineering force, enable us to enter new markets or industry sectors
or to provide new services.
Service Offerings
We offer comprehensive and flexible wireless data solutions that permit
subscribers to access their email, corporate intranets, personal Web pages and
the Internet anytime on a nationwide basis.
Access to the Internet. Our subscribers efficiently and reliably access
public Web sites from all our supported devices. Through our Go.Web service, we
provide a personal menu of popular Web sites which enable our subscribers to
access a wide variety of Internet content, such as business and financial data,
news, sports, travel, entertainment, personal contact and other information.
Our subscribers can also conduct ecommerce transactions, such as shopping,
reservations and stock trading, to the extent permitted by their mobile device
of choice. This menu is organized by major content categories and reduces the
amount of time and the amount of data input it takes for our customers to
access these sites. The dynamic nature of the menu allows us to update it
periodically and add valuable wireless Web sites for our subscribers. Our menu
also allows our corporate subscribers to pre-determine the choices available to
their users. Through business
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arrangements, we offer streamlined access to public databases such as those
from Lexis-Nexis, as well as personal ecommerce access to banking, brokerage
and shopping services. Mygo.web allows our subscribers to customize their menus
by bookmarking and linking to their Web sites of choice.
Access to Corporate Networks. Our business customers often require secure
connections to their enterprise systems, but do not want to change the way that
their systems are configured. Through our virtual private network and data
hosting services, we provide the required secure and reliable wireless access
to corporate data. Business users can access their corporate databases through
Web servers either inside our firewall or their own security system. Through
standard Internet interfaces, our corporate subscribers can access their
enterprise messaging systems such as Microsoft Exchange and Lotus Notes or use
value-added services such as sales force automation, customer retention
management and Web dispatch offerings.
Email Services. Our services provide individual and business subscribers
access to the wide variety of Internet based email services. We also provide an
email address at goamerica.net for all of our subscribers as a free service.
Our business subscribers are able to fully manage their email accounts if their
corporate networks permit remote access. In such cases, our subscribers can
send, receive, read, reply, forward and delete their regular corporate email on
a remote basis. Individual subscribers who have accounts at Internet service
providers or Web portals, such as Earthlink or Yahoo!, can access those email
accounts when they are using their existing wireline service or their GoAmerica
wireless Internet service.
Instant Messaging, Paging and Operator Services. We currently provide an
instant messaging service between GoAmerica subscribers with compatible
interactive pagers that generally provides quicker transmission than
traditional paging. Our instant messaging service also provides confirmation of
message delivery and a read receipt between sender and recipient. In addition,
through our business alliances with paging service providers, we also provide
traditional paging and operator services that allow our subscribers to migrate
from one-way to two-way services without disruption.
Customers
We sell and market to individual and corporate customers. Our subscriber
base has grown from 1,630 subscribers at December 31, 1998 to 5,859 subscribers
at December 31, 1999. We generally target our corporate marketing and selling
efforts toward decision-makers within communication-intensive small to mid-
sized businesses. We focus our individual consumer customer marketing and
selling efforts on high-end mobile professionals. These mobile professionals
typically have computer and Internet access, use a cellular phone or pager, and
have a strong professional or personal need to stay in touch with Web-based
information. The majority of our subscribers today are corporate customers, but
we expect over time that individual consumers will represent a larger portion
of our subscriber base. We continually seek to enhance and expand our service
offerings for our customers which we believe is a critical element in growing
our subscriber base and maintaining customer satisfaction.
We also develop corporate solutions which enable us to expand our subscriber
base while allowing our corporate partner to enhance its service offerings to
its customers. For example, regional wireless service provider, Frontier
Cellular, uses our hosting services for its wireless data products. We host and
manage Phone.com WAP servers at our Wireless Internet Connectivity Center for
Frontier and provide our content to digital PCS phones on Frontier's network.
We also developed a customer management interface to allow Frontier to
provision and manage its customers remotely. We connect to Frontier's network
over a virtual private network that we engineered jointly with Frontier. This
virtual private network connection provides the security required by Frontier
and is similar to connections deployed for our other corporate customers.
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Sales and Marketing
Sales
We currently sell our services directly through a combination of sales
representatives, inbound telemarketers and our Web site and sell indirectly
through value-added resellers and dealers. In addition, we seek to generate
sales from joint marketing relationships, such as the relationship we have with
Sierra Wireless.
Direct Sales Representatives. As of January 31, 2000, we had two direct
sales professionals who focus primarily on small to mid-sized corporate
customers seeking to establish wireless Internet services for their employees
or customers. We intend to grow our direct sales force significantly over the
next 12 months. Our business development personnel and senior executives,
particularly our chief executive officer and executive vice president, also
spend a considerable amount of their time developing potential customer
relationships and selling and promoting our services.
Telemarketing. As of January 31, 2000, we had two telemarketing
professionals. Our telemarketing professionals respond to queries generated as
a result of Web site visits and our marketing efforts which usually list our
toll-free sales telephone number.
GoAmerica Web Site. Our Web site seeks to educate and inform potential
customers about wireless data networks and devices. When a customer is ready to
order, they can order directly through an online subscription form that is
automated with our order entry and product fulfillment operations. We receive
no advertising or sponsorship revenues from our Web site currently. We will
continue to explore ways to gain revenues from our Web site.
Value-Added Resellers and Dealers. Through our GoAmerica Alliance Program,
we provide commissions to value-added resellers and dealers for each sale they
bring to us. As of January 31, 2000, we had five channel manager professionals
who supervise our four-tiered program that includes resellers, master dealers,
dealers and agents.
Resellers buy GoAmerica service at a wholesale price and sell it at a retail
price. Resellers are not paid a commission. Resellers are responsible for
selling the GoAmerica service and mobile devices, and billing and supporting
the customer. GoAmerica is responsible for billing the reseller. We believe
that as of December 31, 1999, our resellers had in excess of 200 direct sales
professionals. In addition, in January 2000, we added significantly to our
reseller network by entering into an agreement with Arch Paging Inc., the
second largest paging company in the United States. We intend to leverage
Arch's sales force to reach potential new subscribers of our services. We also
have a reselling relationship with American Mobile pursuant to which American
Mobile resells our Go.Web service as a part of American Mobile's suite of
services to its customers through its distribution channels.
Master dealers sell GoAmerica service through a network of other dealers and
are paid a higher commission than dealers but are assigned a quota. Master
dealers are responsible for selling the GoAmerica service, training their
dealer network, providing the mobile devices, and supporting the subscriber.
Under such arrangements, we are responsible for billing the subscriber. Our
master dealers have approximately 500 direct sales professionals. Our dealers
and agents sell the GoAmerica service through their own sales efforts, and are
not assigned a quota. Dealers are paid a smaller commission than a master
dealer. Dealers are responsible for selling the GoAmerica service and providing
the mobile devices. We bill and support the subscribers provided by our
dealers. Our dealers have approximately 250 direct sales professionals. Agents
are paid a smaller commission than dealers because they are only responsible
for selling the GoAmerica service. We sell and provide the mobile devices, bill
and support the subscribers provided by our agents. Our agents have
approximately 50 direct sales professionals.
Joint Selling Relationships. We have partnered and seek to continue to
partner for joint selling purposes with other companies that have complementary
wireless data products or services. For example, we offer
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wireless data, PCS and cellular carriers a single resource for outsourcing
ready-to-market wireless email and Web-based data solutions based on standard
platforms from the leading software vendors and device manufacturers. By
providing a suite of platform and device-independent services, we position
these carriers to be able to address the data needs of their customers today.
We then engage in joint selling activities with clearly defined
responsibilities. We offer wireless device manufacturers an opportunity to
increase their sales because our services increase the usefulness of their
devices. We also engage in joint selling activities with the sales
professionals of these manufacturers. In addition, we work with application
providers and jointly sell into the installed base of customers in the market
segment addressed by their application. For example, our relationship with w-
Trade, a wireless financial information software company, allows us to approach
broker dealers who want to wirelessly enable their customers using software
offered by w-Trade and our wireless data access and delivery expertise.
Marketing
We market and advertise in order to establish our brand name and create
sales opportunities. We conduct market awareness tracking research to measure
awareness of the GoAmerica brand and related sales. Our efforts have been and
will continue to be targeted in market segments and geographic markets where we
believe there is opportunity for substantial subscriber penetration. We believe
that high concentrations of potential subscribers reduce our subscriber
acquisition costs. With a portion of the net proceeds from this offering, we
intend to expand our presence as a mass market provider of wireless Internet
access by making a significant investment in establishing and building the
GoAmerica brand.
We continually seek new ways to reach potential subscribers that are
learning about wireless Internet communications. We also seek to establish
GoAmerica as a strong independent wireless Internet brand. Through a
combination of mass media advertising and Web advertising, we seek to expand
our subscriber base, strengthen our customer relationships and capture
significant market share. We supplement our existing subscriber acquisition
programs through value added reseller and dealer co-marketing programs and
partner marketing programs. We plan to continue to develop a variety of co-
marketing programs that make use of brand loyalties and existing customer
relationships.
For example, in November 1999, we announced a preferred partnership
arrangement with Avis-Rent-a-Car, the second largest car rental company in the
United States. Under this arrangement, our customers will be able to access the
Avis reservation system through Go.Web. We anticipate that this service will be
commercially available in the second quarter of 2000. We also have a marketing
agreement with Lexis-Nexis, a leading provider of information to the legal
profession, to provide wireless access to Lexis.com services using a co-branded
service called "Law On The Go". In January 2000, we entered into a co-marketing
agreement with DLJ direct Inc. in which we agreed to market DLJ direct as a
featured Web-based online trading company. DLJ direct agreed to market
GoAmerica as a featured wireless data services company. We intend to link to
each other's website during the second quarter of 2000. GoAmerica subscribers
will have the opportunity to open a DLJ direct account and wirelessly trade
securities through Go.Web. In addition to service providers, we have also
developed joint marketing relationships with several manufacturers of wireless
devices which we believe will benefit from being able to market our value-added
services. For example, we have a preferred service provider agreement with
Novatel Wireless, a leading supplier of wireless modems for the CDPD networks,
and a reseller and joint marketing agreement with Sierra Wireless, the
manufacturer of Aircard 300, a wireless PC Card for the CDPD networks.
Wireless Carrier and Other Relationships
We have assembled a strategic combination of relationships with wireless
network operators, application developers and mobile device manufacturers.
American Mobile. American Mobile's ARDIS network serves approximately 425
metropolitan areas in the United States, encompassing approximately 11,000
cities and towns. We offer our subscribers access to the
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ARDIS network. American Mobile also resells our Go.Web service, as a part of
American Mobile's suite of services, to its customers through its distribution
channels.
AT&T Wireless Services. AT&T Wireless' cellular digital packet data, CDPD,
network is the largest CDPD network in the United States. We offer access to
the AT&T nationwide CDPD network to our subscribers.
Bell Atlantic Mobile. Bell Atlantic has the largest regional CDPD network
covering the New England and Mid Atlantic states. We offer the Bell Atlantic
regional CDPD network to our subscribers and receive sales leads from the Bell
Atlantic Mobile data sales force.
BellSouth Wireless Data. BellSouth's Mobitex network covers approximately
80% of the United States population and approximately 93% of the urban business
population. We have been offering the BellSouth nationwide Mobitex network to
our subscribers since 1996. We also have a software license to the BellSouth
Interactive Paging Service gateway.
Phone.com. Phone.com has developed software technology that runs on phones
that combine voice and data. We first licensed and deployed their technology in
1997. We were the first non-cellular carrier to license their UPlink software
and were the first company in North America to deploy their WAP compliant
gateway.
Research in Motion. RIM is the manufacturer of the RIM 950 interactive
pager, the RIM 850 wireless handheld device and the RIM Blackberry device. We
have a distribution agreement with RIM and co-market the Go.Web service on the
Blackberry device.
Technology and Operations
Service Infrastructure
Wireless Internet Connectivity Center. We operate a secure network
operations center at our headquarters in Hackensack, New Jersey. This Wireless
Internet Connectivity Center is connected to multiple Tier-1 Internet backbone
providers such as UUNET/MCI Worldcom, Sprint, and AT&T via redundant high-
capacity, high-speed leased T-1 telecommunications lines as well as fixed
location frame-relay circuits. These circuits connect to our customers' data
sources and to the wireless data networks we use. Our Wireless Internet
Connectivity Center is supported by a switched fiber optic backbone provided by
Cisco Systems. The center is equipped with proven, industry standard equipment,
including Cisco and Paradyne networking equipment, Sun Sparc Enterprise UNIX
servers, high-end clustered Compaq servers, Network Appliance NFS Servers and
Clarion Raid Arrays. We believe our Wireless Internet Connectivity Center is
capable of meeting the capacity demands and security standards for services we
developed or are developing for our customers. We staff the center from 8:00
a.m. to 11:00 p.m. Eastern time on weekdays. In addition, our technical staff
monitor network traffic, service quality, and security 24 hours a day, seven
days a week. We intend to continue to invest in improved network monitoring
software and hardware systems.
In order to provide our subscribers with the highest availability of
services we are building a completely redundant data center facility which is
expected to be operational during the second quarter of 2000. This facility
will become our primary Wireless Internet Connectivity Center. This data center
will have a back-up power supply, redundant communications connection and will
be monitored 24 hours a day, seven days a week.
Wireless Networks. Through our relationships with third-party provider-owned
wireless networks, our subscribers are able to wirelessly access the Internet
in most major metropolitan areas in the continental United States via a local
wireless network. We purchase access to wireless networks through services
agreements with a variety of carriers including BellSouth Wireless Data, AT&T
Wireless Services, Bell Atlantic Mobile and American Mobile. Using a
combination of third-party wireless network providers enables us to provide
wireless Internet access and services on a nationwide basis while managing the
timing and magnitude of our capital
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expenditures. We employ a strategy of using different third-party network
providers in locations where it is most economical to do so. We periodically
reevaluate the economics of this strategy and, if warranted, move subscribers
to different networks.
Software Technology
Our strategy is to develop solutions using existing technologies and
industry standards in proprietary ways to continue to deliver customer-
friendly wireless Internet services and dynamic applications, as well as
allowing our partners to develop wireless applications with standard
development tools.
Our Software Technology
We have developed a proprietary services platform, Go.Web, that we believe
is a competitive advantage because it enables our subscribers to access and
personalize the Internet from virtually any leading wireless device. Go.Web
also allows qualified developers to introduce standard Web-based applications
for virtually any wireless device or network. As a result of our Go.Web
development efforts, our engineering staff has acquired substantial wireless
and Web formatting expertise, which will enable us to develop solutions
quickly as new wireless devices are introduced. In addition, our proprietary
compression technology and enhanced wireless transport protocol included in
our software provides bandwidth efficiency and maximizes data transmission
speeds. We also have employed industry standard SSL, or secure sockets layer,
and our internally developed encryption technologies to ensure security
through our Internet gateway.
We developed our software technology to better serve our customers and
provide the following features:
. simplify installation;
. provide a convenient and intuitive starting place for subscribers;
. enhance the efficiency of our support services; and
. provide state-of-the-art wireless applications.
Licensed Software Technology
BellSouth Wireless Data--The BellSouth Interactive Paging Service (IPS) is
based on server software that has been licensed by GoAmerica. We are one of a
limited number of companies that have deployed their own IPS gateway. This
service provides two-way messaging on devices such as the RIM interactive
pagers.
Phone.com--Phone.com has developed software technology that runs on phones
that combine voice and data. They have created a page display language, HDML,
to show Web content on small screen devices, and now support the WAP standard.
We have licensed and deployed this technology and provide services to cellular
carriers and individual customers.
Telcordia--Telcordia, formerly Bellcore, has developed software technology
that supports Microsoft Windows platforms such as laptops and CE devices. We
presently use this technology primarily to support our subscribers using
Windows platforms to enable access to our GoAmerica services.
Customer Service and Billing
We provide customer service, billing and product fulfillment at our
customer service center. Our customer service program provides our subscribers
with the ability to contact us through toll free telephone, Web, or email.
Through our goamerica.net Web site, subscribers can access answers to
Frequently Asked Questions and information about our services 24 hours a day.
Through our Web site and customer service representatives, we verify that a
potential subscriber will have wireless network coverage where such customer
plans to use the service. For subscribers who order directly from us, we
maintain an inventory of mobile devices and wireless
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modems which we buy from third-party manufacturers and resellers. We load and
configure custom software on mobile devices, activate wireless modems and
perform quality assurance checks. We then pack, ship and track the product
until the subscriber receives it. For customers who already own a mobile
device, we provide only the wireless modem and software application. Our
subscribers are able to deal directly with us for all repair, replacement and
warranty issues for devices we provide to them.
As of January 31, 2000, we had 16 customer service and technical support
representatives who handle inquiries about our services, device features and
wireless communications. Our customer service and technical support personnel
are available weekdays from 8:00 a.m. until 11:00 p.m. Eastern time. We
expanded our customer service center hours during the first quarter of 2000 and
plan further expansion. We also intend to expand our ecommerce Web site
capabilities to include self provisioning, on-line billing, and interactive
customer care during the second half of 2000. We provide corporate or
individual customer billing for all subscription fees, devices and modems, and
other fees.
Competition
The market for our wireless Internet services is becoming increasingly
competitive. The widespread adoption of industry standards in the wireless data
communications market may make it easier for new market entrants and existing
competitors to introduce services that compete against ours. We developed our
solutions using standard industry development tools. Many of our agreements
with wireless carriers, wireless handheld device manufacturers and data
providers are non-exclusive. Our competitors may use the same products and
services in competition with us. With time and capital, it would be possible
for competitors to replicate our services. We expect that we will compete
primarily on the basis of the functionality, breadth, quality and price of our
services.
Many of our existing and potential competitors have substantially greater
financial, technical, marketing and distribution resources than we do. Please
refer to "Risk Factors--We may face increased competition which may negatively
impact our prices for our services or cause us to lose business opportunities"
for a listing of some our current and potential competitors. Additionally, many
of these companies have greater name recognition and more established
relationships with our target customers. Furthermore, these competitors may be
able to adopt more aggressive pricing policies and offer customers more
attractive terms than we can. In the event such companies decide to compete
directly with us, such relationships will likely be terminated, which may have
a material adverse effect on our business and reduce our market share or force
us to lower prices to unprofitable levels.
Intellectual Property Rights
We have not yet obtained patents on our technology that would preclude or
inhibit competitors from using our technology. We have, however, recently filed
a patent application on certain aspects of our Go.Web technology. The
application is presently pending in the United States Patent and Trademark
Office. We rely on a combination of patent, copyright, trademark, service mark,
trade secret laws, unfair competition law and contractual restrictions to
establish and protect certain proprietary rights in our technology and
intellectual property. We have applied for registration of our GoAmerica names
and marks in the United States Patent and Trademark Office and in trademark
offices in jurisdictions throughout the world, including but not limited to,
U.S. federal trademark applications for the marks "GoAmerica", "Go.Web" and
"Law on the Go". The steps taken by us to protect our intellectual property may
not prove sufficient to prevent misappropriation of our technology or to deter
independent third-party development of similar technologies. In addition, the
laws of certain foreign countries may not protect our technologies or
intellectual property rights to the same extent as do the laws of the United
States. We also rely on certain technologies that we license from third
parties. These third-party technology licenses may not continue to be available
to us on commercially attractive terms. The loss of the ability to use such
technology could require us to obtain the rights to use substitute technology,
which could be more expensive or offer lower quality or performance, and
therefore have a material adverse effect on our business, financial condition
or results of operations. Third parties could claim infringement by us with
respect to current or future technology. We expect that we and other
participants in our markets will be
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increasingly subject to infringement claims as the number of services and
competitors in our industry segment grows. Any such claim, whether meritorious
or not, could be time consuming, result in costly litigation, cause service or
installation interruptions or require us to enter into royalty or licensing
agreements. Such royalty or licensing agreements might not be available on
terms acceptable to us or at all. As a result, any such claim could have a
material adverse effect upon our business, financial condition or results of
operations. We received a claim in November 1999, on behalf of ROTIS
Technologies Corporation, that our technology relating to the wireless
provision of stock quotes infringes a patent relating to a price quotation
system, which patent expires on September 25, 2001. We believe that such claim
is not material and without merit. We intend to defend such claim vigorously.
Such claim is, however, in its preliminary stages and no specific claim for
damages has been asserted. Therefore, no assurance can be made that such claim
could not become material in the future. We also received in January 2000 an
offer from NTP Incorporated to enter into negotiations to obtain a license
under one or more of NTP's patent properties relating to wireless email
systems. We are in the process of reviewing NTP's patents.
Government Regulation
We are not currently subject to direct federal, state or local government
regulation, other than regulations that apply to businesses generally. The
wireless network carriers we contract with to provide airtime are subject to
regulation by the Federal Communications Commission. Changes in FCC regulations
could affect the availability of wireless coverage these carriers are willing
or able to sell to us. We could also be adversely affected by developments in
regulations that govern or may in the future govern the Internet, the
allocation of radio frequencies or the placement of cellular towers. Also,
changes in these regulations could create uncertainty in the marketplace that
could reduce demand for our services or increase the cost of doing business as
a result of costs of litigation or increased service delivery cost or could in
some other manner have a material adverse effect on our business, financial
condition or results of operations.
We currently do not collect sales or other taxes with respect to the sale of
services or products in states and countries where we believe we are not
required to do so. We do collect sales and other taxes in the states in which
we have offices and are required by law to do so. One or more jurisdictions
have sought to impose sales or other tax obligations on companies that engage
in online commerce within their jurisdictions. A successful assertion by one or
more jurisdictions that we should collect sales or other taxes on our products
and services, or remit payment of sales or other taxes for prior periods, could
have a material adverse effect on our business, financial condition or results
of operations.
Any new legislation or regulation, or the application of laws or regulations
from jurisdictions whose laws do not currently apply to our business, could
have an adverse effect on our business.
Facilities
Our principal offices are located in Hackensack, New Jersey in a 20,300
square-foot leased facility. Our primary lease on approximately 15,900 square
feet of such space expires in May 2007. In addition, in December 1999, we
entered into a facilities maintenance agreement with Data General pursuant to
which we will operate a network operating center at their facility in New York
City. Such facility will initially provide redundant data backup for our
current network operating center located at our headquarters in Hackensack. We
anticipate that our New York facility will serve as our primary network
operating center by mid-2000. We believe that our facilities will be adequate
to meet our requirements for the foreseeable future and that suitable
additional space will be available if needed.
Employees
As of January 31, 2000, we had a total of 57 full-time employees. None of
our employees is covered by a collective bargaining agreement. We believe that
our relations with our employees are good.
Legal Proceedings
We are not currently subject to any material legal proceedings. However, we
may from time to time become a party to various legal proceedings arising in
the ordinary course of our business.
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MANAGEMENT
Directors and Executive Officers
Our directors and executive officers are as follows:
<TABLE>
<CAPTION>
Name Age Position(s)
- ---- --- -----------
<S> <C> <C>
Aaron Dobrinsky......... 36 Chairman of the Board, President and Chief Executive Officer and Director
Joseph Korb............. 48 Executive Vice President and Director
Francis Elenio.......... 34 Chief Financial Officer, Treasurer and Secretary
Robi Blumenstein(1)(2).. 43 Director
Adam Dell............... 30 Director
Alan Docter(2).......... 56 Director
Mark Kristoff(1)........ 38 Director
Zachary Prensky(1)...... 26 Director
Nelson Schwab III....... 55 Director
Andrew Seybold(2)....... 53 Director
</TABLE>
- --------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
All directors currently hold office until the next annual meeting of
stockholders or until their successors have been elected and qualified. Our
Certificate of Incorporation provides that upon closing of this offering the
terms of office of the members of the board of directors will be divided into
three classes as set forth below. All executive officers are elected annually
by the board of directors and serve at the discretion of the board of directors
and until their successors are elected and qualified. There are no family
relationships between any of our directors or executive officers.
Aaron Dobrinsky founded GoAmerica in 1996 and has served as our Chairman of
the Board, President and Chief Executive Officer and as a director since our
inception in 1996. Prior to founding the company, from February 1996 to July
1996, Mr. Dobrinsky served as Executive Vice President of Mineral Trading Corp.
Prior to that, Mr. Dobrinsky served most recently as Senior Vice President of
American International Ore Corporation from 1990 to February 1996. Mr.
Dobrinsky also serves on the board of directors of DataRover Mobile Systems,
Inc.
Joseph Korb joined GoAmerica in 1997 as Executive Vice President and has
been a director since October 1996. Prior to joining us, Mr. Korb served in
various capacities, including Vice President of Product Management and Business
Development at RAM Mobile Data (now BellSouth Wireless Data) from 1992 to 1996.
Prior to that, Mr. Korb served as Vice President at Citibank, N.A. where he
served as Director of Technology in an electronic products development group.
Mr. Korb currently serves as a board member and Vice President of Portable
Computing and Communications Association, an industry trade association.
Francis Elenio joined GoAmerica in January 1999 as Chief Financial Officer
and has also served as our Treasurer and Secretary since December 1999. Prior
to joining us, Mr. Elenio served as Corporate Controller of Bogen
Communications, Inc. from June 1997 to January 1999. Prior to that, Mr. Elenio
served most recently as Vice President of Finance and Administration and
Corporate Controller of KTI, Inc. from 1991 to 1997. He previously was a Senior
Accountant with Ernst & Young LLP and is a Certified Public Accountant in New
Jersey.
Robi Blumenstein joined our board of directors in June 1999 as the designee
of CIBC WMV Inc. Mr. Blumenstein currently is a principal of Marsh & McLennan
Capital Inc. and co-head of the Marsh & McLennan Capital Communications and
Information Fund I. From January 1994 to February 2000, Mr. Blumenstein was a
Managing Director of CIBC Capital Partners, the merchant banking arm of CIBC
World Markets. Mr. Blumenstein joined CIBC World Markets in 1994. Mr.
Blumenstein is a member of the board of
39
<PAGE>
directors of a number of privately held companies. Prior to joining CIBC
Capital Partners, Mr. Blumenstein worked at First City Capital Corporation and
as an attorney at Tory, Tory, DesLauriers & Binnington.
Adam Dell joined our board of directors in February 2000 as the designee of
Dell USA L.P. Mr. Dell is the managing partner of Impact Venture Partners,
L.P., which was founded in November 1999. Prior to that, Mr. Dell most recently
was a partner with Crosspoint Venture Partners, since October 1998, and a
Senior Associate with Enterprise Partners, focused on ecommerce, enterprise
software and networking and communication infrastructure. Prior to that, he was
a Senior Associate with Winstead, Sechrest and Minick. Mr. Dell is also an
adjunct professor at Columbia Business School.
Alan Docter joined our board of directors in October 1996 at the time of his
initial investment in GoAmerica. Since 1990, Mr. Docter has been an early-stage
investor in technology companies, including M.A.I.D. plc (now The Dialog
Corporation), ViaWeb (sold to Yahoo!), Butterfly V.L.S.I. Ltd. (sold to Texas
Instruments) and Invino Corp. (sold to Youth Stream Media Networks). He has
served as Vice Chairman of Considar, Inc., an international metals trading
company, since he co-founded such company in 1986. Mr. Docter also serves on
the board of directors of a number of privately held companies.
Mark Kristoff joined our board of directors in June 1998. Since 1991, Mr.
Kristoff has been President and Chief Operating Officer of Considar, Inc., an
international metals trading company. Since 1990, Mr. Kristoff also has been an
early-stage investor in many technology companies and serves on the board of
directors of a number of privately held companies.
Zachary Prensky joined our board of directors in June 1998. Since October
1998, Mr. Prensky has been Managing Director of Investment Banking for
Wellfleet Partners, an investment banking firm based in New York City. Prior to
that, Mr. Prensky served as Chief Executive Officer and Chairman of Zackfoot
Investments LLC which he founded in 1997. Zackfoot invested and facilitated a
round of private equity financing by GoAmerica in 1998. Mr. Prensky served as
Chief Financial Officer of Ram Caterers from October 1995 to May 1997. From
July 1993 to October 1995, Mr. Prensky served as President of Zackfoot Software
which developed software packages for the footwear industry. Mr. Prensky has
been an early-stage investor in technology companies, including Register.com,
HomeworkCentral.com, Liveprint.com, Inc., DataRover Mobile Systems, Inc.,
Livemind, Inc. and Aluminium.com, Inc.
Nelson Schwab III joined our board of directors in January 2000, as the
designee of Forstmann Little & Co. Equity Partnership-VI, L.P. Mr. Schwab was a
co-founder of Carousel Capital, a merchant banking firm, and has been a
Managing Director of such firm since its inception in 1996. He was Chairman and
Chief Executive Officer of Paramount Parks Inc., owner of amusement theme
parks, from 1992 until 1995. He also serves on the board of directors of
Burlington Industries, First Union National Bank of North Carolina, Summit
Properties, Inc. and several private companies.
Andrew Seybold joined our board of directors in December 1999. Mr. Seybold
has extensive experience as a consultant, systems designer and product analyst
in the communications and computer industries. Since 1983, Mr. Seybold has
served as publisher, Editor-in-Chief and in various management positions with
Pinecrest Press, Inc. which publishes "Andrew Seybold's Outlook on
Communications and Computing."
Key Employees
Our key employees are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Ellen Flora.................. 31 Vice President of Operations
Jesse Odom................... 34 Vice President of Network Operations and
Technology
David Gantman................ 58 Vice President of Strategic Marketing
Peter Varvara................ 46 Vice President of Marketing Communications
Martin May................... 53 Director of Alternate Distribution and Carrier
Relations
Joshua Rochlin............... 33 Director of Business Development
Joseph Strempel.............. 32 Director of Direct Sales and Telemarketing
</TABLE>
40
<PAGE>
Ellen Flora joined GoAmerica in October 1999 as Vice President of
Operations. Prior to joining us, Ms. Flora served in various capacities,
including most recently as Business Development Manager for the Communications
Industry Group at Electronic Data Systems from October 1993 to October 1999.
Jesse Odom joined GoAmerica in 1996 as Vice President of Network Operations.
Prior to joining GoAmerica, Mr. Odom served as Vice President of Network
Engineering at American International Ore Corporation from 1991 to 1996.
David Gantman joined GoAmerica in January 2000 as Vice President of
Strategic Marketing of GoAmerica Marketing, Inc., our wholly-owned subsidiary.
Mr. Gantman has served as President of Strategem Plus, Inc. since January 1995
and served as Executive Vice President of NW Ayer, Inc. from 1984 until January
1995.
Peter Varvara joined GoAmerica in January 2000 as Vice President of
Marketing Communications of GoAmerica Marketing, Inc., our wholly-owned
subsidiary. Mr. Varvara has served as President of Customer Strategies
Worldwide LLC since February 1998 and served as Executive Vice President of NW
Ayer, Inc. from 1982 until February 1998.
Martin May joined GoAmerica in December 1999 as Director of Alternate
Distribution and Carrier Relations. Prior to joining us, Mr. May served as a
director of sales for BellSouth Wireless Data from November 1993 to December
1999.
Joshua Rochlin joined GoAmerica in December 1999 as Director of Business
Development. Prior to joining us, Mr. Rochlin was the founder and Chief
Executive Officer of MyCalendar.com LLC from January 1999 to December 1999. Mr.
Rochlin previously served as an associate for the law firm of Rubin Baum from
February 1995 to December 1998. Mr. Rochlin has served as a director of Hydron
Technologies, Inc. since January 2000.
Joseph Strempel joined GoAmerica in January 1998 and currently serves as
Director of Direct Sales and Telemarketing. Prior to joining us, Mr. Strempel
served in various sales positions, and most recently as a Wireless Data Account
Executive, with Bell Atlantic Mobile (formerly NYNEX) from January 1993 to
December 1997.
Board Committees
The board of directors has a compensation committee, which approves salaries
and incentive compensation for our executive officers and administers our stock
option plans and our employee stock purchase plan. The compensation committee
is made up of Robi Blumenstein, Alan Docter and Andrew Seybold. The board of
directors also has an audit committee, which reviews the results and scope of
the audit and other services provided by our independent accountants. The audit
committee is made up of Robi Blumenstein, Mark Kristoff and Zachary Prensky.
Board Composition
We currently have nine directors. Our certificate of incorporation provides
that, effective upon the closing of this offering, the terms of office of the
members of the board of directors will be divided into three classes: Class A,
whose term will expire at the annual meeting of stockholders to be held in
2001; Class B, whose term will expire at the annual meeting of stockholders to
be held in 2002; and Class C, whose term will expire at the annual meeting of
stockholders to be held in 2003. The Class A directors are Messrs. Kristoff,
Prensky and
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<PAGE>
Seybold, the Class B directors are Messrs. Blumenstein, Korb and Schwab and the
Class C directors are Messrs. Dobrinsky, Dell and Docter. At each annual
meeting of stockholders after this initial classification, the successors to
directors whose term will then expire will be elected to serve from the time of
election and qualification until the third annual meeting following election.
Our bylaws permit the board of directors to increase or decrease the size of
the board of directors. Any additional directorships resulting from an increase
in the number of directors will be distributed among the three classes so that,
as nearly as possible, each class will consist of one-third of the total number
of directors. This classification of the board of directors may have the effect
of delaying or preventing changes in control or management of GoAmerica.
Directors' Compensation
Each non-employee, non-investor director serving on our board of directors
will receive annual compensation of $20,000. In addition, each independent
director, upon election to the board of directors, will receive options to
purchase up to 64,000 shares of our common stock. On December 31, 1999, Mr.
Seybold was granted options to purchase 64,000 shares at $1.31 per share,
subject to vesting. Each director who is a stockholder of the Company and who
serves on the board of directors as a representative of another individual,
entity or group of stockholders will receive options to purchase up to 32,000
shares of our common stock. On December 31, 1999, Messrs. Blumenstein, Docter,
Kristoff and Prensky each received options to purchase 32,000 shares at $1.31
per share, subject to vesting. All future option grants shall have an exercise
price equal to the fair market value of our common stock on the date of grant
and shall vest at a rate of one-third per year, from the date of grant. Each
director will be reimbursed by us for his or her reasonable expenses incurred
in connection with his or her participation in our board of directors meetings.
Mr. Schwab and Mr. Dell each received options to purchase 32,000 shares of
common stock in February 2000 at an exercise price of $15.00 per share.
Executive Compensation
The following table sets forth certain information concerning compensation
that we paid for services in all capacities awarded to, earned by or paid to
our chief executive officer and each of our other executive officers whose
aggregate compensation exceeded $100,000 during the three years ended December
31, 1999 (collectively, the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------- -------------
Name and Principal Position(s) Salary Bonus Stock Options
------------------------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Aaron Dobrinsky, Chairman of the
Board, President and Chief Executive
Officer.............................. 1999 $ 150,000 $ 50,000 80,000
1998 93,750 -- --
1997 105,000 -- --
Joseph Korb, Executive Vice
President............................ 1999 $ 150,000 $ 50,000 80,000
1998 93,750 -- --
1997 -- -- --
Francis Elenio, Chief Financial
Officer, Treasurer and Secretary..... 1999 $ 95,833 $ 20,000 240,000
1998 -- -- --
1997 -- -- --
</TABLE>
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<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth information for the fiscal year ended
December 31, 1999 with respect to each grant of stock options to the Named
Executive Officers:
Option Grants During Year Ended December 31, 1999
<TABLE>
<CAPTION>
Individual Grants(/1/) Potential Realizable
-------------------------------- Value at Assumed
% of Total Potential Realizable Annual Rates of Stock
Shares Options Exercise Value at Assumed Price Appreciation for
Underlying Granted to Price Initial Offering Option Term(/3/)
Options Employees in Per Expiration Price of $15.00 -----------------------
Name Granted 1999(/2/) Share Date Per Share 5% 10%
- ---- ---------- ------------ -------- ---------- -------------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aaron Dobrinsky......... 80,000 3.6% $0.56 08/02/04 $1,155,200 $ 1,486,538 $1,887,612
Joseph Korb............. 80,000 3.6% $0.56 08/02/04 $1,155,200 $ 1,486,538 $1,887,612
Francis Elenio.......... 240,000 10.8% $0.56 08/02/09 $3,465,600 $5,729,021 $9,202,473
</TABLE>
- --------
(1) Each of these options was granted pursuant to the 1999 Stock Option Plan of
GoAmerica Communications Corp. and is subject to the terms of such plan. In
connection with our reorganization, such options are exercisable into
shares of our common stock. All these options vested immediately.
(2) In 1999, we granted options to purchase an aggregate of 2,216,008 shares of
common stock to our employees. The percentage calculation excludes options
to purchase 192,000 shares of common stock granted to our non-employee
directors during 1999.
(3) Amounts represent hypothetical values that could be achieved for the
respective options if exercised at the end of the option term. These values
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date based on the initial offering price of $15.00 per
share. These assumptions are not intended to forecast future appreciation
of our stock price. The potential realizable value computation does not
take into account federal or state income tax consequences of option
exercises or sales of appreciated stock.
1999 Year-End Option Values
<TABLE>
<CAPTION>
Number of Options at Value of In-the-
December 31, Money
1999 Options(/1/)
------------------------ -------------------
Name Vested Unvested Vested Unvested
- ---- ------------ ----------- ---------- --------
<S> <C> <C> <C> <C>
Aaron Dobrinsky..................... 80,000 -- $1,155,200 $ --
Joseph Korb......................... 80,000 -- 1,155,200 --
Francis Elenio...................... 240,000 -- 3,465,600 --
</TABLE>
- --------
(1) The value of the options is determined by subtracting the exercise price
per share from the proposed initial public offering price per share offered
hereby, multiplied by the number of shares underlying the options.
There were no options exercised during the year ended December 31, 1999.
GoAmerica Communications Corp. 1999 Stock Option Plan
The GoAmerica Communications Corp. 1999 Stock Option Plan was adopted by the
board of directors of GoAmerica Communications Corp. and became effective on
August 3, 1999. Such plan was approved by the stockholders of GoAmerica
Communications Corp. effective on such date. On December 9, 1999 the board of
directors of GoAmerica Communications Corp. determined that, upon the closing
of our reorganization, no additional awards would be issued under the 1999
Stock Option Plan. As of the closing of our reorganization, the outstanding
options to purchase 1,916,000 shares of common stock of GoAmerica
Communications Corp. became, by their terms, options to purchase 1,916,000
shares of GoAmerica, Inc. common stock, otherwise in accordance with the terms
and conditions of the 1999 Stock Option Plan. Accordingly, our board of
directors has reserved 1,916,000 shares of our common stock for issuance upon
exercise of these options. The
43
<PAGE>
outstanding option under the 1999 Stock Option Plan are governed by the
compensation committee of our board of directors subject to the terms of the
1999 Stock Option Plan.
All the options granted under the 1999 Stock Option Plan were made to
employees of GoAmerica Communications Corp. and are non-qualified stock
options. All such options terminate not more than ten years from the date of
grant, subject to earlier termination upon or after a fixed period following
each optionee's death, disability or termination of employment with us. The
vesting provisions of each outstanding option was determined by the board of
directors of GoAmerica Communications Corp. and such options are not generally
assignable or otherwise transferable except by will or as per the laws of
descent and distribution. In the event of certain changes in control, and in
such other circumstances as set forth in the 1999 Stock Option Plan, the
administrator shall, in its equitable discretion, make adjustments in the terms
and conditions of any then outstanding stock options.
GoAmerica, Inc. 1999 Stock Plan
The 1999 Stock Plan was adopted by our board of directors on December 9,
1999 and approved by our stockholders on December 31, 1999. The 1999 Stock Plan
was effective as of December 9, 1999 and shall remain in effect until
terminated by our board of directors. The total number of shares of common
stock with respect to which awards may be granted under this plan is 4,800,000,
which amount shall be adjusted in accordance with the terms of the plan and to
an amount equal to twenty percent of the shares of our common stock outstanding
on December 31, 2000, and each December 31 thereafter. In no event shall such
annual adjustment decrease the shares available for issuance. Those eligible to
receive stock option grants under the 1999 Stock Plan include our employees,
directors and consultants. The 1999 Stock Plan is administered by the
compensation committee of our board of directors. As of December 31, 1999,
there were outstanding options to purchase 524,008 shares of common stock under
our 1999 Stock Plan. We also issued options to purchase an additional 1,559,400
shares of Common Stock under our 1999 Stock Plan in 2000, through the date of
this Prospectus. Of such options, 848,000 were issued during January with an
exercise price of $5.02 per share and the remaining options were issued during
February and March with exercise prices of $15.00 per share.
Subject to the provisions of the 1999 Stock Plan, the administrator of the
1999 Stock Plan has the discretion to determine the optionees and/or grantees,
the type of options to be granted, the vesting provisions, the terms of the
grants and other related grant provisions. The exercise price of an incentive
stock option may not be less than the fair market value per share of the common
stock on the date of grant or, in the case of an optionee who beneficially owns
10% or more of the voting power of all classes of our capital stock, not less
than 110% of the fair market value per share on the date of grant. The exercise
price of a non-qualified stock option may not be less than 85% of the fair
market value per share of the common stock on the date of grant. Fair market
value is determined by the plan administrator in good faith. We anticipate that
following consummation of this offering, fair market value shall be determined
in accordance with the closing sales price of our common stock as quoted on the
Nasdaq National Market. The 1999 Stock Plan also allows for the grant of
restricted stock and other awards, in the discretion of the plan administrator.
Incentive stock options granted under the 1999 Stock Plan terminate not more
than ten years from the date of grant, subject to earlier termination upon or
after a fixed period following the optionee's death, disability or termination
of employment with us. The term of non-qualified option grants is not limited,
provided that the term of any options, including incentive stock options and
non-qualified options, granted to a holder of more than 10% of the capital
stock may be no longer than five years. Options granted under the 1999 Stock
Plan will vest in the manner determined by the plan administrator. Options are
not assignable or otherwise transferable except by will or as per the laws of
descent and distribution. In the event of certain mergers, a reorganization, or
consolidation of us with or into another corporation or the sale of all or
substantially all our assets or all of our capital stock in which the successor
corporation does not assume outstanding options or issue equivalent options,
our board of directors is required to provide accelerated vesting of
outstanding options.
Employee Stock Purchase Plan
Our Employee Stock Purchase Plan provides our employees with an opportunity
to purchase our common stock through accumulated payroll deductions and at a
discount from fair market value. The plan was approved
44
<PAGE>
by our board of directors on December 9, 1999 and was approved by our
stockholders on December 31, 1999. The plan became effective on December 9,
1999. The total number of shares of common stock with respect to which
purchases may be made under the plan is 4,000,000, which amount shall be
adjusted in accordance with the terms of the plan. The Employee Stock Purchase
Plan will be administered by our compensation committee.
Eligible employees may purchase up to a maximum fair market value of $25,000
for all purchases ending within the same calendar year under this plan. Our
employees are eligible to participate if they are employed by us for at least
20 hours per week and for more than five months in any calendar year and do not
own 5% or more of our voting stock. The initial offering period under the plan
will commence on the date that the registration statement with respect to this
offering is declared effective by the Securities and Exchange Commission and
ends on or about December 31, 2000. It is currently contemplated that new
offering periods will commence every six months thereafter. The purchase price
per share for our common stock under the plan will be equal to the lower of 85%
of the fair market value of our common stock on the first or last day of each
purchase period. Employees may end their participation under the plan at any
time prior to the exercise date of any one purchase period and, generally, such
participants shall be automatically terminated upon termination of employment.
In the event we are the surviving corporation in any merger, reorganization or
other business combination, options to purchase shares issued under the plan
shall be assumed. A dissolution or liquidation or a merger or consolidation in
which we are not the surviving entity will cause each option then outstanding
to terminate. Generally, our board of directors can amend, modify or terminate
the plan at any time provided the rights of plan participants are not impaired.
The plan terminates on December 31, 2004 unless earlier terminated by our board
of directors.
Employment Agreements, Non-Competition, Non-Disclosure and Invention Assignment
Agreements
Mr. Dobrinsky is a party to an agreement with us effective December 31, 1999
under which he serves as our Chairman of the Board, President and Chief
Executive Officer at a base salary of $225,000, subject to annual adjustment.
Mr. Korb is a party to an agreement with us effective December 31, 1999 under
which he serves as our Executive Vice President at a base salary of $225,000,
subject to annual adjustment. Mr. Elenio is a party to an agreement with us
effective December 31, 1999 under which he serves as our Chief Financial
Officer, Treasurer and Secretary at a base salary of $150,000, subject to
annual adjustment. Mr. Odom is a party to an agreement with us effective
December 31, 1999 under which he serves as our Vice President, Network
Operations and Technology at a base salary of $125,000, subject to annual
adjustment, with a minimum bonus of $25,000. The Compensation Committee may
award any or all of these individuals additional bonus payments or option
grants in its discretion. The initial term of each such agreement is for three
years and renews annually for one year periods thereafter. In the event Mr.
Dobrinsky, Mr. Korb or Mr. Elenio is terminated without cause, resigns for good
reason or, in the case of each of Mr. Dobrinsky and Mr. Korb, is not reelected
to our board of directors, he shall be entitled to severance in an amount to
include all payments that otherwise would have been paid to him through the end
of the then current term of the agreement. However, in no event shall such
severance amount be less than such employee's then current one year annual base
salary, or if such termination occurs after the third anniversary of the
effective date of such employee's agreement, such amount shall be no less than
such employee's then current annual salary plus one-twelfth of such annual
salary for each year of employment commenced beyond such anniversary date. If
Mr. Odom is terminated without cause or resigns for good reason, we must pay
Mr. Odom salary and benefits for a period of six months from the date of such
termination or resignation. In the event any of the foregoing employees dies or
is terminated for disability, he or his representative shall be entitled to
continued payments of base salary for a period of one year plus, in the case of
termination for disability, certain other benefits. Each of Mr. Dobrinsky and
Mr. Korb will also receive $800 per month in automobile allowances and will be
reimbursed for additional automobile expenses incurred in connection with their
duties. In addition, each of Mr. Dobrinsky and Mr. Korb also is the beneficiary
of a term life insurance policy in his respective name, in the face amount of
up to $1.0 million, for which we pay the premiums. Each employment agreement
also contains certain non-competition, non-solicitation, invention assignment
and confidentiality provisions and also requires that we maintain standard
directors and officers insurance of no less than $10.0 million.
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<PAGE>
We require that all employees sign an agreement with us pursuant to which
they agree to maintain the confidentiality of our proprietary information, to
assign any inventions to us, and to agree not to solicit our customers,
suppliers or employees away from us.
Compensation Committee Interlocks and Insider Participation
Until our board of directors formed its compensation committee on December
9, 1999, the compensation of our executive officers during 1999 was determined
by the entire board of directors. The compensation committee consists of
Messrs. Blumenstein, Docter and Seybold. There are no compensation committee
interlocks.
Since our inception in 1996, we consummated several rounds of private equity
financing. Certain of these transactions included issuances of our capital
stock to individuals who serve on our board of directors. In addition, certain
individuals were granted options or issued warrants to purchase shares of our
common stock.
Robi . CIBC WMV Inc. purchased 7,500 shares of Series A Preferred
Blumenstein Stock on June 25, 1999 for an aggregate of $7.5 million. Mr.
Blumenstein serves on our board of directors as the
representative of CIBC WMV Inc. Such shares of Series A
Preferred Stock shall convert into an aggregate of 5,741,632
shares of common stock upon completion of this offering.
. Granted options to purchase 32,000 shares of common stock at
an exercise price of $1.31 per share on December 31, 1999.
One third of such options shall vest on each of the first,
second and third anniversaries from the date of grant.
Aaron . Purchased 8,533,280 shares of common stock on August 8, 1996
Dobrinsky for an aggregate of $533.33 upon founding of GoAmerica.
. Granted options to purchase 80,000 shares of common stock at
an exercise price of $0.56 per share on August 3, 1999. All
such options vested immediately.
. Granted options to purchase 160,000 shares of common stock
at an exercise price of $5.02 per share on January 6, 2000.
All of such options vested immediately.
Alan Docter . Purchased 800,000 shares of common stock on October 15, 1996
for an aggregate of $250,000.
. Purchased, on January 31, 1998, 141,440 shares of common
stock and warrants to purchase 26,560 shares of common stock
at an exercise price of $1.23 per share, for an aggregate of
$130,000.
. Purchased, on September 22, 1998, 536,672 shares of common
stock and warrants to purchase 398,576 shares of common
stock at an exercise price of $1.51 per share, for an
aggregate of $500,000. Such warrants were issued in
connection with Mr. Docter's assistance in our equity
financing efforts.
. Received warrants to purchase 53,664 shares of common stock
on May 15, 1999 at an exercise price of $.00125 per share in
connection with the May 1999 Agreement set forth below.
. Purchased 130,816 shares of common stock pursuant to certain
pre-emptive rights on November 30, 1999 for an aggregate of
$136,703.
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<PAGE>
. Purchased 320 shares of Series A Preferred Stock pursuant to
certain pre-emptive rights on November 30, 1999 for an
aggregate of $320,000. Such shares of Series A Preferred
Stock shall convert into an aggregate of 244,984 shares of
common stock upon completion of this offering.
. Granted options to purchase 32,000 shares of common stock at
an exercise price of $1.31 per share on December 31, 1999.
One third of such options shall vest on each of the first,
second and third anniversaries from the date of grant.
Joseph Korb . Purchased 4,266,720 shares of common stock on October 7,
1996 for an aggregate of $266.67.
. Granted options to purchase 80,000 shares of common stock at
an exercise price of $0.56 per share on August 3, 1999. All
such options vested immediately.
. Granted options to purchase 160,000 shares of common stock
at an exercise price of $5.02 per share on January 6, 2000.
All of such options vested immediately.
Mark Kristoff . Purchased 160,000 shares of common stock on October 15, 1996
for an aggregate of $50,000.
. Purchased 156,336 shares of common stock on September 22,
1998 for an aggregate of $150,000.
. Received warrants to purchase 15,632 shares of common stock
on May 15, 1999 at an exercise price of $.00125 per share in
connection with the May 1999 agreement set forth below.
. Granted options to purchase 32,000 shares of common stock at
an exercise price of $1.31 per share on December 31, 1999.
One third of such options shall vest on each of the first,
second and third anniversaries from the date of grant.
Zachary . Zackfoot Investment LLC purchased 9,600 shares of common
Prensky stock for a purchase price of $10,686 and received 49,568
shares of common stock and warrants to purchase 139,504
shares of common stock at an exercise price of $1.51 per
share on May 28, 1998 in connection with Zackfoot Investment
LLC's assistance in our equity financing efforts. Mr.
Prensky was Chief Executive Officer and Chairman of Zackfoot
Investment LLC.
. Zackfoot Investment LLC purchased 3,200 shares of common
stock for a purchase price of $3,562 and received 3,328
shares of common stock and warrants to purchase 51,760
shares of common stock at an exercise price of $1.93 per
share on June 30, 1998 in connection with Zackfoot
Investment LLC's assistance in our equity financing efforts.
. Zackfoot Investment LLC received warrants to purchase 9,848
shares of common stock on May 19, 1999 at an exercise price
of $.00125 per share in connection with the May 1999
agreement set forth below.
. Granted options to purchase 32,000 shares of common stock at
an exercise price of $1.31 per share on December 31, 1999.
One third of such options shall vest on each of the first,
second and third anniversaries from the date of grant.
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We also entered into a financial services consulting agreement with CIBC
World Markets Corp. pursuant to which CIBC was engaged to evaluate certain
potential financial and strategic initiatives. Mr. Blumenstein is the designee
of CIBC WMV, Inc. on our Board of Directors. In exchange for such services, we
paid a retainer fee of $50,000 to CIBC World Markets Corp. In connection with
the issuance and sale of our Series B Preferred Stock in January 2000, we paid
CIBC World Markets, Inc. $780,000 in cash and issued 226,816 shares of our
common stock. CIBC paid a finder's fee to a third party. For all future
transactions for which CIBC is entitled to compensation, if any, we have agreed
to pay a transaction fee in the amount of 6% of gross proceeds raised in such a
financing transaction, excluding this offering. Such payment for services, if
any, will be made one-half in cash and one-half in our equity securities. This
agreement will terminate upon the closing of this offering.
The May 1999 Agreements with Certain Prior Investors
In May 1999, each of GoAmerica, Aaron Dobrinsky, Joseph Korb and certain
prior investors, including Zackfoot Investments LLC, of which Mr. Prensky was a
managing director, and Alan Docter, entered into various agreements, including
a settlement agreement and release. The settlement agreement and release
resulted from claims by such investors that they were entitled to additional
securities of GoAmerica, at no additional cost, as a result of the issuance of
certain GoAmerica securities and the granting of certain rights by GoAmerica to
subsequent third party investors on terms and conditions alleged to be more
favorable, than were provided to the investors making such claims, including
the valuation of securities purchased. All parties entered the settlement
agreement and release without admission of any liability or wrongdoing. In
connection with the May 1999 agreements, we agreed to issue to such investors
warrants to purchase an aggregate of 549,000 shares of common stock and each of
Messrs. Dobrinsky and Korb agreed to issue to such investors options to
purchase an aggregate of 75,880 and 37,968 shares of the common stock held by
each of them respectively. As a result of such agreements, we recorded a non-
cash charge of approximately $297,000 during 1999. We anticipate that all such
options and warrants will be exercised as of the consummation of this offering.
Key Person Insurance
We maintain, and are the beneficiary of, life insurance policies on the life
of Aaron Dobrinsky in the aggregate amount of $3.0 million. We have applied for
similar life insurance on the life of Joseph Korb in the amount of $3.0 million
for which we will be the beneficiary. There can be no assurance that such
insurance on Mr. Korb will be obtained. We do not intend to maintain key person
life insurance on any of our other executive officers or key personnel.
Limitation of Liability and Indemnification of Directors and Officers
Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for:
. any breach of their duty of loyalty to the corporation or its
stockholders;
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. unlawful payments of dividends or unlawful stock repurchases or
redemptions; or
. any transaction from which the director derived an improper personal
benefit.
This limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.
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Our certificate of incorporation and bylaws provide that we shall indemnify
our directors, officers, employees and agents to the fullest extent permitted
by law. We believe that indemnification under our bylaws covers at least
negligence and gross negligence on the part of indemnified parties. Upon the
completion of this offering, we expect to have director and officer liability
insurance in the minimum amount of $25,000,000 with respect to claims made
against our directors and officers, including matters arising under the
Securities Act.
We have also entered into written agreements to indemnify our directors and
executive officers, in addition to the indemnification provided for in our
bylaws. These agreements, among other things, provide for indemnification of
our directors and executive officers for judgments, fines, settlement amounts
and expenses, including attorneys' fees, incurred by any of these persons in
any action or proceeding, including any action by or in the right of GoAmerica,
Inc. arising out of that person's services as our director or executive
officer, or as a director or executive officer of any of our subsidiaries or
any other company or enterprise to which such person provides services at our
request. We believe that these provisions and agreements are necessary to
attract and retain qualified persons as directors and executive officers.
There is no pending litigation or proceeding involving any of our directors,
officers, employees or agents where indemnification will be required or
permitted. We are not aware of any pending or threatened litigation or
proceeding that might result in a claim for such indemnification.
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CERTAIN TRANSACTIONS
Transactions involving each of Robi Blumenstein, Aaron Dobrinsky, Alan
Docter, Joseph Korb, Mark Kristoff and Zachary Prensky are included under the
heading Compensation Committee Interlocks and Insider Participation. Those
transactions occurred while each such individual was serving on our board of
directors and, in the case of Mr. Dobrinsky, while he was also serving as our
president and chief executive officer.
Francis Elenio, our chief financial officer, treasurer and secretary, was
granted options to purchase 240,000 shares of GoAmerica Communications Corp.
common stock for $0.56 per share on August 3, 1999 in his capacity as an
officer of GoAmerica Communications Corp. In connection with our reorganization
on December 31, 1999, all such options are now exercisable into shares of our
common stock. Mr. Elenio also was granted options to purchase 80,000 shares of
common stock for $5.02 per share on January 6, 2000. All such options are
immediately exercisable.
In July 1998, we entered into a consulting arrangement with Andrew Seybold
Group LLC, pursuant to which we are obligated to pay Mr. Seybold's firm $3,000
per month for consulting services and expertise relating to the wireless data
and communications industry. On December 31, 1999, our compensation committee
granted Mr. Seybold options to purchase 64,000 shares of our common stock at
$1.31 per share in connection with his services to be rendered as a member of
our board of directors. One third of such options shall vest on each of the
first, second and third anniversaries from the date of grant.
In January 2000, we issued and sold an aggregate of 648,057 shares of Series
B Convertible Preferred Stock to Dell USA L.P., Carousel Capital Partners,
L.P., Forstmann Little & Co. Equity Partnership - VI, L.P. and Impact Venture
Partners, L.P. Mr. Schwab, a managing director of Carousel Capital Partners,
serves as the designee of Forstmann Little on our board of directors. Adam
Dell, managing partner of Impact Venture Partners, was elected to our board of
directors in February 2000 as the designee of Dell USA L.P. Each of Mr. Dell
and Mr. Schwab was granted options in February 2000 to purchase 32,000 shares
of common stock at $15.00 per share. One third of such options shall vest on
each of the first, second and third anniversaries from the date of grant.
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PRINCIPAL STOCKHOLDERS
The following table sets forth as of February 28, 2000, as adjusted to give
effect to the sale of common stock offered hereby, certain information
regarding beneficial ownership of our common stock by:
. each person or group of affiliated persons we expect to be the
beneficial owner of more than 5% of the outstanding shares of common
stock;
. each director;
. each Named Executive Officer;
. and all directors and Named Executive Officers as a group.
The address for each officer is c/o GoAmerica, Inc., 401 Hackensack Avenue,
Hackensack, New Jersey 07601.
<TABLE>
<CAPTION>
Percentage(/2/)
--------------------------------
Name Shares(/1/) Prior to Offering After Offering
- ---- ----------- ----------------- --------------
<S> <C> <C> <C>
Aaron Dobrinsky(/3/)............. 8,425,248 22.5% 17.8%
Dobrinsky Family Holdings,
L.P.(/4/)....................... 4,092,624 11.0 8.7
Dobrinsky Business Holdings,
L.P.(/4/)....................... 2,455,560 6.6 5.2
CIBC WMV Inc.(/5/)............... 5,741,632 15.5 12.2
Robi Blumenstein(/6/)............ -- -- --
Joseph Korb(/7/)................. 4,332,752 11.6 9.2
Korb Business Holdings,
L.P.(/8/)....................... 2,046,376 5.5 4.3
Dell USA L.P.(/9/)............... 2,592,224 7.0 5.5
Adam Dell(/10/).................. 598,208 1.6 1.3
Alan Docter(/11/)................ 2,684,872 7.1 5.6
Mark Kristoff(/12/).............. 331,968 * *
Francis Elenio(/13/)............. 320,000 * *
Zachary Prensky(/14/)............ 218,320 * *
Nelson Schwab(/15/).............. 1,296,112 3.5 2.8
Andrew Seybold................... -- -- --
All executive officers and
directors as a group (10
persons)(/16/).................. 18,207,480 47.2% 37.5%
</TABLE>
- --------
* Less than 1%.
(1) Beneficial ownership includes any shares as to which the individual or
entity has sole or shared voting power or investment power and also any
shares which the individual or entity has a right to acquire within 60
days after February 28, 2000 through the exercise of any stock options or
warrants. We have also assumed the conversion of all outstanding shares of
Preferred Stock into shares of our common stock upon completion of this
offering. The inclusion herein of such shares, however, does not
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of such shares. Unless otherwise indicated, each person
or entity named in the table has sole voting power and investment power
with respect to all shares of capital stock listed as owned by such person
or entity.
(2) Applicable percentage of ownership is based on an aggregate of 37,136,760
shares of common stock outstanding on February 28, 2000 (including
8,038,304 shares of common stock to be issued upon conversion of all
outstanding shares of Series A Preferred Stock and 5,184,456 shares of
common stock issuable upon conversion of our Series B Preferred Stock upon
completion of the offering) and an aggregate of 47,136,760 shares of
common stock outstanding after the completion of this offering.
(3) Includes 240,000 shares subject to options that are immediately
exercisable. Also includes 4,092,624 shares held by Dobrinsky Family
Holdings, L.P. and 2,455,560 shares held by Dobrinsky Business Holdings,
L.P.
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(4) Mr. Dobrinsky has voting and dispositive power with respect to the shares
of common stock held by Dobrinsky Family Holdings, L.P. and Dobrinsky
Business Holdings, L.P.
(5) Represents 5,741,632 shares to be issued in connection with the conversion
of 7,500 shares of Series A Preferred Stock upon completion of this
offering. Excludes 226,816 shares of common stock issued to CIBC World
Markets, Inc. for services rendered in connection with the Series B
Preferred Stock Financing.
(6) Mr. Blumenstein is the designee of CIBC WMV, Inc. on our board of
directors. Mr. Blumenstein does not have the power to vote or direct the
vote of and to dispose or direct the disposition of the shares owned by
CIBC WMV Inc. Accordingly, Mr. Blumenstein expressly disclaims beneficial
ownership of such shares.
(7) Includes 240,000 shares subject to options that are immediately
exercisable. Also includes 2,046,376 shares held by Korb Business
Holdings, L.P.
(8) Mr. Korb has voting and dispositive power with respect to the shares of
common stock held by Korb Business Holdings, L.P.
(9) Represents 2,592,224 shares of common stock to be issued in connection
with the conversion of the Series B Preferred Stock.
(10) Represents 598,208 shares of common stock to be issued in connection with
the conversion of the Series B Preferred Stock owned by Impact Venture
Partners, L.P., of which Mr. Dell serves as managing partner. Mr. Dell
expressly disclaims beneficial ownership of such shares except with
respect to his proportionate interest in the limited partnership.
(11) Includes 244,984 shares to be issued in connection with the conversion of
320 shares of Series A Preferred Stock upon completion of this offering.
Also includes 478,800 shares subject to warrant agreements that are
immediately exercisable.
(12) Includes 15,632 shares subject to a warrant agreement that is immediately
exercisable.
(13) Represents 320,000 shares subject to options that are immediately
exercisable.
(14) Includes 139,504 shares subject to a warrant agreement in the name of
Zackfoot Investments, LLC that is immediately exercisable.
(15) Represents 1,296,112 shares of common stock to be issued in connection
with the conversion of the Series B Preferred Stock owned by Carousel
Capital Partners, L.P., of which Mr. Schwab serves as a managing director.
Mr. Schwab expressly disclaims beneficial ownership of such shares except
with respect to his proportionate interest in the limited partnership.
(16) See notes 3 through 15.
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DESCRIPTION OF CAPITAL STOCK
General
GoAmerica Communications Corp. was incorporated in Delaware in 1996. In
December 1999, GoAmerica, Inc. was incorporated in Delaware and each of the
stockholders of GoAmerica Communications Corp. exchanged all their outstanding
shares of common stock and preferred stock of that company for newly issued
shares of GoAmerica, Inc. with equivalent rights and preferences. As a result,
GoAmerica Communications Corp. became a wholly-owned subsidiary of GoAmerica,
Inc. In addition, each outstanding warrant and option to purchase shares of
common stock of GoAmerica Communication Corp. is now exercisable for shares of
common stock of GoAmerica, Inc.
Upon consummation of this offering, our authorized capital stock will
consist of 200,000,000 shares of common stock, par value $0.01 per share, and
4,351,943 shares of undesignated preferred stock, par value $0.01 per share. At
December 31, 1999, after giving effect to the conversion of all outstanding
shares of Series A Preferred Stock and Series B Preferred Stock upon
consummation of this offering, 47,136,760 shares of common stock were
outstanding and held by 77 stockholders. The following statements are brief
summaries of certain provisions with respect to our capital stock contained in
our certificate of incorporation and bylaws, copies of which have been filed as
exhibits to our registration statement. See "Where You Can Find More
Information." The following summary is qualified in its entirety by reference
to such documents.
Common Stock
The holders of our common stock are entitled to one vote for each share held
of record upon such matters and in such manner as may be provided by law.
Subject to preferences applicable to any outstanding shares of preferred stock,
the holders of common stock are entitled to receive ratably dividends, if any,
as may be declared by the board of directors out of funds legally available for
dividend payments. In the event we liquidate, dissolve or wind up, the holders
of common stock are entitled to share ratably in all assets remaining after
payment of liabilities and liquidation preferences of any outstanding shares of
the preferred stock. Holders of common stock have no preemptive rights or
rights to convert their common stock into any other securities. There are no
redemption or sinking fund provisions applicable to the common stock.
Preferred Stock
The preferred stock is issuable from time to time in one or more series and
with such designations, preferences and other rights for each series as shall
be stated in the resolutions providing for the designation and issue of each
such series adopted by our board of directors. The board of directors is
authorized by our Certificate of Incorporation to determine, among other
things, the voting, dividend, redemption, conversion, exchange and liquidation
powers, rights and preferences and the limitations thereon pertaining to such
series. The board of directors, without stockholder approval, may issue
preferred stock with voting and other rights that could adversely affect the
voting power of the holders of the common stock and that could have certain
anti-takeover effects. We have no present plans to issue any shares of
preferred stock. The ability of the board of directors to issue preferred stock
without stockholder approval could have the effect of delaying, deferring or
preventing a change in control of us or the removal of existing management.
Warrants
At December 31, 1999, we had outstanding warrants to purchase an aggregate
of 1,276,800 shares of our common stock. The weighted average exercise price of
the warrants is $1.17 per share. Any warrant may be exercised by applying the
value of a portion of the warrant, which is equal to the number shares issuable
under the warrant being exercised multiplied by the fair market value of a
share of our common stock, less the per share exercise price, in lieu of
payment of the exercise price per share. Of such warrants, an aggregate of
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848,912 will expire in 2001, an aggregate of 42,880 will expire in 2003, an
aggregate of 65,008 will expire in 2004, and an aggregate of 320,000 will
expire in 2008.
Delaware Anti-Takeover Law and Our Certificate of Incorporation and Bylaw
Provisions
Provisions of Delaware law and our certificate of incorporation and bylaws
could make it difficult for a third party to acquire us and to remove our
incumbent officers and directors. These provisions, summarized below, are
expected to discourage coercive takeover practices and inadequate takeover bids
and to encourage persons seeking to acquire control of GoAmerica to negotiate
first with our board of directors. We believe that the benefits of increased
protection of our ability to negotiate with the proponent of an unfriendly or
unsolicited acquisition proposal outweigh the disadvantages of discouraging
such proposals because, among other things, negotiation could result in an
improvement of the terms of the proposal.
We are subject to Section 203 of the Delaware General Corporation Law, which
regulates corporate acquisitions. In general, Section 203 prohibits a publicly-
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years following the date the
person became an interested stockholder, unless:
. the board of directors approved the transaction in which such
stockholder became an interested stockholder prior to the date the
interested stockholder attained such status;
. upon consummation of the transaction that resulted in the stockholder's
becoming an interested stockholder, he or she owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding shares owned by persons who are directors and also
officers; or
. on or subsequent to such date the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the
corporation's voting stock not owned by the interested stockholder.
A "business combination" generally includes a merger, sale of assets or
stock, or other transaction resulting in a financial benefit to the interested
stockholder. In general, an "interested stockholder" is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status, did own, 15% or more of a
corporation's voting stock.
Our certificate of incorporation provides that, effective upon the closing
of this offering, the terms of office of the members of the board of directors
will be divided into three classes: Class A, whose term will expire at the
annual meeting of stockholders to be held in 2001, Class B, whose term will
expire at the annual meeting of stockholders to be held in 2002, and Class C,
whose term will expire at the annual meeting of stockholders to be held in
2003. At each annual meeting of stockholders after the initial classification,
the successors to directors whose term will then expire will be elected to
serve from the time of election and qualification until the third annual
meeting following election. Our bylaws permit the board of directors to
increase or decrease the size of the board of directors. Any additional
directorships resulting from an increase in the number of directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of one-third of the total number of directors. This classification
of the board of directors may have the effect of delaying or preventing changes
in control or management of GoAmerica.
Furthermore, our certificate of incorporation and bylaws also provide that:
. the affirmative vote of the holders of at least 80% of the voting power
of all outstanding shares of the capital stock of GoAmerica shall be
required to adopt, amend or repeal any provision of our bylaws;
. upon the closing of this offering, stockholders of GoAmerica may not
take any action by written consent;
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<PAGE>
. upon the closing of this offering, special meetings of stockholders may
be called only by our president, the chairman of our board of directors
or a majority of our board of directors and business transacted at any
such special meeting shall be limited to matters relating to the
purposes set forth in the notice of such special meeting;
. our board of directors, when evaluating an offer related to a tender or
exchange offer or other business combination, is authorized to give due
consideration to any relevant factors, including the social, legal and
economic effects upon employees, suppliers, customers, creditors, the
community in which we conduct business, and the economy of the state,
region and nation; and
. the affirmative vote of the holders of at least 80% of the voting power
of all outstanding shares of the capital stock of GoAmerica shall be
required to amend the above provisions or the limitations on director
liability.
The Delaware statute, the undesignated authorized preferred stock and the
foregoing provisions of our certificate of incorporation and our bylaws may
discourage certain types of transactions involving an actual or potential
change in control of GoAmerica and could have the effect of delaying, deterring
or preventing a change in control of GoAmerica. In addition, in the event of
certain mergers, a reorganization or consolidation of GoAmerica with or into
another corporation or the sale of all or substantially all of our assets or
all of our capital stock wherein the successor corporation does not assume
outstanding options or issue equivalent options, our board of directors is
required to accelerate vesting of options outstanding under our 1999 Stock
Plan.
Registration Rights
In October 1996, we entered into a registration rights agreement pursuant to
which we granted registration rights to stockholders covering an aggregate of
5,501,216 shares of our common stock. Messrs. Docter and Kristoff are among
such stockholders. Pursuant to the October 1996 registration rights agreement,
at any time beginning six months after the effective date of this offering, the
stockholders of at least a majority of such registrable shares of common stock
have the right, subject to certain restrictions set forth therein, to require
that we register, at our expense, on no more than two occasions any or all of
their shares of common stock covered by such agreement.
The October 1996 registration rights agreement also provides that, if at any
time we propose to register any of our common stock under the Securities Act
for sale to the public on either a Form S-1, Form S-2 or Form S-3 Registration
Statement, those stockholders party to the agreement have unlimited piggyback
registration rights at our expense, subject to certain restrictions, including
the right of the managing underwriter in such offering to limit the amount of
securities registered by such stockholders.
In January 1998, we issued warrants to purchase 16,320 shares of our common
stock and such shares have registration rights similar to the registration
rights set forth in the October 1996 registration rights agreement.
In June 1999, we entered into a registration rights agreement pursuant to
which we granted registration rights to stockholders covering an aggregate of
7,655,512 shares of our common stock that will be issued upon the consummation
of this offering and the automatic conversion of their shares of Series A
Preferred Stock. This number of shares also included shares of Series A
Preferred Stock sold in August 1999. CIBC WMV is one of the stockholders party
to this agreement. Pursuant to the June 1999 registration rights agreement, at
any time beginning 180 days after the effective date of this offering, the
stockholders of at least 67% of such shares have the right, subject to certain
restrictions set forth in the June 1999 registration rights agreement, to
request that we register, at our expense, any or all of their shares.
The June 1999 registration rights agreement also provides that, if at any
time we propose to register any of our common stock under the Securities Act
for sale to the public, the stockholders party to this agreement have unlimited
piggyback registration rights at our expense, subject to certain restrictions,
including the right
55
<PAGE>
of the managing underwriter to limit the amount of securities registered by
such stockholders. In addition, the 1999 Registration Rights Agreement provides
that under certain circumstances, stockholders party thereto may register up to
fifty percent of the number of shares available to be sold in any secondary
offering of our common stock.
In January 2000, we entered into a registration rights agreement in which we
granted registration rights to stockholders covering an aggregate of 5,184,456
shares of our common stock that will be issued upon the automatic conversion of
their shares of Series B Preferred Stock upon the completion of this offering.
Dell USA L.P., Impact Venture Partners, L.P., Carousel Capital Partners, L.P.
and Forstmann Little Equity Partnership-VI, L.P. are the stockholders party to
this agreement. The January 2000 registration rights agreement provides that at
any time beginning 180 days after the effective date of this offering, the
stockholders of at least 50% of such shares have the right, subject to certain
restrictions, to request that we register, at our expense, any or all of their
shares.
The January 2000 registration rights agreement also provides that, if at any
time we propose to register any of our common stock under the Securities Act
for sale to the public, the stockholders party to this agreement have unlimited
piggyback registration rights at our expense, subject to certain restrictions,
including the right of the managing underwriter to limit the amount of
securities registered by such stockholders. In the event that the holders of
our Series B Preferred Stock, Series A Preferred Stock and Common Stock desire
to register their shares together and there is a need to reduce the number of
shares registered, the Series B Preferred Stock stockholders will have priority
over other stockholders for the registration of their shares. This agreement
also provides that under certain circumstances, these stockholders may register
all of their shares available to be sold in any secondary offering of our
common stock.
Our underwriters have advised our stockholders that they may not participate
in this offering or otherwise exercise any of their registration rights in
connection herewith.
Listing
Our common stock has been approved for quotation on the Nasdaq National
Market under the symbol "GOAM".
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is American Stock
Transfer & Trust Company. The transfer agent's address and telephone number is
40 Wall Street, New York, New York 10005, 718-921-8200.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 47,136,760 shares of common
stock outstanding. Of these shares, the 10,000,000 shares sold in the offering,
plus any additional shares sold upon exercise of the underwriters' over-
allotment option, will be freely transferable by persons other than
"affiliates" of GoAmerica without restriction or further registration under the
Securities Act. The remaining 37,136,760 outstanding shares will be "restricted
securities" (the "Restricted Shares") within the meaning of Rule 144 under the
Securities Act and may not be sold in the absence of registration under the
Securities Act unless an exemption from registration is available, such as the
exemption afforded by Rule 144.
Each of GoAmerica, our officers and directors, and certain of our
stockholders have entered into "lock-up" agreements with a representative of
the underwriters, providing that, subject to certain exceptions, they will not
offer, sell or otherwise dispose of any shares of common stock, or securities
convertible into or exchangeable for common stock, or enter into any agreement
to do so, for a period of 180 days after the date of this prospectus without
the prior written consent of Bear, Stearns & Co. Inc. acting as a
representative of the underwriters. Bear, Stearns & Co. Inc. may release any of
such shares in its sole discretion at any time and without prior notice.
Following expiration of the "lock-up" period, all the Restricted Shares will
become eligible for sale at various times commencing immediately pursuant to
Rule 144, subject to certain limitations described below. In addition, certain
of the Restricted Shares may be sold upon expiration of the "lock-up" period if
eligible stockholders elect to exercise available registration rights. See
"Description of Capital Stock--Registration Rights."
Rule 144, as currently in effect, provides that an affiliate of GoAmerica or
a person, or persons whose sales are aggregated, who has beneficially owned
Restricted Shares that were issued by GoAmerica or purchased by such person
from a nonaffiliate of GoAmerica at least one year prior to such sale is
entitled to sell, commencing 90 days after the date of this prospectus, within
any three-month period, a number of shares that does not exceed the greater of
1% of the then outstanding shares of common stock (approximately shares of
common stock immediately after this offering) and the average weekly trading
volume in the common stock during the four calendar weeks preceding such sale.
Sales under Rule 144 also are subject to certain manner-of-sale provisions,
notice requirements and the availability of current public information about
us. However, a person who is not an "affiliate" of GoAmerica at any time during
the three months preceding a sale, and who has beneficially owned Restricted
Shares that were issued by GoAmerica or purchased by such person from a
nonaffiliate of GoAmerica at least two years prior to such sale, is entitled to
sell such shares under Rule 144 without regard to the limitations described
above.
As of the date of this prospectus, there were outstanding options and
warrants to purchase an aggregate of 3,716,808 shares of common stock. After
giving effect to vesting provisions limiting the exercisability of all the
outstanding options and the "lock-up" period applicable to certain option
holders, none of these shares will become available for sale in the public
market pursuant to Rules 144 and 701 under the Securities Act until at least
180 days after completion of this offering. Rule 701 relates to the sale of
shares issuable under compensatory stock plans. 1,996,800 of such shares will
become available for resale at the expiration of the "lock-up" period. We
intend to register on a Form S-8 registration statement under the Securities
Act, during the 180-day lock-up period, the resale of 6,716,000 shares of
common stock issuable upon the exercise of outstanding options or reserved for
issuance under the 1999 Stock Plan and the resale of 4,000,000 shares of common
stock to be sold to employees pursuant to our Employee Stock Purchase Plan. See
"Management--GoAmerica, Inc. 1999 Stock Option Plan" and "--Employee Stock
Purchase Plan."
Since there has been no public market for shares of the common stock prior
to this offering, we are unable to predict the effect that sales made pursuant
to Rules 144 or 701 under the Securities Act, or otherwise, may have on the
prevailing market price of the shares of the common stock. Sales of a
substantial amount of the common stock in the public market, or the perception
that such sales could occur, could adversely affect the market prices of our
stock. See "Risk Factors--Future sales of our common stock may negatively
affect our stock price."
57
<PAGE>
CERTAIN U.S. TAX CONSEQUENCES TO NON-U.S. HOLDERS
Following is a general discussion of the material U.S. federal income and
estate tax consequences of the ownership and disposition of the common stock
applicable to non-U.S. holders of our common stock. For purposes of this
discussion, a non-U.S. holder is any holder of our common stock that, for U.S.
federal income tax purposes, is not a U.S. person (as defined below). This
discussion does not address all aspects of U.S. federal income and estate
taxation that may be relevant in light of a non-U.S. holder's particular facts
and circumstances, such as being a U.S. expatriate, and does not address any
tax consequences arising under the laws of any state, local or non-U.S. taxing
jurisdiction. Furthermore, the following discussion is based on current
provisions of the Internal Revenue Code of 1986, as amended, and administrative
and judicial interpretations thereof, all as in effect on the date hereof, and
all of which are subject to change, possibly with retroactive effect. We have
not and will not seek a ruling from the Internal Revenue Service with respect
to the U.S. federal income and estate tax consequences described below, and as
a result, there can be no assurance that the Internal Revenue Service will not
disagree with or challenge any of the conclusions set forth in this discussion.
For purposes of this discussion, the term U.S. person means:
. a citizen or resident of the United States;
. a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or any political
subdivision thereof;
. an estate whose income is included in gross income for U.S. federal
income tax purposes regardless of its source; or
. a trust whose administration is subject to the primary supervision of a
U.S. court and which has one or more U.S. persons who have the authority
to control all substantial decisions of the trust.
Dividends
A dividend paid to a non-U.S. holder generally will be subject to U.S.
withholding tax either at a rate of 30% of the gross amount of the dividend or
such lower rate as may be specified by an applicable income tax treaty.
Dividends received by a non-U.S. holder that are effectively connected with a
U.S. trade or business conducted by the non-U.S. holder are exempt from that
withholding tax. However, those effectively connected dividends, net of certain
deductions and credits, are taxed at the same graduated rates applicable to
U.S. persons.
In addition to the graduated tax described above, dividends received by a
corporate non-U.S. holder that are effectively connected with a U.S. trade or
business of the corporate non-U.S. holder may also be subject to a branch
profits tax at a rate of 30% or such lower rate as may be specified by an
applicable income tax treaty.
A non-U.S. holder that is eligible for a reduced rate of withholding tax
pursuant to an applicable income tax treaty may be required to submit
documentation to avail itself of that treaty and may be able to obtain a refund
of any excess amounts withheld by GoAmerica by filing an appropriate claim for
refund with the Internal Revenue Service.
Gain On Disposition Of Common Stock
A non-U.S. holder generally will not be subject to U.S. federal income tax
on any gain realized upon the sale or other disposition of our common stock
unless:
. the gain is effectively connected with a U.S. trade or business of the
non-U.S. holder (which gain, in the case of a corporate non-U.S. holder,
must also be taken into account for branch profits tax purposes);
58
<PAGE>
. the non-U.S. holder is an individual who holds his or her common stock
as a capital asset (generally, an asset held for investment purposes)
and who is present in the United States for a period or periods
aggregating 183 days or more during the calendar year in which the sale
or disposition occurs and certain other conditions are met; or
. we are or have been a "United States real property holding corporation"
for U.S. federal income tax purposes at any time within the shorter of
the five-year period preceding the disposition or the holder's holding
period for its common stock. We believe that we are not and do not
believe that we will become a "United States real property holding
corporation" for U.S. federal income tax purposes.
Backup Withholding and Information Reporting
Generally, we would be required to report annually to the Internal Revenue
Service the amount of dividends, if any, paid on the common stock, the name and
address of the recipient, and the amount, if any, of tax withheld. A similar
report would be sent to the recipient. Pursuant to applicable income tax
treaties or other agreements, the Internal Revenue Service may make its reports
available to tax authorities in the recipient's country of residence.
Dividends paid to a non-U.S. holder at an address within the United States
may be subject to backup withholding at a rate of 31% if the non-U.S. holder
fails to establish that it is entitled to an exemption or to provide a correct
taxpayer identification number and other information to the payer. Backup
withholding will generally not apply to the dividends paid to non-U.S. holders
at an address outside the United States on or prior to December 31, 2000 unless
the payer has knowledge that the payee is a U.S. person. Under recently
finalized Treasury Regulations regarding withholding and information reporting,
payment of dividends to non-U.S. holders at an address outside the United
States after December 31, 2000 may be subject to backup withholding at a rate
of 31% unless such non-U.S. holder satisfies various certification
requirements.
Under current Treasury Regulations, the payment of the proceeds of the
disposition of our common stock to or through the U.S. office of a broker is
subject to information reporting and backup withholding at a rate of 31% unless
the holder certifies its non-U.S. status under penalties of perjury or
otherwise establishes an exemption. Generally, the payment of the proceeds of
the disposition by a non-U.S. holder of our common stock outside the United
States to or through a foreign office of a broker will not be subject to backup
withholding but will be subject to information reporting requirements if the
broker is:
. a U.S. person;
. a "controlled foreign corporation" for U.S. federal income tax purposes;
or
. a foreign person 50% or more of whose gross income for certain periods
is from the conduct of a U.S. trade or business
unless the broker has documentary evidence in its files of the holder's non-
U.S. status and certain other conditions are met, or the non-U.S. holder
otherwise establishes an exemption. Neither backup withholding nor information
reporting generally will apply to a payment of the proceeds of a disposition of
our common stock by or through a foreign office of a foreign broker not subject
to the preceding sentence.
In general, the recently finalized Treasury Regulations, described above, do
not significantly alter substantive withholding and information reporting
requirements but would alter procedures for claiming benefits of an income tax
treaty and change the certifications procedures relating to the receipt by
intermediaries of payments on behalf of the beneficial owner of shares of
common stock. Non-U.S. holders should consult their tax advisors regarding the
effect, if any, of those final Treasury Regulations on an investment in our
common stock. Those final Treasury Regulations are generally effective for
payments made after December 31, 2000.
59
<PAGE>
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the Internal
Revenue Service.
Estate Tax
An individual non-U.S. holder who owns our common stock at the time of his
or her death or had made certain lifetime transfers of an interest in our
common stock will be required to include the value of our common stock in his
or her gross estate for U.S. federal estate tax purposes, unless an applicable
estate tax treaty provides otherwise.
The foregoing discussion is a summary of the principal U.S. federal income
and estate tax consequences of the ownership, sale or other disposition of our
common stock by non-U.S. holders. Accordingly, investors are urged to consult
their own tax advisors with respect to the income and estate tax consequences
of the ownership and disposition of common stock, including the application and
effect of the laws of any state, local, foreign or other taxing jurisdiction.
60
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
dated , 2000, each of the underwriters named below, through their
representatives Bear, Stearns & Co. Inc., Chase Securities Inc., U.S. Bancorp
Piper Jaffray Inc., Wit SoundView Corporation and DLJdirect Inc., has severally
agreed to purchase from us the aggregate number of shares of common stock set
forth opposite its name below at the public offering price less the
underwriting discount set forth on the cover page of this prospectus.
<TABLE>
<CAPTION>
Underwriters Number of Shares
- ------------ ----------------
<S> <C>
Bear, Stearns & Co. Inc........................................
Chase Securities Inc...........................................
U.S. Bancorp Piper Jaffray Inc.................................
Wit SoundView Corporation......................................
DLJdirect Inc..................................................
----------
Total........................................................ 10,000,000
==========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters thereunder are subject to approval of certain legal matters by
their counsel and to various other conditions. Under the underwriting
agreement, the underwriters are obligated to purchase and pay for all of the
above shares of common stock, other than those covered by the over-allotment
option described below, if they purchase any of the shares.
The underwriters propose to initially offer some of the shares directly to
the public at the offering price set forth on the cover page of this prospectus
and some of the shares to dealers at this price less a concession not in excess
of $ per share. The underwriters may allow, and dealers may re-allow,
concessions not in excess of $ per share on sales to other dealers. After
the initial offering of the shares to the public, the underwriters may change
the offering price, concessions and other selling terms. The underwriters do
not intend to confirm sales to any accounts over which they exercise
discretionary authority.
We have granted the underwriters an option exercisable for 30 days from the
date of the underwriting agreement to purchase up to 1,500,000 additional
shares, at the offering price less the underwriting discount. The underwriters
may exercise this option solely to cover over-allotments, if any, made in
connection with this offering. To the extent underwriters exercise this option
in whole or in part then each of the underwriters will become obligated,
subject to conditions, to purchase a number of additional shares approximately
proportionate to each underwriter's initial purchase commitment as indicated in
the preceding table.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act.
Our directors, executive officers and stockholders, who collectively hold a
total of 37,204,808 shares of common stock, have agreed, subject to limited
exceptions, not to sell or offer to sell or otherwise dispose of any shares of
common stock or securities convertible into or exercisable or exchangeable for
our common stock, for a period of 180 days after the date of this prospectus
without the prior written consent of Bear, Stearns & Co. Inc., on behalf of the
underwriters.
In addition, we have agreed that for a period of 180 days after the date of
this prospectus we will not offer, sell or otherwise dispose of any shares of
common stock except for the shares offered in this offering and any shares
offered in connection with employee benefit plans, without the consent of Bear,
Stearns & Co. Inc., on behalf of the underwriters.
61
<PAGE>
Prior to the offering, there has been no public market for our common stock.
Consequently, the initial offering price for the common stock will be
determined by negotiations between us and the representatives of the
underwriters. Among the factors to be considered in these negotiations will be:
. our results of operations in recent periods;
. estimates of our business potential;
. an assessment of our management;
. prevailing market conditions; and
. the prices of similar securities of generally comparable companies.
Our common stock has been approved for quotation on the Nasdaq National
Market under the symbol "GOAM." We cannot assure you, however, that an active
or orderly trading market will develop for the common stock or that our common
stock will trade in the public markets subsequent to the offering at or above
the initial offering price.
In order to facilitate the offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock during and after the offering. Specifically, the underwriters may
over-allot or otherwise create a short position in the common stock for their
own account by selling more shares of common stock than we have actually sold
to them. The underwriters may elect to cover any short position by purchasing
shares of common stock in the open market or by exercising the over-allotment
option granted to the underwriters. In addition, the underwriters may stabilize
or maintain the price of the common stock by bidding for or purchasing shares
of common stock in the open market and may impose penalty bids, under which
selling concessions allowed to syndicate members or other broker-dealers
participating in the offering are reclaimed if shares of common stock
previously distributed in the offering are repurchased in connection with
stabilization transactions or otherwise. The effect of these transactions may
be to stabilize or maintain the market price at a level above that which might
otherwise prevail in the open market and these transactions may be discontinued
at any time. The imposition of a penalty bid may also affect the price of the
common stock to the extent that it discourages resales. No representation is
made as to the magnitude or effect of these activities.
A prospectus in electronic format is available on an Internet Web site
maintained by Wit SoundView Corporation's affiliate, Wit Capital Corporation.
In addition, other dealers purchasing shares from Wit SoundView in this
offering have agreed to make a prospectus in electronic format available on Web
sites maintained by each of these dealers. An electronic prospectus is also
available on the Web site maintained by DLJdirect Inc. Other than the
prospectus in electronic format, the information on these Web sites and any
information contained on any other Web site maintained by Wit Capital or
DLJdirect Inc. is not part of this prospectus or the registration statement of
which this prospectus forms a part, has not been approved or endorsed by us or
any underwriter in its capacity as underwriter and should not be relied upon by
investors.
Wit SoundView and DLJdirect Inc. intend to conduct an electronic
distribution of some or all of the GoAmerica shares allocated to each such firm
through their respective Web sites. Each firm will distribute the GoAmerica
shares pursuant to their respective procedures.
Other than their respective participation as underwriters in this offering,
none of the underwriters has any relationship with GoAmerica, or any of its
founders or significant stockholders, except as follows. In January 2000,
GoAmerica and DLJdirect Inc. entered into a co-marketing arrangement pursuant
to which each party features the services of the other. There are no payment or
fee obligations which arise from this co-marketing relationship.
62
<PAGE>
The underwriters have reserved for sale, at the initial public offering
price, up to 600,000 shares of common stock for employees, directors and other
persons associated with us who express an interest in purchasing these shares
of common stock in the offering. The number of shares available for sale to the
general public in the offering will be reduced to the extent these persons
purchase reserved shares. Any reserved shares not purchased by these persons
will be offered by the underwriters to the general public on the same terms as
the other shares offered in this offering.
The underwriters may, from time to time, engage in transactions with, and
perform services for, us in the ordinary course of their business.
The following table shows the underwriting discount to be paid to the
underwriters in connection with this offering. These amounts are shown assuming
both no exercise and full exercise of the underwriters' option to purchase
additional shares of common stock.
<TABLE>
<CAPTION>
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per share.......................................... $ $
Total.............................................. $ $
</TABLE>
Other expenses of this offering (including the registration fees and the
fees of financial printers, counsel and accountants) payable by us are expected
to be approximately $1.4 million.
63
<PAGE>
LEGAL MATTERS
The validity of the shares of the common stock offered hereby will be passed
upon by Buchanan Ingersoll Professional Corporation, Princeton, New Jersey.
Certain legal matters in connection with the offering will be passed upon for
the underwriters by Sidley & Austin, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements at December 31, 1998 and 1999, and for each of the three years in
the period ended December 31, 1999 as set forth in their report. We have
included our financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
John D. Hilcher, CPA, independent auditor, has audited the financial
statements of the business segment ZAP.IT for the six month period ended June
30, 1998 as set forth in his report. We have included these financial
statements in the prospectus and elsewhere in the registration statement in
reliance on John D. Hilcher's report, given on his authority as an expert in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act, with respect to the shares of
common stock offered hereby. This prospectus does not contain all the
information which is in the registration statement. We refer to the
registration statement and to the exhibits and schedules filed with the
Registration Statement for further information with respect to us and the
shares of common stock offered in this prospectus. Statements contained herein
as to the content of any contract or other document are materially complete.
However, reference is made to the copy of such contract or other document filed
as an exhibit to the registration statement, and each such statement is
qualified in its entirety by such reference.
The registration statement and the exhibits and schedules thereto may be
inspected without charge at the Public Reference Room of the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located at Seven World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such documents may be obtained from the
Public Reference Room of the Commission at prescribed rates. This material also
may be obtained on the Commission's website at http://www.sec.gov. Information
regarding the operation of the Public Reference Room may be obtained by calling
the Commission at 1(800) SEC-0330.
We intend to furnish our stockholders with annual reports containing
financial statements certified by our independent accountants and make
available quarterly reports containing unaudited financial information for the
first three quarters of each year.
64
<PAGE>
GOAMERICA, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GoAmerica, Inc.
Report of Independent Auditors........................................... F-2
Consolidated Balance Sheets as of December 31, 1998 and 1999............. F-3
Consolidated Statements of Operations for the years ended December 31,
1997, 1998 and 1999..................................................... F-4
Consolidated Statements of Stockholders' Equity (Deficit) for the years
ended December 31, 1997, 1998 and 1999.................................. F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1998 and 1999..................................................... F-6
Notes to Consolidated Financial Statements............................... F-7
ZAP.IT Business Segment
Report of Independent Auditors........................................... F-19
Statement of Operations from Business Segment for the period beginning
January 1, 1998 and ended July 14, 1998................................. F-20
Statement of Cash Flows from Business Segment for the period beginning
January 1, 1998 and ended July 14, 1998................................. F-21
Notes to Financial Statements of Business Segment........................ F-23
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
GoAmerica, Inc.
We have audited the accompanying consolidated balance sheets of GoAmerica,
Inc. and subsidiary, as of December 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of GoAmerica,
Inc. and subsidiary at December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
/s/ Ernst & Young LLP
MetroPark, New Jersey
February 23, 2000, except for the third paragraph of Note 14 as to which the
date is March 17, 2000
F-2
<PAGE>
GOAMERICA, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Pro forma
Stockholders'
December 31, Equity
------------------------- -------------
December 31,
1999
1998 1999 (Note 13)
----------- ------------ -------------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents........... $ 1,960,954 $ 6,343,793
Accounts receivable, less allowance
for doubtful accounts of $20,000 in
1998 and $75,000 in 1999........... 199,021 541,865
Merchandise inventories............. 66,222 589,307
Prepaid expenses and other.......... 34,149 471,455
----------- ------------
Total current assets.................. 2,260,346 7,946,420
Property, equipment and leasehold
improvements, net.................... 643,692 959,243
Deferred costs........................ 510,748
Investment in DataRover Mobile
Systems, Inc. ....................... 255,700
Other assets.......................... 105,945 84,573
----------- ------------
$ 3,009,983 $ 9,756,684
=========== ============
Liabilities, redeemable convertible
preferred stock and stockholders'
equity (deficit)
Current liabilities:
Accounts payable.................... $ 165,383 $ 3,837,715
Accrued expenses.................... 604,806 1,460,936
Capital lease obligations........... 157,854
Deferred income..................... 14,508 64,300
----------- ------------
Total current liabilities............. 784,697 5,520,805
Other liabilities..................... 139,274
Commitments and contingencies
Series A redeemable convertible
preferred stock, $.01 par value,
authorized: none in 1998 and 10,500
shares in 1999; issued and
outstanding: none in 1998; 10,500
shares in 1999, and none pro forma
1999, $10,500,000 liquidation
preference........................... 20,755,323 $ --
Stockholders' equity (deficit):
Preferred stock $.01 par value,
authorized: 5,000,000 shares in
1998 and 1999; issued and
outstanding: none in 1998 and 1999;
none pro forma 1999................
Common stock, $.01 par value;
authorized: 40,000,000 in 1998, and
100,000,000 shares in 1999,
respectively; issued and
outstanding: 21,327,776 in 1998 and
23,687,184 shares in 1999,
respectively, and 37,136,760 shares
pro forma 1999..................... 213,278 236,872 371,368
Additional paid-in capital.......... 5,855,432 5,483,655 51,294,482
Deferred employee compensation...... (7,067,533) (7,067,533)
Accumulated deficit................. (3,843,424) (15,311,712) (15,311,712)
----------- ------------ -----------
Total stockholders' equity (deficit).. 2,225,286 (16,658,718) $29,286,605
----------- ------------ ===========
$ 3,009,983 $ 9,756,684
=========== ============
</TABLE>
See accompanying notes.
F-3
<PAGE>
GOAMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Revenues:
Subscriber.......................... $ 114,524 $ 359,364 $ 1,182,695
Equipment........................... 33,431 449,027 1,341,356
Other............................... 24,775 18,264 206,496
----------- ----------- ------------
172,730 826,655 2,730,547
Costs and expenses:
Cost of subscriber revenue.......... 87,551 303,477 4,051,182
Cost of equipment revenue........... 14,960 532,074 1,648,160
Sales and marketing................. 242,708 908,694 3,283,021
General and administrative.......... 841,090 1,549,188 4,809,232
Depreciation and amortization....... 32,384 123,616 275,067
Settlement costs.................... 297,310
----------- ----------- ------------
1,218,693 3,417,049 14,363,972
----------- ----------- ------------
Loss from operations.................. (1,045,963) (2,590,394) (11,633,425)
Interest income..................... 13,685 165,137
----------- ----------- ------------
Net loss.............................. $(1,045,963) $(2,576,709) $(11,468,288)
=========== ===========
Beneficial conversion feature and
accretion of redemption value of
mandatorily redeemable convertible
preferred stock...................... (10,463,472)
------------
Net loss applicable to common
stockholders......................... $(21,931,760)
============
Basic net loss per share applicable to
common stockholders.................. $ (0.07) $ (0.14) $ (1.02)
Diluted net loss per share applicable
to common stockholders............... $ (0.06) $ (0.14) $ (1.00)
=========== =========== ============
Weighted average shares used in
computation of basic net loss per
share applicable to common
stockholders......................... 16,083,028 18,391,368 21,590,259
Weighted average shares used in
computation of diluted net loss per
share applicable to common
stockholders......................... 16,518,052 18,826,392 22,025,283
Pro forma basic net loss per share
(unaudited).......................... $ (0.45)
Pro forma diluted net loss per share
(unaudited).......................... -- -- $ (0.45)
============
Weighted average shares used in
computation of pro forma
basic net loss per share
(unaudited).......................... -- -- 25,257,560
Weighted average shares used in
computation of pro forma diluted net
loss per share (unaudited)........... -- -- 25,692,584
</TABLE>
See accompanying notes.
F-4
<PAGE>
GOAMERICA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Period from January 1, 1997 to December 31, 1999
<TABLE>
<CAPTION>
Total
Common Stock Additional Deferred Stockholders'
------------------- Paid-in Employee Accumulated Equity
Shares Amount Capital Compensation Deficit (Deficit)
---------- -------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1997................... 16,000,000 160,000 $ 840,000 $ -- $ (220,752) $ 779,248
Issuance of common
stock................. 409,440 4,095 410,905 415,000
Net loss............... (1,045,963) (1,045,963)
---------- -------- ----------- ----------- ------------ ------------
Balance at December 31,
1997................... 16,409,440 164,095 1,250,905 -- (1,266,715) 148,285
Sale of common stock
and stock purchase
warrants.............. 4,918,336 49,183 4,604,527 4,653,710
Net loss............... (2,576,709) (2,576,709)
---------- -------- ----------- ----------- ------------ ------------
Balance at December 31,
1998................... 21,327,776 213,278 5,855,432 -- (3,843,424) 2,225,286
Sale of common stock... 1,875,416 18,754 1,999,322 2,018,076
Issuance of common
stock upon exercise of
warrants.............. 483,992 4,840 (4,235) 605
Non-cash capital
contribution by
principal shareholders
in connection with
settlement
agreements............ 148,572 148,572
Issuance of warrants to
purchase common stock
in connection with
settlement
agreements............ 148,738 148,738
Deferred non-cash
employee
compensation.......... 7,799,298 (7,799,298) --
Amortization of non-
cash deferred employee
compensation.......... 731,765 731,765
Beneficial conversion
feature and accretion
of redemption value of
redeemable convertible
preferred stock....... (10,463,472) (10,463,472)
Net loss............... (11,468,288) (11,468,288)
---------- -------- ----------- ----------- ------------ ------------
Balance at December 31,
1999................... 23,687,184 $236,872 $ 5,483,655 $(7,067,533) $(15,311,712) $(16,658,718)
========== ======== =========== =========== ============ ============
</TABLE>
See accompanying notes.
F-5
<PAGE>
GOAMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Operating activities
Net loss............................... $(1,045,963) $(2,576,709) $(11,468,288)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization......... 32,384 123,616 275,067
Provision for losses on accounts
receivable........................... 5,000 15,000 215,297
Non-cash employee compensation........ 731,765
Non-cash settlement costs............. 297,310
Non-cash rent expense................. 139,274
Changes in operating assets and
liabilities:
Increase in accounts receivable....... (10,492) (199,651) (558,141)
Increase in merchandise inventories... (6,420) (3,202) (523,085)
(Increase) decrease in prepaid
expenses and other assets............ 59,319 (78,316) (432,601)
Increase (decrease) in accounts
payable.............................. 80,817 (20,125) 3,672,332
Increase (decrease) in accrued
expenses............................. 82,501 510,303 856,130
Increase in deferred income........... 14,508 49,792
----------- ----------- ------------
Net cash used in operating activities.. (802,854) (2,214,576) (6,745,148)
Investing activities
Purchase of property, equipment and
leasehold improvements................ (179,877) (297,769) (387,116)
Acquisition of DTS assets.............. (200,000)
Investment in DataRover Mobile Systems,
Inc................................... (255,700)
----------- ----------- ------------
Net cash used in investing activities.. (179,877) (497,769) (642,816)
Financing activities
Proceeds from sale of common stock and
stock purchase warrants............... 415,000 4,653,710 2,018,681
Proceeds from sale of preferred stock.. 10,291,851
Deferred financing costs............... (510,748)
Payments made on capital lease
obligations........................... (28,981)
----------- ----------- ------------
Net cash provided by financing
activities............................ 415,000 4,653,710 11,770,803
----------- ----------- ------------
Increase (decrease) in cash and cash
equivalents........................... (567,731) 1,941,365 4,382,839
Cash and cash equivalents at beginning
of period............................. 587,320 19,589 1,960,954
----------- ----------- ------------
Cash and cash equivalents at end of
period................................ $ 19,589 $ 1,960,954 $ 6,343,793
=========== =========== ============
</TABLE>
See accompanying notes.
F-6
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997, December 31, 1998 and December 31, 1999
1. Description of Business
GoAmerica, Inc. (the "Company") offers wireless access to the internet and
corporate intranet systems to customers located in the United States. The
Company has formed strategic relationships with wireless carriers, software
providers, and hardware manufacturers who provide the mobile computer user
wireless communications, services and devices that complement the Company's
services. The Company also distributes wireless communication devices,
principally to customers of its wireless services.
The Company operates in a highly competitive environment subject to rapid
technological change and emergence of new technology. Although management
believes its services are transferable to emerging technologies, rapid changes
in technology could have an adverse financial impact on the Company.
The Company is highly dependent on third-party providers for wireless
communication services.
On December 31, 1999, the stockholders of GoAmerica Communications Corp.,
the predecessor to GoAmerica, Inc., exchanged all of the outstanding common and
Series A Preferred shares of GoAmerica Communications Corp. for the same number
of shares of similar securities of GoAmerica, Inc., and as a result, GoAmerica
Communications Corp. became a wholly-owned subsidiary of GoAmerica, Inc. All
outstanding options and warrants of GoAmerica Communications Corp. were
exchanged into similar securities of GoAmerica, Inc. Prior to December 31,
1999, GoAmerica, Inc. had no operations, assets or liabilities. This corporate
reorganization was accounted for as an exchange of shares between entities
under common control and no changes were made to the historical cost basis of
GoAmerica Communications Corp.'s net assets.
In December 1999, the Company Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission for an
initial public offering of the Company's common stock.
Basis of Consolidation
As noted above, GoAmerica Communications Corp. became a wholly-owned
subsidiary of GoAmerica, Inc. effective December 31, 1999. The accompanying
consolidated financial statements reflect the results of operations of
GoAmerica Communications Corp. through December 31, 1999. All significant
intercompany balances and transactions are eliminated in consolidation.
2. Significant Accounting Policies
Cash Equivalents
Cash equivalents consist of highly liquid investments with a maturity of
three month or less when purchased.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements, and the reported amounts of certain expenses
during the reporting periods. Actual results could differ from those estimates.
F-7
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
Merchandise Inventories
Merchandise inventories, principally wireless devices, are stated at the
lower of cost (first-in, first-out) basis or market. The inventory of the
Company is subject to rapid technological changes which could have an adverse
impact on its realization in future periods. In addition, there are a limited
number of suppliers of the Company's inventory.
Property, Equipment and Leasehold Improvements
Property, equipment and leasehold improvements are stated at cost.
Depreciation is provided on the straight-line method over the estimated useful
lives of the related assets ranging from three to seven years. Expenditures for
maintenance and repairs are charged to expense as incurred.
Investment in DataRover Mobile Systems, Inc.
The investment in DataRover Mobile Systems, Inc. ("DataRover") consists of
the Company's investment in Series B Preferred Stock of DataRover, a private
company engaged in the hand-held mobile computing business. The investment is
accounted for on a cost basis as the Company's ownership is less than 5% of the
total outstanding shares of DataRover at December 31, 1999; the Company does
not exercise significant influence over DataRover; and the DataRover stock does
not have a readily determinable fair value.
Deferred Costs
As of December 31, 1999, external costs directly attributable to the planned
initial public offering of GoAmerica, Inc. shares have been deferred. These
costs will be charged against the Company's additional paid- in-capital in
connection with the consummation of its initial public offering.
Revenue and Deferred Revenue
The Company derives subscriber revenue from the provision of wireless
communication services. Subscriber revenue consists of monthly charges for
access and usage and is recognized as the service is provided. Also included in
subscriber revenue are one-time non-refundable activation fees. To the extent
such fees exceed the related costs, they are deferred and recognized ratably
over the life of the related service contracts generally six months or twelve
months. Equipment revenue is recognized upon shipment. Consulting revenue,
included in other revenue, is recognized as the related services are provided.
Cost of Revenues
Cost of subscriber revenue consists principally of airtime costs. Cost of
equipment revenue consists of the cost of equipment sold.
Income Taxes
Deferred income taxes are determined using the liability method. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
Advertising Costs
Advertising costs are expensed as incurred. During 1997, 1998 and 1999,
advertising expense was approximately $68,000, $203,000 and $1,081,000,
respectively.
F-8
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
Research and Development Costs
Research and development costs are expensed as incurred. During 1998 and
1999, research and development costs totaled approximately $155,000 and
$465,000, respectively. The Company did not incur research and development
costs during 1997.
Stock-Based Employee Compensation
The Company accounts for employee stock-based compensation in accordance
with Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
Issued to Employees", using an intrinsic value approach to measure compensation
expense, if any. Appropriate disclosures using a fair value based method, as
provided by Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), are also reflected in
the accompanying notes to the financial statements. Options issued to non-
employees are accounted for in accordance with SFAS 123, using a fair value
approach.
Net Loss Available for Common Stockholders
Net loss available for common stockholders represents net loss reduced by
accretion of the redeemable preferred stock to redemption value and an amount
representing beneficial conversion features on preferred stock.
Stock Splits
On April 15, 1998, the Company's Board of Directors declared a 2000 for 1
stock split. Additionally, on February 23, 2000, the Company's Board of
Directors approved an amendment to the Company's certificate of incorporation
to increase the number of common shares authorized from 45,000,000 to
100,000,000. On that same date, the Company's Board of Directors declared an
eight for one stock split to become effective upon the filing of the amendment
to the certificate of incorporation. All share and per share data included in
the financial statements have been retroactively adjusted to reflect the stock
splits, and the amendment to the certificate of incorporation.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash and cash equivalents and accounts
receivable. The Company maintains a significant portion of its cash and cash
equivalents with a major regional bank. The Company performs periodic credit
evaluations of its customers but generally does not require collateral.
Fair Value of Financial Instruments
The carrying amounts of the Company's financial instruments, which include
cash and cash equivalents, accounts receivable, accounts payable, accrued
expenses and Series A redeemable convertible preferred stock approximate their
fair values.
Segment Information
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 131, "Disclosures About Segments of an Enterprise and Related Information,"
which establishes standards for the way that a
F-9
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
public enterprise reports information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. The Company
operates in a single segment. The chief operating decision maker allocates
resources and assesses the performance associated with wireless services and
equipment sales on a single segment basis.
Software Development Costs
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants ("AICPA") issued Statement of
Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use." This SOP is effective for fiscal years beginning
after December 15, 1998. The Company has adopted the provisions of SOP 98-1 as
of January 1, 1999, with no material effect.
All projects are being amortized over their estimated useful lives, which
has been determined by management to be three years. Amortization on the
projects begins when the software is ready for its intended use.
Start-Up Activities
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-
up Activities." SOP 98-5, effective for fiscal years beginning after December
15, 1998, provides guidance on the financial reporting of start-up costs and
organization costs. It requires costs of start-up activities and organization
costs to be expensed as incurred. As the Company expensed these costs as
incurred, the adoption of this standard as of January 1, 1999 had no impact on
the Company's results of operations, financial position or cash flows.
Recent Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, Accounting for Derivatives and Hedging Activities ("SFAS 133"), which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. SFAS 133,
as amended, is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. As the Company does not currently intend to engage in
derivatives or hedging transactions, the Company does not anticipate any effect
on its results of operations, financial position or cash flows upon the
adoption of SFAS 133.
F-10
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
3. Property, Equipment and Leasehold Improvements
Property, equipment and leasehold improvements consists of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
1998 1999
--------- ----------
<S> <C> <C>
Furniture, fixtures and equipment..................... $ 197,573 $ 328,142
Computer equipment and software....................... 589,142 1,018,443
Leasehold improvements................................ 17,415 31,502
--------- ----------
804,130 1,378,087
Less accumulated depreciation and amortization........ (160,438) (418,844)
--------- ----------
$ 643,692 $ 959,243
========= ==========
</TABLE>
At December 31, 1999, the Company leased equipment with a cost basis of
$186,841 which is included in computer equipment and software. Accumulated
amortization on leased equipment was $1,062.
4. Supplemental Balance Sheet Information
The following table summarizes the activity in the allowance for doubtful
accounts for the years ended December 31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
December 31
-----------------------
1997 1998 1999
------ ------- --------
<S> <C> <C> <C>
Balance, beginning of period........................ $ -- $ 5,000 $ 20,000
Provision charged to operations..................... 5,000 15,000 215,000
Amounts written off................................. -- -- 160,000
------ ------- --------
Balance, end of period.............................. $5,000 $20,000 $ 75,000
====== ======= ========
</TABLE>
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
December 31,
-------------------
1998 1999
-------- ----------
<S> <C> <C>
Inventory purchases..................................... $179,454 $ 85,025
Employee compensation................................... 120,909 213,750
Professional fees....................................... 118,897 233,007
Equipment and leasehold improvement purchases........... -- 125,000
Accrued legal settlement................................ -- 80,000
Marketing expenses...................................... -- 400,000
Carrier services........................................ -- 164,134
Sales and use taxes..................................... 46,581 45,098
Other................................................... 138,965 114,922
-------- ----------
$604,806 $1,460,936
======== ==========
</TABLE>
5. Commitments and Contingencies
The Company leases office facilities under an operating lease which expires
in 2007. The Company has the option to renew the lease for an additional five
year period.
F-11
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
On December 15, 1999, the Company entered into a facilities maintenance
agreement for a new network operating center. This agreement obligates the
Company to make aggregate payments of approximately $1,607,000 through 2004.
Future minimum payments to be made pursuant to noncancelable operating
leases with initial or remaining terms of one year or more as well as the
minimum payments to be made under the facilities maintenance agreement are as
follows:
<TABLE>
<S> <C>
2000............................................................ $ 931,000
2001............................................................ 852,000
2002............................................................ 857,000
2003............................................................ 686,000
2004............................................................ 440,000
Thereafter...................................................... 1,088,000
</TABLE>
During 1997, 1998 and 1999 total rent expense was approximately $44,000,
$60,000 and $287,000, respectively.
At December 31, the Company has accrued approximately $139,000 representing
the difference between the actual rental payments due under the lease and the
rent expense recorded on a straight line basis. This amount is included in
other liabilities.
On December 31, 1999, the Company entered into employment agreements with
certain of its key executives which provide for fixed compensation and bonuses
based upon the Company's operating results, as defined. These agreements
generally continue until terminated by the employee or the Company and, under
certain circumstances, provide for salary continuance for a specified period.
The Company's maximum aggregate liability under the agreements, if all
employees were terminated by the Company, is approximately $1,875,000 at the
inception of the agreements.
During 1999, the Company became a defendant in litigation involving its use
of certain computer software. On April 22, 1999, the Company entered into an
agreement under which it will pay $170,000 during 1999 and 2000 to settle all
claims. The Company recorded a charge to operating results as a result of the
settlement during 1999.
6. Data Transmission Services, Inc.
In July 1998, the Company acquired certain assets and liabilities of a
segment of Data Transmission Services, Inc. ("DTS"), known as ZAP.IT, for
approximately $200,000 which was allocated to the acquired assets and
liabilities based on their respective estimated fair values.
The following unaudited pro forma summary presents the combined results of
operations as if the acquisition described above had occurred as of January 1,
1997, and does not purport to be indicative of the results that would have
occurred had the transaction been completed as of that date or of results that
may occur in the future.
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Net revenues...................................... $ 303,201 $ 889,122
Net loss.......................................... $(3,082,859) $(3,902,552)
Net loss per share--basic......................... $ (0.19) $ (0.21)
Net loss per share--diluted....................... $ (0.19) $ (0.21)
</TABLE>
F-12
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
7. Benefit Plan
The Company has established a defined contribution plan under Section 401(k)
of the Internal Revenue Code which provides for voluntary employee
contributions of up to 15 percent of compensation for employees meeting certain
eligibility requirements. The Company does not contribute to the plan.
8. Series A Redeemable Convertible Preferred Stock
On June 25, 1999, the Company sold 7,500 shares of Series A Redeemable
Convertible Preferred Stock ("Series A Preferred Stock") to various investors
at a purchase price of $1,000 per share, the estimated fair value at such date,
resulting in net proceeds of approximately $7,335,000. On August 30, 1999, the
Company sold an additional 2,500 shares of Series A Preferred Stock to various
investors at a purchase price of $1,000 per share, the estimated fair value at
such date, resulting in net proceeds of approximately $2,457,000. During
November 1999, the Company sold an additional 500 shares of Series A Preferred
Stock. The purchase price of such shares was $1,000 per share, resulting in net
proceeds of $500,000. The Company recorded an adjustment to net loss applicable
to common stockholders of approximately $500,000 relating to the beneficial
conversion feature inherent in the November 1999 issuance. This amount was
determined based upon the excess of the estimated fair value of the Company's
common stock into which the Series A Preferred Stock was immediately
convertible less the initial conversion price of $1.31 per share and in
accordance with EITF No. 98-5 Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion Ratios
limited to the amount of proceeds received for the 500 shares of Series A
Preferred Stock.
Each share of Series A Preferred Stock has a liquidation value of $1,000 per
share and is convertible into shares of common stock at an initial conversion
price of $1.31 per share, subject to adjustments, under certain circumstances.
Potential adjustments to the initial conversion price would result principally
from the issuance or sale of certain equity instruments, as defined, at less
than the initial conversion price per share by the Company prior to the date of
such conversions. In addition, the initial conversion price is subject to
adjustment in the event of a change in control of the Company, as defined. On
December 9, 1999, the Company's Board of Directors adopted a resolution which
provides for the conversion of the Series A Preferred into common stock upon
the consummation of the Company's initial public offering. To the extent not
previously converted, upon the five year anniversary of the issuance of the
Series A Preferred Stock, a stockholder may request the Company to redeem any
or all shares of Series A Preferred Stock held at their then fair market value,
as defined.
The Series A Preferred Stock pay no dividends; however, such stockholders
are entitled to participate in the event dividends are paid to the holders of
the Company's common stock.
The holders of the Series A Preferred Stock vote together with all other
classes of stock on all actions taken by the stockholders of the Company as a
single class. Each holder of Series A Preferred Stock is entitled to that
number of votes such holder would be entitled to if the holder had converted
the shares of Series A Preferred Stock into shares of common stock.
The holders of the Series A Preferred Stock have registration rights under
an agreement dated June 25, 1999 which provides for the registration of common
stock held by such stockholders within the periods specified by such
agreements.
The holders of the Series A Preferred Stock have anti-dilution rights
granted pursuant to an agreement dated August 30, 1999 which allows such
stockholders to purchase additional securities of the Company upon the issuance
or sale of certain equity instruments, as defined.
F-13
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
9. Stockholders' Equity
In connection with the sale of certain equity securities, the Company
entered into agreements with such stockholders which provided certain rights,
including the right to purchase additional equity securities to maintain their
respective proportionate ownership in the event of subsequent equity issuances
by the Company and certain registration rights in the event the Company was to
complete a qualified initial public offering, as defined. In connection with
the reorganization described in Note 1 above, the stockholders have agreed to
waive certain of these rights through June 30, 2000.
During 1998, in conjunction with the sale of its common stock, the Company
issued to the purchasers of such common stock warrants to purchase an
aggregate of 891,792 shares of the Company's common stock. Exercise prices
under the warrants range from $1.23 per share to $1.93 per share. The warrants
were exercisable at the date of issue and expire at various dates through
January 2003. As of December 31, 1999, all of these warrants remain
outstanding.
In connection with certain equity financings during 1998, two of the
Company's principal shareholders issued to an existing investor in the
Company, warrants to purchase 408,160 currently outstanding shares of the
Company's common stock owned by the principal shareholders at an exercise
price of $.92 per share. Such warrants were exercisable at the date of grant
and expire on February 6, 2003.
During May 1999, the Company issued to certain stockholders warrants to
purchase 113,976 shares of the Company's common stock at a price of $.00125
per share. These warrants were issued to settle the Company's obligations
based upon claims by certain stockholders arising from the sale of certain
common stock. Also, as part of this settlement, two of the Company's principal
stockholders issued options to purchase 113,848 currently outstanding shares
of the Company's common stock owned by the principal stockholders at an
exercise price of $.00125 per share. As a result of these agreements and the
related warrant and option issuances by both the Company and the principal
stockholders, the Company recorded a non-cash charge of $297,310 based on the
estimated fair value of the warrants and options on the date of issuance. Such
fair value was determined to equal the fair value of the underlying common
stock. The options issued by the principal stockholders have been accounted
for as a capital contribution.
In connection with the issuance of certain shares of its common stock
during 1998, the Company agreed to issue additional shares in the event
certain subscriber levels were not achieved. To satisfy its obligation, in May
1999, the Company issued warrants to purchase 435,024 shares of its common
stock at a price of $.00125 per share.
The warrants and options described in the two immediately preceding
paragraphs were exercisable at the date of grant and expire five years from
the date of grant. As of December 31, 1999, 65,008 of these warrants remain
outstanding.
During the fourth quarter of 1999, the Company sold an additional 1,871,008
shares of its common stock to certain existing common stockholders in
connection with the exercise of anti-dilution rights granted to them upon
their initial purchase of common stock. The net proceeds to the Company were
approximately $1,882,255
In December 1999, the Company's Board of Directors adopted the Employee
Stock Purchase Plan to be effective upon completion of the Company's initial
public offering of its common stock. The Company initially reserved 4,000,000
shares of common stock for issuance under the plan.
As of December 31, 1999, the Company had reserved shares of common stock
for issuance as follows:
<TABLE>
<S> <C>
Exercise of common stock options................................... 6,716,000
Exercise of common stock purchase warrants......................... 1,276,800
Employee stock purchase plan....................................... 4,000,000
Conversion of Series A preferred stock............................. 8,038,304
</TABLE>
F-14
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
10. Stock Option Plans and Other Stock-Based Compensation
On August 3, 1999, the Company adopted the GoAmerica Communications Corp.
1999 Stock Option Plan. This plan provided for the granting of awards to
purchase shares of common stock. No further options will be made under the
GoAmerica Communications Corp. 1999 Stock Option Plan.
In December 1999, the Company's Board of Directors adopted the GoAmerica,
Inc. 1999 Stock Plan (the "Plan") as a successor plan to the GoAmerica
Communications Corp. 1999 Stock Option Plan, pursuant to which 4,800,000
additional shares of the Company's common stock have been reserved for issuance
to selected employees, non-employee directors and consultants.
Under the terms of the Plan, a committee of the Company's Board of Directors
may grant options to purchase shares of the Company's common stock to employees
and consultants of the Company at such prices as may be determined by the
committee. The Plan provides for award grants in the form of incentive stock
options and non-qualified stock options. Options granted under the Plan
generally vest annually over 4 years and expire after 10 years.
The following table summarizes activity on a combined basis for the plans
during 1999:
<TABLE>
<CAPTION>
Weighted-
Average
Number of Exercise
Options Price
--------- ---------
<S> <C> <C>
Outstanding at January 1, 1999........................... -- $--
Granted.................................................. 2,440,008 .92
Cancelled................................................ -- --
--------- ----
Outstanding at December 31, 1999......................... 2,440,008 .92
========= ====
Exercisable at December 31, 1999......................... 856,000 .95
========= ====
</TABLE>
The following table summarizes information about fixed price stock options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
Outstanding Exercisable
--------------------- ------------------------
Weighted-
Average Weighted- Number Weighted-
Range of Number Remaining Average Exercisable at Average
Exercise of Contractual Exercise December 31, Exercise
Prices Shares Life Price 1999 Price
-------- --------- ----------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C>
$.25 160,000 9.6 years $ .25 -- $ --
.56 1,096,000 8.9 years .56 480,000 .56
1.06--1.56 1,024,008 9.7 years 1.21 256,000 1.09
1.91--2.44 160,000 9.6 years 2.24 120,000 2.18
</TABLE>
For certain options granted during 1999, the Company has recorded pursuant
to APB No. 25 approximately $7,799,000 of deferred compensation expense
representing the difference between the exercise price thereof and the market
value of the common stock as of the date of grant. This compensation expense is
amortized over the vesting period of each option granted. Amortization of
deferred compensation under the Plan amounted to approximately $732,000 during
the year ended December 31, 1999.
During 1996, the Company granted an employee a warrant to purchase up to
320,000 shares of the Company's common stock at $.44 per share, an amount in
excess of the estimated fair value at the date of grant. The warrant was
exercisable on the date of grant and expires in October 2008. No compensation
expense
F-15
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
would have been recognized had the Company elected to account for such grant
under SFAS No. 123 as the fair value of this warrant at the date of grant
estimated using the minimum value method option pricing model was $0. As of
December 31, 1999, all of this warrant remains outstanding.
The following table discloses, for the year ended December 31, 1999, the
number of options granted, the weighted-average fair values and the weighted-
average exercise prices for those options with exercise prices greater than,
equal to or less than the market price of the common stock on the date of
grant.
<TABLE>
<CAPTION>
Number
of Fair Exercise
Options Value Price
--------- ----- --------
<S> <C> <C> <C>
Exercise price greater than market price............ 160,000 $0.00 $2.24
Exercise price equals market price.................. 288,000 0.22 1.31
Exercise price less than market price............... 1,992,008 4.04 0.76
</TABLE>
Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of SFAS
No. 123. The fair value for these options was estimated at the date of grant
using the minimum value method option pricing model with the following
assumptions for 1999: weighted-average risk-free interest rate of 6.11%; no
dividends; and a weighted-average expected life of the options of 3 years.
There were no options granted prior to August 1999.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows:
<TABLE>
<CAPTION>
Year ended
December 31, 1999
-----------------
<S> <C>
Pro forma net loss applicable to common stockholders...... $(22,044,352)
Pro forma loss per share--basic .......................... $ (1.02)
Pro forma loss per share--diluted ........................ $ (1.00)
</TABLE>
The pro forma information above is not likely to be representative of the
effects on reported net loss for future years as options are generally granted
each year and vest over several years.
11. Income Taxes
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------
1998 1999
----------- ----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward................... $ 1,542,000 6,087,000
Less valuation allowance........................... (1,536,000) (6,071,000)
----------- ----------
Deferred tax asset................................. 6,000 16,000
Deferred tax liabilities:
Property, equipment and leasehold improvements.... 6,000 16,000
----------- ----------
Net deferred tax asset............................. $ -- $ --
=========== ==========
</TABLE>
F-16
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
A reconciliation setting forth the differences between the effective tax
rate of the Company and the U.S. statutory rate is as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------
1997 1998 1999
--------- ---------- -----------
<S> <C> <C> <C>
Statutory federal income tax (benefit)
at 34%................................ $(355,000) $ (876,000) $(3,855,000)
State income tax (benefit), net of
federal benefit....................... (62,000) (155,000) (680,000)
Increase in valuation allowance........ 417,000 1,031,000 4,535,000
--------- ---------- -----------
Total.................................. $ -- $ -- $ --
========= ========== ===========
</TABLE>
At December 31, 1999, the Company has a federal and state net operating loss
("NOL") carryforward of approximately $15.2 million. The federal NOL
carryforwards expire from 2011 to 2019. The Tax Reform Act of 1986 enacted a
complex set of rules limiting the potential utilization of net operating loss
and tax credit carryforwards in periods following a corporate "ownership
change". In general, for federal income tax purposes, an ownership change is
deemed to occur if the percentage of stock of a loss corporation owned
(actually, constructively and, in some cases, deemed) by one or more "5%
shareholders" has increased by more than 50 percentage points over the lowest
percentage of such stock owned during a three-year testing period. During 1999,
such a change in ownership occurred. As a result of the change, the Company's
ability to utilize certain of its net operating loss carryforwards will be
limited to approximately $1,400,000 of taxable income, per year.
12. Earnings (Loss) Per share
The Company computes net loss per share under the provisions of SFAS No.
128, "Earnings per Share" (SFAS 128), and SEC Staff Accounting Bulletin No. 98
(SAB 98).
Under the provisions of SFAS 128 and SAB 98, basic and diluted net loss per
share is computed by dividing the net loss available to common stockholders for
the period by the weighted-average number of shares of Common Stock outstanding
during the period. The calculation of diluted net loss per share excludes
potential common shares if the effect is antidilutive. Basic earnings per share
is computed by dividing income or loss applicable to common stockholders by the
weighted-average number of shares of Common Stock outstanding during this
period. Diluted earnings per share is determined in the same manner as basic
earnings per share except that the number of shares is increased assuming
exercise of dilutive stock options and warrants using the treasury stock method
and assuming conversion of the Company's Series A Preferred Stock. In addition,
income or loss is adjusted for dividends and other transactions relating to
preferred shares for which conversion is assumed. The weighted average number
of shares utilized in arriving at diluted earnings per share for all periods
presented reflect an adjustment for the 435,024 shares of common stock issuable
pursuant to warrants as described in Note 9 above which were issued for nominal
consideration. As the Company had a net loss, the impact of the assumed
exercise of the stock options, warrants and the assumed preferred stock
conversion is anti-dilutive and as such, these amounts (except for warrants as
described in Note 9 issued for nominal consideration) have been excluded from
the calculation of diluted earnings per share.
13. Unaudited Pro Forma Financial Information
The unaudited pro forma net loss per share assumes the conversion of the
Series A Preferred Stock to Common Stock, at a conversion price of $1.31. as if
it had been converted as the date of issuance , event though the results is
anti-dilutive.
F-17
<PAGE>
GOAMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1997, December 31, 1998 and December 31, 1999
The following tables present the calculation of basic and diluted net loss
per share and pro forma net loss per share for the year ended December 31,
1999:
<TABLE>
<CAPTION>
Denominator
Numerator (Weighted-
(Net Loss) Average Shares) Per Share
------------ --------------- ---------
<S> <C> <C> <C>
Basic net loss per common share..... $(21,931,760) 21,590,259 $(1.02)
Beneficial conversion feature and
accretion of redemption value of
mandatorily redeemable convertible
preferred stock.................... 10,463,472 -- --
Assumed conversion of shares of
mandatorily redeemable convertible
preferred stock into shares of
common stock at issuance........... -- 3,667,301 --
------------ ---------- ------
Pro forma basic net loss per common
share.............................. $(11,468,288) 25,257,560 $(0.45)
============ ========== ======
Diluted net loss per common share... $(21,931,760) 22,025,283 $(1.00)
Beneficial conversion feature and
accretion of redemption value of
mandatorily redeemable convertible
preferred stock.................... 10,463,472 -- --
Assumed conversion of shares of
mandatorily redeemable convertible
preferred stock into shares of
common stock at issuance........... -- 3,667,301 --
------------ ---------- ------
Pro forma diluted net loss per
common share....................... $(11,468,288) 25,692,584 $(0.45)
============ ========== ======
</TABLE>
The unaudited pro forma stockholders' equity presented on the balance sheet,
assumes the conversion of the Series A Preferred Stock outstanding as of
December 31, 1999 and the conversion of the Series B Preferred Stock issued in
January 2000.
14. Subsequent Events
Sales and Other Issuances of Additional Equity Securities
In January 2000, the Company entered into a definitive stock purchase
agreement to issue and sell 648,057 shares of its newly designated Series B
redeemable convertible preferred stock ("Series B Preferred Stock") for
aggregate net proceeds of approximately $25,190,000. Each share of the Series B
Preferred Stock has a liquidation value of $40.12 per share and is convertible
at any time at the option of the holder into eight shares of common stock,
subject to adjustments, under certain circumstances. The Series B Preferred
Stock is subject to automatic conversion upon the completion by the Company of
a qualified initial public offering, as defined, of its common stock. To the
extent not converted, commencing August 30, 2004 a holder of Series B Preferred
Stock may require the Company to redeem any or all of the shares of Series B
Preferred Stock held at their then fair market value, as defined. The Series B
Preferred Stock pays no dividends; however, such stockholders are entitled to
participate in the event dividends are paid on the Company's common and
preferred stock. The Series B Preferred Stock has voting and registration
rights similar to those of the Company's Series A Preferred Stock. In
connection with the sale of the Series B Preferred Stock, the Company will pay
to its financial advisors certain cash consideration and issue approximately
226,816 shares of its common stock. Based on the beneficial conversion terms of
the Series B Preferred Stock, assuming an initial public offering price of
$15.00 per share the Company will record an adjustment to net loss applicable
to common stockholders for approximately $22 million at the date of issuance
which will be accounted for as a beneficial conversion in accordance with EITF
98-5.
During January 2000, the Company granted a total of 848,000 additional stock
options at an exercise price of $5.02 per share. In connection with these
grants, assuming an initial public offering price of $15.00 per share, the
Company would record a non-cash compensation charge of approximately
$8,457,000, of which approximately $4,405,000 would be incurred in the first
quarter of 2000.
During the period from February 1, 2000 through March 17, 2000 the Company
granted a total of 711,400 additional stock options to purchase common stock at
an exercise price of $15.00 per share.
F-18
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Management of
GoAmerica Communications Corporation
Hackensack, New Jersey
I have audited the accompanying statements of operations from business
segment and cash flows from business segment of ZAP.IT for the period beginning
January 1, 1998 and ended July 14, 1998. These business segment financial
statements are the responsibility of ZAP.IT's management. My responsibility is
to express an opinion on these business segment financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the business segment financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the business segment
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall business segment financial statement presentation. I
believe that my audit provides a reasonable basis for my opinion.
In my opinion, the business segment financial statements present fairly, in
all material respects, the results of operations and cash flows of ZAP.IT for
the period beginning January 1, 1998 and ended July 14, 1998, in conformity
with generally accepted accounting principles.
The accompanying business segment financial statements have been prepared
from the separate records maintained by the business segment and may not
necessarily be indicative of the conditions that would have existed or the
results of operations if the business segment had been operated as an
unaffiliated company. Portions of certain income and expenses represent
allocations made from its affiliate for items applicable to the affiliate and
its business segment as a whole.
The business segment's affiliate entered into an agreement whereby
substantially all the assets and liabilities of this business segment were sold
to an independent third party.
/s/ John D. Hilcher, CPA
Bloomfield, New Jersey
February 25, 2000
F-19
<PAGE>
ZAP.IT
STATEMENT OF OPERATIONS FROM BUSINESS SEGMENT
<TABLE>
<CAPTION>
For the Period Beginning
January 1, 1998 and
Ended July 14, 1998
------------------------
<S> <C>
Revenues........................................ $ 62,467
Expenses
Cost of sales.................................. 163,169
Selling and administrative expenses............ 1,039,936
Depreciation and amortization.................. 79,165
Loss due to impairment of long-lived assets ... 158,649
-----------
Total expenses.............................. 1,440,919
-----------
Net (Loss) From Business Segment................ $(1,378,452)
===========
</TABLE>
See notes to financial statements.
F-20
<PAGE>
ZAP.IT
STATEMENT OF CASH FLOWS FROM BUSINESS SEGMENT
<TABLE>
<CAPTION>
For the Period Beginning
January 1, 1998 and
Ended July 14, 1998
------------------------
<S> <C>
Cash Flows from Operating Activities from
Business Segment
Net (loss) from business segment................... $(1,378,452)
Adjustments to reconcile net (loss) from
business segment to net cash (used) by
operating activities from business segment:
Loss due to impairment of long-lived assets...... 158,649
Depreciation..................................... 79,165
Allowance for doubtful accounts.................. 4,000
Loss due to prepaid asset write-off.............. 61,992
Loss due to inventory write-off.................. 56,600
Loss due to miscellaneous receivable write-off... 5,000
-----------
Net Cash (Used) By Operating Activities from
Business Segment.................................... (1,013,046)
Cash Flows from Financing Activity from Business
Segment
Divisional advances................................. 1,013,046
-----------
Net Increase in Cash from Business Segment........... $ --
===========
</TABLE>
See notes to financial statements.
F-21
<PAGE>
ZAP.IT
Notes to Financial Statements of Business Segment
July 14, 1998
Note A--Nature of Activities and Organization
ZAP.IT was a business segment of its affiliate, Data Transmission Services,
Inc., offering wireless and E-mail services nationwide.
Note B--Summary of Significant Accounting Policies
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Accordingly, actual results could differ from those
estimates.
Revenue Recognition. Revenue from sales, services and products are
recognized when services are provided or products shipped.
Property and Equipment. Property and equipment are stated at cost.
Depreciation for financial reporting purposes is provided principally on the
straight-line method based upon estimated useful lives. Repairs and maintenance
are charged to expense as incurred.
Impairment of Long-lived Assets. The business segment evaluated the
recoverability of the carrying value of its property and equipment when events
and circumstances indicated that the assets might be impaired and the total of
future undiscounted cash flows were less than the carrying amount of the
property and equipment. Such circumstances existed during the period ended July
14, 1998. Under the circumstances the future cash flows to be generated by the
property and equipment was determined based upon the proceeds from the sale of
such assets to a third party. As a result, the business segment recorded a
$158,649 noncash charge to its Statement of Operations for the period ended
July 14, 1998.
F-22
<PAGE>
ZAP.IT
Notes to Financial Statements of Business Segment--Continued
July 14, 1998
Note C--Related Party Transactions
The business segment financial statements have been prepared from the
separate records maintained by the business segment and may not necessarily be
indicative of the conditions that would have existed or the results of
operations if the business segment had been operated as an unaffiliated
company. Portions of selling, general and administrative expenses, which are
principally comprised of employee salaries and office rental expenses, were
allocated from Data Transmission Services, Inc. to ZAP.IT based upon ZAP.IT's
proportionate level of sales revenue compared to that of Data Transmission
Services, Inc. as a whole. Management believes such allocation methodology is
reasonable and appropriate based upon the nature of such expenses.
Note D--Subsequent Event
The business segment's affiliate, Data Transmission Services, Inc., closed
on an asset purchase agreement on July 14, 1998, whereby the buyer, GoAmerica
Communications, Corp., purchased certain defined assets and assumed certain
defined liabilities of the business segment.
F-23
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Prospective investors may rely only on the information contained in this pro-
spectus. Neither GoAmerica, Inc. nor any underwriter has authorized anyone to
provide prospective investors different or additional information. This pro-
spectus is not an offer to sell nor is it seeking an offer to buy these securi-
ties in any jurisdiction where the offer or sale is not permitted. The informa-
tion contained in this prospectus is accurate only as of the date of the pro-
spectus, regardless of the time of delivery of this prospectus or of any sale
of these securities.
No action is being taken in any jurisdiction outside the United States to
permit a public offering of the common stock or possession or distribution of
this prospectus in any such jurisdiction. Persons who come into possession of
this prospectus in jurisdictions outside the United States are required to in-
form themselves about and to observe the restrictions of that jurisdiction re-
lated to this offering and the distribution of this prospectus.
--------------------
TABLE OF CONTENTS
--------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 16
Dividend Policy.......................................................... 16
Capitalization........................................................... 17
Dilution................................................................. 18
Selected Financial Data.................................................. 19
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 21
Business................................................................. 27
Management............................................................... 39
Certain Transactions..................................................... 50
Principal Stockholders................................................... 51
Description of Capital Stock............................................. 53
Shares Eligible for Future Sale.......................................... 57
Certain U.S. Tax Consequences to Non-U.S. Holders........................ 58
Underwriting............................................................. 61
Legal Matters............................................................ 64
Experts.................................................................. 64
Where You Can Find More Information...................................... 64
Index to Consolidated Financial Statements............................... F-1
</TABLE>
Until , 2000 (25 days after the date of this prospectus), all dealers
effecting transactions in the common stock, whether or not participating in
this distribution, may be required to deliver a prospectus. This delivery re-
quirement is in addition to the obligation of dealers to deliver a prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10,000,000 Shares
[LOGO OF GOAMERICA/TM/ APPEARS HERE}
Common Stock
---------------
PROSPECTUS
---------------
Bear, Stearns & Co. Inc.
Chase H&Q
U.S. Bancorp Piper Jaffray
Wit SoundView
---------------
DLJdirect Inc.
, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale and
distribution of the securities being registered. All amounts are estimated
except the Securities and Exchange Commission registration fee and the NASD
filing fee. All the expenses below will be paid by GoAmerica.
<TABLE>
<CAPTION>
Item Amount
---- -------------
<S> <C>
Securities and Exchange Commission registration fee........ $ 48,576.00
NASD filing fee............................................ 18,900.00
Nasdaq National Market listing (entry) fee................. 30,000.00
Blue Sky fees and expenses................................. 2,000.00
Printing and engraving expenses............................ 200,000.00
Legal fees and expenses.................................... 600,000.00
Accounting fees and expenses............................... 400,000.00
Transfer Agent and registrar fees.......................... 15,000.00
Miscellaneous.............................................. 35,524.00
-------------
Total.................................................... $1,350,000.00
=============
</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 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 and to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified. Reference is also made to Section 7(b) 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
GoAmerica Communications Corp. was incorporated in Delaware in 1996. In
December 1999, GoAmerica, Inc. was incorporated in Delaware and each of the
stockholders of GoAmerica Communications Corp. exchanged all their outstanding
shares of common stock and preferred stock of that company for newly issued
shares of GoAmerica, Inc. with equivalent rights and preferences. As a result,
GoAmerica Communications Corp. became a wholly-owned subsidiary of GoAmerica,
Inc. Each outstanding warrant and option to purchase shares of common stock of
GoAmerica Communication Corp. are now convertible into shares of common stock
of GoAmerica, Inc. All the contractual and other rights and obligations
negotiated between the stockholders of GoAmerica Communications Corp. and
GoAmerica Communications Corp. were transferred in their entirety to GoAmerica,
Inc.
II-1
<PAGE>
Prior to this offering, we issued the following securities:
Issuances of Capital Stock by GoAmerica Communications Corp.
Preferred Stock:
. from June 1999 through November 1999, 10,500 shares of Series A Preferred
Stock were issued to eight (8) accredited investors for an aggregate
purchase price of $10,500,000
Common Stock:
. in August 1996, an aggregate of 8,533,280 shares of common stock were
issued to Aaron Dobrinsky, a founder of GoAmerica Communications Corp.
for an aggregate purchase price of $533
. in October 1996 an aggregate of 4,266,720 shares of common stock were
issued to Joseph Korb, a founder of GoAmerica Communications Corp. for
an aggregate purchase price of $267
. in October 1996, an aggregate of 3,200,000 shares of common stock were
issued to sixteen (16) accredited investors for an aggregate purchase
price of $1,000,000
. throughout 1997, an aggregate of 409,440 shares of common stock were
issued to seven (7) accredited investors for an aggregate purchase price
of $415,000
. in January 1998 and March 1998, an aggregate of 632,080 shares of common
stock were issued to ten (10) accredited investors for an aggregate
purchase price of $268,513
. in May 1998, an aggregate of 1,787,096 shares of common stock were issued
to twenty six (26) accredited investors for an aggregate purchase price
of $1,839,247
. in June 1998, an aggregate of 390,312 shares of common stock were issued
to seventeen (17) accredited investors for an aggregate purchase price of
$434,466
. in November 1998, an aggregate of 2,108,848 shares of common stock were
issued to twenty three (23) accredited investors for an aggregate
purchase price of $2,111,484
. in September 1999, an aggregate of 16,200 shares of common stock were
issued to two (2) shareholders upon the exercise of certain outstanding
warrants
. in September and November 1999, an aggregate of 1,875,416 shares of
common stock were issued to twenty five (25) shareholders in connection
with the exercise of certain outstanding pre-emptive rights for an
aggregate purchase price of $2,018,076
. in December 1999, an aggregate of 467,792 shares of common stock were
issued to forty three (43) shareholders upon the exercise of certain
outstanding warrants.
Issuances of Options and Warrants by GoAmerica Communications Corp.
. in August 1999, options to purchase an aggregate of 1,916,000 shares of
common stock were granted to employees at a weighted average exercise
price of $0.95
. in 1996, warrants to purchase an aggregate of 320,000 shares of common
stock were issued to one (1) employee at a weighted average exercise
price of $0.44
. in 1998, warrants to purchase an aggregate of 891,792 shares of common
stock were issued to ten (10) shareholders at a weighted average exercise
price of $1.52
. in 1999, warrants to purchase an aggregate of 549,000 shares of common
stock were issued to fifty three (53) shareholders at a weighted average
exercise price of $0.00125
Issuances of Capital Stock of GoAmerica, Inc.
In December 1999, in connection with our reorganization and in
consideration for all the outstanding shares of capital stock and warrants
to purchase shares of GoAmerica Communications Corp. common stock, we
issued the following securities:
. 10,500 shares of our Series A Preferred Stock
. 23,687,184 shares of our common stock
II-2
<PAGE>
. warrants to purchase an aggregate of 1,276,800 shares of our common stock
. in addition, the outstanding options to purchase 1,916,000 shares of
common stock of GoAmerica Communications Corp. became exercisable to
purchase 1,916,000 shares of our common stock
In addition, we issued the following securities:
Preferred Stock:
. in January 2000, prior to the filing of this prospectus, 648,057 shares
of Series B Preferred Stock were issued to four (4) accredited
institutional investors for an aggregate purchase price of $26,000,047
Common Stock:
. in January 2000, 226,816 shares of common stock were issued to two (2)
private placement agents in consideration for their services related to
the sale of our Series B Preferred Stock
. in January and February 2000, 68,048 shares of common stock were issued
to eleven (11) shareholders upon the exercise of certain outstanding
warrants
Options:
. in December 1999, options to purchase an aggregate of 524,008 shares of
common stock were issued to three (3) employees and four (4) directors at
a weighted average exercise price of $1.00
. in January 2000, options to purchase 848,000 shares of common stock were
granted to seventeen (17) employees at a weighted average exercise price
of $5.02
We believe that the foregoing described issuances of securities, if they
constitute sales, are exempt from registration under the Securities Act by
virtue of the exemption provided by Section 4(2) thereof for transactions not
involving a public offering or Rule 701 under the Securities Act as
transactions made pursuant to a written compensatory plan or pursuant to a
written contract relating to compensation. The sales of securities were made
without the use of an underwriter and the certificates evidencing the shares
bear a restrictive legend permitting the transfer thereof only upon
registration of the shares or an exemption under the Securities Act. We believe
that all recipients had adequate access to information about GoAmerica.
Item 16. Exhibits and Financial Statements
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- ----------------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of GoAmerica, as amended.
3.2 Bylaws of GoAmerica.
5.1 Form of Opinion of Buchanan Ingersoll Professional Corporation.
10.1 CDPD Value Added Reseller Agreement by and between GoAmerica and AT&T
Wireless Data, Inc. dated May 6, 1997 as amended.+*
10.2 AirBridge Packet Service Agreement by and between GoAmerica and Bell
Atlantic NYNEX Mobile, Inc. dated May 13, 1997, as amended.+*
10.3 Value Added Reseller Agreement by and between GoAmerica and BellSouth
Wireless Data L.P. dated August 31, 1999.+*
10.4 Reseller Agreement for Messaging Services by and between GoAmerica and
ARDIS Company dated August 25, 1999.+*
10.5 Form of Invention Assignment and Non-Disclosure Agreement by and
between GoAmerica and its employees.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- ----------------------
<C> <S>
10.6 Form of Indemnification Agreement by and between GoAmerica and each of
its directors and executive officers.
10.7 Employment Agreement by and between GoAmerica and Aaron Dobrinsky
dated as of December 31, 1999.
10.8 Employment Agreement by and between GoAmerica and Joseph Korb dated as
of December 31, 1999.
10.9 Employment Agreement by and between GoAmerica and Francis Elenio dated
as of December 31, 1999.
10.10 Employment Agreement by and between GoAmerica and Jesse Odom dated as
of December 31, 1999.
10.11 GoAmerica Communications Corp. 1999 Stock Option Plan.
10.12 GoAmerica, Inc. 1999 Stock Plan.
10.13 GoAmerica, Inc. Employee Stock Purchase Plan.
10.14 Lease Agreement by and between GoAmerica and Continental Investors,
L.P. dated August 7, 1996, as amended.
10.15 Facilities Maintenance Agreement by and between GoAmerica and Data
General, a division of EMC Corporation, dated December 13, 1999.
10.16 Registration Rights Agreement, dated October 15, 1996, by and between
GoAmerica Communications Corp. and the Investors set forth therein.
10.17 Registration Rights Agreement, dated June 25, 1999, by and between
GoAmerica Communications Corp. and CIBC WMV Inc. and other investors.
10.18 Registration Rights Agreement, dated January 28, 2000, by and between
GoAmerica, Inc., Dell USA L.P., Carousel Capital Partners, L.P.,
Forstmann Little & Co. Equity Partnership-VI, L.P. and Impact Venture
Partners, L.P.
21.1 List of subsidiaries of GoAmerica.
23.1 Consent of Ernst & Young LLP.*
23.2 Consent of Buchanan Ingersoll Professional Corporation (contained in
the opinion filed as Exhibit 5 to the Registration Statement).
23.3 Consent of John D. Hilcher CPA.*
24 Powers of Attorney of certain officers and directors of GoAmerica
(contained on the signature page of this Registration Statement).
27.1 Financial Data Schedule.*
</TABLE>
- --------
* Filed herewith. All other exhibits were filed previously.
+ Confidential treatment has been requested for a portion of this exhibit.
(b) Financial Statement Schedules
None.
Item 17. Undertakings
We hereby undertake that:
(1) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted as to directors, officers and controlling
persons of GoAmerica pursuant to the provisions described in Item 14, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by GoAmerica of expenses incurred or paid by a director,
officer or controlling person of GoAmerica in the successful
II-4
<PAGE>
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our 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 Securities Act and will be governed by
the final adjudication of such issue.
(2) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus as filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by GoAmerica pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the Securities
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 the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(4) At the closing, specified in the underwriting agreement, we shall
provide the underwriters certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to
each purchaser.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Amendment to the Registration Statement on Form S-
1 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Hackensack, State of New Jersey, on the 6th day of April, 2000.
GoAmerica, Inc.
/s/ Aaron Dobrinsky
By: _________________________________
Aaron Dobrinsky
President and Chief Executive
Officer
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
/s/ Aaron Dobrinsky President and Chief Executive April 6, 2000
_________________________________ Officer and Director (Principal
Aaron Dobrinsky Executive Officer)
* Executive Vice President and April 6, 2000
_________________________________ Director
Joseph Korb
/s/ Francis Elenio Chief Financial Officer, April 6, 2000
_________________________________ Treasurer and Secretary
Francis Elenio (Principal Financial and
Accounting Officer)
* Director April 6, 2000
_________________________________
Robi Blumenstein
* Director April 6, 2000
_________________________________
Adam Dell
* Director April 6, 2000
_________________________________
Alan Docter
* Director April 6, 2000
_________________________________
Mark Kristoff
* Director April 6, 2000
_________________________________
Zachary Prensky
* Director April 6, 2000
_________________________________
Nelson Schwab
* Director April 6, 2000
_________________________________
Andrew Seybold
</TABLE>
* By his signature set forth below, the undersigned, pursuant to duly
authorized powers of attorney filed with the Securities and Exchange
Commission, has signed this Amendment to the Registration Statement on
behalf of the persons indicated.
By: /s/ Francis Elenio
- -------------------------------------
Francis Elenio (Attorney-in-fact)
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- ----------------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of GoAmerica, as amended.
3.2 Bylaws of GoAmerica.
5.1 Form of Opinion of Buchanan Ingersoll Professional Corporation.
10.1 CDPD Value Added Reseller Agreement by and between GoAmerica and AT&T
Wireless Data, Inc. dated May 6, 1997 as amended.+*
10.2 AirBridge Packet Service Agreement by and between GoAmerica and Bell
Atlantic NYNEX Mobile, Inc. dated May 13, 1997, as amended.+*
10.3 Value Added Reseller Agreement by and between GoAmerica and BellSouth
Wireless Data L.P. dated August 31, 1999.+*
10.4 Reseller Agreement for Messaging Services by and between GoAmerica and
ARDIS Company dated August 25, 1999.+*
10.5 Form of Invention Assignment and Non-Disclosure Agreement by and
between GoAmerica and its employees.
10.6 Form of Indemnification Agreement by and between GoAmerica and each of
its directors and executive officers.
10.7 Employment Agreement by and between GoAmerica and Aaron Dobrinsky
dated as of December 31, 1999.
10.8 Employment Agreement by and between GoAmerica and Joseph Korb dated as
of December 31, 1999.
10.9 Employment Agreement by and between GoAmerica and Francis Elenio dated
as of December 31, 1999.
10.10 Employment Agreement by and between GoAmerica and Jesse Odom dated as
of December 31, 1999.
10.11 GoAmerica Communications Corp. 1999 Stock Option Plan.
10.12 GoAmerica, Inc. 1999 Stock Plan.
10.13 GoAmerica, Inc. Employee Stock Purchase Plan.
10.14 Lease Agreement by and between GoAmerica and Continental Investors,
L.P. dated August 7, 1996.
10.15 Facilities Maintenance Agreement by and between GoAmerica and Data
General, a division of EMC Corporation, dated December 13, 1999.
10.16 Registration Rights Agreement, dated October 15, 1996, by and between
GoAmerica Communications Corp. and the Investors set forth therein.
10.17 Registration Rights Agreement, dated June 25, 1999, by and between
GoAmerica Communications Corp. and CIBC WMV Inc. and other investors.
10.18 Registration Rights Agreement, dated January 28, 2000, by and between
GoAmerica, Inc., Dell USA L.P., Carousel Capital Partners, L.P.,
Forstmann Little & Co. Equity Partnership-VI, L.P. and Impact Venture
Partners, L.P.
21.1 List of subsidiaries of GoAmerica.
23.1 Consent of Ernst & Young LLP.*
23.2 Consent of Buchanan Ingersoll Professional Corporation (contained in
the opinion filed as Exhibit 5 to the Registration Statement).
23.3 Consent of John D. Hilcher CPA.*
24 Powers of Attorney of certain officers and directors of GoAmerica
(contained on the signature page of this Registration Statement).
27.1 Financial Data Schedule.*
</TABLE>
- --------
* Filed herewith. All other exhibits were filed previously.
+ Confidential treatment has been requested for a portion of this exhibit.
<PAGE>
Exhibit 10.1
CDPD VALUE ADDED RESELLER AGREEMENT
This CDPD Value Added Reseller Agreement (this "Agreement"), dated as of
May 6, 1997 is made between AT&T Wireless Data, Inc., a Delaware corporation
doing business as AT&T Wireless Services, for cellular digital packet data
("CDPD") communications service (defined below) provided by AT&T Wireless Data,
Inc., d/b/a AT&T Wireless Services and its Affiliates, collectively, ("AT&T"),
and GoAmerica, a corporation organized under the laws of the Delaware, for
itself and on behalf of its Affiliates (as defined below) and any permitted
assignee (collectively, "Customer").
RECITALS
A. Customer would like to receive Service from AT&T, in connection with
Customer's provision of certain value-added communications services to its End
Users.
B. AT&T wishes to provide Service to Customer based upon the value-added
communications services provided by Customer to its End Users, in accordance
with the terms and conditions of this Agreement.
AGREEMENTS
In consideration of the mutual promises contained in this Agreement, the
Parties hereby agree as follows:
Section 1. Definitions
1.1 Affiliate means, with respect to any entity, any other entity that directly
Controls, is Controlled by or is under common Control with the first entity.
1.2 Application means the combination of the Service and Customer's value added
communications services provided to its End Users. The Application is more
specifically described in Exhibit A hereto.
1.3 Control (and all conjugations thereof) means, with respect to any entity,
the direct or indirect possession of the power to direct the management and
policies of such entity.
1.4 End User means the individuals or entities obtaining access to Service from
Customer.
1.5 Number means, for each End User, the AT&T network and service identifier
numbers and various other network, equipment and service numbers assigned to
Customer for that End User to obtain access to Service.
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1.6 Service means the cellular digital packet data (CDPD) service offered by
AT&T. Cellular digital packet data service generally consists of a wireless data
communications service in which data is sent through a cellular network in a
connectionless packet data format in accordance with the most recent CDPD
specifications, similar to the manner in which data is sent over a TCP/IP Local
Area Network.
1.7 Service Area means those portions of AT&T's CDPD operating areas as
identified by AT&T from time to time (the "Service Area") and as set forth in
Exhibit B hereto, as amended from time to time.
Section 2. The Service
2.1 Provision
2.1.1 Service is available to each of Customer's users or units
within AT&Ts Service Area as long as Customer's CDPD transmitting and receiving
equipment (the "Equipment") is turned on, programmed with AT&T network and
service identifier numbers (collectively, the "Numbers").
2.1.2 Service provided pursuant to this Agreement will be provided
only upon the request of Customer's authorized representatives, and not by End
Users, and only in connection with the Application.
2.1.3 Customer is not authorized under this Agreement to use the
Service independent of the Application or in conjunction with any other
Application unless such Application is described and attached in Exhibit A
hereto.
2.2 Support Services. AT&T will provide to Customer, and not directly to
End Users, network monitoring, technical assistance and trouble-shooting support
of the Service through AT&T's technical assistance center (the "ATAC"). The
ATAC will be staffed and available to Customer's authorized representatives
twenty-four (24) hours per day, seven (7) days per week to perform these
functions and to address Customer's inquiries. Customer will provide AT&T with
access to contacts and dispatch information to facilitate appropriate response
to Service interruptions.
2.3. Numbers. Customer shall be issued an initial amount of Numbers as set
forth in the Service Plan attached as Exhibit C hereto. Customer may order
additional Numbers by completing a Service Request Form. Additional Numbers will
be issued to Customer provided Customer is not in default hereof, and subject to
any requirements for a security deposit. AT&T may change any of Customer's
Numbers from time to time, by giving Customer written notice thereof. AT&T will
use its best efforts to minimize such changes. Customer will inform its End
Users of the provisions of this Section and agrees that neither it nor its End
Users will acquire any proprietary right in any specific Number provided by
AT&T.
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2.4 Use
2.4.1 Customer will use the Service only for lawful business purposes
and only in connection with the Application, and may resell the Service only in
connection with the Application and as provided by this Agreement.
2.4.2 AT&T authorizes Customer to provide any or all of the Service
to End Users in connection with End Users' use of the Application.
2.4.3 AT&T is obligated only to Customer, with which it is in privity
of contract, and not to End Users, with whom AT&T is not in privity. End Users
are not to be deemed third-party beneficiaries of this Agreement.
2.4.4 Customer is solely responsible for all risks and expenses
incurred with its actions or omissions in the provision of the Service or the
provision of the Application to End Users, including but not limited to payment
to AT&T for all charges for Service used by Customer or its End Users or third
Parties using a Number assigned to Customer. In connection with such
activities, Customer will act in all respects for its own account and will be
responsible for such things as credit verification, deposits, billing,
collection, bad debts and any [charges for] unauthorized use of the Service by
End Users or any third Party using a Number assigned to Customer.
2.4.5 Customer will disclose to End Users the provisions set forth in
Exhibit D.
2.4.6 Customer is responsible for all End User support regarding all
aspects of End Users' use of the Service (whether arising in connection with
hardware, software or Service), including but not limited to issues relating to
modems, protocol stacks, software configuration and setup, usability issues,
Service activation, Service coverage, billing, and any and all other aspects of
technical services and customer care. This includes, but is not limited to,
Customer taking the End Users' calls and using reasonable commercial efforts to
remedy any Customer or End User-identified problem without AT&T's participation.
Customer will report a problem to AT&T only upon reasonable verification that
the problem is due to reasons other than misuse, malfunction or the failure of
the Customer Equipment to meet the technical standards for compatibility with
the Service, or failure of the End User to understand how to use the Service.
2.4.7 The Service will not be used to transmit any communication
where the message, or its transmission or distribution would involve any local
court order or regulation or would likely be offensive to the recipient or
recipients thereof.
2.5 Continuing Right. AT&T will have the continuing right to market and
sell the service and any other communications services to any third Parties,
including but not limited to current, future and potential End Users of
Customer.
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2.6 Procedures. Customer will comply with AT&T's procedures for obtaining
Numbers and for activating Service with respect to any End User. AT&T may from
time to time modify these procedures by giving Customer written notice of such
modification.
2.7 Service Area. The Service is available only within the Service Area
and is subject to (a) transmission limitations caused by atmospheric,
topographical or other conditions affecting transmission, (b) equipment
modifications, repairs and other similar activities necessary for the proper or
improved operation of the Service, and (c) equipment failures beyond AT&T`s
reasonable Control. AT&T will not be responsible for any interruption or
inability to use the Service that results from equipment or systems used in
connection with the Service or the Application. AT&T may amend Exhibit B to add
or delete any portion of the Service Area from time to time and will use good
faith efforts to provide prior written notice to Customer.
2.8 Interruptions and Field Trials. The Service may be temporarily
refused, limited, interrupted or curtailed due to governmental regulations or
orders, system capacity limitations or equipment maintenance, repair,
modifications, upgrades or relocation. AT&T will make reasonable efforts to
perform scheduled maintenance or repairs on Sundays during the hours of four
(4:00) a.m. to six (6:00) a.m. AT&T will attempt to notify Customer of scheduled
and unscheduled network outages that are expected to last more than two (2)
hours and that may affect the Service. Customer will cooperate, at AT&T's
expense, in conducting any field tests and trials that AT&T or any Service
provider reasonably determines are necessary or desirable to ensure the
performance and reliability of the Service.
Section 3. Interconnection
Customer will be required to obtain and pay for any interconnection
services required to connect Customer to AT&T's CDPD network to be used by End
Users. In the event that individual connectivity to End Users is required,
Customer will follow AWS policies and procedures for such connections.
Section 4. Customer Equipment
Customer will be responsible for the acquisition, programming,
installation, maintenance and repair of all equipment (other than equipment
comprising portions of AT&T's CDPD network) necessary to enable Customer and its
End Users to receive the Service ("Customer Equipment"). Customer will ensure
that all Customer Equipment is technically and operationally compatible with the
Service and meets all applicable federal and state laws, rules and regulations.
Section 5. Rates
5.1 Customer will pay AT&T for Service provided to Customer and its End Users
in accordance with the Service Plan. Unless the Service Plan provides
otherwise, AT&T shall not
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increase the rates contained in the Service Plan ****** from the effective date
of this Agreement. Thereafter, however, AT&T may increase the rates contained in
the Service Plan from time to time on thirty days (30) written notice to
Customer; provided, however, if such increase is unacceptable to Customer,
Customer may terminate this Agreement by providing AT&T with written notice at
least fifteen (15) days in advance of such termination. Notwithstanding the
foregoing, if AT&T rescinds its notice of rate increase within such fifteen
days, this Agreement will not terminate, but will remain in full force and
effect. AT&T may decrease the rates contained in the Service Plan from time to
time upon written notice to Customer, effective on the date specified on such
notice. To the extent AT&T arranges for Customer to receive Service from non-
AT&T Service providers, Customer will pay AT&T for Service at Company's regular
retail rate for such Service.
5.2 Customer may ****** that is ****** to a ****** of ******. Customer
may ****** that it ****** Service ****** , provided that Company may, upon
******, either ****** or ****** Agreement and ******.
Section 6. Invoices, Payments, Taxes and Security Deposits
6.1 Invoices. AT&T will provide Customer written invoices on a monthly
basis.
6.2 Payment. Customer will pay each invoice within thirty (30) days
following its receipt thereof. Any payment not received by the due date will
accrue interest at the rate of one and one-half percent (1.5%) per month or the
maximum lawful rate. Additional fees will be assessed for any check returned
for insufficient funds.
6.3. Disputed Charges. If the amount of any invoice is disputed, Customer
will pay the entire amount of the invoice by the due date and will include with
such payment a detailed statement sufficient to allow AT&T to ascertain the
disputed amount and the reasons for the dispute. Any amount not disputed within
ninety (90) days of an invoice due date may not thereafter be disputed.
Customer and AT&T will use good faith efforts to resolve any dispute within
sixty (60) days of receipt of such statement.
6.4 Taxes. Customer will pay all applicable federal, state and local
sales, use, public utilities, gross receipts or other taxes or fees imposed on
AT&T as a result of this Agreement (other than taxes imposed on the net income
of AT&T). Customer will provide certificates of resale required for the states
in which it will resell service, as indicated on Exhibit C. Customer will
reimburse AT&T for any such taxes or fees paid by AT&T on Customer's behalf.
6.5. Security Deposits. AT&T may from time to time require Customer to
provide it with a cash deposit, irrevocable letter of credit, or other security
acceptable to AT&T based upon AT&T's assessment of Customer's creditworthiness.
__________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
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Section 7. Term and Termination
7.1 Term. The initial term of this Agreement will begin on the date hereof
and, unless earlier terminated in accordance with this Section 7, will continue
for a three (3) year term. This Agreement will automatically renew for
successive one-year renewal terms unless either Party, at least ninety (90) days
prior to the end of the then-current term, notifies the other Party in writing
of its intent to terminate this Agreement.
7.2 Termination
7.2.1 If either Party breaches a material term of this Agreement, and
such Party fails to cure the breach within thirty (30) days following its
receipt of written notice from the non-breaching Party (or ten days in the event
of non-payment of any amounts due hereunder), then the non-breaching Party, in
addition to any other remedies it may have at law or in equity, may terminate
this Agreement upon written notice to the breaching Party.
7.2.2 This Agreement will automatically terminate in the event of
either Party's dissolution, insolvency, assignment for the benefit of creditors
or filing for relief under the provisions of the bankruptcy laws or similar
creditor protection laws.
7.2.3 AT&T may terminate this Agreement immediately and without
penalty upon written notice to Customer if the Federal Communications Commission
or any other regulatory agency or court promulgates any rule, regulation,
judgment or order that (a) prohibits or substantially impedes (in effect or
Application) AT&T from fulfilling its obligations hereunder, (b) prohibits or
substantially impedes non-AT&T Service providers from providing Service, or (c)
adversely affects AT&T's ability to conduct business upon terms and conditions
acceptable to it. AT&T will notify Customer promptly following AT&T's
determination that an event permitting termination under this Section has
occurred.
7.2.4 If Customer shall at any time fail to meet the Service Plan
requirements set forth in Exhibit C, Company may provide Customer with ninety
(90) days written notice either 1) that Customer is no longer eligible to
receive Service under this Agreement, or 2) that Company will modify the Service
Plan in accordance with Customer's actual usage. If Customer is unable, during
the sixty (60) day period after Company's notice is sent, to satisfy the
eligibility criteria, Company and Customer will renegotiate the Service Plan
Requirements. If the parties fail to reach a mutually acceptable agreement
regarding the Service Plan within the following thirty (30) day period, Company
may either, immediately or upon notice to Customer, 1) modify the Service Plan,
or 2) terminate this Agreement without further notice, in its sole discretion.
7.3 Survival. Sections 8, 9, 10, 11, 12, 16 and 17 (together with all
other provisions of this Agreement that may reasonably be interpreted or
construed as surviving termination) will survive the termination of this
Agreement.
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7.4 Payment upon Termination. Upon termination of this Agreement for any
reason, all amounts owing to AT&T hereunder will become due and payable.
Section 8. Force Majeure
Neither Party will be liable for any loss, damage, cost, delay or failure
to perform resulting from causes beyond its reasonable Control including, but
not limited to, acts of God, fires, floods, earthquakes, strikes, insurrections,
riots, lightening or storms, or delays of suppliers or subcontractors for the
same causes.
Section 9. Indemnification
9.1 MUTUAL INDEMNITY. EACH PARTY WILL DEFEND, INDEMNIFY AND HOLD THE
OTHER, THE OTHER'S SUBSIDIARIES AND AFFILIATES (AND THEIR RESPECTIVE OWNERS,
DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES AND AGENTS) AND ANY UNDERLYING
CARRIER ENABLING THE PROVISION OF SERVICE HARMLESS AGAINST ANY DAMAGES, LOSSES
AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' AND EXPERT WITNESS' FEES AND
DISBURSEMENTS, WHETHER AT TRIAL OR ON ANY APPEAL) ARISING OUT OF OR RELATING TO
ANY CLAIMS, ACTIONS OR OTHER PROCEEDINGS THAT (A) ARE BROUGHT BY OR ON BEHALF OF
ANY THIRD PARTY, AND (B) RESULT FROM THE INDEMNIFYING PARTY'S BREACH, FAILURE TO
PERFORM OR OTHER MISCONDUCT IN CONNECTION WITH ITS DUTIES, OR THE EXERCISE OF
ITS RIGHTS UNDER THIS AGREEMENT.
9.2 ADDITIONAL INDEMNITY. CUSTOMER FURTHER AGREES TO DEFEND, INDEMNIFY
AND HOLD AT&T, ITS SUBSIDIARIES AND AFFILIATES, THEIR RESPECTIVE OWNERS,
DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES AND AGENTS AND ANY UNDERLYING
CARRIER ENABLING THE PROVISION OF SERVICE (COLLECTIVELY, AS USED IN THIS
SUBPARAGRAPH, "AT&T") HARMLESS AGAINST ANY DAMAGES, LOSSES AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' AND EXPERT WITNESS' FEES AND DISBURSEMENTS,
WHETHER AT TRIAL OR ON ANY APPEAL) ARISING OUT OF OR RELATING TO ANY CLAIMS,
ACTIONS OR OTHER PROCEEDINGS THAT ARE BROUGHT BY OR ON BEHALF OF END USERS;
PROVIDED THAT CUSTOMER'S OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD AT&T HARMLESS
WILL NOT APPLY TO THE EXTENT THE CLAIM, ACTION OR PROCEEDING RESULTS FROM AT&T'S
NEGLIGENCE OR WILLFUL MISCONDUCT.
Section 10. No Warranties
AT&T represents and warrant that it has all necessary rights, including but
not limited to property, governmental license, patent, trademark, and other
intellectual property rights to enable it to carry out its obligations under
this Agreement.
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Notwithstanding the foregoing, AT&T SUPPLIES A SERVICE, AND NOT GOODS. AT&T
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICE OR THE
PERFORMANCE OF ANY OBLIGATIONS HEREUNDER INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ALL SUCH
WARRANTIES ARE EXPRESSLY EXCLUDED. AT&T IS NOT THE MANUFACTURER OF ANY CUSTOMER
EQUIPMENT AND MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT THERETO.
AT&T PROVIDES ACCESS TO INFORMATION PROVIDED BY OTHER SOURCES, HOWEVER AT&T
ACCEPTS NO LIABILITY FOR AND MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE CONTENT THEREOF.
Section 11. Limitation of Liability
11.1 NO CONSEQUENTIAL DAMAGES. NEITHER PARTY WILL BE LIABLE TO THE OTHER
(OR ITS END USERS, CUSTOMERS OR ANY THIRD PARTY) FOR ANY INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF SUCH PARTY'S FAILURE TO PERFORM UNDER THIS
AGREEMENT. NOTHING IN THIS SECTION 11. 1 WILL LIMIT A PARTY'S OBLIGATION TO
FULLY INDEMNIFY THE OTHER UNDER SECTION 9 FOR ACTIONS BROUGHT BY THE
INDEMNIFYING PARTY'S CUSTOMERS, END USERS OR BY ANY THIRD-PARTY, EVEN IF SUCH
ACTIONS INCLUDE CLAIMS FOR INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
11.2 LIMITATION OF ACTIONS. EXCEPT FOR ACTIONS ARISING IN CONNECTION WITH
SECTION 9, NEITHER PARTY MAY BRING AN A LEGAL ACTION WITH RESPECT TO THIS
AGREEMENT MORE THAN TWENTY-FOUR (24) MONTHS AFTER THE CAUSE OF ACTION ACCRUES.
11.3 LIABILITY CAP. EXCEPT FOR LIABILITIES ARISING UNDER SECTION 9, THE
AGGREGATE LIABILITY OF AT&T TO CUSTOMER FOR CLAIMS RELATING TO THIS AGREEMENT,
WHETHER FOR BREACH OR IN TORT, WILL NOT EXCEED THE AMOUNT PAID BY CUSTOMER TO
AT&T IN THE TWO MONTH PERIOD PROCEEDING THE DATE THE CLAIM AROSE.
11.4 PARTY. FOR THE PURPOSES OF THIS SECTION 11, "PARTY" MEANS THE PARTY,
ITS SUBSIDIARIES AND AFFILIATES AND THEIR RESPECTIVE OWNERS DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, REPRESENTATIVES, SUBCONTRACTORS AND SUPPLIERS.
11.5 SECURITY. ALTHOUGH THE SERVICE USES AN ENCRYPTED TECHNOLOGY, AND THE
LAW GENERALLY PROHIBITS THIRD PARTIES FROM MONITORING CELLULAR TRANSMISSIONS,
AT&T CANNOT GUARANTY THE SECURITY OF DATA TRANSMISSIONS. AT&T SHALL NOT BE
LIABLE FOR ANY LACK OF SECURITY RELATING IN ANY WAY TO USE OF THE SERVICE OR
CUSTOMER'S OR ITS END USERS DATA TRANSMISSIONS.
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Section 12. Confidentiality
12.1 Confidential Information. As used in this Agreement, "Confidential
Information" means any information of either AT&T or Customer that is not
generally known to the public, whether of a technical, business or other nature
(including, but not necessarily limited to, trade secrets, know-how and
information relating to the technology, customers, business plans, promotional
and marketing activities, finances and other business affairs of such Party).
AT&T's Confidential Information includes, among other things, the rates, terms
and conditions relating to AT&T's provision of Service to Customer.
12.2 Use and Disclosure. In the performance of or otherwise in connection
with this Agreement, any Party (the "Receiving Party") may receive certain
Confidential Information of the other Party (the "Disclosing Party"). The
Receiving Party, except as expressly provided in this Agreement, will not
disclose such Confidential Information to anyone without the Disclosing Party's
prior written consent. The Receiving Party will not use, or permit others to
use, Confidential Information for any purpose other than the purpose for which
it was disclosed. The Receiving Party will take all reasonable measures to
avoid disclosure, dissemination or unauthorized use of Confidential Information,
including, at a minimum, those measures it takes to protect its own confidential
information of a similar nature.
12.3 Exceptions. The provisions of Section 12.2 will not apply to any
information that (a) is or becomes publicly available without breach of this
Agreement, (b) can be shown by documentation to have been known to the Receiving
Party at the time of its receipt from the Disclosing Party, (c) is rightfully
received from a third Party who did not acquire or disclose such information by
a wrongful or tortious act, or (d) can be shown by documentation to have been
independently developed by the Receiving Party without reference to any
Confidential Information.
12.4 Disclosure to Governmental Entities. If the Receiving Party becomes
legally obligated to disclose Confidential Information to any governmental
entity with jurisdiction over it, the Receiving Party will give the Disclosing
Party prompt written notice sufficient to allow the Disclosing Party to seek a
protective order or other appropriate remedy. The Receiving Party will disclose
only such information as is required by the governmental entity and will use its
reasonable best efforts to obtain confidential treatment for any Confidential
Information that is so disclosed.
12.5 Ownership; Return. All Confidential Information will remain the
exclusive property of the Disclosing Party, and the Receiving Party will have no
rights, by license or otherwise, to use the Confidential Information except as
expressly provided herein. The Receiving Party promptly will return or destroy
all tangible material embodying Confidential Information (in any form and
including, without limitation, all summaries, copies and excerpts of
Confidential Information) upon the earlier of (a) the completion or termination
of the dealings between the Disclosing Party and the Receiving Party, and (b)
the Disclosing Party's written request.
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Section 13. Notices
All notices and other communications relating to this Agreement will be
made in writing and will be deemed to have been duly delivered, effective upon
receipt, if sent to the address set forth below each Party's signature.
Section 14. Assignment
Except as provided in this Section 14, neither Party may assign or transfer
this Agreement, or its rights or obligations hereunder, without the prior
written consent of the other Party. Either Party may assign this Agreement,
without the other's consent, to (a) any Affiliate of the assignor, or (b) any
person or entity that acquires the assignor or substantially all of the
assignor's business through any merger, consolidation or stock or asset
purchase; provided that the assignee agrees in writing to be bound by the
provisions of this Agreement. In addition, AT&T may assign certain of its rights
and obligations under this Agreement without Customer's consent.
Section 15. No Agency
AT&T and Customer are independent contracting Parties. This Agreement does
not create any partnership, joint venture or agency relationship between the
Parties.
Section 16. Marks
Customer recognizes the right, title and interest of AT&T, the CDPD Systems
and their respective Affiliates in and to all service marks, trademarks and
trade names used by any of them in connection with the Service (the "Marks").
Customer will not gain any rights to the Marks by virtue of this Agreement and
will not use any Marks without Company's prior written consent.
Section 17. General
17.1 State law/venue. This Agreement will be governed by the laws of the
State of Washington, without reference to its choice of law rules.
17.2 Attorneys' fees. In the event an action is commenced by either Party
to enforce the terms of this Agreement, the substantially prevailing Party in
such action shall be entitled to its reasonable costs and attorneys' and expert
witness' fees incurred therein and on any appeal thereof.
17.3 Entire agreement. This Agreement, together with its attached
Exhibits, sets forth the entire agreement between the Parties concerning the
subject matter hereof. Any amendment or modification to this Agreement will be
effective only if made in writing and signed by both Parties. Provided, however,
this Agreement shall be deemed automatically
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amended to the extent inconsistent with any federal, state or local law,
regulation, court order or tariff required to be filed by AT&T.
17.4 Waiver. The waiver of any provision or default of this Agreement will
not constitute a waiver of any other provision or default. If any provision of
this Agreement is deemed to be unenforceable, the remaining provisions will
remain in full force and effect.
17.5 Compliance with laws. AT&T and Customer shall at all times comply in
all material respects with all laws, rules and regulations applicable to the
performance of this Agreement.
The Parties have executed this Agreement on the date first above written.
GoAmerica AT&T Wireless Data, Inc.
By: /s/ Joseph Korb By: /s/ Anne Gant
-------------------------------- --------------------------------
Title: Executive Vice President Title: V.P.-Marketing
---------------------------- ------------------------------
Address: __________________________ Address: 10230 N.E. Points Drive
__________________________ Kirkland, Washington 98033
__________________________ Attn:
Attn:_____________________ (With copy to General Counsel)
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EXHIBIT A
Application
GoAmerica is engaged in the business of providing wireless communication
services to end users for access to the World Wide Web and Intranets as well as
certain other services such as messaging and custom information services (the
"GoAmerica Service").
12
<PAGE>
EXHIBIT B
Service Area
Customer is authorized to provide the Service in the following MSAs:
Arizona: Phoenix*, Tucson*
- -------
California: Fresno, Sacramento, San Diego*, San Francisco*, San Jose*,
- ----------
Bakersfield*
Colorado: Denver
- --------
Connecticut: Bridgeport*, Hartford*, New Haven*, New London/Norwich*
- -----------
Delaware: Wilmington*, Dover*
- --------
Florida: Orlando, Tampa/St. Petersburg, West Palm Beach/Boca Raton
- -------
Miami/Ft. Lauderdale, Lakeland/Winter Haven*
Illinois: Chicago*
- --------
Indiana: Gary*, Indianapolis*
- -------
Kentucky: Louisville*
- --------
Maryland: Baltimore*, Frederick*
- --------
Massachusetts: Boston*, Worcester*
- -------------
Michigan: Detroit*
- --------
Minnesota: Minneapolis/St. Paul
- ---------
Missouri: St. Louis*
- --------
Nevada: Las Vegas, Reno
- ------
New Hampshire: Manchester*
- -------------
New Jersey: Atlantic City*, Trenton*, Long Branch*, New Brunswick*,
- ----------
Ocean City*, Vineland
New Mexico: Albuquerque*, Las Cruces*
- ----------
New York: New York
- ---------
North Carolina: Charlotte*, Raleigh*
- --------------
Ohio: Cincinnati*, Columbus*, Dayton*, Cleveland*, Akron*, Canton*
- -----
Oklahoma: Oklahoma City, Tulsa
- --------
Oregon: Portland
- ------
Pennsylvania: Pittsburgh, Allentown*, Philadelphia*
- ------------
South Carolina: Columbia, Greenville*
- --------------
Tennessee: Memphis*, Nashville*
- ---------
13
<PAGE>
Texas: Austin, Dallas/Ft. Worth, San Antonio, El Paso*, Houston*,
- -----
Galveston*
Utah: Salt Lake City
- ----
Virginia: Newport News*, Richmond*, Norfolk*
- --------
Washington: Seattle/Everett, Tacoma
- ----------
Washington D.C.*
- ----------------
* These markets are available for Service through an intercarrier
arrangement.
14
<PAGE>
EXHIBIT C
---------
Service Plan
Certificates of Resale provided for the following states: New Jersey
- --------------------------------------------------------
Interconnection: Interconnection between the parties' networks will be
- ---------------
implemented ******.
Access Fees*: $ ****** per month per activated Number. $ ****** per month
- -------------
per assigned, but not activated, Number. On an optional basis, Reseller may
request a block of network addresses prior to activation. AT&T will hold such
addresses in a pool until Reseller requests activation. During any month in
which such held Number is activated, only the $ ****** (or as discounted below)
Access Fee plus any applicable usage will be charged.
*Access Fee Discount:
- --------------------
*As Customer's number of active Numbers, increases, the monthly access fee will
be reduced according to the following schedule:
Active Numbers Access Fee
****** $ ******
****** $ ******
****** $ ******
****** $ ******
Assignment Fee: A one time fee of $ ****** will be charged for every new
- --------------
Number. This reflects Company's costs of providing personnel, systems, and
completing paperwork necessary to reserve Numbers to Reseller and to activate
them.
Usage Charges**: $ ****** per kilobyte***
- ---------------
*** Any applicable discount for usage for any given month shall be credited on
the following month's bill.
**Usage Volume Discount:
- -----------------------
As Customer's average kilobyte usage per user increases, the price per kilobyte
will be reduced according to the following schedule. The first month of usage
for a newly activated user is not included in the calculation***:
__________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
15
<PAGE>
Average Monthly Kilobyte Usage Per Number Price per Kilobyte****
****** $ ******
****** $ ******
****** $ ******
****** $ ******
****** $ ******
****** $ ******
****** $ ******
**** Note that usage in non-AT&T markets is not subject to the discount schedule
and will be charged at the rate of $ ****** per kilobyte, without exception.
Cancellation Fee: ****** will be assessed upon deactivation or deassignment of
- ----------------
Numbers.
Billing Guidelines for Calls.
- ----------------------------
1. General. AT&T will bill Customer on a monthly basis for Service
-------
furnished under this Agreement, including regular monthly Service charges and
usage charges for all data transmissions processed through the Number. Usage
charges include charges on a per kilobyte basis for transmissions that are sent
or received by Equipment programmed with a Number assigned to Customer. Usage
charges may also include charges for additional services offered by AT&T which
Customer may subscribe to at rates determined by AT&T from time to time.
2. Access Charges. Access charges are billed monthly in arrears. Usage
--------------
charges are billed monthly in arrears. If AT&T agrees to provide Service
features to Customer, Company reserves the right to charge a reasonable fee for
adding or deleting Service features.
3. Measurement. The measurement of a transmission is in kilobytes.
-----------
4. Loss of Registration. Registration may be "lost" (i.e., involuntarily
--------------------
disconnected) for a variety of reasons, including atmospheric conditions,
topography, weak batteries, system overcapacity, movement outside a service
area, and gaps in coverage within a service area. Loss of registration may
result in retransmissions and additional usage charges.
Minimum Number Requirements:
- ---------------------------
Customer shall maintain, within ****** of the date of this Agreement, a
minimum of ****** active Numbers.
__________________
****** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
16
<PAGE>
Failure to Meet Minimum Number Requirements. In the event Customer fails to
- -------------------------------------------
achieve the minimum Number requirements set forth in this Exhibit C for any
given ******, Customer shall pay to AT&T in addition to all other amounts due
the difference between Customer's actual Numbers and the required minimum
Numbers times the minimum monthly usage set forth in Exhibit C for each ******
in which Customer fails to achieve such minimum. Continued failure to meet
Minimum Number Requirements shall give rise to AT&T's right to terminate under
section 7.2.4
Promotional Tools: AT&T will provide Customer with up to ****** Numbers, at
- -----------------
******, with ****** usage in AT&T markets, and up to ****** Numbers at a rate of
****** , with ****** in AT&T markets. Usage outside of AT&T markets and all
taxes on usage relating to such Numbers will remain the responsibility of
Customer.
__________________
****** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
17
<PAGE>
EXHIBIT D
End User Disclosures
1. [END USER] HAS NO PROPERTY RIGHT IN ANY NUMBER ASSIGNED TO IT.
2. [END USER] UNDERSTANDS THAT [CUSTOMER] IS AN AUTHORIZED RESELLER OF AT&T
WIRELESS PACKET DATA SERVICE.
3. [END USER] UNDERSTANDS AND AGREES THAT IT HAS NO CONTRACTUAL RELATIONSHIP
WHATSOEVER WITH AT&T WIRELESS SERVICES AND THAT [END USER] IS NOT A THIRD PARTY
BENEFICIARY OF ANY AGREEMENT BETWEEN [CUSTOMER] AND AT&T WIRELESS SERVICES.
4. [END USER] UNDERSTANDS AND AGREES THAT AT&T WIRELESS SERVICES WILL HAVE NO
LEGAL, EQUITABLE OR OTHER LIABILITY OF ANY KIND TO [END USER]. IN ANY EVENT,
AT&T WIRELESS SERVICES' TOTAL LIABILITY ARISING IN CONNECTION WITH THIS
AGREEMENT (REGARDLESS OF THE FORM OF THE ACTION) FOR ANY CAUSE WHATSOEVER
(INCLUDING BUT NOT LIMITED TO ANY FAILURE OR DISRUPTION OF THE CDPD SERVICE
PROVIDED HEREUNDER) IS LIMITED TO PAYMENT OF DAMAGES IN AN AMOUNT EQUAL TO THE
PROPORTIONATE FIXED MONTHLY CHARGE PAYABLE FOR SERVICES PROVIDED TO [END USER]
UNDER THIS AGREEMENT FOR THE PERIOD OF SERVICE DURING WHICH SUCH DAMAGES OCCUR.
5. UNLESS CAUSED BY THE NEGLIGENCE OF [CUSTOMER] OR AT&T WIRELESS SERVICES,
[END USER] WILL INDEMNIFY AND HOLD AT&T WIRELESS SERVICES (AND ITS AFFILIATED
COMPANIES AND ANY OF THEIR OFFICERS, EMPLOYEES AND AGENTS) HARMLESS AGAINST ALL
CLAIMS (INCLUDING, WITHOUT LIMITATION, CLAIMS FOR LIBEL, SLANDER, COPYRIGHT OR
PATENT INFRINGEMENT OR ANY PERSONAL INJURY OR DEATH) ARISING DIRECTLY OR
INDIRECTLY FROM [END USER'S] USE, FAILURE TO USE, OR INABILITY TO USE THE
NUMBERS ASSIGNED TO IT OR THE CDPD SERVICE. THIS INDEMNITY WILL SURVIVE THE
TERMINATION OF THIS AGREEMENT.
6. ALTHOUGH CDPD SERVICE USES AN ENCRYPTED TECHNOLOGY, AND THE LAWS GENERALLY
PROHIBIT THIRD PARTIES FROM MONITORING CELLULAR TRANSMISSIONS, AT&T WIRELESS
SERVICES CANNOT GUARANTY THE SECURITY OF DATA TRANSMISSIONS. NEITHER AT&T
WIRELESS SERVICES NOR ANY
18
<PAGE>
UNDERLYING CARRIER SHALL BE LIABLE FOR ANY LACK OF SECURITY RELATING IN ANY WAY
TO USE OF THE SERVICE OR [END USER'S] DATA TRANSMISSIONS.
7. [END USER] WILL NOT USE THE SERVICE TO TRANSMIT ANY COMMUNICATION WHERE THE
MESSAGE, OMITS TRANSMISSION OR DISTRIBUTION WOULD VIOLATE ANY LAW, COURT ORDER
OR REGULATION, OR WOULD LIKELY BE OFFENSIVE TO THE RECIPIENT OR RECIPIENTS
THEREOF.
8. [END USER] USES THE CONTENT ACCESSED BY THE CDPD SERVICE AT ITS OWN RISK.
19
<PAGE>
July 28, 1998
Joe Korb
Executive Vice President and Director
Go America
401 Hackensack Avenue
Hackensack, NJ 07601
I want to take this opportunity to inform you of some positive changes and
additions we have made with our VAR Rate Plans. We have lowered our Standard
VAR Rate (SVR) plan to be more competitive with other network providers
offerings as well as to be consistent with our own retail pricing. We have also
added ****** plans, which hopefully will allow you to be more creative with your
pricing as well as drive higher margins.
To summarize the changes in the ****** plan, we have implemented the following:
. ******
. ******
. ******
The additional rate plans that you can now take advantage of are as follows:
. ******
. ******
The details around each of the existing and new rate plans follows.
I. ******
Monthly Access Fee: ******
- ------------------
Volume Discounts: As the volume of GO AMERICA's Numbers increases across all
- ----------------
rate plans, GO AMERICA will receive the following discounts. These discount
levels are the same and have not changed.
- -------------------------------------------------------------------
- -------------------------------------------------------------------
****** ******
- -------------------------------------------------------------------
****** ******
- -------------------------------------------------------------------
****** ******
- -------------------------------------------------------------------
****** ******
- -------------------------------------------------------------------
__________________
****** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
20
<PAGE>
Usage Charges:
- -------------
In AT&T Markets: ****** per kilobyte*
In non-AT&T Markets: ****** per kilobyte
*Usage in AT&T markets during off-peak hours (weekends and from 7 p.m. to 7
a.m., Monday through Friday) qualify for a ****** discount.
II. ****** Rate Plans
****** Rate Plan. ****** per Number per month for ****** or usage in AT&T
- ----------------
markets. Any usage above the ****** or usage in non-AT&T markets will be billed
at ****** without exception.
****** Rate Plan. ****** per Number per month for ****** usage in AT&T markets.
- ----------------
Any usage above the ****** or usage in non-AT&T markets will be billed at ******
without exception.
****** Rate Plan. ****** per Number per month for ****** usage in AT&T markets.
- ----------------
Any usage above the ****** or usage in non-AT&T markets will be billed at ******
without exception.
****** Rate Plan. ****** per Number per month for ****** usage in AT&T markets.
Any usage above the ****** in non-AT&T markets will be billed at ****** without
exception.
*To determine ******, AT&T will aggregate usage across all of the Numbers in a
particular ******.
III. ****** Rate Plans
Limitations: TO qualify for ******, the ****** using the service ****** in an
- -----------
AT&T Market.
******: ****** per Number per month for ****** in AT&T markets. ****** usage in
-
non-AT&T Markets will be billed at ****** without exception.
******: ****** per Number per month for ****** Wireless IP Service is offered,
-
whether in AT&T markets or non-AT&T markets.
******: As the volume of GO AMERICA's Numbers increases across all rate plans,
GO AMERICA will receive the following discounts.
- --------------------------------------------------------------------------------
LUV NUV
- --------------------------------------------------------------------------------
****** ****** ******
- --------------------------------------------------------------------------------
****** ****** ******
- --------------------------------------------------------------------------------
****** ****** ******
- --------------------------------------------------------------------------------
****** ****** ******
- --------------------------------------------------------------------------------
* Volume discounts only apply to ****** and not on ******.
__________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
21
<PAGE>
IV. ****** Rate Plan
Limitations: To qualify for the ****** Rate Plan, GO AMERICA must have an
- -----------
******.
GO AMERICA can either ****** off the ****** or ****** their own ******. If GO
AMERICA should choose to ****** off the ******, the ****** would not be
accessible. In addition, GO AMERICA utilizing the ****** would be responsible
for ****** their own ****** on their ******.
******: ****** per Number per month for ****** usage in AT&T markets utilizing
-
an HDML based application. Any usage in non-AT&T markets and any usage that
does not go through the UP.LINK gateway will be billed at ****** per kilobyte
without exception.
Volume Discounts: As the volume of GO AMERICA's Numbers increases across all
- ----------------
rate plans, GO AMERICA will receive the following discounts.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
****** ******
- --------------------------------------------------------------------------------
****** ******
- --------------------------------------------------------------------------------
V. ****** Rate Plans
Limitations: To qualify for a ******, GO AMERICA must submit ****** that the
- -----------
****** receiving service under the plan ****** and that ****** is a ****** of
******. AT&T will make all ****** as to ****** in its ******. In addition, the
Service address of the End User using Service must be in an AT&T market.
******: ****** per Number per month for unlimited usage in AT&T markets. Any
usage in non-AT&T markets will be charged at ****** without exception.
Volume Discounts: As the volume of GO AMERICA's Numbers increases, GO AMERICA
- ----------------
will receive the following discounts.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
****** ******
- --------------------------------------------------------------------------------
****** ******
- --------------------------------------------------------------------------------
****** ******
- --------------------------------------------------------------------------------
* Volume discounts only apply to ****** and not on ******.
The following items still apply for all VAR rate plans, including the new ones
described above.
__________________
****** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
22
<PAGE>
Reservation Fee: GO AMERICA may request a block of network addresses be
- ---------------
reserved to it prior to activation. AT&T will hold such addresses in a pool
until GO AMERICA requests activation. GO AMERICA will be charged ******, but
not activated, Number. During any month in which a reserved Number is
activated, GO AMERICA will be charged only the applicable Access Fee plus any
applicable usage, and will not be charged a Reservation Fee.
Assignment Fee: A onetime fee of ****** will be charged for every new Number at
- --------------
the earlier of the time of reservation or activation.
Cancellation Fee: No cancellation fee will be assessed upon deactivation or
- ----------------
deassignment of Numbers.
The new rate plans will be available starting August 1, 1998. If you plan to
make changes based on these changes and addition, please have to us list of IPs
that need to be changed with the requested rate plans by each.
You will also receive soon an updated Exhibit C to your VAR Agreement. If you
have no changes, please sign and return this to my attention.
As always, if you have any issues or concerns please give me a call.
John Russell
National VAR Account Manager
AT&T Wireless, Wireless Data Division
__________________
****** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
23
<PAGE>
EXHIBIT 10.2
AIRBRIDGE PACKET SERVICE AGREEMENT
BETWEEN
BELL ATLANTIC NYNEX MOBILE
AND
GOAMERICA COMMUNICATIONS CORP.
<PAGE>
Contract No. ******
AIRBRIDGE(R) PACKET SERVICE AGREEMENT
This Service Agreement is entered into by and between GoAmerica Communications
Corporation, a New Jersey corporation, with a principal place of business
located at 401 Hackensack Avenue, Hackensack, NJ 07601 ("Customer") and Cellco
Partnership, a Delaware general partnership, by its managing general partner,
Bell Atlantic NYNEX Mobile, Inc. (hereinafter known as "BANM") with offices at
180 Washington Valley Road, Bedminster, New Jersey 07921 (the "Agreement").
WHEREAS, BANM is either licensed and authorized by the Federal
Communications Commission ("FCC") to provide cellular telecommunications
service, or manages on behalf of the FCC licensee pursuant to a management
agreement in the Area (defined below); and
WHEREAS, the Customer wishes to establish a mobile data communications
system through a public packet switched network in order to utilize the system
for data communication by Customer and/or its Authorized Users (defined below);
and
WHEREAS, BANM has the capability to provide Cellular Digital Packet
Data ("CDPD") Service, known as AirBridge(R) Packet Service; and
WHEREAS, Customer wishes to obtain such AirBridge(R) Packet Service
from BANM in the Area; and
WHEREAS, BANM wishes to make available AirBridge(R) Packet Service to
Customer on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and intending to be legally bound, the parties agree as
follows:
TERMS
1. DEFINITIONS.
-----------
As used herein the following terms shall have the following respective meaning:
Area. The markets listed in Exhibit A within which BANM either is
----
licensed and authorized by the FCC to provide commercial mobile service, or
manages on behalf of the FCC licensee pursuant to a management agreement and in
which BANM currently provides or may provide AirBridge Packet Service.
Authorized User. Individuals or companies authorized by Customer to
---------------
use the System established by Customer.
Cellular Digital Packet Data Service ("CDPD"). Cellular radio service
---------------------------------------------
utilizing packet switching technology to transmit data over radio frequency
channels. The raw data rate of CDPD is 19.2 Kilobits per second. It is a
connectionless multi-protocol network service providing peer network wireless
extension to existing data networks.
Customer. Customer is GOAmerica Communications Corporation.
--------
1
<PAGE>
Equipment Identifier (EID). An electronic serial number "burned" into
--------------------------
a CDPD radio modem at the time of manufacture.
Fixed End System (FES). A host computer(s) operated by or on behalf
----------------------
of Customer.
Kilobyte. A kilobyte is 1000 octets of data, measures at the IP
--------
packet layer. IP header and data octets are included in the kilobyte count.
Mobile Data Base Station ("MDBS"). The unit located at BANM cell
---------------------------------
sites which serves as the data link relay point. The MDIS communicates with
each MES through the MDBS.
Mobile Service Area. Market areas or combinations of Market areas
-------------------
which Company establishes to provide Commercial Mobile service.
Mobile Data Intermediate Systems ("MDIS"). The component of the
-----------------------------------------
AirBridge Packet Service network which performs routing and which contains the
network control functions, including the mobility manager, registration and
authentication functions.
Mobile End System ("MES"). A data terminal, CDPD radio modem, and
-------------------------
antenna.
Network Entity Identifier ("NEI"). A network address assigned to the
---------------------------------
MES. Each MES has an NEI and a unique corresponding EID for authentication
purposes.
Packet. The continuous sequence of binary digits of information,
------
which is routed through the AirBridge Packet Service network as an integral
unit. Packet sizes can be flexible within a range of "0" user bytes to a
maximum of "2048" bytes.
Service. The Airbridge Packet Service provided pursuant to this
-------
Agreement.
2. PROVISION OF SERVICE.
---------------------
BANM hereby undertakes to provide the Service to Customer in order for the
Customer and/or its Authorized Users to transmit and receive data over the
Service network in the Area, pursuant to the terms and conditions specified
in this Agreement. Customer shall purchase CDPD service ****** from BANM
or its affiliates which provide such Service in the Area. BANM will issue
****** NEIs to Customer. All such NEI assignments shall be made in
accordance with the CDPD Network Information Center policies in effect from
time to time. Customer has no property rights or interest in the NEI or IP
address assigned to its equipment. Rights in the NEIs and IP addresses
shall remain the property of BANM.
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
2
<PAGE>
3. PRICING.
-------
The rate for the Service provided by BANM is set forth in Exhibit B. The
availability of such rate is restricted to the applications set forth in
Exhibit B. In the event Customer has selected and is purchasing equipment
through BANM, the terms of payment and price of such equipment are set
forth in Exhibit B. ******
4. INSTALLATION.
------------
At Customer's request, BANM will provide and/or arrange for installation
services of MES equipment in the Area. The rate for such installation
services will be negotiated on a case by case basis and will be included in
a separate attachment to this Agreement.
5. COMMITMENT OF CUSTOMER.
----------------------
Customer shall, unless otherwise agreed upon in writing and in advance, at
its sole expense:
(i) purchase and maintain any equipment that Customer and/or its
Authorized Users may require to communicate with the Service network;
and
(ii) establish and maintain facilities or services for connecting
Customer's and/or its Authorized Users' networks or host processors to
the Service network (such as private line connections and/or frame
relay service); and
(iii) maintain at its sole expense and option all MES's and ensure
that each is technically and operationally compatible with the Service
network and is in compliance with applicable state and federal laws,
rules, and regulations; and
(iv) procure any other items or services, including, but not limited
to, any applications software or professional services that may be
required by Customer and/or its Authorized Users in connection with
the Service and/or this Agreement; and
(v) submit a completed copy of the form entitled, "Air-Bridge Packet
Service Request Form", attached hereto as Exhibit C, for modification,
addition or deletion of NEIs/EIDs during the term of this Agreement;
and
(vi) pay and hereby guarantees the payment of all invoices presented
by BANM under the terms of this Agreement.
(vii) provide the following to its end users:
(1) technical help desk support during normal working hours of a
five (5) day week.
(2) thorough training of the host and mobile systems.
(3) successful installation of host software and hardware with
back end connectivity.
(4) successful installation of mobile software and hardware with
wireless connectivity.
(5) successful configuring of all software and hardware to BANM
Network specifications.
(6) submission of necessary information to BANM to receive IP
Address.
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
3
<PAGE>
(viii) subscribe to a minimum of ****** NEIs during the term of this
Agreement as shown in Exhibit B.
6. AVAILABILITY OF THE SERVICE.
---------------------------
The Service is available for Customer and/or its Authorized Users who are
equipped for the Service when they are within the range of cell sites
providing the Service. BANM will make good faith efforts to have scheduled
outages during off-peak hours.
6.1 The Service is subject to transmission limitations caused by
atmospheric and like conditions. The Service may be temporarily
interrupted or curtailed due to government regulations, suspected
fraudulent activities, equipment modifications, upgrades, relocations,
repairs and similar activities necessary or appropriate for the proper or
improved operation of the Service.
6.2 The Service, although encrypted, is capable of being intercepted
without knowledge of or permission from Customer by unauthorized third
parties possessing certain types of devices or equipment.
7. TARIFF FILINGS.
--------------
This Agreement and performance hereunder are subject to any required State
and Federal regulatory filings. Where required, BANM shall commence the
process for submission of any such filings upon execution of this
Agreement.
8. BILLING.
--------
BANM will provide Customer with a monthly invoice for the Service provided
under this Agreement.
8.1 The invoice will identify charges in accordance with Exhibit B. Terms
of payment shall be net thirty (30) days from the date of the invoice.
8.2 Undisputed payments received more than thirty (30) days after the date
of the invoice will incur a late payment charge in the amount of the
greater of one and one-half percent (1 1/2%) of the unpaid balance or the
applicable limit (if any) set by law for each month or fraction thereof
that such balance shall remain unpaid.
8.3 Customer will reimburse BANM for court costs, attorney's fees, costs
of investigation or collection and similar expenses incurred by BANM in the
enforcement of any right or privilege hereunder.
8.4 BANM may verify and/or reverify Customer's credit rating at any time
and BANM may require Customer at any time to make a suitable deposit that
BANM shall hold as guarantee of the payment of charges. Upon termination
of Service, BANM may apply Customer's deposit against Customer's bill for
all charges.
9. LIMITATION OF LIABILITY.
------------------------
9.1 IN NO EVENT SHALL BANM BE LIABLE TO CUSTOMER, ITS AUTHORIZED USERS, OR
EMPLOYEES AND/OR AGENTS OF EITHER OF THEM, OR ANY THIRD PARTY, FOR ANY
INDIRECT, INCIDENTAL, SPECIAL,
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
4
<PAGE>
CONSEQUENTIAL, PUNITIVE DAMAGES, OR LOST PROFITS OR ANY CLAIM OR DEMAND OF
ANY NATURE OR KIND, INCLUDING, BUT NOT LIMITED TO, USE OR INABILITY TO
USE/ACCESS THE SERVICE, INCLUDING, BUT NOT LIMITED TO, RELIANCE BY CUSTOMER
AND/OR AN AUTHORIZED USER ON ANY DATA OBTAINED THROUGH USE OF THE SERVICE,
ANY INTERRUPTION, DEFECT, ERROR, VIRUS OR DELAY IN OPERATION OR
TRANSMISSION, ANY FAILURE TO TRANSMIT OR ANY LOSS OF DATA, ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR THE PERFORMANCE OR BREACH THEREOF.
9.2 NOTWITHSTANDING THE FOREGOING, BANM SHALL DEFEND ANY SUIT OR
PROCEEDING BROUGHT AGAINST CUSTOMER TO THE EXTENT THAT SUCH SUIT OR
PROCEEDING IS BASED ON A CLAIM THAT THE SERVICE FURNISHED TO CUSTOMER BY
BANM UNDER THIS AGREEMENT CONSTITUTES AN INFRINGEMENT OF ANY PATENT,
COPYRIGHT OR TRADE SECRET OR A VIOLATION OF ANY FEDERAL OR OTHER LICENSE OR
FRANCHISE REQUIRED TO BE MAINTAINED IN ORDER TO PROVIDE SUCH SERVICE;
PROVIDED, HOWEVER, THAT CUSTOMER SHALL GIVE BANM PROMPT NOTICE IN WRITING
OF SUCH SUIT OR PROCEEDING, BANM SHALL HAVE COMPLETE CONTROL OF THE
DEFENSE, AND CUSTOMER SHALL PROVIDE ANY INFORMATION AND ASSISTANCE
REASONABLY REQUESTED BY BANM (AT BANM'S EXPENSE). BANM SHALL PAY ALL
DAMAGES AND COSTS FINALLY AWARDED THEREIN AGAINST CUSTOMER, BUT BANM SHALL
NOT BE RESPONSIBLE FOR ANY COMPROMISE MADE WITHOUT ITS CONSENT.
10. DISCLAIMER OR WARRANTIES.
-------------------------
10.1 DUE TO THE POSSIBILITY OF ERRORS INCIDENT IN THE USE OF CDPD, THE
SERVICE FURNISHED BY BANM IS SUBJECT TO THE TERMS, CONDITIONS AND
LIMITATIONS SPECIFIED HEREIN. BANM MAKES NO WARRANTY, EITHER EXPRESS OR
IMPLIED, CONCERNING THE SERVICE, INCLUDING WITHOUT LIMITATION, WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE OR USE.
10.2 CUSTOMER ACKNOWLEDGES IT HAS SELECTED CUSTOMER'S SOFTWARE AND/OR
EQUIPMENT (INCLUDING EQUIPMENT THAT MAY BE PURCHASED BY CUSTOMER THROUGH
BANM). BANM HAS MADE AND MAKES NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER, DIRECTLY OR INDIRECTLY, EXPRESS OR IMPLIED, AS TO THE
SUITABILITY, DURABILITY, FITNESS FOR PARTICULAR PURPOSE OR USE,
MERCHANTABILITY, CONDITION OR QUALITY OF THE CUSTOMER SELECTED EQUIPMENT
AND/OR SOFTWARE. BANM SHALL NOT BE LIABLE TO CUSTOMER AND/OR ANY AUTHORIZED
USER FOR ANY LOSS, DAMAGE OR EXPENSE OF ANY KIND OR NATURE CAUSED DIRECTLY
OR INDIRECTLY BY THE CUSTOMER SELECTED EQUIPMENT AND/OR SOFTWARE, OR BY THE
USE OR MANUFACTURE THEREOF, OR BY ANY REPAIR, SERVICE OR ADJUSTMENT THERETO
OR BY ANY INTERRUPTION OF SERVICE OR LOSS
5
<PAGE>
OF USE THEREOF, OR FOR ANY LOSS OF BUSINESS OR DAMAGE WHATSOEVER AND
HOWSOEVER CAUSED. TO THE EXTENT PERMITTED, BANM AGREES TO ASSIGN TO
CUSTOMER ANY OF THE EQUIPMENT MANUFACTURER'S WARRANTIES RECEIVED BY BANM
WITH RESPECT TO THE CUSTOMER SELECTED EQUIPMENT.
11. CREDIT FOR OUTAGES.
-------------------
No credit or adjustment will be made for interruptions of the Service
unless the interruption continues for a period of twenty-four (24) hours or
more, measured from the time the interruption is reported to BANM by
Customer. In the event of an interruption of the Service that continues for
a period of twenty-four (24) hours or more, credit allowance will be made,
at Customer's request, for a pro-rata amount not to exceed the minimum
charge per NEI for that month for each NEI rendered inoperative by the
interruption. The credit shall be available only where the interruption is
in no part due to the acts or omissions of Customer or an Authorized User
whether negligent or otherwise or by interruptions caused by failure of
equipment or service not provided by BANM. The foregoing credit shall be
the sole and exclusive remedy to Customer and/or Authorized User for any
interruption of the Service. In order to be eligible for any such credit,
Customer must request the credit within sixty (60) days of the commencement
of the interruption.
12. USE OF THE SERVICE.
-------------------
12.1 The Service furnished hereunder is for use only by Customer or its
Authorized Users.
12.2 Customer will be liable for all usage and administrative, financial
charges and any other losses, damages, charges or expenses arising from or
out of the fraudulent use of Service, including unauthorized use resulting
from or attributable to Customer and/or its Authorized Users. The parties
will actively cooperate in order to minimize the fraudulent or other
unauthorized use and subsequent abuse of the Service provided by BANM.
13. USE OF MARKS.
-------------
13.1 Customer shall not, directly or indirectly, hold itself out as or
otherwise create the impression that it is sponsored, authorized, endorsed
by, affiliated with, or an agent of BANM or an affiliate thereof.
Additionally, Customer shall not use the name "Bell Atlantic NYNEX Mobile",
"Bell Atlantic", "NYNEX" or any mark used by BANM, Bell Atlantic or NYNEX
or any of their affiliates, or any colorable imitation thereof, in or as
part of any company name or trade name or in any other confusing or
misleading manner, without the prior written consent of BANM. Nothing
contained in this Agreement is intended to convey a license to use any such
trademarks, service marks or trade names.
14. INDEMNIFICATION.
----------------
(a) Customer shall defend, indemnify, and save harmless BANM and its
successors and assigns and its employees and agents and their heirs, legal
representatives and assigns from any and all claims or demands whatsoever,
including the costs, expenses and reasonable attorney's fees incurred on
account thereof, that may be made by any person,
6
<PAGE>
specifically including, but not limited to, employees of the Customer,
including, but not limited to, claims for bodily injury (including death to
persons) or damage to property (including theft) occasioned by or alleged
to have been occasioned by the acts or omissions of Customer, its employees
or persons furnished by the Customer whether negligent or otherwise.
(b) Customer shall defend BANM at BANMs request, against any such
liability, claim or demand. The foregoing indemnification shall apply
whether Customer or BANM defends such suit or claims. BANM agrees to
notify Customer promptly of any written claim or demands against BANM for
which Customer is responsible hereunder.
15. TERM OF AGREEMENT.
------------------
15.1 This Agreement shall be effective when executed by an authorized
representative of BANM ("Effective Date"). The term of this Agreement
shall be two (2) years from the Effective Date. This Agreement shall
automatically renew for additional one (1) year terms unless either party
provides at least sixty (60) days written notice prior to the expiration
thereof of its intention not to renew this Agreement.
16. TERMINATION OF THE SERVICE.
---------------------------
16.1 Upon nonpayment of any sum due BANM, or upon a violation by Customer
of any of the provisions of this Agreement, BANM may give Customer written
notice of such nonpayment and/or violation. If Customer fails to rectify
the nonpayment or the violation within thirty (30) days of being given such
written notice, then BANM may immediately, without incurring any liability,
temporarily discontinue or interrupt the furnishing of the Service to
Customer.
16.2 Should Customer or its Authorized User's MES's be used with the
Service provided by BANM in violation of any of the provisions of this
Agreement, BANM may, immediately upon written notice to Customer, without
-------------------------------
incurring any liability, take such action as it may reasonably determine is
necessary or appropriate for the provision of the Service to its Customers.
Customer shall effect the discontinuance of any use of MES that is in
violation of this Agreement immediately upon notice to it of the violation,
and shall confirm in writing to BANM within five (5) business days that
such use has been discontinued. BANM may, in sole discretion, choose to
restore service to the MES in question when Customer has complied with the
provisions of this Section 17.2.
17. TERMINATION OF AGREEMENT.
-------------------------
17.1 Upon Default by Customer under this Agreement, of which Customer has
been given written notice, and which Customer has not cured within thirty
(30) days of such written notice BANM may, without incurring any liability,
immediately terminate this Agreement.
17.2 For purposes of this Section 17, "Default" shall be defined as:
-------
17.2.1 Failure by Customer to pay any charge when due (i.e. within thirty
(30) days of date of invoice) or to perform or observe any term or
condition of this Agreement; or
17.2.2 Institution by the Customer of any proceeding in bankruptcy,
reorganization, or insolvency; institution against Customer of any
proceeding in bankruptcy, reorganization, or insolvency that is acquiesced
to or not dismissed within ninety (90) days; appointment
7
<PAGE>
of a receiver for any substantial part of Customer assets; the making of an
assignment for the benefit of creditors or an admission in writing of
Customer of its inability to pay its debts as they mature.
17.3 Customer can terminate on notice and the buyout will be equal to the
$****** monthly access charge times the ****** line minimum, times the
months remaining in the original term.
18. PROPRIETARY AND CONFIDENTIAL INFORMATION.
----------------------------------------
In connection with BANM's provision of the AirBridgeSM Services, certain
confidential and proprietary, technical, financial or business information
may be disclosed by either party. The term "Information," as used in this
Agreement includes all specifications, drawings, sketches, models, samples,
reports, plans, forecasts, current or historical data, computer programs or
documentation and all other technical, financial or business data.
"Proprietary and/or Confidential Information" is defined as Information
which is in the possession of the Disclosing Party, is not generally
available to the public, and which the Disclosing Party desires to protect
against unrestricted disclosure or competitive use. All Information which
is disclosed by the Disclosing Party to the Receiving Party and which is to
be protected hereunder as Proprietary and/or Confidential Information of
the Disclosing Party shall:
a. if in writing or other tangible form, be conspicuously labeled as
proprietary, confidential or the like at the time of delivery; and
b. if oral, be identified as Proprietary and/or Confidential Information
prior to disclosure and be reduced to a writing labeled as indicated
in (a) above within fifteen (15) business days after its disclosure.
The Disclosing Party shall have the right to correct any inadvertent
failure to designate Information as Proprietary and/or Confidential
Information as set forth above by written notification as soon as
practical (but in no event later than five (5) business days) after
such error is determined. After receiving said notification, the
Receiving Party shall from that time forward treat such Information as
Proprietary and/or Confidential Information.
c. With respect to Proprietary and/or Confidential Information provided
under this Agreement, the Receiving Party shall during the term of
this Agreement:
(1) hold the Proprietary and/or Confidential Information in strictest
confidence; and
(2) restrict disclosure and/or use to solely those employees of the
Receiving Party with a need to know and not disclose it to any
other parties; and
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
8
<PAGE>
(3) advise those employees of their obligations with respect to the
Proprietary and/or Confidential Information and use the
Proprietary and/or Confidential Information only for the purposes
hereunder except as may otherwise be mutually agreed upon in
writing.
d. Any Information disclosed by the Disclosing Party to the Receiving
Party which the Disclosing Party holds subject to an obligation of
confidence to a third party, shall be subject to the same level of
protection as Proprietary and/or Confidential Information of the
Disclosing Party, provided the Disclosing Party advises the Receiving
Party of the confidential nature of such third party Information.
e. Neither party shall have an obligation to preserve the proprietary
nature of any Information which:
(1) was previously known to the Receiving Party free of any obligation
to keep confidential; or
(2) is disclosed to third parties by the Disclosing Party without
restriction; or
(3) is or becomes publicly available by other than unauthorized
disclosure; or
(4) is independently developed and so documented by the Receiving
Party; or
(5) which the Receiving Party is required to disclose pursuant to a
current law, regulation, or ordinance or a valid order of a court or
other governmental body or any political subdivision thereof;
provided, however, that the recipient of the Proprietary Information
shall first have given notice to the Disclosing Party and gives the
Disclosing Party a reasonable opportunity to make a reasonable effort
to obtain a protective order requiring that the Proprietary
Information and/or documents so disclosed be used only for the
purposes for which the order was issued.
f. All Information shall be deemed the property of the Disclosing Party.
Upon request the Receiving Party shall return all Information in tangible form
to the Disclosing Party or destroy all such Information.
g. Upon discovery of any disclosure by the Receiving Party, its agents,
employees, consultants or contractors, of any Proprietary and/or Confidential
Information, Receiving Party shall notify the Disclosing Party and, at its own
expense, take all steps necessary to prevent any further disclosure of
Proprietary and/or Confidential Information in violation of this Agreement.
h. Nothing contained in this Agreement shall be construed as granting or
conferring any rights by license or otherwise in any Information disclosed to
the Receiving Party.
19. MISCELLANEOUS.
--------------
19.1 Entire Agreement; Amendment. This Agreement and the attached Exhibits
---------------------------
constitute the entire agreement between the parties with respect to the
provision of the Service and associated services and supersede all prior
agreements, proposals, and understandings, whether written or oral. Any
modification or waiver of any provision of this Agreement must be in
writing and signed by authorized representatives of the parties.
9
<PAGE>
19.2 Severability. If any provision, or portion thereof, of this Agreement
------------
is invalid or unenforceable under applicable statute or rule of law, it is
only to that extent to be deemed omitted, and such unenforceability shall
not affect any other provision of this Agreement, but this Agreement shall
then be construed as if such unenforceable provision or provisions had
never been contained herein.
19.3 Independent Contractor. No party nor its employees or agents shall be
----------------------
deemed to be employees or agents of the other party, it being understood
that each party is an independent contractor for all purposes and at all
times, and each party shall be wholly responsible for withholding and
payment of all federal, state, and local income and other payroll taxes
with respect to its employees, including contribution from them as required
by law.
19.4 Waiver. The failure by Customer or BANM at any time to enforce any of
------
the provisions of this Agreement or any right with respect thereto, will in
no way be construed to be a waiver of such provisions or rights or in any
way to affect the validity of this Agreement. The exercise by a party of
any rights under the terms or provisions of this Agreement shall not
preclude or prejudice the exercising thereafter of the same or any other
right.
19.5 Governing Law. Subject to any tariffs on file with any state or
-------------
federal regulatory body, this Agreement shall be governed by the law of the
State of New Jersey regardless of any conflicts of laws or rules which
would require the application of the laws of another jurisdiction.
19.6 Notices. Any notice to be given hereunder by either party to the
-------
other shall be in writing and shall be valid and sufficient if dispatched
by: a) registered or certified mail, postage prepaid in any post office in
the United States; b) hand delivery; or c) overnight courier prepaid.
Notices to BANM shall be addressed to:
Bell Atlantic NYNEX Mobile
180 Washington Valley Road
Bedminster, New Jersey 07921
Attention: GM Product Management
with a copy to Legal Dept - same address
Notices to Customer shall be addressed to:
GOAmerica Communications Corporation
401 Hackensack Avenue
Hackensack, NJ 07601
Attention:
If either party changes its address during the term hereof, it shall so
advise the other party in writing and any notice thereafter required to be
given shall be sent by certified mail to such new address.
19.7 Captions. The captions in this Agreement are for convenience only and
--------
shall not be construed to define or limit any of the terms herein.
10
<PAGE>
19.8 Publicity and Advertising. Without the prior written consent of the
-------------------------
other party, no party hereto will disclose to any person the terms and
conditions of this Agreement, except as may be required by law and then
only in compliance with Section 19.3(e). Customer shall submit to BANM all
advertising, sales promotion, press releases and other publicity matters
relating to the Service furnished by BANM under this Agreement wherein
BANM's name or marks is mentioned or language from which the connection of
said names or marks therewith may be inferred or implied. Customer shall
not publish or use such advertising, sales promotion, press releases, or
publicity matters without BANM's prior written approval.
19.9 Assignment. Any assignment of this Agreement, in whole or in part or
----------
any other interest hereunder without BANM's prior written consent shall be
void which consent shall not be unreasonably withheld. It is further
agreed that BANM upon written notice to Customer, may assign this
Agreement, in whole or in part, or any of its rights, duties and
obligations under this Agreement to its parent, an affiliate or affiliates
of BANM, or to a partnership or partnerships in which BANM its parent or an
affiliate has an BANM interest. This Agreement shall benefit and be
binding upon the parties hereto and their respective successors and
permitted assigns.
19.10 Authorized Signatures. BANM and Customer each represent that the
---------------------
individual signing this Agreement on its behalf has the power and authority
to enter into this Agreement and that this Agreement constitutes a valid
and binding obligation of each party.
19.11 Compliance with Laws. Both parties shall comply with all applicable
--------------------
local, state, and federal regulations, laws, ordinances, rules, and
decisions.
19.12 Acts of God. In no event shall either party have any liability for
-----------
any failure to comply with this Agreement, if such failure results from the
occurrence of any contingency beyond the reasonable control of such party,
including without limitation, the cellular provider serving a particular
area, strike or other labor disturbance, riot, theft, flood, fire,
lightning, storm, any act of God, power failure, war, national emergency,
interference by any government or governmental agency, embargo, seizure, or
enactment of any law, statute, ordinance, rule or regulation.
11
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
CELLCO PARTNERSHIP
By Bell Atlantic NYNEX Mobile, Inc., GOAMERICA COMMUNICATIONS
its managing general partner CORPORATION
By: /s/ Cynthia J. White By: /s/ Aaron Dobrinsky
------------------------------ ------------------------
Name: Cynthia White Name:____________________________
Title: Executive Vice President & COO Title:___________________________
Date: 5/13/97 Date: 5/12/97
------------------------------ ----------------------
12
<PAGE>
EXHIBIT A
This Exhibit A sets forth the Area(s), as that term is used in this Agreement,
in which BANM is authorized to provide CRS as described in this Agreement. In
this Exhibit there is described the individual counties of the MSA's and/or
RSA's in which BANM is authorized to conduct its CRS operations
1. (a) COUNTIES OF THE MSA(s) IN WHICH BANM IS LICENSED:
Bronx NY, Kings NY, New York NY, Queens NY, Richmond NY, Putnam NY,
Rockland NY, Westchester NY, Bergen NJ, Nassau NY, Suffolk NY, Essex
NJ, Morris NJ, Somerset NJ, Union NJ, Hudson NJ and Passaic NJ of the
New York MSA; Bucks PA, Chester PA, Delaware PA, Montgomery PA,
Philadelphia PA, Burlington NJ, Camden NJ and Gloucester NJ of the
Philadelphia MSA; Essex MA, Middlesex MA, Plymouth MA, Suffolk MA and
Rockingham NH of the Boston MSA; District of Columbia, Charles MD,
Montgomery MD, Prince Georges MD, Alexandria City VA, Fairfax City VA,
Falls Church City VA, Manassas City VA, Manassas Park City VA,
Arlington VA, Fairfax VA, Loudoun VA and Prince William VA of the
Washington DC MSA; Allegheny PA, Beaver PA, Washington PA and
Westmoreland PA of the Pittsburgh MSA; Baltimore City MD, Anne Arundel
MD, Baltimore MD, Carroll MD, Harford MD and Howard MD of the
Baltimore MSA; Hartford CT, Middlesex CT and Tolland CT of the
Hartford MSA; New Haven CT of the New Haven MSA; Madison NY, Worcester
MA of the Worcester MSA; Lackawanna PA, Carbon PA, Lehigh PA,
Northampton PA and Warren NJ of the Allentown MSA; Charles City VA,
Chesterfield VA, Goochland VA, Hanover VA, Henrico VA, Gaston NC,
Meklenburg NC and Union NC of the Charlotte MSA; Middlesex NJ of the
New Brunswick MSA; Hampden MA and Hampshire MA of the Springfield MSA;
Greenville SC, Pickens SC and Spartanburg SC of the Greenville MSA;
New Castle DE, Salem NJ and Cecil MD of the Wilmington MSA; Monmouth
NJ of the Long Branch MSA; Bristol MA of the New Bedford MSA;
Lexington SC and Richland SC of the Columbia MSA; Gloucester VA,
Hampden City VA, James City VA, Poquoson City VA, Berks PA of the
Reading MSA; Mercer NJ of the Trenton MSA; Hillsborough NH of the
Manchester MSA; Atlantic NJ and Cape May NJ of the Atlantic City MSA;
Orange NY of the Orange County MSA; Dutchess NY of the Poughkeepsie
MSA; New London CT of the New London MSA; Alexander NC, Burke NC and
Catawba NC of the Hickory MSA; Berkshire MA of the Pittsfield MSA;
Anderson SC of the Anderson MSA; Cumberland NJ of the Vineland MSA;
Warren NY and Washington NY of the Glen Falls MSA; Chittenden VT and
Grand Isle VT of the Burlington MSA.
(b) COUNTIES OF THE RSA(s) IN WHICH BANM IS LICENSED:
Hunterdon in NJ 1-HUNTERDON; Ocean in NJ 2-OCEAN; Sussex in NJ 3-
SUSSEX; Kent and Sussex in DE 1-KENT; Kent, Queen Annes, Talbot,
Caroline, Dorchester, Wicomico, Somerset, Calvert, St. Marys, and
Worcester in MD 2-
13
<PAGE>
KENT; Frederick in MD 3-FREDERICK; Lee, Wise, Dickenson, Buchanan,
Russell and Norton City in VA 1-LEE; Frederick, Clark, Shenandoah,
Page, Rappahannock, Fauquier, Warren and Winchester City in VA 10-
FREDERICK (B1); Mason, Jackson, Roane, and Calhoun in WV 1-MASON;
Wetzel, Tyler, Doddridge, Ritchie, Gilmer, Lewis, Pleasants in WV 2-
WETZEL; McKean, Camerom, and Elk in PA 2-MCKEAN; Butler, Clarion,
Lawrence and Armstrong in PA 6-LAWRENCE (B2); Indiana, Jefferson and
Clearfield in PA 7- JEFFERSON; Greene and Fayette in PA 9-GREENE;
Huntingdon, Juniata and Mifflin in PA 11-HUNTINGDON; Windham in CT 2-
WINDHAM; Newport in R11-NEWPORT; Cherokee, Clay, Graham, Macon, Swain,
Haywood, Jackson and Transylvania in NC 1-CHEROKEE; Anson, Montgomery,
Richmond, Scotland in NC 5-ANSON; Cabarrus, Stanly, Rowan, Iredell,
and Davie in NC 15-CABARRUS; Laurens, Greenwood, McCormick, Edgefield,
Saluda, Newberry and Abbeville in SC 2-LAURENS; Calhoun, Orangeburg,
Barnwell, Bamberg and Allendale in SC 7-CALHOUN; Oconee in SC 1-
OCONEE; Cherokee, Chester, Union and Fairfield in SC 3-CHEROKEE;
Lancaster and York in SC 9-LANCASTER; Barnstable, Dukes and Nantucket
in MA 2-BARNSTABLE; Carroll, Belknap and Merrimack in NH 2-CARROLL;
Franklin, Orleans, Essex, Lamoille, Washington, Caledonia and Orange
in VT 1-FRANKLIN; Addison, Rutland, Windsor, Bennigton and Windham in
VT 2-ADDISON; Dawson, Lumpkin, White, Habersham, Hall, Banks,
Franklin, Stephens, Rabun, Barrow in GA 2-DAWSON.
14
<PAGE>
EXHIBIT B
PRICE SCHEDULE
****** Access Fee $****** per NEI
Kilobyte Rate - in BANM markets $******
Kilobyte Rate - out of BANM markets $******
<TABLE>
<CAPTION>
Minimum Unit Commitment
- --------------------------------------------------------------------------------------------
Bill Cycle Committed Minimum Units Absolute Minimum Revenue
- --------------------------------------------------------------------------------------------
<S> <C> <C>
1 ****** ******
- --------------------------------------------------------------------------------------------
2 ****** ******
- --------------------------------------------------------------------------------------------
3 ****** ******
- --------------------------------------------------------------------------------------------
4 ****** ******
- --------------------------------------------------------------------------------------------
5 ****** ******
- --------------------------------------------------------------------------------------------
6 ****** ******
- --------------------------------------------------------------------------------------------
7 ****** ******
- --------------------------------------------------------------------------------------------
8 ****** ******
- --------------------------------------------------------------------------------------------
9 ****** ******
- --------------------------------------------------------------------------------------------
10 ****** ******
- --------------------------------------------------------------------------------------------
11 ****** ******
- --------------------------------------------------------------------------------------------
12 ****** ******
- --------------------------------------------------------------------------------------------
13 ****** ******
- --------------------------------------------------------------------------------------------
14 ****** ******
- --------------------------------------------------------------------------------------------
15 ****** ******
- --------------------------------------------------------------------------------------------
16 ****** ******
- --------------------------------------------------------------------------------------------
17 ****** ******
- --------------------------------------------------------------------------------------------
18 ****** ******
- --------------------------------------------------------------------------------------------
19 ****** ******
- --------------------------------------------------------------------------------------------
20 ****** ******
- --------------------------------------------------------------------------------------------
21 ****** ******
- --------------------------------------------------------------------------------------------
22 ****** ******
- --------------------------------------------------------------------------------------------
23 ****** ******
- --------------------------------------------------------------------------------------------
24 ****** ******
- --------------------------------------------------------------------------------------------
Total ******
- --------------------------------------------------------------------------------------------
</TABLE>
* Actual units in service on last day, of bill cycle is compared to the
minimum, and if actual is less than the minimum, an additional charge of
$****** x (****** - actual) is added to the bill.
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
15
<PAGE>
EXHIBIT C
AirBridge(R) Packet Service Request Form
Please fax requests to Jeffrey Pazkiewicz or Patrick Aanstoots at 908-658-4889
Contract Number __________________ Date _______________________
Customer Number __________________ Quantity _______________________
MDIS EID's NEI's Activation/Deactivation Date
____ 1._________ 1.____________ 1.__________________________
2._________ 2.____________ 2.__________________________
3._________ 3.____________ 3.__________________________
4._________ 4.____________ 4.__________________________
5._________ 5.____________ 5.__________________________
MDIS EID's NEI's Activation/Deactivation Date
____ 1._________ 1.____________ 1.__________________________
2._________ 2.____________ 2.__________________________
3._________ 3.____________ 3.__________________________
4._________ 4.____________ 4.__________________________
5._________ 5.____________ 5.__________________________
MDIS EID's NEI's Activation/Deactivation Date
____ 1._________ 1.____________ 1.__________________________
2._________ 2.____________ 2.__________________________
3._________ 3.____________ 3.__________________________
4._________ 4.____________ 4.__________________________
5._________ 5.____________ 5.__________________________
MDIS EID's NEI's Activation/Deactivation Date
____ 1._________ 1.____________ 1.__________________________
2._________ 2.____________ 2.__________________________
3._________ 3.____________ 3.__________________________
4._________ 4.____________ 4.__________________________
5._________ 5.____________ 5.__________________________
Authorized Signer: ______________________
Print Name and Title
Signature: ______________________
16
<PAGE>
AMENDMENT NO.1
This AMENDMENT No. 1 (the "Amendment") is made and entered into by and
between GOAmerica Communications Corporation ("Customer") and Cellco
Partnership, doing business as Bell Atlantic Mobile ("BAM") for attachment to
Contract # ******, dated May 13, 1997 (the "Agreement").
1. This Amendment is an integral part of and modifies the Agreement. The
terms used herein which are defined or specified in the Agreement shall have the
meanings set forth in the Agreement. If there are any inconsistencies between
the provisions of this Amendment and the provisions of the Agreement, the
provisions of this Amendment shall control.
2. The term of the Agreement is hereby extended for three (3) years, from
the date this Amendment is executed, and shall automatically renew for
additional one (1) year terms, unless Customer notifies BAM in writing at least
sixty (60) day prior to the expiration of the then current term, that it does
not wish to renew the Agreement.
3. Exhibit B, Price Schedule is hereby deleted in its entirety and
replaced with a new Exhibit B and B1, as attached hereto.
4. A new Section 8.5, which applies to "Electronic Billing", is hereby
added to "Billing", of the Agreement, which shall read as follows:
8.5 Should Electronic Billing become available, BAM will notify
Customer of the availability of Electronic Billing and make Electronic
Billing available to the Customer.
5. Section 4, of the Agreement, "Installation", is hereby deleted in its
entirety.
6. Section 2, of the Agreement, "Provision of Service", second sentence,
the term *****, is hereby deleted and replaced with the term *****.
7. Section 19.6 of the Agreement, "Notices", is hereby deleted in its
entirety and replaced with the following:
Notices. Any change in the Exhibits contained herein, shall require
written notification from both parties and shall not be valid until
mutually agreed upon and accepted by both parties. In addition, any
notice to be given hereunder by either party to the other shall also
be in writing and shall be valid and sufficient only if dispatched by:
a) registered or certified mail, postage prepaid in any post office in
the United States; b) hand delivery; or c) overnight courier prepaid.
Notices to BAM shall be addressed to:
Bell Atlantic Mobile
180 Washington Valley Road
Bedminster, NJ 07921
Attn: Mr. Peter Rohr
Staff Director - Contract Mgt. and Administration
(908) 306-7550
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
1
<PAGE>
Notices to Customer shall be addressed to:
GOAmerica Communications Corporation
401 Hackensack Avenue
Hackensack, NJ 07601
Attn: Mr. Frank Elenio
Chief Financial Officer
8. Exhibit A, is hereby deleted in its entirety and replaced with a new
Exhibit A, in the form attached hereto.
9. Exhibit C, "Airbridge(R) Packet Service Request Form", is hereby
deleted in its entirety and replaced with a new Exhibit C, "Bell Atlantic Mobile
Activation Procedures for Value Added Customers", in the form attached hereto.
10. This Amendment shall be effective when executed by both parties.
11. All provisions of the Agreement, including attachments thereto, not
addressed by this Amendment remain in full force and effect.
IN WITNESS WHEREOF, and intending to be bound hereby, the parties affix
their signature to this Amendment.
CELLCO PARTNERSHIP
By Bell Atlantic Mobile, Inc.
its managing general partner: GOAMERICA
COMMUNICATIONS CORPORATION
By: /s/ Robert J. Hirsh By: /s/ Francis J. Elenio
------------------------- -----------------------------
Name:_______________________ Name:___________________________
Title:______________________ Title:__________________________
Date: 1/7/00 Date: 12/29/99
----------------------- ---------------------------
2
<PAGE>
EXHIBIT A
This Exhibit C sets forth the Area(s), as that term is used in this Agreement,
in which BAM is authorized to provide CRS as described in this Agreement. In
this Exhibit there is described the individual counties of the MSAs and/or RSAs
in which BAM is authorized to conduct its CRS operations
(a) COUNTIES OF THE MSA(s) IN WHICH BAM IS LICENSED:
Northeast Region: Norfolk MA, Essex MA, Middlesex MA, Plymouth MA, Suffolk MA
and Rockingham NH of the Boston MSA; Hartford CT, Middlesex CT and Tolland CT of
the Hartford MSA; New Haven CT of the New Haven MSA; Madison NY, Worcester MA of
the Worcester MSA; Hampden MA and Hampshire MA of the Springfield MSA; Bristol
MA of the New Bedford MSA; Hillsborough NH of the Manchester MSA; Orange NY of
the Orange County MSA; Dutchess NY of the Poughkeepsie MSA; New London CT of the
New London MSA; Berkshire MA of the Pittsfield MSA; Warren NY and Washington NY
of the Glen Falls MSA; Chittenden VT and Grand Isle VT of the Burlington MSA;
Bristol RI, Kent RI, Providence RI, Washington RI of the Providence MSA;
Fairfield CT of the Bridgeport MSA; Albany NY, Montgomery NY, Rensselaer NY,
Saratoga NY, Schenectady NY of the Albany MSA.
Pittsburgh Region: Allegheny PA, Beaver PA, Washington PA and Westmoreland PA of
the Pittsburgh MSA
Northern New Jersey/NY Metro Region: Bronx NY, Kings NY, New York NY, Queens NY,
Richmond NY, Putnam NY, Rockland NY, Westchester NY, Bergen NJ, Nassau NY,
Suffolk NY, Essex NJ, Morris NJ, Somerset NJ, Union NJ, Hudson NJ and Passaic NJ
of the New York MSA; Middlesex NJ of the New Brunswick MSA; Monmouth NJ of the
Long Branch MSA.
Philadelphia Region: Bucks PA, Chester PA, Delaware PA, Montgomery PA,
Philadelphia PA, Burlington NJ, Camden NJ and Gloucester NJ of the Philadelphia
MSA;Carbon PA, Lehigh PA, Northampton PA and Warren NJ of the Allentown MSA;
Cumberland NJ of the Vineland MSA, New Castle DE, Salem NJ, Cecil MD of the
Wilmington MSA, Berks PA of the Reading MSA, Mercer NJ of the Trenton MSA,
Atlantic NJ, Cape May NJ of the Atlantic City MSA.
Washington/Baltimore: District of Columbia, Charles MD, Montgomery MD, Prince
Georges MD, Alexandria City VA, Fairfax City VA, Falls Church City VA, Manassas
City VA, Manassas Park City VA, Arlington VA, Fairfax VA, Loudoun VA and Prince
William VA of the Washington DC MSA; Baltimore City MD, Anne Arundel MD,
Baltimore MD, Carroll MD, Harford MD and Howard MD of the Baltimore MSA
Southeast: Gaston NC, Meklenburg NC and Union NC of the Charlotte MSA;
Greenville SC, Pickens SC and Spartanburg SC of the Greenville MSA; Lexington SC
and Richland SC of the Columbia MSA; Alexander NC, Burke NC and Catawba NC of
the Hickory MSA; Buncombe and Madison of the Asheville, NC MSA; Anderson SC of
the Anderson MSA.
(b) COUNTIES OF THE RSA(s) IN WHICH BAM IS LICENSED:
Northeast Region: Windham in CT 2-WINDHAM; Newport in R1-NEWPORT; Barnstable,
Dukes and Nantucket in MA 2-BARNSTABLE; Carroll, Belknap and Merrimack in NH 2-
CARROLL; Franklin, Orleans, Essex, Lamoille, Washington, Caledonia and Orange in
VT 1-FRANKLIN; Addison, Rutland, Windsor, Bennigton and Windham in VT 2-ADDISON
(B1); Ostego, Delaware, Schoharie, Sullivan and Ulster in NY 5-OSTEGO.
Pittsburgh Region: Mason, Jackson, Roane, and Calhoun in WV 1 MASON; Wetzel,
Tyler, Doddridge, Ritchie, Gilmer, Lewis, Pleasants in WV 2 WETZEL; McKean,
Camerom, and Elk in PA 2 MCKEAN; Butler, Clarion, Lawrence and Armstrong in PA 6
LAWRENCE (B2); Indiana, Jefferson and Clearfield in PA 7 JEFFERSON; Greene and
Fayette in PA 9 GREENE; Huntingdon, Juniata and Mifflin in PA 11 HUNTINGDON
(B2).
Northern New Jersey/NY Metro Region: Hunterdon in NJ 1-HUNTERDON; Sussex in NJ
3-SUSSEX.
Philadelphia Region: Ocean in NJ 2-OCEAN; Kent and Sussex in DE 1-KENT.
Washington/Baltimore: Kent, Queen Annes, Talbot, Caroline, Dorchester, Wicomico,
Somerset, Calvert, St. Marys, and Worcester in MD 2-KENT; Frederick in MD 3-
FREDERICK; Frederick, Clark, Shenandoah, Page, Rappahannock, Fauquier, Warren
and Winchester City in VA 10-FREDERICK (B1); Madison, Culpeper, Orange,
Fredericksburg City, Spotsylvania, Louisa and Stafford VA 11-MADISON (B3);
Caroline, King George, King William, King & Queen, Essex, Richmond,
Westmoreland, Northumberland. Lancaster, Mathews, Northampton, Accomack, and
Middlesex in VA 12-CAROLINE (B2).
Southeast: Yancey, Mitchell, Avery, Watauga,and Caldwell in NC 2-YANCEY;
Cherokee, Clay, Graham, Macon, Swain, Haywood, Jackson and Transylvania in NC 1-
CHEROKEE; Anson, Montgomery, Richmond, Scotland in NC 5-ANSON; Cabarrus, Stanly,
Rowan, Iredell, and Davie in NC 15-CABARRUS; Laurens, Greenwood, McCormick,
Edgefield, Saluda, Newberry and Abbeville in SC 2-LAURENS; Oconee in SC 1-
OCONEE; Cherokee, Chester, Union and Fairfield in SC 3-CHEROKEE; Lancaster and
York in SC 9-LANCASTER; Dawson, Lumpkin, White, Habersham, Hall, Banks,
Franklin, Stephens, Rabun, Barrow in GA 2-DAWSON, Henderson, Polk, Rutherford,
Cleveland, McDowell and Lincoln in NC4-HENDERSON; Lee, Wise, Dickenson,
Buchanan, Russell and Norton City in VA 1-LEE.
3
<PAGE>
Exhibit B
AirBridge(R) Internet Access
***** Access fee: $***** per NEI
Rate over Allowance: $***** /kilobyte
Usage outside BAM markets: $***** /kilobyte
General Pricing Terms
- ---------------------
Use of these rate plans is limited to the following software applications(note:
This list may be amended from time to time):
. *****
. *****
. *****
. *****
. *****
*****
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
4
<PAGE>
EXHIBIT B1
AirBridge(R) Internet Access ***** Price Plan
Access Fee $*****
Usage in BAM Markets ***** usage included*
Usage Outside BAM Markets $*****
NEI Unit Commitment *****
Activation fee $*****
Contract Term in Years 3
Commitment Schedule:
NEIs in Service
Month ***** *****
Month ***** *****
Month ***** *****
Month ***** *****
Month ***** *****
Month ***** *****
Month ***** *****
Month ***** *****
Month ***** *****
Month ***** *****
Month ***** *****
Month ***** *****
$***** Traveler Option Available
Pricing does not include electronic billing information
Use limited to the following applications *****
NEIs in service on the rate plan shown in Exhibit B shall not count towards the
NEI commitment of this rate plan. Should Customer not have the number of active
NEIs corresponding to the commitment schedule shown above, Customer shall be
charged as if those NEIs were in service.
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
5
<PAGE>
EXHIBIT C
Page 1
Objective: To streamline the data activation process for Value Added
Customers.
Goal: To establish activation procedures that will maximize efficiency
for both Bell Atlantic Mobile and our Value Added Customers. This
procedure will create an activation process that will allow for
easier activation, billing, tracking and reporting that will
benefit BAM as well as our customers.
Introduction: Once a customer has been identified as a VAC with a contract in
place, it is our recommendation that they have the ability to
reserve and activate NEIs directly through our Credit & Ordering
Operations Department. This will allow for maximum efficiency
given the quantity of NEIs that are activated through our VACs.
Alternative procedures may be evaluated due to the needs of a
particular customer on a case by case basis.
Procedure: NEI Reservations
----------------
VACs will have the ability to reserve NEIs in blocks of *****.
These NEIs will be reserved by BAM geographic region (i.e. *****
NEI's out of NY Metro, ***** NEI's out of Wash/Balt, please see
Exhibit C, page 2). This form will be filled out by an authorized
VAC representative and faxed directly to our COOS department in
Morristown, NJ (Fax number 973-971-1036, Tel number 800-627-
2791). Reservation requests may take up to 2 business days to
complete. Once the request has been processed, a COOS
representative will complete the form and list of reserved NEIs
and fax it back to the VAC representative as well as to Greg
Fucheck, Manager - Value Added Customers (Fax 908-306-4227, Tel
908-306-7746).
NEI Activations
---------------
In order to activate an NEI, Value Added Customers will be able
to fax a form directly to the BAM COOS department (Please see
Exhibit C, page 3). This form will be filled out by an authorized
VAC representative and will list the NEIs from the reserved block
to be activated. The BAM COOS department will convert these NEIs
from reserved status to active status in our systems. Once all
the NEIs have been activated, a COOS representative will fax back
the activation form to the VAC as well as to Greg Fucheck.
Note: These forms can only be signed by an authorized VAC
representative. Each VAC will be responsible for providing a list
of authorized representatives that will be forwarded to Greg
Fucheck who will then forward to the COOS department.
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
6
<PAGE>
EXHIBIT C
Page 2
Customer: GO AMERICA
Customer #: *****
Address: 401 Hackensack Avenue
Hackensack, NJ 07601
Phone: (201) 996-7306
Fax: (201) 996-1772
Authorized Person: _________________________________________
Signature: ____________________ Date: ___________
- --------------------------------------------------------------------------------
Primary City, ST Price Plan Saleforce Contract NEI
Code ID Length
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
Special Requests/Comments
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________
Note: This form is to be used when requesting activation of IP addresses on BAM
CDPD Network.
Please fax this form to BAM's COOS department at 973-971-1036 (attn. Charlene or
Dave)
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
7
<PAGE>
EXHIBIT C
Page 3
Customer: GO AMERICA
Customer #: *****
Address: 401 Hackensack Avenue
Hackensack, NJ 07601
Phone: (201) 996-7306
Fax: (201) 996-1772
Authorized Person: _________________________________________
Signature: ____________________ Date: ____________
Total Number of NEI to be reserved (in blocks of *****):
- --------------------------------------------------------------------------------
Qty. to Primary City, State NEI Range
Reserve (to be completed by BAM)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Special Requests/Comments
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Note: This form is to be faxed to BAM's COOS department at 973-971-1036 ( attn.
Charlene or Dave) when reserving blocks of IP addresses for future use.
________________
****** Confidential portion omitted and filed separately with the Securities
and Exchange Commission.
8
<PAGE>
EXHIBIT 10.3
VALUE ADDED RESELLER AGREEMENT
THIS AGREEMENT, is made and entered into as of the 31 day of August, 1999
(the "Effective Date"), by and between BellSouth Wireless Data L.P.
("BellSouth") having an address at 10 Woodbridge Center Drive, Woodbridge New
Jersey 07095, and GoAmerica Communications Corporation ("GoAmerica") having an
address at 401 Hackensack Avenue, Hackensack, New Jersey 07601.
WHEREAS, BellSouth provides certain intra-LATA two-way wireless data
communications services (the "BellSouth Services") using radio base stations and
switching facilities implemented and operated by BellSouth, from time to time
(the "BellSouth Facilities");
WHEREAS, GoAmerica owns and operates a data processing center located at
401 Hackensack Avenue, Hackensack New Jersey (the "GoAmerica Facilities") which
provides, or will provide to third parties, the use of certain electronic
messaging and communications gateways including computer servers and software
which are used to provide GoAmerica's GoWeb and GoMail services referred to
herein as the "GoAmerica Services";
WHEREAS, GoAmerica desires to sell and distribute the BellSouth Services in
connection with the GoAmerica Services (the combination of the BellSouth
Services and the GoAmerica Services being hereinafter referred to as the
"GoAmerica/BellSouth Services"), develop applications software appropriate to
the GoAmerica/BellSouth Services, and effect the interconnection between the
BellSouth Facilities and the GoAmerica Facilities in connection therewith on the
terms and conditions hereinafter set forth, and
WHEREAS, BellSouth desires to permit GoAmerica's above described activities
upon the terms and conditions set forth herein
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, BellSouth and GoAmerica hereby agree as follows:
I. Solicitation of Subscribers and Value Added Requirement.
--------------------------------------------------------
a. GoAmerica shall use all reasonable efforts, consistent with good
business judgment, to solicit subscribers to the BellSouth Services to
be received in connection with the GoAmerica/BellSouth Services.
b. GoAmerica's resale of the BellSouth Services shall only be in
connection with the sale of the GoAmerica/BellSouth Services and
incidental to the GoAmerica Services, which shall constitute
significant, value to subscribers of the GoAmerica/BellSouth Services.
The BellSouth Services shall be integrated with the GoAmerica Services
and GoAmerica shall not have the right to offer, resell or otherwise
make available the BellSouth Services, including, but not limited to,
the transmission of packets included therein, as a separate service or
product.
<PAGE>
c. GoAmerica may, at its own expense and solely in connection with the
GoAmerica/BellSouth Services, market, promote, and advertise the
BellSouth Services. GoAmerica will not in any manner use, display,
broadcast, or disseminate any advertising or promotional material
which contains any (i) material misrepresentations, or omits to state
a material fact, with regard to BellSouth and/or the BellSouth
Services, or (ii) statement in derogation of BellSouth, and/or the
BellSouth Services. Notwithstanding anything to the contrary herein,
GoAmerica shall, prior to its proposed use of any advertising or
promotional material referring to the BellSouth Services, submit a
copy of such material to BellSouth for BellSouth's prior written
approval which approval shall not be unreasonably withheld.
d. The rights granted to GoAmerica hereunder are not exclusive. Subject
to Section 6 below, BellSouth is free (i) to increase or decrease the
number of parties it authorizes to solicit subscribers to the
BellSouth Services and (ii) to solicit subscribers to the BellSouth
Services in its own behalf at any time without notice to GoAmerica.
2. The BellSouth Services.
-----------------------
a. BellSouth shall provide the BellSouth Services to subscribers to the
GoAmerica/BellSouth Services as GoAmerica shall notify BellSouth
during the term of this Agreement. BellSouth agrees to register on
the BellSouth Facilities subscribers to the GoAmerica/BellSouth
Services and the equipment utilized by such subscribers (each, a
"Subscriber Unit") and to provide the BellSouth Services to such
Subscriber Units thereafter, unless notified by GoAmerica to cease the
provision of the BellSouth Services to such Subscriber Units as
specified in such notice. The date on which the first Subscriber Unit
is registered on the BellSouth Facilities is hereinafter referred to
as the "Initial Service Date."
b. GoAmerica shall pay BellSouth for the provision of the BellSouth
Services to Subscriber Units in accordance with the Schedule of
Charges annexed hereto as Schedule 2.b. Notwithstanding anything to
the contrary contained in this Agreement GoAmerica shall bear full
responsibility for, and shall pay BellSouth in accordance with the
Schedule of Charges for the provision of all BellSouth Services used
by Subscriber Units activated by BellSouth pursuant to Section 2.a.
including, but not limited to, use of the BellSouth Services in
connection with Mobile-to-Mobile message transmissions by a Subscriber
Unit.
c. On approximately the fifteenth (15th) day of each month following the
Initial Service Date, BellSouth shall invoice GoAmerica for the
aggregate amount of BellSouth Services used in connection with
Subscriber Units calculated in accordance with the applicable rates
specified in the Schedule of Charges.
2
<PAGE>
d. GoAmerica shall make payment in full, by Federal wire transfer or by
good check for immediately available funds, of each of BellSouth's
invoices not later than thirty (30) days after each invoice is
rendered. BellSouth shall provide such wire transfer instructions to
GoAmerica with BellSouth's first invoice due pursuant to Section 2.c.
above.
e. GoAmerica will receive all payments from subscribers to the
GoAmerica/BellSouth Services and shall be responsible for all billing,
collection, and bad debt recovery with respect to subscribers to the
GoAmerica/BellSouth Services.
f. GoAmerica shall be responsible for assuring that the use of the
BellSouth Services by subscribers to the GoAmerica/BellSouth Services,
and the computer application software and all Subscriber Units in
connection therewith, comply with and have been approved by BellSouth
for use on the BellSouth Facilities in accordance with procedures and
technical specifications established by BellSouth, during the term of
this Agreement and comply with all applicable laws, rules, and
regulations, including without limitation the rules and regulations of
the Federal Communications Commission ("FCC") concerning the licensing
of end users of Specialized Mobile Radio Service facilities and the
type approval of end user equipment.
3. Application Software Development and Connectivity.
-------------------------------------------------
a. GoAmerica shall undertake and be responsible for, at its own expense,
the development and implementation of any and all new, modified, or
enhanced application, interface, middleware, or communications
software necessary to enable present and future subscribers to the
GoAmerica Services to receive the GoAmerica/BellSouth Services and to
achieve connectivity between and among Subscriber Units, the BellSouth
Facilities, and the GoAmerica Facilities. GoAmerica shall be
responsible for assuring that the GoAmerica Services, the GoAmerica
Facilities, and the use of the BellSouth Services by subscribers to
the GoAmerica/BellSouth Services do not cause traffic congestion,
degradation, disruption, abnormal and burdensome operating expense or
other detrimental effects, as reasonably determined by BellSouth, to
the BellSouth Facilities (or any portion thereof), the BellSouth
Services, or the use of the BellSouth Services or the BellSouth
Facilities by users other than subscribers to the GoAmerica/BellSouth
Services. BellSouth shall have the right to take such steps, including
but not limited to requiring GoAmerica to modify, at GoAmerica's
expense, the Go America Facilities or features or functions of the
GoAmerica Services (including, for example, the retry algorithm used
by the GoAmerica Services in circumstances where transmission of a
message has been aborted by application or middleware software) as
reasonably necessary to eliminate traffic congestion, degradation,
disruption, abnormal and burdensome operating expense or other
detrimental effects caused by the GoAmerica Services, the GoAmerica
Facilities, or Subscriber Units activated hereunder for GoAmerica. In
accordance with its usual Customer Service and network management
practices, BellSouth shall notify GoAmerica when the BellSouth
Facilities experience any such congestion, degradation, disruption,
abnormal and burdensome operating expense or other detrimental effect
caused by the GoAmerica Services, the GoAmerica
3
<PAGE>
Facilities, or Subscriber Units activated hereunder for GoAmerica.
In accordance with its usual Customer Service and network management
practices, BellSouth shall notify GoAmerica when the BellSouth
Facilities experience any such congestion, degradation, disruption,
abnormal and burdensome operating expense or other detrimental effect
caused by the GoAmerica Services, the GoAmerica Facilities, or
Subscriber Units activated hereunder for GoAmerica and GoAmerica shall
thereafter cooperate with BellSouth to resolve such problem. Each
party shall be responsible at its own expense for its own facilities.
If any such congestion, degradation, or disruption of the BellSouth
Facilities occurs in a manner which has a significant impact on the
BellSouth Facilities discernible to users of the BellSouth Services
other than subscribers to the GoAmerica/BellSouth Services, BellSouth
shall have the right to modify, curtail or terminate use of the
BellSouth Services by GoAmerica and its Subscribers as reasonably
necessary to prevent such impact until such congestion, degradation or
disruption is remedied.
b. GoAmerica shall not modify the GoAmerica Services or introduce new
software or equipment to be used in connection with the BellSouth
Facilities or Service without the prior written approval of BellSouth.
c. GoAmerica shall bear the cost of procuring, implementing, operating,
and maintaining the facilities necessary to interconnect the BellSouth
Facilities and the GoAmerica Facilities, except for such digital
service units ("DSUs") as may be located on BellSouth's premises.
d. GoAmerica shall be the sole owner of any and a intellectual property
rights in any software developed by GoAmerica or on GoAmerica's behalf
pursuant to this Agreement. This Agreement does not convey to
BellSouth any license, by implication, estoppel or otherwise, to any
proprietary copyright or patent right which GoAmerica has or may have
in any software developed by GoAmerica or on GoAmerica's behalf
pursuant to this Agreement, nor does this Agreement grant any rights
to BellSouth to use or modify such software or any part thereof or to
combine such software or any part thereof with any other software,
product or parts, except as may be expressly provided herein or in any
subsequent agreement between GoAmerica and BellSouth.
4. Marketing Activities.
---------------------
Neither party shall distribute to any third parties any materials,
information or writings describing the products or services of the other
party, or use any logos, trademarks, service marks, trade names, or the
corporate names of the other party without the prior written consent of
such party, which consent shall not be unreasonably withheld or delayed.
5. Non-Exclusivity
---------------
4
<PAGE>
a. Nothing herein shall be construed so as to restrict the activities of
BellSouth or GoAmerica, acting alone or in concert with others, in
connection with the development, implementation, operation, or
provision of any services or facilities whatsoever, whether similar to
or competitive with the GoAmerica Services, the GoAmerica Facilities,
the BellSouth Services, the BellSouth Facilities, or the
GoAmerica/BellSouth Services.
b. Notwithstanding anything to the contrary in this Agreement, the
GoAmerica/BellSouth Services shall not include and GoAmerica shall
have no right whatsoever to offer the BellSouth Services in connection
with any software applications, products or services providing outdoor
billboards (including, but not limited to, structures that remotely
convey advertising, changeable traffic or other Intelligent Traffic
System Information) with fixed data application software or services
for remote illumination control and/or data collection
6. Confidentiality and Non-Disclosure.
-----------------------------------
a. BellSouth and GoAmerica each acknowledge that, as parties to this
Agreement and in connection with the activities contemplated hereby,
they may have access to Confidential Information of each other and of
their respective affiliates. As used herein, the term "Confidential
Information" shall include, without limitation: technical, financial
and commercial data; forms of provision and computation; names,
addresses, telephone and telefax numbers, contact persons and other
identifying or valuable information relating to actual or potential
customers, shareholders, partners, independent contractors and
suppliers; reports; market studies; design, price and cost information
with respect to the BellSouth Facilities, the GoAmerica Facilities,
the BellSouth Services, the GoAmerica Services, and the
GoAmerica/BellSouth Services; and lists, compilations and archives of
any and all of the foregoing. Notwithstanding the foregoing, the term
"Confidential Information" shall not include any information that:
(a) the receiving party can demonstrate, by prior existing records,
was within its legitimate possession prior to the time of disclosure
by the furnishing party, (b) was within the public domain prior to
such disclosure; or (c) after disclosure, comes into the public
domain, as evidenced by documents that are generally published,
through no fault of the receiving party. Information that is specific
to certain data shall not be deemed to be in the public domain merely
because such information is embraced by more general disclosures in
the public domain.
b. BellSouth and GoAmerica each will afford confidential treatment to the
Confidential. Information it receives in connection with this
Agreement and the activities contemplated hereby and shall not use
such information or any other Confidential Information in any way that
is detrimental to the party furnishing the Confidential Information or
for any purpose other than those legitimate purposes contemplated in
this Agreement, nor shall the receiving party disclose any or all
Confidential Information to anyone other than its affiliates, partners
or potential
5
<PAGE>
partners, advisors, agents, and employees who need to know such
Confidential Information in connection with the legitimate purposes
contemplated by this Agreement. The receiving party shall maintain
adequate procedures to ensure that all of the persons to whom it
discloses or provides access to Confidential Information comply with
the restrictions set forth herein.
c. Neither party to this Agreement shall without the written consent of
the other party (i) make any news releases, public announcements, or
denials or confirmations of the same, concerning all or any part of
the discussions or negotiations between the parties, (ii) in any
manner advertise or publish the fact that the parties have entered
into discussions or negotiations, or (iii) disclose any details of
such discussions or negotiations (whether or not Confidential
Information) to any third parties.
d. BellSouth and GoAmerica acknowledge and agree that each of them
reserves the right to take any legal action to which it may be
entitled in the event of breach, in full or in part, of the
confidentiality and non-disclosure provisions of this Agreement.
7. Term.
-----
a. The initial term of this Agreement shall commence as of the date
hereof and shall continue, unless sooner terminated pursuant to the
provisions hereof, until the date which shall be three (3) years after
the Initial Service Date (the "Initial Term").
b. Upon expiration of the Initial Term, this Agreement shall be
automatically renewed for additional periods of three (3) years (each
a "Renewal Term") unless either party gives written notice to the
other party that such renewal shall not occur, such notice to be given
not less than sixty days prior to the end of the Initial Term or the
then current Renewal Term. During any Renewal Term BellSouth shall
have the right to change the prices as provided in this Agreement
after 120 days notice to GoAmerica. ***** per calendar year.
c. Nothing in this Agreement will be deemed to create any express or
implied obligation on either party to renew or extend this Agreement
or to create any right to continue this Agreement on the same terms
and conditions contained herein. GoAmerica understands that BellSouth
intends to review its Value Added Reseller strategy and the terms and
conditions of this Agreement on an ongoing basis and may require
execution of an amended form of this Agreement as a condition of
renewal.
_____________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
6
<PAGE>
8. Termination.
------------
a. This Agreement shall terminate automatically, and without liability or
further obligation of either party to the other in the event
termination is required by:
1. the FCC or in the event BellSouth loses its authority to operate
the BellSouth Facilities or if such authority is suspended or if
required licenses are not renewed, provided, however, that in the
event BellSouth loses its authority to operate fewer than all of
the BellSouth Facilities or if the suspension of any authority or
non-renewal of any license relates to fewer than all of the
BellSouth Facilities, then this Agreement shall terminate only as
to the BellSouth Facilities affected by such loss of authority,
suspension, or non renewal (but nothing herein shall be construed
so as to diminish BellSouth's responsibility to use all
reasonable efforts to maintain all required authority and
licenses in full force and effect for the duration of this
Agreement); or
2. any law, rule, regulation, or valid order of a court of competent
jurisdiction (including, without limitation, the application of
any restrictions which may be applicable to BellSouth or its
affiliates pursuant to the Telecommunications Act of 1996 and the
rules and regulations of the FCC promulgated, from time to time,
in connection therewith, as subsequently modified and interpreted
from time to time) (and nothing herein shall be construed to
require BellSouth to seek waiver of any law, rule, regulation, or
restriction, or seek judicial review or appeal of any court
order).
b. Upon any Event of Default (as hereinafter defined), either party may,
upon written notice to the defaulting party (the "Defaulting Party"),
terminate this Agreement without liability to the Defaulting Party.
Each of the following constitutes an Event of Default:
1. an admission by the Defaulting Party of an inability to pay its
debts, the entering into by the Defaulting Party of a composition
or arrangement with its creditors, the appointment of a trustee
or receiver, with or without consent, for the Defaulting Party or
all or any substantial part of its property, or the filing of a
petition for relief by or against the Defaulting Party under the
Bankruptcy Code or any similar federal or state statute now or
hereafter in effect; and
2. failure by the Defaulting Party to perform any material
obligation imposed upon it by or pursuant to this Agreement, or
any other material breach of this Agreement, provided that such
breach is not corrected within thirty (30) days after written
notice to the Defaulting Party specifying the nature of such
breach (or such longer period as may be required to correct such
7
<PAGE>
breach, if within said thirty (30) days, the Defaulting Party
shall commence the correction of such breach and thereafter
diligently pursue the correction thereof).
c. 1. in the event that this Agreement should not be renewed for any
Renewal Term as the result of written notice by BellSouth to
GoAmerica pursuant to the provisions of Section 7.b. herein, then
in such event BellSouth shall for a period in no event to exceed
*****, at GoAmerica's option, continue to provide the BellSouth
Services to subscribers secured by GoAmerica to the
GoAmerica/BellSouth Services up to the date of termination for so
long as GoAmerica continues to make timely payment of fees due to
BellSouth pursuant to Section 2.b. herein. If GoAmerica fails to
continue to make such timely payments of fees to BellSouth,
BellSouth shall have the right, at its sole option, to terminate
the BellSouth Services to subscribers secured by GoAmerica to the
GoAmerica/BellSouth Services.
2. In the event that this Agreement should not be renewed for any
Renewal Term as the result of written notice by GoAmerica to
BellSouth pursuant to the provisions of Section 7.b. herein, then
in such event BellSouth may, at its option, continue to provide
the BellSouth Services to subscribers secured by GoAmerica to the
GoAmerica/BellSouth Services up to the date of termination for so
long as GoAmerica continues to make timely payment of fees due to
BellSouth pursuant to Section 2.b. herein. If GoAmerica fails to
continue to make such timely payments of fees to BellSouth, then,
in order to assure continuity of service to all subscribers,
GoAmerica shall, within five days demand therefor by BellSouth,
provide BellSouth with a complete list of subscribers, utilizing
the BellSouth Services which have been obtained by GoAmerica to
the GoAmerica/BellSouth Services, including the name, address,
and telephone number thereof. The possession of that list shall
not relieve GoAmerica of the obligation to pay all sums to
BellSouth and shall not obligate BellSouth to make any payments
therefor to GoAmerica.
9. Independent Contractors.
------------------------
a. GoAmerica and BellSouth shall at all times be, and represent
themselves to be, solely independent contractors each acting on their
own account in all transactions involving the BellSouth Services, the
GoAmerica Services, and the GoAmerica/BellSouth Services. Nothing in
this Agreement shall be construed to make either party (or any person
employed by either party) an employee of the other party. Neither
party shall have any authority to bind or commit the other
_________________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
8
<PAGE>
party in any respect or to accept legal process on behalf of the other
party. Without limiting the generality of the foregoing neither party
shall be liable to any agent reseller, subcontractor, supplier,
employee, or customer of the other party for any commission,
compensation, remuneration, benefit, damage, or claim of any nature
whatsoever.
b. GoAmerica shall not, in any manner whatsoever, represent itself as the
operator of the BellSouth Facilities or the provider of the BellSouth
Services, but shall identify BellSouth as the entity authorized to
operate the BellSouth Facilities and provide the BellSouth Services
and represent itself only as an authorized reseller of the BellSouth
Services.
10. Patent, Copyright, Trademark and Trade Secret Indemnification
-------------------------------------------------------------
a. BellSouth, at its own expense, will defend and indemnify GoAmerica
against claims that the BellSouth Services, in and of themselves,
infringe a United States patent or copyright or misappropriate trade
secrets protected under United States law, provided GoAmerica (a)
gives BellSouth prompt written notice of such claims pursuant to
Section 14, (b) permits BellSouth to defend or settle the claims, and
(c) provides reasonable assistance to BellSouth at BellSouth's expense
in defending or settling the claims.
b. As to any claim of infringement or misappropriation arising as
provided in 10.a above, BellSouth may elect to (a) obtain the right of
continued use of the BellSouth Services for GoAmerica, or (b) modify
the BellSouth Services to avoid such claim. If neither alternative is
available on commercially reasonable terms, then BellSouth shall have
the right to terminate this Agreement and no further charges will
accrue hereunder.
c. BellSouth will not defend or indemnify GoAmerica if any claim of
infringement or misappropriation (a) is asserted by a parent,
subsidiary or affiliate of GoAmerica, (b) results from use of the
BellSouth Services in combination with any product or services not
provided by BellSouth, including but not limited to the GoAmerica
Services and the GoAmerica Facilities.
d. This Section 10 states the entire liability of BellSouth and
GoAmerica's sole and exclusive remedies for patent or copyright
infringement and trade secret misappropriation.
11. Remedies: Limitation of Remedies.
---------------------------------
a. GoAmerica's sole remedies for loss or damage caused by partial or
total failure of the BellSouth Facilities or for delay or
nonperformance of any of the BellSouth Services under this Agreement,
regardless of the form of action, whether in contract, tort (including
negligence), strict liability or otherwise, shall be, where
9
<PAGE>
applicable, GoAmerica's actual damages, if any, resulting from such
failure, delay, or nonperformance. Except with respect to BellSouth's
liability to indemnify GoAmerica pursuant to Section 10 above,
BellSouth's liability hereunder shall be limited solely to the amount
paid by GoAmerica to BellSouth for the BellSouth Services under this
Agreement during such period of failure, delay, or nonperformance.
b. AS A MATERIAL PART OF THE CONSIDERATION PAID BY GOAMERICA FOR THE
BELLSOUTH SERVICES PROVIDED BY BELLSOUTH UNDER THIS AGREEMENT, THE
PARTIES AGREE THAT BELLSOUTH SHALL IN NO EVENT BE LIABLE FOR, AND
GOAMERICA, FOR ITSELF AND THE SUBSCRIBERS TO THE GOAMERICA/BELLSOUTH
SERVICES, HEREBY WAIVES THE RIGHT TO CLAIM ANY INDIRECT, SPECIAL,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) DIRECTLY
OR INDIRECTLY RELATING TO OR ARISING OUT OF GOAMERICA'S OR ITS
SUBSCRIBERS' INABILITY TO USE THE BELLSOUTH FACILITIES OR ANY PART
THEREOF, EITHER SEPARATELY OR IN COMBINATION WITH ANY OTHER FACILITIES
OR SERVICES, PERFORMED OR NOT PERFORMED BY BELLSOUTH UNDER TIES
AGREEMENT, OR FOR ANY OR ALL LOSS OR DAMAGE DIRECTLY OR INDIRECTLY
RELATING TO OR ARISING OUT OF A THIRD PARTY'S UNAUTHORIZED ACCESS TO
GOAMERICA'S OR ITS SUBSCRIBERS' DATA TRANSMITTED OVER THE BELLSOUTH
FACILITIES, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT,
TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR OTHERWISE, AND
WHETHER OR NOT SUCH DAMAGES WERE FORESEEN OR UNFORESEEN.
c. GoAmerica shall use a form of agreement with subscribers to the
GoAmerica/BellSouth Services that contains a provision substantially
consistent with the following language and no language inconsistent
therewith: "Neither GoAmerica, as reseller of wireless data
communications services provided through the facilities of BellSouth
Wireless Data L.P. ("BellSouth"), nor BellSouth, as the provider of
such services, shall have any liability of any kind, direct or
indirect, to [subscriber of GoAmerica] for any damages other than
actual damages directly and proximately resulting from the failure,
delay, or nonperformance of the services and the maximum collective
liability of GoAmerica and BellSouth for such damages shall be limited
solely to the amount paid by [subscriber] to GoAmerica for the
services during such period of failure, delay, or nonperformance.
Neither GoAmerica nor BellSouth shall have any liability, direct or
indirect, whatsoever for any damages other than for such directly and
proximately caused damage, and, in particular, without limitation,
neither GoAmerica nor BellSouth shall have any liability, direct or
indirect, for any special, incidental, or consequential damages
(including lost profits) directly or indirectly relating to or arising
out of [subscriber's] inability to use the services
10
<PAGE>
or related facilities, equipment or software, either separately or in
combination with any other services, facilities, equipment or
software, whether or not performed or provided under this Agreement,
or for any loss or damage directly or indirectly relating to or
arising out of any third party's unauthorized access to [subscriber's]
data transmitted over the BellSouth Facilities, regardless of the form
of action, whether in contract, tort (including negligence), strict
liability, or otherwise, and whether or not such damages were foreseen
or unforeseen."
12. Representations and Warranties.
-------------------------------
a. GoAmerica represents and warrants to BellSouth as follows:
1. it is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to own, operate, and
lease its properties and carry on its business as now being
conducted, and to enter into this Agreement and perform its
obligations hereunder;
2. the execution and delivery of this Agreement has been duly and
validly authorized and approved by all necessary GoAmerica
corporate action and this Agreement is valid and binding upon it
in accordance with its terms;
3. the execution and carrying out of this Agreement and compliance
with the provisions hereof by it will not violate any provision
of law, will not, with or without the giving of notice and/or the
passage of time, conflict with or result in the breach of any of
the terms or conditions of or constitute a default under, any
indenture, mortgage, agreement, or other instrument to which it
is a party or by which it is bound;
4. the resale of the BellSouth Services shall only be in connection
with the sale of the GoAmerica/BellSouth Services and incidental
to the GoAmerica Services, which shall constitute the principal
value to subscribers of the GoAmerica/BellSouth Services.
b. BellSouth represents and warrants to GoAmerica as follows:
1. it is a limited partnership duly organized, validly existing, and
in good standing under the laws of the State of Delaware, and has
all requisite power and authority to own, operate, and lease its
properties and carry on its business as now being conducted, and
to enter into this Agreement and perform its obligations
hereunder
2. the execution and delivery of this Agreement has been duly and
validly authorized and approved by all necessary BellSouth
partnership action and this Agreement is valid and binding upon
it in accordance with its terms;
11
<PAGE>
3. the execution and carrying out of this Agreement and compliance
with the provisions hereof by it will not violate any provision
of law, will not with or without the giving of notice and/or the
passage of time, conflict with or result in the breach of any of
the terms or conditions of or constitute a default under, any
indenture, mortgage, agreement, or other instrument to which it
is a party or by which it is bound.
13. Force Majeure
-------------
In no event shall either party have any liability for failure to comply
with this Agreement, if such failure results from the occurrence of any
contingency beyond the reasonable control of the party, including, without
limitation, strike or other labor disturbance, riot, theft, flood,
lightning, storm, any act of God, power failure, war, national emergency,
interference by any government or governmental agency, embargo, seizure, or
enactment of any law, statute, ordinance, rule, or regulation.
14. Notices.
-------
a. All notices and other communications provided for herein shall be in
writing and sent by certified or registered mail, postage prepaid,
return receipt requested, or delivered personally to the intended
recipient, at the street address set forth below:
1. if to BellSouth:
BellSouth Mobile Data USA Limited Partnership
10 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Attention: George Pappas
Executive Vice President-Operations
with a copy (which shall not constitute notice) to:
BellSouth Mobile Data USA Limited Partnership
10 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Attention: Senior Vice President and General Counsel
2. if to GoAmerica:
GoAmerica Communications Corp.
401 Hackensack Avenue
Hackensack, New Jersey 07601
Attention: Aaron Dobrinsky
President
12
<PAGE>
or, as to either party, at such other address as shall have been
designated by such party in a notice to the other party delivered in
accordance with the provisions hereof.
b. Except as may otherwise be provided in this Agreement, all notices and
other communications hereunder shall be deemed to have been given when
actually received by the intended recipient.
c. Notices may be given by telephone, provided that such notices are
promptly confirmed by the sender in writing and delivered as provided
herein.
15. Waivers.
-------
a. The parties may at any time waive any of the provisions of this
Agreement, but any such waivers shall be reduced to writing and duly
executed and delivered by duly authorized representatives of the
parties hereto.
b. The failure of either party to enforce at any time any of the
provisions of this Agreement shall not constitute or be construed to
be a waiver of such provisions or of the right of such party
thereafter to enforce any such provisions.
16. Entire Agreement: Severability.
------------------------------
a. This instrument contains the entire agreement between the parties and
there are merged hereinto all prior and collateral representations,
promises, and conditions in connection with the subject matter hereof
any representation, promise, or condition not incorporated herein
shall not be binding upon either party and this Agreement supersedes
and is in lieu of all existing agreements or arrangements between the
parties with respect to the subject matter hereof ANY MODIFICATION OF
ANY PROVISION OF THIS AGREEMENT MUST BE IN WRITING AND SIGNED BY
AUTHORIZED REPRESENTATIVES OF BOTH PARTIES.
b. if any provision of this Agreement shall be invalid or unenforceable,
such invalidity or unenforceability shall not invalidate or render
unenforceable the entirety of this Agreement, but rather (unless a
failure of consideration would result therefrom), the entirety of this
Agreement shall be construed as if not containing the particular
invalid or unenforceable provision, and the rights and obligations of
the parties shall be construed and enforced accordingly.
17. Assignments and Delegation of Rights and Duties.
-----------------------------------------------
Neither party may assign any of its rights or delegate any of its duties
under this Agreement without the prior written consent of the other party,
which consent shall not be unreasonably withheld or delayed; provided,
however, that either party may assign any
13
<PAGE>
or all of its rights or delegate any or all of its duties under this
Agreement without the prior written consent of the other party if and to
the extent such assignment or delegation is to (i) an entity which
controls, is controlled by, or is under common control with such party or
(ii) an entity that has acquired all or substantially all of such party's
assets as a successor to the business of the assigning party (whether by
way of merger, reverse merger, consolidation, sale and purchase of assets
or otherwise) and such entity agrees in writing within thirty (30) days of
the date of such assignment or delegation to be bound by and perform in
accordance with this Agreement as if it were a party hereto. As used
herein, "control" means the ownership of fifty percent (50%) or more of the
outstanding voting stock or other equity interest in the relevant entity.
Any attempted assignment or delegation in violation of this Agreement shall
be void and of no force and effect.
18. Miscellaneous.
-------------
a. Except as may be otherwise specifically provided in this Agreement,
this Agreement is not intended to and shall not confer upon any other
person or business entity, other than the parties hereto, any rights
or remedies with respect to the subject matter hereof.
b. This Agreement may be executed in any number of counterpart copies,
each of which shall be deemed an original, but which taken together
shall constitute a single instrument.
c. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York pertaining to contracts entered into
and to be performed entirely within the State of New York, regardless
of the place of making or performance.
d. All paragraph headings and captions used herein and in the schedules
hereto are for the convenience of the parties only and shall not be
part of the text hereof or affect the meaning of this Agreement.
IN WITNESS WHEREOF, GoAmerica and BellSouth have caused this Agreement to
be duly executed by their respective duly authorized representatives as of the
day and year first above written.
BELLSOUTH WIRELESS DATA L.P. GOAMERICA COMMUNICATIONS
CORPORATION
/s/ Chris Nelson /s/ Aaron Dobrinsky
- ----------------------------- ---------------------------------
Signature Signature
_____________________________ _________________________________
Name (Print) Name (Print)
14
<PAGE>
VP Sales President
- ----------------------------- ---------------------------------
Title Title
SCHEDULE 2.2
SCHEDULE OF CHARGES
I. One Time Charges
----------------
*****................................ $*****
Per Fixed Terminal connection to the BellSouth Facilities
II. Recurring Charges for Host Connection
-------------------------------------
*****................................ $*****
In addition to BellSouth's Fixed Terminal charges, GoAmerica shall procure
from a carrier of its choice the necessary leased line(s) between the
GoAmerica Facilities and a point of presence of the BellSouth Facilities
specified by BellSouth as the point of interconnection. GoAmerica shall pay
directly to such carrier all initial and recurring charges for such leased
lines. BellSouth's fixed terminal connection charges include the use
maintenance and administration of two (2) digital service units provided by
BellSouth. Higher speed fixed terminal connections are available at higher
rates.
III. Recurring Charges for Subscriber Units
--------------------------------------
Whenever GoAmerica requests that BellSouth activate a Subscriber Unit under
this Agreement, GoAmerica shall designate to BellSouth in writing by MAN
Number which one of the following Price Plans shall apply to such
Subscriber Unit. The Regular Price Plan shall apply to any Subscriber Unit
for which GoAmerica fails to make such a designation at the time of
activation.
Regular Price Plan
------------------
Any Subscriber unit billable under this Agreement shall be billed each
month at the rate of i) $***** for the first ***** or part thereof plus ii)
$***** for each ***** or part thereof in excess of the ***** limit.
_________________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
15
<PAGE>
Special Price Plans
-------------------
For each Subscriber Unit activated under a Special Price Plan, GoAmerica
shall pay BellSouth at the following rates, and no discount shall be
applied:
*****................................ $*****
For ***** use of the BellSouth Services in connection with use of the
GoAmerica/BellSouth Services by GoAmerica *****. GoAmerica shall not
activate more than ***** such subscriptions for any single such GoAmerica
*****. Subscriptions at this price may not be activated for or used by any
end user who is not an authorized GoAmerica *****) A "GoAmerica *****"
means a business that has entered into a written agreement with GoAmerica
which agreement authorizes such business to market, promote and sell the
GoAmerica/BellSouth Services. Subscriptions at this price may not be
activated for or used for any purpose other than as provided above.
*****................................ $*****
For ***** use of the BellSouth Services in connection with the
GoAmerica/BellSouth Services for ***** activities of ***** to demonstrate,
test or promote the use of the GoAmerica/BellSouth Services in connection
with products or services offered by such *****. *****. GoAmerica shall
not activate more than ***** such subscriptions for any single such *****.
Subscriptions at this price may not be activated for or used by any end
user who is not a ***** as defined above.
*****................................ $*****
For ***** use of the BellSouth Services in connection with the
GoAmerica/BellSouth Services for ***** activities of GoAmerica and ***** to
test demonstrate, market or promote the use of the GoAmerica/BellSouth
Services in connection with products or services offered by ***** such as
the *****. GoAmerica shall not activate more than ***** such
subscriptions. Subscriptions at this price may not be activated for or
used for any purpose other than as provided above, and each *****
Subscription shall be identified and designated as such by MAN number in
writing by GoAmerica at the time of activation.
*****................................ $*****
For ***** use of the BellSouth Services in connection with evaluation of
the GoAmerica/BellSouth Services for not more than ***** days
_________________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
16
<PAGE>
(the "*****"). For each Subscriber Unit activated under the *****, before
expiration of the ***** with respect to such Subscriber Unit, GoAmerica,
shall designate in writing to BellSouth a Regular Price Plan (as set forth
above) which shall apply to such Subscriber Unit after the *****. If
GoAmerica fails to make such designation, BellSouth shall deactivate such
Subscriber Unit upon expiration of the *****.
*****................................ $*****
Under this Plan a subscriber may send an ***** number of kilobytes of data
using the BellSouth Services in connection with the GoAmerica/BellSouth
Services for ***** activities of ***** to demonstrate, test or promote the
use of the GoAmerica/BellSouth Services in connection with products or
services offered by *****. GoAmerica shall not activate more than *****
such subscriptions for *****.
*****................................ $*****
Under this Plan a subscriber may send an ***** number of kilobytes of data
using the BellSouth Services subject to the following:
i) GoAmerica shall make this Plan available only to consumers who
purchase a ***** on or after the date of this Amendment. The only units
activated under this Plan shall be ***** used in connection with the
GoAmerica/BellSouth Services.
ii) At any time or times hereafter as elected by BellSouth in its sole
discretion, BellSouth shall have the continuing right, after ***** days
notice to GoAmerica, to amend or discontinue this Plan. It is provided,
however, that BellSouth shall not change the price and allowed kilobyte
usage for any units activated under the plan until such time as the unit
has been activated for a period of at *****.
iii) BellSouth shall not be obligated to make an activation under this
Plan unless the serial number of the ***** which the subscriber will use to
access the BellSouth Services is first provided to BellSouth by GoAmerica.
GoAmerica shall not request or permit an activation under this Plan unless
it has obtained from each subscriber a certification from the subscriber
certifying that the subscriber has purchased a *****, the serial number of
that computer, and that the subscriber shall access the BellSouth Service
under this Plan only through the use of a *****.
iv) GoAmerica shall for a period of at least ***** after this Agreement is
terminated, maintain the original certification described
_________________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
17
<PAGE>
in paragraph iii above and other records sufficient to
establish that all activations under this Plan meet the
requirements of item "i" of this Plan, above. BellSouth
shall have the right, no more often than *****, during *****
business hours, to have these records audited by an
independent third party to assure compliance with item "i"
above. The independent third party shall first sign a non-
disclosure agreement reasonably satisfactory to GoAmerica
and BellSouth which protects the identities of the
subscribers from disclosure to BellSouth and third parties.
Circumstances of disclosure and use for purposes of any
litigation shall be controlled by a protective order granted
pursuant to the rules of the court before which any such
litigation is pending.
IV. Mobile-to-Mobile Charges
------------------------
Data transmitted between two mobile units requires two transmissions and
the number of bytes contained in each of the two transmissions will be
billed to each Subscriber Unit. The number of bytes contained in Mobile-
to-Mobile transmissions shall be billed at BellSouth's then current
standard per kilobyte rates, and no discount shall be applied.
V. Other Charges
-------------
*****................................ *****
Applies to any amount not paid by its due date as Provided in this
Agreement.
Prorated for each day past due.
*****................................ *****
Applies when GoAmerica requests a monthly Reseller Traffic Detail Report or Host
Detail Report in either BellSouth's standard electronic format or hard copy
VI. Troubleshooting Services
------------------------
Hourly (minimum charge - 2 hours).............. $***** per hour*
Daily............................ $***** per day (***** hours)*
These rates apply only to requests that BellSouth Customer Service resolve
problems which are not caused by problems occurring in the BellSouth
Facilities. Rates do not include expenses incurred for travel, lodging,
meals and cost of materials and equipment, which will be billed separately
and reimbursed by GoAmerica.
_________________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
18
<PAGE>
ARDIS
RESELLER AGREEMENT FOR MESSAGING SERVICES
-----------------------------------------
AGREEMENT dated as of August 25, 1999, between GoAmerica Communications
Corporation, a Delaware corporation, ("GoAmerica") with offices at 401
Hackensack Ave. Hackensack, NJ 07601 and ARDIS Company, a New York general
partnership ("ARDIS"), with offices at 300 Knightsbridge Parkway, Suite 500,
Lincolnshire, Illinois 60069.
WHEREAS, ARDIS is engaged in providing shared data radio-based
communications network services as authorized by the Federal Communications
Commission; and
WHEREAS, GoAmerica currently provides certain software and other value added
services in the marketplace; and
WHEREAS, ARDIS and GoAmerica desire a non-exclusive relationship to pursue
opportunities within the marketplace; and
WHEREAS, ARDIS desires to provide, and GoAmerica desires to remarket ARDIS'
services subject to the terms and conditions hereof.
GOAMERICA AND ARDIS AGREE AS FOLLOWS:
1. DEFINITIONS - For purposes of this Agreement:
-----------
(a) "Market" shall mean all commercial users of the ARDIS GoAmerica
Services.
(b) "FCC" shall mean the Federal Communications Commission.
(c) "Initial Term" shall mean the period commencing on the date hereof and
ending thirty-six (36) months thereafter.
(d) "Prices" shall mean ARDIS prices, as set forth in Attachment A.
(e) "Services" shall mean ARDIS' shared data radio-based communications
network services which enables a user to access and communicate
wirelessly with various third party supplied information sources, or
with certain subscribers using the ARDIS radio data network. This
Service includes the use of the ARDIS Message Switches and related
network software when accessed by user procured terminals and
compatible software, and the eLink(TM) wireless email services.
(f) "Territory" shall mean the United States and any other countries or
jurisdictions where the Services are provided by ARDIS in accordance
with applicable legal and regulatory requirements.
<PAGE>
(g) "Additional Services" shall mean the GoAmerica webhand(TM) suite of
services running over the ARDIS radio data network.
2. SCOPE OF AGREEMENT
------------------
ARDIS hereby agrees to establish a non-exclusive marketing relationship with
GoAmerica as follows:
(a) ARDIS hereby licenses GoAmerica to be a non-exclusive remarketer of
ARDIS Services within the Market and Territory. GoAmerica acknowledges
that ARDIS reserves the right to market directly to end users and to
license other resellers within the Market and Territory.
(b) GoAmerica shall develop and implement a non-exclusive marketing plan to
facilitate the remarketing of the Services by GoAmerica. Such marketing
plan may include, without limitation:
(i) joint development of product literature describing the Services
and their capabilities;
(ii) joint attendance at trade shows, conferences and related events
within the marketplace;
(iii) joint presentations to prospective clients of the Services;
(iv) joint press releases, advertising and participation at the ARDIS
booth at certain trade shows;
(v) joint marketing projections for the Services;
(vi) joint development activities with terminal hardware vendors; and
(vii) previews of ARDIS' future technology and business plan.
(d) GoAmerica may use the ARDIS trademarks and ARDIS trade name within the
Market and Territory in sales literature, press releases and other
promotional media subject to the prior written consent of ARDIS as
provided in Section 2(e) below.
(e) GoAmerica and ARDIS agree not to publish or use advertising, sales
promotions or any publicity matters, including the mention of the
existence of this Agreement without prior written consent, which
consent will not be unreasonably withheld.
2
<PAGE>
3. GOAMERICA MARKETING AND DEVELOPMENT OBLIGATIONS
-----------------------------------------------
(a) GoAmerica shall be responsible for insuring that all users to whom it
remarkets ARDIS' Services are, if required by applicable law or
regulation, licensed by the FCC prior to use of ARDIS' Services. ARDIS
shall, however, provide administrative and consultative support to
GoAmerica to facilitate the licensing process.
(b) During the term of this Agreement, GoAmerica will use commercially
reasonable efforts to meet the following performance milestones within
the timeframes indicated below:
===========================================================================
TIME ***** ***** *****
---------------------------------------------------------------------------
Number of GoAmerica
Subscriber Units Using ARDIS ***** ***** *****
Services *****
===========================================================================
(c) In addition to the reseller responsibilities indicated in Attachment
B, GoAmerica agrees:
(a) To provide E-mail connectivity via a GoAmerica Internet domain
name.
(b) To be responsible for end-users registration and for providing
ARDIS with the following information, including but not limited
to Pin number, and LI number.
4. PRICING
-------
GoAmerica will pay ARDIS the Prices as discounted and set forth in
Attachment A.
5. BILLING AND PAYMENTS
--------------------
(a) GoAmerica will be responsible for billing to GoAmerica's end user
customers for the Services and Additional Services.
(b) ARDIS will provide GoAmerica with the information to bill
GoAmerica's end user customers via a monthly invoice that shows
individual unit usage in bytes to GoAmerica within ten (10) days'
after the end of the monthly billing period.
(c) Payment to ARDIS will be due within thirty (30) days of the
receipt of the invoice by GoAmerica.
(d) TAXES: In addition to the charges due under this Agreement,
GoAmerica agrees to pay amounts equal to any taxes resulting from
this Agreement, exclusive of taxes based on ARDIS' net income and
subject to applicable legal exemptions.
_____________________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
3
<PAGE>
6. ORDERING
--------
(a) GoAmerica shall order data terminals for its end user customers
directly from ***** and may have the benefit of the terms and
conditions of the ***** Supply Agreement. ***** shall work with *****
to supply the relevant sections of the ***** Supply Agreement to
GoAmerica, redacted if necessary.
(b) GoAmerica shall order the Services for each new end user customer
electronically as mutually agreed. ARDIS shall process all such orders
no later than one day after receipt of order.
7. SUPPORT FOR ADDITIONAL UNITS: Service for additional terminals, if
----------------------------
available, will be provided under these same terms and conditions. Service for
such additional end user terminal registrations shall be authorized by GoAmerica
through the issuance of a purchase order which references this Agreement, the
number of terminals to be activated or registered, the selected Service Plan and
selected additional Services, if any. It is specifically agreed between
GoAmerica and ARDIS that no such purchase order shall be effective to modify,
substitute or supplement the terms of this Agreement.
8. DENIAL OF SERVICE: GoAmerica agrees that its end user customers will (a)
-----------------
observe and abide by all applicable statutes, laws, ordinances, rules and
regulations including, but not limited to, those of the FCC, and (b) use the
ARDIS Network or Systems on a shared basis with other companies so as not to
cause undue interference with any other companies using such systems. GoAmerica
acknowledges that ARDIS reserves the right to deny service to any GoAmerica end
user should the Service be used other than as intended [e.g. for data streaming
or for non HTTP file transfer]
9. TERM / TERMINATION
------------------
(a) This Agreement shall have an Initial Term of ***** and shall
automatically continue after the Initial Term until terminated by
either GoAmerica or ARDIS upon ***** written notice.
(b) ARDIS may modify the GoAmerica discount specified in Attachment "A" of
this Agreement upon ***** written notice for GoAmerica's failure to
meet the applicable performance levels set forth in Paragraph 3(b).
Should this contract be modified pursuant to this Paragraph, ARDIS
shall continue to provide ARDIS communication services to GoAmerica's
then current users of the Services at the revised discount
(c) Notwithstanding anything to the contrary contained herein, either
GoAmerica or ARDIS may terminate this Agreement (i) upon the expiration
of ***** from the
_____________________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
4
<PAGE>
receipt by the other party of written notice of material breach by such
other of its obligations under this Agreement if such breach is not
cured within such ***** period, or (ii) if the other party shall
dissolve or commit an act of bankruptcy or become insolvent, by sending
such party written notice of termination which shall state the nature
of the breach. Notwithstanding the foregoing, this Agreement shall
terminate immediately if the authorization held by ARDIS is revoked by
the FCC.
10. COMPANY RESPONSIBILITIES:
-------------------------
GoAmerica acknowledges that it will inform its end user customers that:
. 100% radio coverage for any on-street or in-building area at all times
is improbable;
. radio frequency coverage maps, if provided, are intended to indicate
expected coverage and are not binding as an exact representation of
coverage;
. uninterrupted or error-free operation is unobtainable; and
. occasionally network availability will be lost, and that ARDIS cannot
be responsible for transmission errors, for corruption of data, or for
the security of data during transmission via public telecommunications
facilities.
Consequently, the end user customers of GoAmerica should asses the effect
such problems will have on their operation and develop, implement and
maintain procedures, external to the ARDIS Network, to safeguard their
programs and data and to establish procedures for the backup and
reconstruction of lost data and programs adequate for their protection.
11. COMPANY PROGRAM AND DATA SECURITY: GoAmerica programs and data which is not
---------------------------------
end user customer data and which come into ARDIS' custody under this
Agreement shall be deemed to be the confidential information (as defined in
Section 16(a)) of GoAmerica.
12. DEFAULT AND REMEDIES
--------------------
If GoAmerica fails to make any payment of any sum due after thirty (30)
days, ARDIS may add a service charge at the maximum rate permitted by
applicable law. Such additional charge shall be due and payable upon receipt
of invoice.
If GoAmerica fails to make any payment of any sum due or fails to perform as
required by any other provision hereunder, and continues in such failure for
fifteen (15) days' after written notice has been sent by ARDIS and received
by GoAmerica, GoAmerica shall be deemed in default under this Agreement.
_____________________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
5
<PAGE>
In the event of default, ARDIS has the right to immediately terminate this
Agreement retain all payments made hereunder, and deny GoAmerica and its
customers any service provided under this Agreement by or through the ARDIS
Network or Systems. Each and all of the rights and remedies of ARDIS
hereunder are cumulative to and not in lieu of each and every other such
right and remedy.
There will be a ***** reactivation fee for customers who wish to re-
establish service once ARDIS has suspended or terminated service.
13. FORCE MAJEURE
-------------
Neither party hereto shall have any liability under this Agreement for
failure to perform, or delay in providing services due directly or
indirectly to causes beyond the reasonable control of such party including,
but not restricted to, acts of God, or governmental entities, or of the
public enemy, strikes, or unusually severe weather conditions.
14. TRAINING AND TECHNICAL SUPPORT
------------------------------
(a) ARDIS shall make available to GoAmerica, at no charge, reasonable
initial training on the use of ARDIS Services.
(b) ARDIS shall continue to provide GoAmerica, at no charge, with technical
assistance performed by competent ARDIS employees in connection with
ongoing use of the Services by GoAmerica and its customers. Such
assistance shall include, without limitation, telephone consultation,
updates relating to changes and enhancements to the Services and
diagnostic services.
15. THIRD PARTY LIABILITY
---------------------
GoAmerica warrants that it will inform its clients and others to whom it
remarkets ARDIS' services, of the applicable terms and conditions of this
Agreement, as expressed in Attachment C hereof, and warrants that it will
indemnify ARDIS Company against any liability from GoAmerica's end user
customers resulting from their use of the ARDIS service.
16. CONFIDENTIAL INFORMATION
------------------------
(a) GoAmerica and ARDIS shall not disclose each other's confidential
information and trade secrets including, without limitation data,
software, documentation, client names and addresses, and all other
proprietary information of such party to persons other than employees
of each other who are required to have such information for the
furtherance of the purposes of this Agreement. Each of
_____________________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
6
<PAGE>
GoAmerica and ARDIS shall take all steps reasonably calculated to
protect such information from unauthorized disclosure. This obligation
shall survive the termination of this Agreement.
(b) Nothing in this Agreement shall cause either party to have any rights
or licenses in any inventions, patents, trade secrets, trademarks
and/or copyrights of the other relating to the subject matter of this
Agreement.
17. INDEPENDENT RELATIONSHIP
------------------------
GoAmerica and ARDIS specifically disclaim any partnership relationship, and
this Agreement shall in no way be construed to make GoAmerica and ARDIS
partners or joint venturers. For the purposes of this Agreement, GoAmerica
and ARDIS shall be deemed to be independent contractors. Furthermore, in the
event GoAmerica elects to sell ARDIS services to the U.S. Government, U.S.
State or Local or any foreign Government, or to a prime contractor selling
to a Government customer, GoAmerica does so at their own option and risk and
agrees not to obligate ARDIS as a subcontractor or otherwise to such
customers. GoAmerica remains solely and exclusively responsible for
compliance with all statutes, regulations, and clauses governing sales to
the U.S. Government State or Local or any foreign Government or to a prime
contractor selling to a Government customer. ARDIS makes no representations,
certifications, or warranties whatsoever with respect to the ability of its
goods, or services, or prices to satisfy any such statutes, regulations, or
clauses.
18. WARRANTIES:
----------
ARDIS warrants that its Network is in good working order on the date of the
Agreement and conforms to ARDIS's officially published performance
information. ARDIS will provide preventative and remedial service to keep
its Network in, or to restore it to, good working order. ARDIS does not
warrant uninterrupted service or error-free operation.
19. DISCLAIMER: THE FOREGOING WARRANTIES ARE IN PLACE FOR ALL OTHER WARRANTIES,
----------
EXPRESSED OR IMPLIED INCLUDING, BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
20. EXCLUSIVE REMEDY:
----------------
In the event of any failure or delay attributable to the fault of ARDIS or
its subcontractors, or for breach of warranty, GoAmerica's sole remedy shall
be limited to a refund of GoAmerica's charges for the affected services
during the time of such failure or delay. GoAmerica agrees, however, that no
refund shall be made for the losses resulting from a single failure or delay
which do not exceed one hundred ($100.00) dollars.
7
<PAGE>
21. LIMITATION OF LIABILITY:
-----------------------
(a) Neither party shall be liable for special, incidental, indirect or
consequential damages under this Agreement, even if such party has been
advised of the possibility of such damages.
(b) Except for GoAmerica's obligation to pay amounts owing under Section 5
of this Agreement and GoAmerica's indemnity obligation pursuant to
paragraph 15, GoAmerica's and ARDIS' total liability for any other
claim arising out of or in any way connected with this Agreement and
the sole remedy regardless of the form of action (whether in contract,
tort or otherwise) shall be actual damages not to exceed fifty thousand
($50,000) dollars.
22. NOTICES
-------
All notices, demands, offers, elections, requests or other communications
required or permitted by this Agreement shall be in writing and shall be
sent by prepaid registered or certified mail, return receipt requested, and
addressed to the parties at the addresses set forth below or to such other
address as shall, from time to time, be supplied by any party to the other
party by like notice, and shall be deemed given on the date mailed. All such
notices shall be addressed to persons listed below:
<TABLE>
<S> <C>
If to ARDIS: If to GoAmerica
Vice President Attn: Mr. Joseph A. Korb
Messaging Services Executive Vice President & Director
ARDIS Company GoAmerica Communications Corp
300 Knightsbridge Parkway, Suite 500 401 Hackensack Ave.
Lincolnshire, Illinois 60069 Hackensack, NJ 07601
Copy: Copy: Chief Financial Officer
Matthew J. Whitehead, II GoAmerica Communications Corp
Vice President and Executive Counsel 401 Hackensack Ave.
ARDIS Company Hackensack, NJ 07601
300 Knightsbridge Parkway, Suite 500
Lincolnshire, Illinois 60069
</TABLE>
23. GENERAL
-------
This Agreement shall be binding on the successors and permitted assigns of
the parties hereto. Neither party shall assign this Agreement without the
other's prior written consent except in connection of a sale of
substantially all of the assets of the business to which this agreement
pertains.
If any provision of this Agreement or the application thereof to any party
or circumstance shall be determined by any court of competent jurisdiction
to be invalid and unenforceable to any extent, the remainder of this
Agreement or the application of such
8
<PAGE>
provision to such person or circumstance, other than those as to which it is
so determined invalid or unenforceable, shall not be affected thereby. and
each provision hereof shall be valid and shall be enforced to the fullest
extent permitted by law.
Neither party may bring an action, regardless of form, arising out of this
Agreement more than one year after the cause of action has arisen. ARDIS may
not bring an action for nonpayment more than 2 years after the date the last
payment was due.
Failure or delay on the part of ARDIS or GoAmerica to exercise any right,
remedy, power or privilege hereunder shall not operate as a waiver thereof.
A waiver, to be effective, must be in writing and signed by the party making
the waiver. A written waiver of a default shall not operate as a waiver of
any other default or of the same type default on a future occasion.
The headings in this Agreement are solely for convenience of reference and
shall not affect its interpretation.
This Agreement shall be constructed and enforced in accordance with the laws
of the State of Illinois.
This Agreement is the entire agreement between the parties with respect to
the subject matter hereof, and no alteration, modification or interpretation
hereof shall be binding unless in writing signed by both parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the day and year first written.
GOAMERICA ARDIS COMPANY
By: /s/ Joseph Korb /s/ Dan Croft
----------------------------------- ----------------------------------
(AUTHORIZED SIGNATURE) (AUTHORIZED SIGNATURE)
___________________________________ __________________________________
(TYPE OR PRINT NAME) (TYPE OR PRINT NAME)
Executive Vice President Vice President
----------------------------------- ----------------------------------
(TITLE) (TITLE)
8/25/99 8/24/99
----------------------------------- ----------------------------------
(DATE) (DATE)
9
<PAGE>
ATTACHMENT "A"
GOAMERICA PRICING FOR PROVIDING THE SERVICES AND THE ADDITIONAL SERVICES
Network Registration Fee: $***** per unit
- ------------------------
Volume Commitments:
- ------------------
Qty. Base Wholesale Price
***** devices $*****
***** devices $*****
***** devices $*****
Unlimited Plan
- --------------
<TABLE>
<S> <C> <C> <C>
Wholesale base price $***** (*****% margin) $***** (***** %) $*****(*****%)
Options:
Lower the wholesale price by doing the following:
. Bill customer/collections -$***** -$***** -$*****
. Hardware fulfillment
. End-user fulfillment -$***** -$***** -$*****
. Private labeling -$***** -$***** -$*****
. Customer Care 1/st/ level -$***** -$***** -$*****
. Operator Assisted Messaging -$***** -$***** -$*****
. Branding, dominant position in
marketing to customer base -$***** -$***** -$*****
------- ------- -------
Wholesale airtime price = $***** $***** $*****
Faxing $*****/page
</TABLE>
Limited Usage Plan
- ------------------
$***** plus $**** per kilobyte per subscriber.
_____________________________
***** Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
10
<PAGE>
ATTACHMENT B
RESELLER
RESPONSIBILITIES
<TABLE>
<CAPTION>
================================================================================================
SALES RESPONSIBILITY
- ------------------------------------------------------------------------------------------------
<S> <C>
GoAmerica shall be the primary sales lead provider.
ARDIS may provide leads to GoAmerica as ARDIS uncovers
Lead Generation such opportunities as part of its normal course of
business.
- ------------------------------------------------------------------------------------------------
GoAmerica will be responsible for developing any and all
proposal materials. ARDIS will support with ARDIS
Proposal Support background, network coverage, cost justification model
development and any other boiler plate requirements.
- ------------------------------------------------------------------------------------------------
PROJECT IMPLEMENTATION
- ------------------------------------------------------------------------------------------------
GoAmerica will be responsible for all training to include
ultimate customer, help desk system administrator. ARDIS
Implementation Training will support such training with telephone and
documentation support.
- ------------------------------------------------------------------------------------------------
GoAmerica will be responsible for installation and
Hardware/Software Install testing of all hardware and software components.
- ------------------------------------------------------------------------------------------------
POST INSTALL SUPPORT
- ------------------------------------------------------------------------------------------------
GoAmerica will remit payment for the timely payment of
Customer Billing - ARDIS Airtime fees and charges for ARDIS Airtime as invoiced.
- ------------------------------------------------------------------------------------------------
GoAmerica will provide the ultimate customer with help
desk training as required and will act as the ultimate
Help Desk (Ultimate Customer) customer's first line trouble interface. ARDIS will
provide second level help desk support to GoAmerica; not
to GoAmerica's customers.
================================================================================================
</TABLE>
11
<PAGE>
ATTACHMENT C
1. Nature and Control of ARDIS Network: GoAmerica is remarketing ARDIS'
-----------------------------------
Services to its clients in conjunction with database information services
and/or other value-added services. ARDIS controls the radio network which
enables communication and provides access in accordance with FCC rules and
regulations to and through GoAmerica on a shared basis. All clients of
GoAmerica shall use the ARDIS Network so as not to cause undue interference
with any other users of the ARDIS Network.
2. Security: Clients of GoAmerica are responsible for developing and/or
--------
maintaining procedures, external to the ARDIS Network, to safeguard
programs and data, and for the backup and reconstruction of lost data,
programs or procedures. Consequently, Clients of GoAmerica release ARDIS
from all liability for the loss or alteration of programs or data or their
acquisition by another party, except for ARDIS' failure to implement those
aspects of security procedures which are under ARDIS' control. ARDIS will
not be responsible for transmission errors, corruption of data or for the
security of data during transmission via public telecommunications
facilities
3. Confidentiality: Any and all programs and other materials provided by ARDIS
---------------
to GoAmerica for distribution or use by its clients in connection with the
use of the ARDIS Services, shall remain the exclusive and confidential
property of ARDIS, are licensed solely for use in conjunction with the
ARDIS Services, shall not be reproduced or copied except as required for
the authorized use of the Services, and shall be returned to ARDIS upon
request.
4. Limitation of Liability: Clients of GoAmerica hereby agree that the
-----------------------
following provisions govern their rights against ARDIS in the event that
they experience a partial or total failure, malfunction or defect in any of
the Services provided by ARDIS under the above-referenced Agreement. In no
event shall ARDIS be liable for incidental or consequential damages
(including without limitation, lost profits, lost savings, incidental
damages or other economic consequential damages, even if ARDIS has been
advised of the possibility of such damages) to the full extent such may be
disclaimed by law. Further, Ardis Company shall not be liable for any
damages based on any third party claim.
12
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 23, 2000 except for the third paragraph of
Note 14 as to which the date is March 17, 2000 in Amendment No. 5 to the
Registration Statement (Form S-1 No. 333-94801) and related Prospectus of Go
America, Inc. for the registration of 11,500,000 shares of its common stock.
/s/ Ernst & Young LLP
-----------------------------------
MetroPark, New Jersey
April 4, 2000
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITOR
I consent to the reference to my firm under the caption "Experts" and to the
use of my report dated February 25, 2000 with respect to the financial
statements of the business segment ZAP.IT in Amendment No. 5 to the
Registration Statement (Form S-1 No. 333-94801) and related Prospectus of Go
America, Inc. for the registration of 11,500,000 shares of its common stock.
/s/ John D. Hilcher CPA
-----------------------------------
April 4, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1999 JAN-01-1998 JAN-01-1997
<PERIOD-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<CASH> 6,343,793 1,960,954 19,589
<SECURITIES> 0 0 0
<RECEIVABLES> 616,865 219,021 10,492
<ALLOWANCES> (75,000) (20,000) (5,000)
<INVENTORY> 589,307 66,222 6,420
<CURRENT-ASSETS> 7,946,420 2,260,346 32,101
<PP&E> 1,378,087 804,050 254,269
<DEPRECIATION> (418,844) (160,438) (35,742)
<TOTAL-ASSETS> 9,756,684 3,009,983 323,606
<CURRENT-LIABILITIES> 5,520,805 784,697 175,321
<BONDS> 0 0 0
0 0 0
20,755,323 0 0
<COMMON> 236,872 213,278 148,285
<OTHER-SE> (16,421,846) 2,012,008 0
<TOTAL-LIABILITY-AND-EQUITY> 9,756,684 3,009,983 323,606
<SALES> 2,730,547 826,655 172,730
<TOTAL-REVENUES> 2,730,547 826,655 172,730
<CGS> 5,699,342 835,551 102,511
<TOTAL-COSTS> 5,699,342 835,551 102,511
<OTHER-EXPENSES> 8,664,630 2,581,498 1,116,182
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> (11,468,288) (2,576,709) (1,045,963)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (11,468,288) (2,576,709) (1,045,963)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (11,468,288) (2,576,709) (1,045,963)
<EPS-BASIC> (1.02) (0.14) (0.07)
<EPS-DILUTED> (1.00) (0.14) (0.06)
</TABLE>
