<PAGE>
As filed with the Securities and Exchange Commission on March 24, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AT ROAD, INC.
(Exact name of Registrant as specified in its charter)
---------------
Delaware 7373 94-3209170
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
47200 Bayside Parkway
Fremont, CA 94538
(510) 668-1638
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------
Krish Panu
President and Chief Executive Officer
At Road, Inc.
47200 Bayside Parkway
Fremont, CA 94538
(510) 668-1638
(Name, address including zip code, and telephone number including area code, of
agent for service)
---------------
Copies to:
Tae Hea Nahm Mark A. Bertelsen
Gene Yoon Jose F. Macias
Flora Szilagyi Betsey Sue
Eric M. Bowen Wilson Sonsini Goodrich & Rosati
VENTURE LAW GROUP 650 Page Mill Road
A Professional Corporation Palo Alto, CA 94304
2800 Sand Hill Road
Menlo Park, CA 94025
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed
Maximum
Title of each Class of Aggregate Amount of
Securities to be Registered Offering Price(1) Registration Fee
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<S> <C> <C>
Common Stock, par value................... 104,650,000.00 $27,627.60
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</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(a) and 457(o) under the Securities
Act.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the Registration Statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting offers to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 24, 2000
Shares
Common Stock
--------
Prior to this offering, there has been no public market for our common stock.
The initial public offering price of the common stock is expected to be between
$ and $ per share. We have applied to list our common stock on the
Nasdaq Stock Market's National Market under the symbol "ARDI."
The underwriters have an option to purchase a maximum of
additional shares to cover over-allotments of shares.
Investing in our common stock involves risks. See "Risk Factors" on page 5.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions @Road
-------- ------------- -----------
<S> <C> <C> <C>
Per Share.................................... $ $ $
Total........................................ $ $ $
</TABLE>
Delivery of the shares of common stock will be made on or about ,
2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
--------
Credit Suisse First Boston
Chase H&Q
U.S. Bancorp Piper Jaffray
The date of this prospectus is , 2000.
<PAGE>
[INSIDE FRONT COVER]
[COLOR ARTWORK]
DESCRIPTION OF COVER ARTWORK
Outside Front Gatefold:
In the top left corner, the text "THE @ROAD SOLUTION" appears.
In the top left corner below the caption, there is a graphic that depicts a
satellite and has the text "GPS SATELLITE" to the immediate right of it.
Coming down from the satellite is a lightning bolt, which is implying data
being sent to the three vehicles below--the vehicle at the left is a mini-van,
the vehicle in the center is a limousine, and the vehicle on the right is a
bus. Each vehicle has an antenna attached to the roof of the vehicle. From the
vehicles moving in a diagonal direction up and to the right, there is a
lightning bolt to a steel tower that has the text "Wireless Network" below it.
The tower has four concentric circles emanating from the top of the tower.
There are three legs to the tower. From the bottom of the right-most leg there
is an upward curving line to the right that goes into a cloud-like object that
has the text "INTERNET" in the center of it. The cloud has a dark outline with
a light interior. From the top and bottom of the cloud two additional lines
emerge. One line curves from the top middle of the cloud in an upwardly left
direction to three rectangular box-like structures meant to resemble computer
data servers with the text "@ROAD INTERNET SERVICE CENTER" above and slightly
to the left of the structures. The three box-like structures cascade slightly
up to the left. From the bottom right of the cloud extends the second line,
which moves down to the right and back to the left. The line terminates in the
back of a laptop computer. On the screen of the computer is a graphical
depiction of roads, land and coastline, meant to illustrate an @Road website
screen shot, as would be seen by an @Road customer.
Text in Lower Left Corner:
The @Road solution enables our customers to track, monitor and manage their
vehicles to improve productivity, lower costs, and enhance the service they
provide their customers. We integrate GPS technology, wireless communications
and the Internet to provide a cost-effective, easy-to-use solution for a broad
range of businesses and organizations.
Inside Front Gatefold:
The gatefold is a two-page side-by-side display which depicts three different
screen shots from our website. Each is a different web page from our website.
In the top left corner of the gatefold is the first screen shot. It is a view
of a computer screen that is running Microsoft Internet Explorer. Down the
left-hand side of this screen shot is first the @Road logo, then a scrolling
menu that says above it "Display Vehicle" and would enable a user of this web
page to select a vehicle. Below this scrolling menu is another scrolling menu
that says above it "Update Position" and would enable a user of the web page
to select a vehicle. Immediately below this menu is a button that a user could
press that has the text "Apply" on it. Below this button are three additional
buttons, one below the next. The first button has the text "Settings" on it,
the second has the text "Locate," and the third has the text "Help." To the
right of this column is another column with a series of options that can be
selected. To the left of each option is a white box that if it were clicked on
would indicate that it had been selected with the appearance of an arrow in
the box. To the right of this column is a map. The map depicts the San
Francisco Bay Area. The map depicts water and land with major roadways and the
names of those roadways depicted. On the map there are light and dark diamonds
that indicate the location of a vehicle that is being tracked presently. One
of the vehicles is selected and additional information about that vehicle is
displayed, including the name of the vehicle, the date, the time and the
length of the current stop. The entire screen shot has a shadow behind it.
To the right of the first screen shot is the following text:
@Road customers can retrieve information about their vehicles and other mobile
resources from our website using an Internet browser. The user interface is
intuitive to use, requires minimal training and can be personalized to meet
the requirements of our customers. With our service, customers can gather and
use location-relevant information to make informed decisions that enhance
their productivity and profitability.
Overlapping the bottom right corner of the first screen shot is the second
screen shot. This screen shot is of equal size as the first screen shot. It is
a view of a computer screen that is running Netscape Navigator. The page has
the text "Activity Report" in the upper left hand corner. Underneath this text
is a second row of text "Vehicle Activity Report" and the text "from 3/16/2000
0:0:0 to 3/17/2000 0:0:0 0:0:59", which is meant to symbolize a report of this
vehicle's activity for this time period. Underneath this text in the next line
is text that reads "Vehicle: C6" meant to represent that the text underneath
this line refers to Vehicle C6 of the customer's fleet. Underneath this text
in bold is the word "Summary:" with five lines of text underneath one another.
On the first line under "Summary" is "Total Time", the second line is "Total
Distance", the third line is "Number of Stops", the fourth line is "Total Stop
Time", the fifth line in bold is "Detail:" and directly underneath it is a
table that is eleven columns wide and ten rows high that provides information
including the exact location of where each stop was made including street
address, closest cross street, city, state, zip code and county. Under this
table in the bottom left corner of the screen shot is a table that summarizes
the information contained on the screen shot with two columns and four rows.
In the first row in the first column is the text "Total Time", in the second
row of the first column is the text "Total Distance", in the third row of the
first column is the text "Number of Stops", and in the fourth row of the first
column is the text "Total Stop Time". In each row of the second column are
numbers meant to represent an example of what a screen shot would show the
customer for each title in the first column.
To the right of the second screen shot is the following text:
The location of a customer's vehicles can be displayed on a map, simplifying
vehicle location, tracking and management. Map views can be personalized by
customers to graphically display different information about their vehicles.
Text to the Right of the "Vehicle Status Report" Screen Shot:
We offer our customers comprehensive, detailed reporting of vehicle activity,
either individually, or for all or a selected group of a customer's vehicles.
Overlapping the bottom right corner of the second screen shot is the third
screen shot. This screen shot is equal in size to the second screen shot. It
is a view of a computer screen that is running America Online and is titled
"@Road Fleet Resource." Down the left-hand side of the screen shot is first
the @Road logo, directly below it is the text "Control Panel" in italics and
then a group of six buttons that a user could press. The first button is
"Vehicle Status," the second is "Map View Plus," the third is "Reports," the
fourth is "Messaging," the fifth is "Administration" and the sixth is
"Support." Slightly below this group of buttons is one more button that is a
slightly lighter shade with the text "Fleet Resources." To the right of this
column is another frame with the heading "Fleet Resources." On the page are a
series of sub-headings with related hypertext links that if clicked on would
enable a user of this web page to be redirected to another desired website.
The sub headings are: "Fleet & Driver Services," "Supplies and Services,"
"Financial," "Fleet Equipment," "Fuel Prices," "Shop," "Industry Related,"
"Services" and "Associations, Government and Trade Magazines". The entire
screen shot has a shadow behind it.
To the right of the third screen shot is the following text:
Our Fleet Resources web page offers customers online information and links to
providers of goods and services that are important to managers of commercial
vehicles.
<PAGE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 5
Use of Proceeds.......................................................... 15
Dividend Policy.......................................................... 15
Capitalization........................................................... 16
Dilution................................................................. 17
Selected Consolidated Financial Data..................................... 18
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 19
Business................................................................. 25
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Management................................................................. 34
Related Party Transactions................................................. 44
Principal Stockholders..................................................... 46
Description of Capital Stock............................................... 48
Shares Eligible For Future Sale............................................ 50
Underwriting............................................................... 52
Notice To Canadian Residents............................................... 55
Legal Matters.............................................................. 56
Experts.................................................................... 56
Where You Can Find More Information........................................ 56
Index To Consolidated Financial Statements................................. F-1
</TABLE>
------------
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities.
Except as otherwise indicated, information in this prospectus is based on
the following assumptions:
. our reincorporation in Delaware and concurrent name change from @Road,
Inc. to At Road, Inc. which occurred in 2000;
. a three-for-two forward stock split of our outstanding capital stock
which occurred in February 2000;
. the conversion of all outstanding shares of our preferred stock into
shares of common stock, on a one-for-one basis, immediately prior to the
closing of this offering;
. the filing of our amended and restated certificate of incorporation; and
. no exercise of the underwriters' over-allotment option.
@Road, At Road, the @Road logo, FleetASAP, StatWhere, iLM, iDT and
www.atroad.com are trademarks and/or service marks of At Road, Inc. All other
brand names or trademarks appearing in this prospectus are the property of
their respective holders.
Dealer Prospectus Delivery Obligations
Until , 2000 (25 days after the commencement of this offering),
all dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealer's obligation to deliver a prospectus when acting
as an underwriter and with respect to unsold allotments or subscriptions.
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all the information you
should consider before buying shares in the offering. You should carefully read
the entire prospectus.
@Road
We integrate Global Positioning System technology, wireless communications
and the Internet to enable companies to efficiently manage their mobile
resources with location-relevant and time-sensitive information. Our solution
is an easy-to-use, cost-effective, Internet-based service for vehicle
management that provides location, reporting, dispatch, messaging and
management services. Our solution allows customers to use our website to track
the movement of their vehicles, employees, and goods and services, and enables
two-way messaging between our customers and their mobile workers. We believe
our solution provides significant value to our customers by reducing costs and
increasing efficiency.
The complex task of monitoring and tracking the movement of products and
people is critical to companies seeking to minimize resource requirements while
maximizing their profitability. Many businesses use inefficient and incomplete
systems such as wireless phones and pagers or systems based on proprietary
technologies requiring substantial and ongoing investments in information
technology and hardware.
We have a cost-effective solution that leverages existing infrastructure,
including Global Positioning System, or GPS, wireless networks and the
Internet. Our solution includes a proprietary hardware and software platform
that integrates wireless Internet connectivity with a GPS receiver. The
platform is installed in each vehicle and receives signals transmitted from GPS
satellites to determine the location and velocity of the vehicle. These data
are transmitted over wireless networks and the Internet to our network of
secure servers. Our customers can retrieve the information from our website
using an Internet browser. Because the customer data and solution software
reside on our Internet infrastructure, our customers do not need to make a
substantial investment in infrastructure and support to use our services.
Our solutions offer the following benefits:
. Productivity enhancement. Customers can achieve enhanced productivity by
closely monitoring all their vehicles, routing vehicles more efficiently,
reducing vehicle downtime, and increasing the number of deliveries or
trips per vehicle.
. Differentiated service. Our customers can provide their customers with
more detailed information on the location of products and services and
allocate resources more efficiently to reduce wait times experienced by
their customers.
. Ease of implementation. The installation of our platform into a vehicle
takes less than an hour. Once installed, our customers can manage all
their vehicles through an Internet browser. As our customers' fleets
grow, our solution is easily scaleable by installing our platform in
additional vehicles.
Our objective is to be the leading provider of location-relevant and time-
sensitive information services and solutions to businesses and organizations
managing mobile resources. Key elements of our strategy include:
. Establish @Road as the market leader in vehicle management services
. Increase the value of our solution by expanding the range of services we
provide
. Leverage partnerships to accelerate market acceptance
. Penetrate new markets and applications
. Maintain technology leadership
As of December 31, 1999, our solution was installed in over 7,000 vehicles.
Our customers' fleets range in size from two vehicles to over 350. We market
and sell our solution to a broad range of customers that vary in size,
geographic location and industry including trucking companies, food and
beverage distributors, delivery services, and taxi cabs and limousines.
We commenced operations in July 1996 and reincorporated in Delaware on April
, 2000. Our address is 47200 Bayside Parkway, Fremont, CA 94538, and our
telephone number is (510) 668-1638. References in the prospectus to "we,"
"our," "us," "@Road," and "At Road" refer to At Road, Inc. Our website is
located at www.atroad.com. Information contained on our website does not
constitute part of this prospectus.
3
<PAGE>
The Offering
<TABLE>
<S> <C>
Common stock offered by
@Road.................. shares
Common stock to be out-
standing after the
offering............... shares
Use of proceeds......... For general corporate purposes, including working
capital and capital expenditures. See "Use of Proceeds."
Proposed Nasdaq National
Market symbol.......... ARDI
</TABLE>
The number of shares of common stock to be outstanding after this offering
is estimated based on the number of shares outstanding on December 31, 1999,
adjusted to reflect our three-for-two stock split effected in February 2000.
The table above excludes 4,056,888 shares subject to outstanding options and
stock purchase rights at a weighted average exercise price of $0.57 per share
as of December 31, 1999, and 2,544,925 shares available for future issuance
under our stock option plan. See "Management--Stock Plans" and Note 7 to notes
to consolidated financial statements.
Summary Financial Data
<TABLE>
<CAPTION>
Period from
July 1, 1996
(commencement
of operations) Years Ended December 31,
to December 31, --------------------------
1996 1997 1998 1999
--------------- ------- ------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Revenues:
Service....................... $ -- $ -- $ 4 $ 612
Product....................... -- -- 64 294
Total revenues................ -- -- 68 906
Stock compensation expense.... -- -- -- 4,973
Total costs and expenses...... 299 1,102 1,568 15,199
Net loss...................... $ (275) $(1,004) $(1,410) $(13,489)
Basic and diluted net loss per
share........................ $ (0.12) $ (0.45) $ (0.62) $ (4.88)
Shares used in calculating
basic and diluted net loss
per share.................... 2,250 2,250 2,287 2,763
Pro forma basic and diluted
net loss per share........... $ (0.59)
Shares used in calculating pro
forma basic and diluted net
loss per share............... 22,882
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
-------------------
Actual As Adjusted
------- -----------
<S> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents................................... $22,714 $
Working capital............................................. 38,758
Total assets................................................ 45,174
Total stockholders' equity.................................. 40,608
</TABLE>
- -------
. See Note 1 of the notes to consolidated financial statements for an
explanation of the determination of the number of shares and share
equivalents used in computing per share data.
. As adjusted reflects the application of the net proceeds from the sale of
shares of our common stock at an assumed initial public offering
price of $ per share, after deducting the estimated underwriting discount
and the estimated offering expenses. It also reflects conversion of all
outstanding shares of preferred stock into common stock upon the closing of
the offering. See "Use of Proceeds" and "Capitalization."
4
<PAGE>
RISK FACTORS
You should carefully consider these risk factors, together with all of the
other information included in this prospectus, before you decide to purchase
shares of our common stock. The risks and uncertainties described below are not
the only ones we face. Additional risks and uncertainties not presently known
to us or that we currently deem immaterial may also harm our business.
Risks Related to Our Business
We have a limited operating history, which makes it difficult to evaluate your
investment in our common stock.
Your evaluation of our business will be difficult because we have a limited
operating history. We commenced operations in July 1996 and commercially
offered our first services in the second half of 1998. We may not continue to
grow or achieve profitability. We face a number of risks encountered by early-
stage companies in the GPS, wireless communications and Internet information
industries, including:
. the uncertainty of market acceptance of our services;
. our need to introduce reliable and robust products and services that meet
the demanding needs of customers;
. our need to expand our marketing, sales and support organizations, as
well as our distribution channels;
. our ability to anticipate and respond to market competition;
. our need to manage expanding operations;
. our dependence on wireless carriers;
. limited coverage of wireless networks; and
. migration to new networks, which could cause our products to be
incompatible or out of date.
Our business strategy may not be successful, and we may not successfully
address these risks.
We have historically incurred losses and these losses may increase in the
future.
We have never been profitable. As of December 31, 1999, we had an
accumulated deficit of $16.2 million. In order to become profitable and sustain
profitability, we will need to generate significant revenues to offset our cost
of revenues, and sales and marketing, research and development and general and
administrative expenses. We may not achieve or sustain our revenue or profit
goals and our losses may grow in the future. In order to facilitate the sale of
our services, we sell our platforms below cost. As a result, we have
experienced, and expect to continue to experience, negative gross margins on
the sale of our platforms. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview."
If we do not increase revenue from the sale of our services to new and existing
customers, our business may not be successful.
Our success depends on our ability to increase revenue from the sale of our
services to new and existing customers and on market acceptance of our
services. We may not be able to achieve widespread adoption of our services. If
we are not able to expand our customer base and increase our revenue from new
and existing customers, our business will be seriously harmed.
Our success depends on our ability to maintain and expand our sales channels.
In order to increase our market awareness, customer base and revenues, we
need to expand our direct and indirect sales operations. There is strong
competition for qualified sales personnel in our business, and we may not be
able to attract and retain sufficient new sales personnel to expand our
operations. New sales personnel
5
<PAGE>
will require training and will take time to achieve full productivity. In
addition, we believe that our success is dependent on expansion of our indirect
distribution channels, including our relationships with wireless carriers and
independent sales agents. To date, we have relationships with a limited number
of these wireless carriers and independent sales agents. We may not be able to
establish relationships with additional distributors on a timely basis, or at
all, and our distributors may not devote adequate resources to promoting and
selling our services.
We have limited resources and may be unable to manage our anticipated growth in
operations.
Our business strategy is based on the assumption that our customer base,
geographic coverage and service offerings will increase. If we fail to develop
and maintain our services as we experience rapid growth, demand for our
services and our revenues could decrease. Our development and expansion has
placed, and will continue to place, significant strain on our managerial,
operational, and financial resources. Due to the limited deployment of our
services, we are unable to assess our ability to grow the business and manage a
substantially larger number of customers and additional services.
If we cannot deliver the features and functionality our customers demand, we
will be unable to retain or attract new customers.
Our success depends upon our ability to determine the features and
functionality our customers demand and to design and implement services that
meet their needs in an efficient manner. We cannot assure you that we can
successfully determine customer requirements or that our future services will
adequately satisfy customer demands. To date, the design of our services has
been based on our internal efforts and feedback from a limited number of
existing and potential customers. In addition, we may experience difficulties
that could delay or prevent the successful development, introduction or
marketing of new services and service enhancements. If we cannot effectively
deploy, maintain and enhance our services, our expenses may increase, we may
not be able to recover our costs and our competitive position may be harmed.
We depend on wireless networks owned and controlled by others. If our customers
do not have continued access to sufficient capacity on reliable networks, we
may be unable to deliver services and our revenues could decrease.
Our ability to grow and achieve profitability depends on the ability of
wireless carriers to provide sufficient network capacity, reliability and
security to our customers. Our financial condition could be seriously harmed if
our wireless carriers were to increase the prices of their services, or to
suffer operational or technical failures. If wireless carriers do not expand
coverage, we may be unable to offer our service to additional areas.
If one or more of the agreements we have with wireless carriers is terminated,
we may be unable to offer our services to our customers within the carrier's
coverage area.
There are a limited number of wireless carriers offering services compatible
with our service. These wireless carriers have little overlap in their primary
service coverage areas. Our existing agreements with wireless carriers may be
terminated upon as little as thirty-day written notice. If one or more of our
wireless carriers decides to terminate or not renew its contract with us, we
may incur additional costs relating to obtaining alternate coverage from
another wireless carrier outside of its primary coverage area, or we may be
unable to replace the coverage at all, causing a complete loss of service to
our customers in that coverage area.
We depend on a limited number of third parties to manufacture and supply
critical components for our services. If these parties do not perform their
obligations, we may be unable to find other suppliers or operate our business.
Our services are enabled through the use of internet Location Modems and
internet Data Terminals. The iLM, which we install in customers' vehicles,
determines the vehicle's location, velocity and orientation and
6
<PAGE>
gathers other information about the vehicle. The iDT, when installed in a
customer's vehicle, adds the incremental ability to send and receive messages
to and from the vehicle. We cannot be sure that alternative sources for key
components used in the iLM and the iDT will be available when needed, or if
available, that these components will be available on commercially reasonable
terms. We rely on sole suppliers and manufacturers for a number of key
components for these products and do not have long term agreements with any of
these suppliers and manufacturers. Our sole suppliers and manufacturers of key
components include:
. Taiwan Semiconductor Manufacturing Company, our sole manufacturer of GPS
receiver chips;
. Philsar Electronics, our sole manufacturer of radio frequency chips;
. Orient Semiconductor Electronics, our sole manufacturer of iLMs; and
. Micronet, our sole supplier of iDTs.
If our agreements with these suppliers and manufacturers are terminated or
expire, or if we are unable to obtain sufficient quantities of these
components, our search for additional or alternate suppliers and manufacturers
could result in significant delays, added expense and our inability to maintain
or expand our customer base. Any of these events could require us to take
unforeseen actions or devote additional resources to provide our services and
could harm our ability to compete effectively.
We depend on recruiting and retaining qualified personnel and our inability to
do so would seriously harm our business.
Because of the technical nature of our services and the market in which we
compete, our success depends on the continued services of our current executive
officers and our ability to attract and retain qualified personnel with GPS,
wireless communications and Internet software expertise. Competition for
qualified personnel in these industries is intense, particularly in the San
Francisco Bay Area. Competitors and others have in the past, and may in the
future, attempt to recruit our employees. In addition, new employees generally
require substantial training, which requires significant resources and
management attention. Even if we invest significant resources to recruit, train
and retain qualified personnel, we may not be successful in our efforts.
We face competition from existing and potential competitors, which could reduce
our market share and revenues.
The market for our services is competitive and is expected to become even
more competitive in the future. Our customers choose our services primarily on
the basis of the functionality, price, ease of use, quality and geographic
coverage of our services. If we are unable to compete successfully in these
areas, competitive pressures may harm our business, resulting in a loss of
market share and revenues. Our current and potential competitors include:
. other providers of vehicle-location services, such as Qualcomm, whose
OmniTRACS service uses satellite communication technology to manage
fleets of trucks that travel long distances;
. other wireless Internet companies, such as Phone.com and Research in
Motion;
. companies working on emergency-911 solutions, such as True Position;
. companies with solutions that integrate location, wireless communications
and call centers, such as General Motors; and
. companies that provide wireless, location-relevant applications, such as
SignalSoft.
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.
7
<PAGE>
Our services also compete with alternative means of communication between
vehicles and their managers, including wireless telephones, two-way radios and
pagers. In addition, we expect that new competitors will enter the market for
location-relevant wireless information as businesses and consumers increasingly
demand information when they are mobile. Furthermore, the widespread adoption
of industry standards may make it easier for new market entrants or existing
competitors to offer the services we offer or may offer in the future.
Our quarterly operating results are subject to fluctuations, and our stock
price may decline if we do not meet the expectations of investors and analysts.
Our quarterly revenues and operating results are difficult to predict and
may fluctuate significantly from quarter to quarter due to a number of factors,
many of which are outside our control. These factors include, but are not
limited to:
. delays in market acceptance or implementation by our customers of our
services;
. changes in demand by our customers for existing and additional services;
. changes in or cancellations of our agreements with wireless carriers;
. introduction of new services by us or our competitors;
. changes in our pricing policies or those of our competitors or suppliers;
. changes in our mix of sources of revenues; and
. changes in accounting standards, including standards relating to revenue
recognition, business combinations and stock-based compensation.
Our expense levels are based, in part, on our expectation of future
revenues. As a result, any shortfall in revenues relative to our expectations
could cause significant changes in our operating results from quarter to
quarter. We believe period-to-period comparisons of our revenue levels and
operating results are not meaningful. You should not rely on our quarterly
revenues and operating results to predict our future performance. In some
future quarter our operating results may be below the expectations of public
market analysts and investors and, as a result, the price of our common stock
may fall.
Our success and ability to compete depends upon our ability to secure and
protect patents, trademarks and other proprietary rights.
Our success depends on our ability to protect our proprietary rights to the
technologies used to implement and operate our services in the U.S. and in
foreign countries. In the event that a third party breaches the confidentiality
provisions in our contracts or misappropriates or infringes on our intellectual
property or the intellectual property licensed to us by third parties, our
business would be seriously harmed. To protect our proprietary rights, we rely
on a combination of trade secrets, confidentiality and other contractual
provisions, and patent, copyright and trademark laws, which afford us only
limited protection. Third parties may independently discover or invent
competing technologies or reverse engineer our trade secrets, software or other
technology. Furthermore, laws in some foreign countries may not protect our
proprietary rights to the same extent as the laws of the U.S. Therefore, the
measures we take to protect our proprietary rights may not be adequate. See
"Business--Intellectual Property."
A disruption of our services due to accidental or intentional security breaches
may harm our reputation, may cause a loss of revenues and may increase our
expenses.
Unauthorized access, computer viruses and other accidental or intentional
actions could disrupt our systems. We expect to incur significant costs to
protect against the threat of security breaches and to alleviate problems
caused by any breaches. Currently, the transmission of our customers'
proprietary information over
8
<PAGE>
the Internet is not protected by encryption technology. If a third party were
to misappropriate our customers' proprietary information, we could be subject
to claims, litigation or other potential liabilities that could seriously harm
our revenues and result in the loss of customers.
System failures could reduce our sales, increase costs or result in liability
claims and seriously harm our business.
Any disruption to our services, information systems or communications
networks could result in the inability of our customers to receive our services
for an indeterminate period of time. Our services may not function properly if
our systems fail, or if there is an earthquake, fire, flood or other natural
disaster, or an act of war. Any disruption to our services could cause us to
lose customers or face litigation that would involve substantial costs and
distract management from operating our business. We currently do not have fully
redundant systems for our services at an alternate site. Our operations depend
upon our ability to maintain and protect our computer systems in our principal
facilities in Fremont, California, which are on or near earthquake fault zones.
We depend on GPS technology owned and controlled by others. If we do not have
continued access to GPS technology and satellites, we will be unable to deliver
our services and our revenues will decrease.
Our services rely on signals from GPS satellites built and maintained by the
U.S. Department of Defense. GPS satellites and their ground support systems are
subject to electronic and mechanical failures and sabotage. If one or more
satellites malfunction, there could be a substantial delay before they are
repaired or replaced, if at all, and our services may cease and customer
satisfaction would suffer.
In addition, the U.S. government could decide not to continue to operate and
maintain GPS satellites over a long period of time or to charge for the use of
GPS. Furthermore, because of ever-increasing commercial applications of GPS,
other U.S. government agencies may become involved in the administration or the
regulation of the use of GPS signals in the future. If the foregoing factors
affect GPS, such as by affecting the availability and pricing of GPS
technology, our business will suffer.
Our GPS technology depends on the use of radio frequency spectrum controlled by
others.
GPS technology is dependent on the use of radio frequency spectrum. An
international organization known as the International Telecommunications Union
controls the assignment of spectrum. If the ITU reallocates radio frequency
spectrum, our services may become less useful or less reliable. This would, in
turn, harm our business. In addition, emissions from mobile satellites and
other equipment using other frequency bands may adversely affect the utility
and reliability of our services.
Third parties may claim that our services infringe on their intellectual
property, which could result in significant expenses or the need to develop or
license the allegedly infringed or other technology.
The GPS, wireless communications and Internet sectors are characterized by a
large number of patents and frequent litigation based on allegations of patent
infringement and other violations of intellectual property rights. As the
number of entrants into our market increases, the possibility of an
intellectual property claim against us grows. Any intellectual property claims,
with or without merit, would be time-consuming and expensive to litigate or
settle and could divert management attention from focusing on our core
business. As a result of these disputes, we may have to develop costly non-
infringing technology, if possible, or enter into license agreements, which may
not be available on terms acceptable to us. This would increase our expenses
and could decrease the functionality of our service, which would make our
services less attractive to our current or potential customers.
9
<PAGE>
We received a letter from the holder of two patents claiming that we
infringe its patents, and requesting information about our GPS chipset. We are
currently in the process of reviewing these two patents. The patent holder has
indicated that it may be willing to license these patents to us. However, we
cannot assure you that we would be able to license these two patents on
commercially reasonable terms, if at all. We may also incur substantial legal
fees, and our management would be distracted, if the patent holder files a
lawsuit against us. See "Business--Intellectual Property."
Defects or errors in our services could result in the cancellation or delays of
our services, which would damage our reputation and harm our financial
condition.
We must develop our services quickly to keep pace with the rapidly changing
GPS, wireless communications and Internet markets. Products and services that
address these markets are likely to contain undetected errors or defects,
especially when first introduced or when new versions are introduced. Our
services may not be free from errors or defects, which could result in the
cancellation or disruption of our services. This would damage our reputation,
and result in lost revenues, diverted development resources, and increased
service and warranty costs.
The reporting of inaccurate location-relevant information could cause the loss
of customers and expose us to legal liability.
The accurate reporting of location-relevant information is critical to our
customers' businesses. If we fail to accurately report location-relevant
information, we could lose customers, our reputation and ability to attract new
customers could be harmed, and we could be exposed to legal liability. We may
not have insurance adequate to cover losses we may incur as a result of these
inaccuracies.
We may be subject to product liability claims that could result in significant
costs to us.
We may be subject to claims for damages related to errors and malfunctions
of our hardware components or their installation. A product liability claim
could seriously harm our business because of the costs of defending against
this type of lawsuit, diversion of employees' time and attention, and potential
damage to our reputation. Some of our agreements with our customers contain
provisions designed to limit exposure to potential product liability claims.
Limitation of liability provisions contained in our agreements may not be
enforceable under the laws of some jurisdictions. As a result, we could be
required to pay substantial amounts of damages in settlement or upon the
determination of any of these types of claims.
Our pending acquisitions of substantially all of the assets of DCI and Hynet
Technologies may not deliver the value we have agreed to pay and may result in
excessive expenses if we do not successfully integrate these assets or if the
costs and management resources we expend in connection with the integration
exceed our expectations.
In March 2000, we agreed to purchase substantially all the assets of
Differential Corrections, Inc. and Hynet Technologies. We expect to complete
these acquisitions in April 2000. These acquisitions will require integrating
the assets and operations of DCI and Hynet Technologies with our own, and are
subject to obtaining necessary consents from third parties and other conditions
to closing. These acquisitions may not be completed or we may not be able to
successfully integrate the personnel, operations and customers of DCI and Hynet
Technologies into our business. Additionally, we may fail to achieve the
anticipated synergies from the acquisition of DCI and Hynet Technologies,
including marketing, product development, location accuracy improvements,
distribution and other operational synergies.
The integration process may further strain our existing financial and
managerial controls, reporting systems and procedures. This may result in the
diversion of management and financial resources from our core business
objectives. We may also have to assume unanticipated liabilities related to the
acquired assets.
10
<PAGE>
We may establish alliances or acquire technologies or companies in the future,
which could result in the dilution of our stockholders and disruption of our
business.
We are continually evaluating our business alliances and external
investments in technologies related to our business. Acquisitions of companies,
divisions of companies, businesses or products and strategic alliances entail
numerous risks, any of which could materially harm our business in several
ways, including:
. diversion of management's attention from our core business objective and
other business concerns;
. failure to integrate the acquired company into our pre-existing business;
. potential loss of key employees from either our pre-existing business or
the acquired business;
. dilution of our existing stockholders as a result of issuing equity
securities; and
. assumption of liabilities of the acquired company.
Some or all of these problems may result from current or future alliances,
acquisitions or investments. Furthermore, we may not realize any value from
these alliances, acquisitions or investments.
We may need and may not be able to obtain additional capital, which could
prevent us from carrying out our business strategy.
We anticipate that our available cash resources combined with the net
proceeds from this offering will be sufficient to fund our operating needs for
the next 18 months, including the expansion of sales and marketing and research
and development programs during that period. Thereafter, we expect to require
additional financing in an amount that we cannot determine at this time. If our
plans or assumptions change or are inaccurate, we may be required to seek
capital sooner than anticipated. We may need to raise funds through public or
private debt or equity financings. If we need to raise additional funds, we may
not be able to do so on commercially reasonable terms, or at all, and may not
be able to continue to fund our operations.
If our wireless carriers decide to abandon CDPD technology or do not continue
to expand their CDPD networks, we may be unable to deliver our services and our
sales could decrease.
Our services use only standard Cellular Digital Packet Data protocol, or
CDPD, to transmit data to and from our customers' vehicles and function only on
CDPD-enabled networks. CDPD covers only portions of the U.S., is not widely
used and may not gain market acceptance. If wireless carriers decide to abandon
CDPD in favor of other types of wireless technology, we may not be able to
provide our current services to our customers. In addition, if wireless
carriers do not expand their CDPD coverage area, we will be unable to meet the
needs of customers who wish to use our services outside the current coverage
area.
Fluctuations in the value of foreign currencies could result in increased
product costs and operating expenses.
We have suppliers and manufacturers that are located outside the U.S. Some
transactions relating to supply and development agreements may be conducted in
currencies other than the U.S. dollar, and fluctuations in the value of foreign
currencies relative to the U.S. dollar could cause us to incur currency
exchange costs. In addition, some of our transactions denominated in U.S.
dollars may be subject to currency exchange rate risk. We cannot predict the
effect of exchange rate fluctuations on our future operating results. Should
there be a sustained increase in average exchange rates for the local
currencies in these countries, our suppliers and manufacturers may request a
price increase at the end of the contract period.
11
<PAGE>
Risks Related to Our Market
Our business will be harmed if the demand for services based on wireless
communications does not grow.
The markets for wireless data services and related products and services are
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. Since the market for our services
is new and evolving, it is difficult to predict the size of this market or its
growth rate. Our financial performance will depend in large part upon the
continued demand for vehicle management services through wireless technologies.
We cannot assure you that a sufficient volume of customers will demand these or
other services based on these technologies. If the market for wireless on-line
vehicle management and other services grows more slowly than we currently
anticipate, our revenues may not grow.
If the use of the Internet by businesses does not continue to grow, our
business will be harmed.
Our future success is dependent on continued growth in the use of the
Internet by businesses. The use and acceptance of the Internet by businesses
may not increase for a number of reasons, including the cost and availability
of Internet access and concerns about privacy, security and reliability.
Capacity constraints caused by growth in the use of the Internet may impede
further development of the Internet to the extent that users experience delays,
transmission errors and other difficulties. If the necessary infrastructure,
products, services or facilities are not developed, or if the Internet does not
become a viable and widespread commercial medium, we may not be able to grow
our business.
Government regulations and standards may harm our business and could increase
our costs or reduce our opportunities to earn revenues.
In addition to regulations applicable to businesses in general, we may also
be subject to direct regulation by governmental agencies, including the Federal
Communications Commission and Department of Defense. These regulations may
impose licensing requirements or safety standards with respect to human
exposure to electromagnetic radiation and signal leakage. A number of
legislative and regulatory proposals under consideration by federal, state,
provincial, local and foreign governmental organizations may lead to laws or
regulations concerning various aspects of the Internet, wireless communications
and GPS technology, including on-line content, user privacy, taxation, access
charges and liability for third-party activities. Additionally, it is uncertain
how existing laws governing issues such as taxation on the use of wireless
networks, intellectual property, libel, user privacy and property ownership,
will be applied to our services. The adoption of new laws or the application of
existing laws may expose us to significant liabilities and additional
operational requirements, which could decrease the demand for our services and
increase our cost of doing business. Wireless carriers who supply us with
airtime are subject to regulation by the FCC and regulations that affect them
could also increase our costs or limit the provision of our services.
Our platform contains encryption technology whose export is restricted by law,
which may slow our growth or result in significant costs.
The U.S. government generally limits the export of encryption technology,
which our services incorporate. Foreign countries may impose similar regulatory
requirements. If any export approval that we receive is revoked or modified, if
our technology is unlawfully exported or if the U.S. government adopts new
legislation or regulations restricting export of our services and encryption
technology, we may not be able to distribute our services to potential
customers outside the U.S., which may seriously harm our business. We may need
to incur significant costs and divert resources to develop replacement
technologies or may need to adopt inferior substitute technologies to satisfy
these export restrictions. These replacement or substitute technologies may not
be the preferred security technologies of our customers, in which case, our
business may not grow. In addition, we may suffer similar consequences if the
laws of any other country limit the ability of third parties to sell encryption
technologies to us.
12
<PAGE>
Risks Related to This Offering
Like many technology companies, our stock price is likely to be volatile, which
may cause you to lose your investment and may result in costly litigation that
could divert our resources.
Stock markets have recently experienced dramatic price and volume
fluctuations, particularly for shares of technology companies. These
fluctuations can be unrelated to the operating performance of these companies.
Broad market fluctuations may reduce the market price of our common stock and
cause you to lose some or all of your investment. 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:
. 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; and
. security breaches.
When the market price of a company's stock drops significantly, stockholders
often institute securities class action lawsuits against that company. A
lawsuit against us could cause us to incur substantial costs and could divert
the time and attention of our management and other resources from our business.
Our securities have no prior public market and our share price may decline
after this offering.
There has never been a public market for our common shares, and an active
public market for our common shares may not develop or be sustained after this
offering. If an active public market for our common shares does not develop,
the liquidity of your investment may be limited, and our share price may
decline below its initial public offering price. The initial public offering
price will be determined by negotiations between the underwriters and us and
may bear no relationship to the price that will prevail in the public market.
Future sales of common stock by our existing stockholders could cause our share
price to fall.
If our stockholders sell substantial amounts of our common stock in the
public market, the market price of our common stock could fall. The perception
among investors that these sales will occur could also produce this effect.
After this offering, based upon the number of common shares outstanding as of
December 31, 1999, we will have common shares outstanding.
All of the common shares we will issue in this offering will
be immediately available for resale in the public markets, other than shares
purchased by our affiliates. In accordance with applicable securities laws and
after giving effect to lock-up agreements executed by our directors, executive
officers and existing stockholders, the common shares outstanding after this
offering will be available for sale in the public market beginning 180 days
after the date of this prospectus, and additional common shares issuable upon
the exercise of stock options will be available for sale once we file a
registration statement relating to our stock option plans. See "Shares Eligible
for Future Sale."
Our certificate of incorporation and bylaws and state law contain provisions
that could discourage a takeover.
Upon completion of this offering, we will adopt a certificate of
incorporation and bylaws, which in addition to state law, may discourage, delay
or prevent a merger or acquisition that a stockholder may consider favorable.
These provisions include the following:
. establishing a classified board in which only a portion of the total
board members will be elected at each annual meeting;
. authorizing the board to issue preferred stock;
. prohibiting cumulative voting in the election of directors;
13
<PAGE>
. limiting the persons who may call special meetings of stockholders;
. prohibiting stockholder action by written consent; and
. establishing advance notice requirements for nominations for election to
the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings.
Upon completion of this offering, we will adopt a certificate of
incorporation that will permit our board to issue shares of preferred stock
without stockholder approval, which means that the board could issue shares
with special voting rights or other provisions that could deter a takeover. In
addition to delaying or preventing an acquisition, the issuance of a
substantial number of preferred shares could adversely affect the price of our
common stock and dilute existing stockholders. See "Management--Board
Composition" and "Description of Capital Stock."
A limited number of stockholders will collectively continue to own a majority
of our common stock after this offering and may act, or prevent certain types
of corporate actions, to the detriment of other stockholders.
Immediately after this offering, our directors, officers and greater than 5%
stockholders will own more than % of our outstanding common shares.
Accordingly, these stockholders may, if they act together, exercise significant
influence over all matters requiring stockholder approval, including the
election of a majority of the directors and the determination of significant
corporate actions after this offering. This concentration could also have the
effect of delaying or preventing a change in control that could otherwise be
beneficial to our stockholders.
We will have broad discretion in how we use the proceeds from this offering,
and our use of these proceeds may not yield a favorable return.
We intend to use the proceeds from this offering for general corporate
purposes, including the development of our products and services and potential
acquisitions. Accordingly, we will have broad discretion in using these
proceeds. You will not have the opportunity to evaluate the economic, financial
or other information that we may use to determine how we use these proceeds.
Upon completion of this offering, you will experience immediate dilution.
Our tangible assets are readily identified assets such as property,
equipment, cash, securities and accounts receivable. The value of these assets
on our pro forma balance sheet minus the value of our liabilities equals $
per share, after giving effect to the completion of this offering. The offering
price exceeds this amount by $ 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 the proceeds, you would not recover the amount you paid for your
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 to
purchase common stock with exercise prices significantly below the price per
share in this offering. As a result, you will experience further dilution to
the extent these options are exercised.
14
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
All statements, trend analysis and other information contained in this
prospectus relating to markets for our services and trends in revenues, gross
margins and anticipated expense levels, as well as other statements including
words such as "anticipate," "believe," "plan," "estimate," "expect," "intend"
and other similar expressions constitute forward-looking statements. These
forward-looking statements are subject to business and economic risks and
uncertainties, and our actual results of operations may differ materially from
those contained in the forward-looking statements.
USE OF PROCEEDS
The net proceeds to us from the sale of shares of common stock in this
offering will be approximately $ million, $ million if the
underwriters' over-allotment option is exercised in full, at an assumed initial
public offering price of $ per share and after deducting estimated
underwriting discounts and commissions and the estimated offering expenses
payable by us.
We intend to use the net proceeds from this offering primarily for general
corporate purposes, including working capital and capital expenditures. We may
use a portion of the net proceeds from this offering to acquire or invest in
businesses, technologies or services that complement our business.
The amounts that we use for working capital purposes will vary significantly
depending on a number of factors. We will retain broad discretion in the
allocation and use of the net proceeds of this offering. Pending their use, we
intend to invest the net proceeds in short-term, interest-bearing, investment-
grade securities.
The principal purposes of this offering are to increase our working capital,
create a public market for our stock, increase our visibility and facilitate
our future access to public equity markets.
DIVIDEND POLICY
We have never declared or paid cash dividends on shares of our capital
stock. We currently intend to retain all available funds and any future
earnings for use in the operation of our business and do not anticipate paying
any cash dividends in the foreseeable future.
15
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999:
. on an actual basis;
. on a pro forma basis to reflect the conversion of all outstanding shares
of preferred stock into shares of common stock upon the closing of this
offering; and
. on a pro forma as adjusted basis to reflect the receipt and application
of the net proceeds from the sale by us of shares of common stock
offered hereby at an assumed public offering price of $ , after
deducting estimated underwriting discounts and commissions and the
estimated offering expenses payable by us and the application of the net
proceeds from the offering. See "Use of Proceeds."
The following table excludes:
. an aggregate of 4,056,888 shares subject to outstanding options and stock
purchase rights at a weighted average exercise price of $0.57 per share
as of December 31, 1999, and
. 2,544,925 shares available for future issuance under our 1996 stock
option plan. See "Management--Stock Plans," "Related Party Transactions"
and Note 7 of notes to consolidated financial statements.
The capitalization information set forth in the table below is qualified by
and should be read in conjunction with our consolidated financial statements
and related notes appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
December 31, 1999
----------------------------
Pro
Pro forma as
Actual forma adjusted
-------- -------- --------
(in thousands, except
share data)
<S> <C> <C> <C>
Cash and cash equivalents......................... $ 22,714 $ 22,714 $
======== ======== ========
Stockholders' equity:
Convertible preferred stock, $0.0001 par value;
authorized: 26,927,886 shares actual, none pro
forma and pro forma as adjusted; outstanding:
25,430,187 actual, none pro forma and pro forma
as adjusted.................................... $ 51,606 $ -- $ --
Common stock, $0.0001 par value; authorized
48,072,114 shares actual, pro forma and pro
forma as adjusted; outstanding: 7,550,001
actual, 32,980,188 pro forma and pro forma
as adjusted.................................... 18,590 70,196
Deferred stock compensation....................... (11,632) (11,632) (11,632)
Notes receivable from stockholders................ (1,758) (1,758) (1,758)
Accumulated other comprehensive loss.............. (21) (21) (21)
Accumulated deficit............................... (16,177) (16,177) (16,177)
-------- -------- --------
Total stockholders' equity and
capitalization............................... $ 40,608 $ 40,608 $
======== ======== ========
</TABLE>
16
<PAGE>
DILUTION
Our pro forma net tangible book value, as of December 31, 1999, was
approximately $40.6 million or $1.23 per share of common stock. Pro forma net
tangible book value per share represents the amount of our total tangible
assets reduced by the amount of our total liabilities and divided by the total
number of shares of common stock outstanding after conversion of all
outstanding shares of preferred stock into common stock. After giving effect to
the sale of the shares of common stock offered by us at an assumed initial
public offering price of $ per share, and the adjustments set forth above,
our pro forma net tangible book value as of December 31, 1999 would have been
$ or $ per share. This represents an immediate increase in net tangible
book value of $ per share to existing stockholders and an immediate dilution
of $ per share to new investors. The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........................ $
Pro forma net tangible book value per share before the offering...... $1.23
Increase per share attributable to new investors.....................
-----
Pro forma net tangible book value per share after the offering.........
---
Dilution per share to new investors.................................... $
===
</TABLE>
The following table summarizes on a pro forma basis, as of December 31,
1999, the differences between the existing stockholders and new investors with
respect to the number of shares of common stock purchased from us, the total
consideration paid to us and the average price per share paid.
<TABLE>
<CAPTION>
Average
Price Per
Shares Purchased Total Consideration Share
------------------ ------------------- ---------
Number Percent Amount Percent
---------- ------- ----------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... 32,980,188 % $51,892,000 % $1.57
New investors..................
Totals....................... 100.0% $ 100.0%
========== ===== =========== ===== =====
</TABLE>
The information presented with respect to existing stockholders assumes no
exercise of outstanding options under the 1996 stock option plan. As of
December 31, 1999 options to purchase 4,056,888 shares were outstanding under
our 1996 stock option plan with a weighted average price of $0.57 per share.
17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below should be read in
conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations, the consolidated financial statements, the related
notes and the other information contained in this prospectus. The selected
consolidated statement of operations data for the years ended December 31,
1997, 1998 and 1999 and the consolidated balance sheet data as of December 31,
1998 and 1999 have been derived from our audited consolidated financial
statements appearing elsewhere in this prospectus. The selected consolidated
balance sheet data as of December 31, 1997 are derived from audited
consolidated financial statements not included in this prospectus. The selected
statement of operations data for the period ended December 31, 1996 and the
consolidated balance sheet data as of December 31, 1996 are derived from
unaudited financial statements not included in this prospectus. The historical
results presented below are not necessarily indicative of future results. The
pro forma information in the following table gives effect to the automatic
conversion of all outstanding shares of our convertible preferred stock into
common stock upon the closing of this offering.
<TABLE>
<CAPTION>
Period from
July 1, 1996
(commencement Years Ended December 31,
of operations) to --------------------------
December 31, 1996 1997 1998 1999
----------------- ------- ------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Consolidated Statements of
Operations Data:
Revenues:
Service........................ $ -- $ -- $ 4 $ 612
Product........................ -- -- 64 294
------- ------- ------- --------
Total revenues................ -- -- 68 906
------- ------- ------- --------
Costs and expenses:
Cost of service revenue........ -- -- 27 681
Cost of product revenue........ -- -- 87 1,777
Sales and marketing............ -- 107 266 3,530
Research and development....... 204 745 731 2,109
General and administrative..... 95 250 457 2,129
Stock compensation............. -- -- -- 4,973
------- ------- ------- --------
Total costs and expenses...... 299 1,102 1,568 15,199
------- ------- ------- --------
Loss from operations............. (299) (1,102) (1,500) (14,293)
Interest income, net............. 25 98 90 804
------- ------- ------- --------
Net loss......................... $ (274) $(1,004) $(1,410) $(13,489)
======= ======= ======= ========
Basic and diluted net loss per
share........................... $ (0.12) $ (0.45) $ (0.62) $ (4.88)
======= ======= ======= ========
Shares used in calculating basic
and diluted net loss per share.. 2,250 2,250 2,287 2,763
======= ======= ======= ========
Pro forma basic and diluted net
loss per share.................. $ (0.59)
========
Shares used in calculating pro
forma basic and diluted net loss
per share....................... 22,882
========
</TABLE>
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1997 1998 1999
------ ------ ------ -------
(in thousands)
<S> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents......................... $2,170 $ 590 $5,356 $22,714
Working capital................................... 2,126 1,078 5,599 38,758
Total assets...................................... 2,271 1,305 6,006 45,174
Total stockholders' equity........................ 2,217 1,213 5,788 40,608
</TABLE>
<TABLE>
<CAPTION>
Year ended
December 31, 1999
-----------------
(in thousands)
<S> <C>
Detail of stock compensation:
Cost of service revenue....................................... $ 17
Cost of product revenue....................................... 52
Sales and marketing........................................... 501
Research and development...................................... 445
General and administrative.................................... 3,958
------
Total....................................................... $4,973
======
</TABLE>
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and the related notes included in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ significantly from those
projected in the forward-looking statements as a result of many factors,
including those discussed in "Risk Factors," "Business" and elsewhere in this
prospectus. We assume no obligation to update the forward-looking statements or
such factors.
Overview
We integrate GPS technology, wireless communications and the Internet to
enable companies to efficiently manage their mobile resources with location-
relevant and time-sensitive information. Our solution is an easy-to-use, cost-
effective, Internet-based service for vehicle management that provides
location, reporting, dispatch, messaging and management services. Our solution
allows customers to use our website to track the movement of their vehicles,
employees, and goods and services, and enables two-way messaging between our
customers and their mobile workers. We believe our solution provides
significant value to our customers by reducing costs and increasing efficiency.
From July 1996 through June 1998, our operations consisted primarily of
various start-up activities relating to our current business, including
development of GPS technologies, recruiting personnel and raising capital. We
did not recognize any revenues prior to June 1998, and our expenses consisted
of research and development, sales and marketing and general and administrative
expenses. In 1998, we expanded our strategy and redirected our focus to provide
location-relevant and time-sensitive information services and solutions to
companies managing mobile resources.
In the second half of 1998, we introduced FleetASAP, a cost-effective
solution that leverages existing infrastructure, including GPS, wireless
networks and the Internet to enable companies to efficiently manage their
mobile resources. Our solution includes a proprietary hardware and software
platform that integrates wireless Internet connectivity with a GPS receiver.
The platform is installed in each vehicle and receives signals transmitted from
GPS satellites to determine the location and velocity of the vehicle. These
data are transmitted over wireless networks and the Internet to our network of
secure servers. Our customers can retrieve the information from our website
using an Internet browser. Because the customer data and solution software
reside on our Internet infrastructure, our customers do not need to make a
substantial investment in infrastructure and support to use our services.
Since 1998, we have derived substantially all of our revenues from the sale
of our service and the associated product hardware. Our service revenue is
comprised of monthly fees. Our customers can contract to receive our services
for terms of one, two or three years and can purchase enhanced features for
additional charges. As more customers use our service, the impact on our
service revenue is compounded. Our product revenue consist of sales of the iLM
and the iDT. Since the selling prices of our platforms are below our costs, we
defer platform costs in amounts equal to or less than the related deferred
product revenue; as a result, we expense a portion of the platform costs at the
time of shipment and the remaining deferred platform costs are amortized
ratably over the minimum service contract period.
We recognize service revenue over the period during which services are
performed. Product revenue is deferred and recognized ratably over the minimum
service contract period. Allowances for sales returns are recorded at the time
product revenue is recognized.
To date, we have not sold our service outside the U.S. and Canada; however,
we intend to expand our service offerings to additional countries during the
fourth quarter of the year 2000. We do not expect that revenues from
international sales will be material in 2000.
19
<PAGE>
We will incur substantial stock compensation expense in future periods,
which represents non-cash charges incurred as a result of the issuance of stock
options to employees and consultants. The charge related to options granted to
employees is recorded based on the difference between the deemed fair value of
the common stock and the option exercise price of such options at the date of
grant, which is amortized over the option-vesting period. The charge related to
options granted to consultants is calculated at the end of each reporting
period based on the Black-Scholes model, which approximates fair value and is
amortized based on the term of the consulting agreement or service period. The
amount of the charge in each period can fluctuate depending on our stock price
and volatility. As of December 31, 1999, deferred stock compensation was $11.6
million, which will be amortized in future periods.
Since inception, we have invested substantially in research and development,
marketing, the building of sales channels, and our overall infrastructure. We
anticipate that such investments will continue to grow in the near future. We
have incurred losses in each year since inception and expect to incur net
losses in the foreseeable future. As of December 31, 1999, we had an
accumulated deficit of $16.2 million. Net losses have increased in each quarter
in 1999, and we expect this trend to continue. Our limited operating history
makes it difficult to forecast future operating results. Even if we were to
achieve profitability in any period, we may not sustain or increase
profitability on a quarterly or annual basis.
Results of Operations
Years Ended December 31, 1997, 1998 and 1999
Service Revenue
Service revenue increased from $4,000 in 1998 to $612,000 in 1999. The
increase in service revenue was attributable to the commercial release of our
FleetASAP service. Initial product installation and service commencement began
at the end of 1998 and, as a result, no revenue was recognized in 1997. The
number of vehicles utilizing our services has grown from 135 as of December 31,
1998 to over 7,000 as of December 31, 1999.
Product Revenue
Product revenue increased from $64,000 in 1998 to $294,000 in 1999, in line
with the commercial release of our service. We did not recognize any product
revenue in 1997.
Cost of Service Revenue
Cost of service revenue consists primarily of employee salaries and expenses
related to the delivery and support of our services, costs and expenses
associated with connecting our services to wireless networks and the Internet,
and depreciation of our Internet infrastructure. Cost of service revenue
increased from $27,000 in 1998 to $681,000 in 1999. The growth in cost of
service was due primarily to the commercial release and expansion of our
services, but also reflects increases in service infrastructure, including
personnel, in support of the FleetASAP service. We did not record any cost of
service revenue for 1997.
Cost of Product Revenue
Cost of product revenue consists primarily of the cost of our platform,
including the iLM, iDT and related parts, as well as costs associated with the
final assembly, test, delivery, and installation of our products. The cost of
products sold to our customers is deferred until services are initiated and are
amortized ratably over the initial contract period. Cost of product revenue
increased from $87,000 in 1998 to $1.8 million in 1999. The increase in cost of
product revenue was attributable primarily to the commercial release and
expansion of our services and the resulting increase in the number of customers
using our services. We did not record any cost of product revenue for 1997.
20
<PAGE>
Research and Development Expenses
Research and development expenses consist primarily of employee salaries and
expenses related to development personnel and consultants, as well as expenses
associated with software and hardware development. In 1997, research and
development expenses also included prototype costs and testing expenses related
to the development of our GPS technology. Research and development expenses
were $745,000 in 1997, $731,000 in 1998, rising to $2.1 million in 1999. The
increase was attributable to the hiring of additional development personnel and
outside consultants. Research and development headcount increased from five as
of December 31, 1998 to 30 as of December 31, 1999. We expect that research and
development expenses will continue to increase in future periods.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, or SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This standard requires
companies to capitalize qualifying computer software costs that are incurred
during the application development stage and amortize them over the software's
estimated useful life. SOP 98-1 is effective for years beginning after December
15, 1998. We implemented this standard in 1999 and capitalized approximately
$242,000 of costs related to internally developed software systems.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of employee salaries, sales
commissions, and marketing and promotional expenses. Sales and marketing
expenses increased from $107,000 in 1997 to $266,000 in 1998, and to $3.5
million in 1999. These expenses increased primarily due to the hiring of
additional personnel, expansion of sales channels, and increased sales and
marketing activities related to development of market awareness of our service.
Sales and marketing headcount grew from three as of December 31, 1998 to 39 as
of December 31, 1999. We expect that sales and marketing expenses will continue
to increase as we hire additional personnel, expand our sales and marketing
efforts and pay sales commissions.
General and Administrative Expenses
General and administrative expenses consist primarily of employee salaries
and related expenses for executive, administrative, accounting, and
professional fees and recruiting. These expenses increased from approximately
$250,000 in 1997, to $457,000 in 1998, and to $2.1 million in 1999. General and
administrative expenses increased due to the hiring of additional personnel and
related expenses. General and administrative headcount increased from four as
of December 31, 1998 to 15 as of December 31, 1999. We expect that these
expenses will increase as we hire additional personnel and incur related
expenses in anticipation of the growth of the business and our operation as a
public company.
Stock Compensation
Deferred stock compensation related to the granting of stock options to
employees and consultants was $11.6 million as of December 31, 1999. Stock
compensation expense in 1999 of $5.0 million represents the amortization of
deferred stock compensation related to the vesting of employee and consultant
stock options granted in 1999. We expect amortization of stock compensation of
approximately $6.9 million, $2.9 million, $1.3 million, $416,000 and $117,000
in the years ended December 31, 2000, 2001, 2002, 2003 and 2004 respectively,
related to these options.
Interest Income, Net
Net interest income is comprised primarily of interest earned on cash and
cash equivalents and short-term investments, offset by interest expense related
to obligations under our line of credit. Net interest income was approximately
$98,000, $90,000 and $804,000 in 1997, 1998 and 1999, respectively. These
balances increased significantly during 1999 as a result of investment in debt
securities of the proceeds from our convertible preferred stock financings
completed in June and December 1999.
21
<PAGE>
Income Taxes
Since inception, we have incurred net losses for federal and state tax
purposes and have not recognized any tax provision or benefit. As of December
31, 1999, we had approximately $10.3 million of both federal and state net
operating loss carryforwards to offset future taxable income. These
carryforwards, if not utilized, expire through 2019 and 2003, respectively.
Net Loss
Net loss increased from $1.0 million in 1997 to $1.4 million in 1998, and to
$13.5 million in 1999. These increases were principally due to operating costs
and expenses of $1.1 million in 1997, $1.6 million in 1998, and $15.2 million
in 1999.
Quarterly Results of Operations
The following table sets forth our consolidated operating results for each
of the four quarters of 1999. This data has been derived from unaudited
consolidated financial statements that, in the opinion of our management,
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such information when read in conjunction
with our annual audited consolidated financial statements and notes thereto
appearing elsewhere in this prospectus. These operating results are not
necessarily indicative of results of any future period.
<TABLE>
<CAPTION>
Quarters Ended
--------------------------------------
March 31, June 30, Sept. 30, Dec. 31,
1999 1999 1999 1999
--------- -------- --------- --------
(in thousands)
<S> <C> <C> <C> <C>
Consolidated Statements of Operations
Data:
Revenues:
Service.............................. $ 7 $ 35 $ 145 $ 425
Product.............................. 24 32 80 158
----- ------- ------- -------
Total revenues..................... 31 67 225 583
----- ------- ------- -------
Costs and expenses:
Cost of service revenue.............. 9 61 154 457
Cost of product revenue.............. 30 192 613 942
Research and development............. 203 291 572 1,043
Sales and marketing.................. 176 424 1,133 1,797
General and administrative........... 309 381 477 962
Stock compensation................... 63 300 637 3,973
----- ------- ------- -------
Total costs and expenses........... 790 1,649 3,586 9,174
----- ------- ------- -------
Loss from operations................... (759) (1,582) (3,361) (8,591)
Interest income, net................... 56 76 351 321
----- ------- ------- -------
Net loss............................... $(703) $(1,506) $(3,010) $(8,270)
===== ======= ======= =======
</TABLE>
During the four quarters ended December 31, 1999, both service and product
revenues increased period over period, a direct result of the commercial
release of our FleetASAP service and the increase of installed units from 135
as of December 31, 1998 to over 7,000 as of December 31, 1999. As more
customers use our service, the impact on our service revenue is compounded.
Cost of service revenue and cost of product revenue increased over the four
quarters in 1999, as a result of the growth in revenues, as well as increases
in units shipped and expansion of our service infrastructure. This expansion in
service infrastructure was in anticipation of future service demand.
22
<PAGE>
Total employees grew from 14 as of December 31, 1998 to 103 as of December
31, 1999. As a result of the growth in the number of employees in our research
and development, sales and marketing, and general and administrative
organizations, operating expenses related to each of these functions increased
on a quarter-to-quarter basis.
We believe period-to-period comparisons of our operating results are not
necessarily meaningful. You should not rely on them to predict future
performance. The amount and timing of our operating expenses may fluctuate
significantly in the future as a result of a variety of factors. We face a
number of risks and uncertainties encountered by early stage companies,
particularly those in rapidly evolving markets. We may not be able to
successfully address these risks and difficulties. For a description of these
risks, see "Risk Factors."
Liquidity and Capital Resources
Since our inception, we have financed operations primarily through private
sales of convertible preferred stock, which totaled $51.6 million in aggregate
net proceeds through December 31, 1999. As of December 31, 1999, we had $22.7
million of cash and cash equivalents and $15.9 million of short-term
investments (including $2.0 million of restricted short-term investments), and
working capital of $38.8 million.
We currently have a $2.0 million revolving line of credit facility against
which there were no borrowings or letters of credit outstanding as of December
31, 1999. The line, against which letters of credit may be issued, is
collateralized by a restricted certificate of deposit of $2.0 million. The line
of credit agreement expires in March 2000.
Net cash used for operating activities was $1.0 million, $1.6 million, and
$8.2 million for 1997, 1998 and 1999, respectively. For 1997, 1998 and 1999,
cash used for operating activities was attributable primarily to net losses and
increases in accounts receivable, inventory, and deferred product costs, offset
in part by amortization of deferred stock compensation, increases in accounts
payable, accrued liabilities, and deferred revenues.
Net cash provided by investing activities was $438,000 and $399,000 for 1997
and 1998, respectively, the result of proceeds from maturities of short-term
investments. For 1999, cash used in investing activities of $17.7 million
resulted from purchases of short-term investments of $20.0 million, offset by
proceeds from maturities of short-term investments of $4.0 million, and $1.6
million of purchases of property and equipment.
Net cash provided by financing activities was $6.0 million and $43.3 million
for 1998 and 1999, respectively. Cash provided by financing activities in each
year was attributable to proceeds from the issuance of convertible preferred
stock. There were no financing activities in 1997.
As of December 31, 1999, we had no material commitments for capital
expenditures, although we anticipate a substantial increase in capital
expenditures and lease commitments consistent with our anticipated growth in
operations, infrastructure and personnel. We also may establish additional
operations as we expand globally.
We believe that the net proceeds from this offering, together with our
current cash, cash equivalents and short-term investments, will be sufficient
to meet our anticipated cash needs for operating expenses, working capital and
capital expenditures for at least the next 18 months. If cash generated from
operations is insufficient to satisfy our liquidity requirements, we may seek
to sell additional equity or debt securities or to obtain a larger credit
facility. If additional funds are raised through the issuance of debt
securities, holders of these securities could have certain rights, preferences
and privileges senior to holders of common stock, and the terms of this debt
could restrict our operations. The sale of additional equity or convertible
debt securities could result in additional dilution to our existing
stockholders, and we cannot be certain that additional financing will be
available in amounts or on terms acceptable to us, if at all. If we are unable
to obtain additional financing, we may be required to reduce the scope of our
operations, which could harm our business, financial condition and operating
results.
23
<PAGE>
Quantitative and Qualitative Disclosure of Market Risks
Short-Term Investments
At December 31, 1999, we held $15.9 million in short-term investments,
consisting of investment grade financial instruments with an original maturity
of from three to eighteen months. These available-for-sale securities are
subject to interest rate risk and will fall in value if market interest rates
increase. If market interest rates were to increase immediately and uniformly
by 10% from levels at December 31, 1999, the fair market value of the short-
term investments would decline by an immaterial amount. We generally expect to
have the ability to hold fixed income investments until maturity and therefore
would not expect operating results or cash flows to be affected to any
significant degree by a sudden change in market interest rates on short-term
investments.
Foreign Currency Exchange Rate
We transact business primarily in U.S. dollars. We are subject to exposure,
however, from adverse movements in foreign currency exchange rates in those
countries where we conduct business. Operating expenses incurred by our
subsidiary in India are denominated in Indian rupees. This subsidiary was
formed in November 1999 to perform research and development activities. To
date, the effect of fluctuations in foreign currency exchange rates on expenses
has not been material.
We hold fixed-price agreements denominated in U.S. dollars with key foreign-
based suppliers. Orient Semiconductor Electronics, in Taiwan, manufactures the
iLM; Novatel, in Canada, provides the modem for the iLM; Taiwan Semiconductor
Manufacturing Company, in Taiwan, manufactures our GPS receiver chips; Philsar
Electronics, in Canada, manufactures our radio frequency chips; and Micronet,
in Israel, supplies our iDT. Should there be a sustained increase in average
exchange rates for the local currencies in each of these countries, our
suppliers may request a price increase at the end of the contract period. If
this were the case, a 10% increase in average exchange rates for each currency
would increase our product costs by approximately 9%.
We do not use derivative financial instruments for speculative trading
purposes, nor do we currently hedge any foreign currency exposure to offset the
effects of changes in foreign exchange rates. Similarly, we do not use
financial instruments to hedge operating expenses of our Indian subsidiary.
Impact of Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
requires companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on the use of
the derivative and whether it qualifies for hedge accounting. SFAS No. 133 will
be effective for our year ending December 31, 2001. We believe that this
statement will not have a significant impact on our financial position, results
of operations or cash flows.
24
<PAGE>
BUSINESS
We integrate GPS technology, wireless communications and the Internet to
enable companies to efficiently manage their mobile resources with location-
relevant and time-sensitive information. Our solution is an easy-to-use, cost-
effective, Internet-based service for vehicle management that provides
location, reporting, dispatch, messaging, and management services. Our solution
allows customers to use our website to track the movement of their vehicles,
employees, and goods and services, and provides for two-way messaging between
our customers and their mobile workers. We believe our solution provides
significant value to our customers by reducing costs and increasing efficiency.
We have a cost-effective solution that leverages existing infrastructure,
including GPS, wireless networks and the Internet. Our solution includes a
proprietary hardware and software platform that integrates wireless Internet
connectivity with a GPS receiver. The platform is installed in each vehicle and
receives signals transmitted from GPS satellites to determine the location and
velocity of the vehicle. These data are transmitted over wireless networks and
the Internet to our network of secure servers. Our customers can retrieve the
information from our website using an Internet browser. Because the customer
data and solution software reside on our Internet infrastructure, our customers
do not need to make a substantial investment in infrastructure and support to
use our services.
Industry Background
Growth of Wireless Communications
Wireless communications has grown rapidly due to declining usage costs, the
proliferation of wireless telephones and mobile computing devices, expanding
network coverage and the integration of enhanced features such as voice and
text messaging. Recent developments in wireless technology and deployments of
wireless networks have enabled the wireless transfer of data in packets.
Packet-based data transmission is more efficient and less expensive than
circuit-switched data transmission because it allows multiple users to share
the same bandwidth, eliminating the need for a dedicated circuit for each user.
Dataquest estimates that the number of wireless data subscribers worldwide will
grow from approximately 14 million at the end of 1998 to approximately 103
million at the end of 2003. We also expect business use of wireless
communications to grow. As global wireless coverage increases and broadband
wireless transmission technologies are deployed, more users will be able to
access more data over wireless networks, facilitating access to information
management and e-business applications to geographically-dispersed users.
Growth of Business Use of the Internet
The Internet has emerged as a global communications medium to deliver and
share information and to conduct business electronically. International Data
Corporation, or IDC, estimates that the number of web users worldwide will grow
from approximately 144 million users in 1998 to 602 million users by the end of
2003. The dramatic growth in the number of Internet users has led to the
proliferation of information and services available on the Internet, including
e-commerce, e-mail, financial services, news and other content. Businesses are
now using the Internet as a medium for managing business-critical functions
such as supply chain management, customer relationships, enterprise resource
planning and collaboration with business partners. We expect companies to
conduct an increasing amount of business transactions over the Internet.
Increasing Commercial Use of Global Positioning System Technology
GPS uses satellite signals to determine the position and velocity of GPS
receivers anywhere on earth. Because of improvements in GPS receiver technology
and reductions in the cost of GPS enabling components, there has recently been
a proliferation of GPS devices for commercial applications. Significant areas
of growth for products and services enabled by GPS are vehicle positioning and
navigation, mobile computing devices,
25
<PAGE>
wireless telephones and portable recreational receivers. Due to the global
scale of the automotive industry, we expect vehicle location and navigation to
be one of the most promising areas of future deployment of GPS technology.
Market Opportunity
The management of vehicles and other mobile resources is complex. Monitoring
and tracking the physical movement of products and people is critical to
companies seeking to minimize resource requirements while maximizing their
profitability. Many businesses use inefficient and incomplete systems such as
wireless telephones and pagers to manage mobile resources. A limited number of
businesses use systems based on proprietary technologies requiring substantial
and ongoing investments in information technology and hardware. Businesses and
organizations seek an easy-to-use, comprehensive, cost-effective solution for
managing their vehicles and other mobile resources. Bobit Auto Research Group
reports that there were approximately 24 million cars and trucks in commercial
and fleet use in 1999, and the U.S. Department of Transportation reports over
4.4 million commercial trailers in the same year.
The @Road Solution
Our solution integrates GPS technology, wireless communications and the
Internet to enable companies to efficiently manage their mobile resources. To
implement our solution, we developed FleetASAP, an easy-to-use, comprehensive,
cost-effective Internet-based management and e-business service for companies
with mobile resources. FleetASAP offers a comprehensive turnkey solution for
vehicle management by providing location, reporting, dispatch, messaging, and
management solutions to meet the needs of any size fleet. FleetASAP allows
customers to track the movement of their vehicles, employees, and goods and
services through our web site and provides for two-way messaging between our
customers and their mobile workers. With our service, customers can gather and
use location-relevant information from mobile resources and make informed
decisions that enhance productivity and profitability.
Our solution includes proprietary hardware and software that integrates
wireless Internet connectivity with a GPS receiver. Customers can use our
solution with any number or type of vehicles, including cars, rental cars,
buses, school buses, vans, trucks, trailers or limousines, by installing our
internet Location Modem, or iLM, which incorporates a GPS receiver, in each
vehicle. The iLM receives signals transmitted from GPS satellites to determine
the location, velocity and orientation of the vehicle or device in which it is
installed. These data are transmitted to the @Road Internet Service Center, our
network of secure servers, using wireless networks and the Internet. Our
customers can then retrieve the information from our web site using an Internet
browser. Customers can purchase an additional messaging unit, the internet Data
Terminal, or iDT, that enables the use of the Internet and wireless networks to
send and receive messages to and from a vehicle enabled with an iDT.
We have designed our solution to be easily adapted to other wireless
protocols in order to enable the global expansion of our solution. We have
entered into strategic relationships with AT&T Wireless, GTE Wireless, Bell
Atlantic Mobile and Ameritech to provide wireless data connectivity between
@Road-enabled vehicles and the Internet over these companies' Cellular Digital
Packet Data, or CDPD, wireless networks.
Customers who adopt our solution find a variety of compelling benefits. Many
of these benefits translate into competitive advantages for our customers.
Benefits of our solution include the following:
. Productivity enhancement. Our solution allows our customers to track,
monitor, and manage their mobile resources more effectively and
efficiently. Customers can achieve enhanced productivity from their fleet
operations by closely monitoring all vehicles in their fleet, routing
vehicles more efficiently, reducing vehicle downtime, and increasing the
number of deliveries or trips per vehicle. In addition, these
improvements to vehicle management can result in more efficient vehicle
maintenance and reduced misuse of vehicles.
26
<PAGE>
. Differentiated service. Our customers can be more responsive to their
customers by more effectively managing their mobile resources. Because
our customers are able to track the location of each vehicle in their
fleet, they are able to provide their customers with more detailed
information on the location of products and services. At the same time,
our customers can allocate their limited resources more efficiently to
reduce wait times experienced by their customers. They can also provide
better customer service because we provide our customers with records
relating to the status and activity of their vehicles at relevant times.
. Ease of implementation. The installation of the iLM and the optional iDT,
our platform, into a vehicle takes less than an hour. Once installed, our
customers can manage all their vehicles through any Internet browser,
such as Microsoft Explorer, Netscape Navigator and that of America
Online. Because we manage the software solution and customer data at our
Internet Service Center, the customer does not incur any incremental
information technology costs associated with the implementation of our
solution. As our customers' fleets grow, our solution is easily scaleable
by installing our platform in additional vehicles. Additionally, we
implement software upgrades centrally on our server and remotely over a
wireless connection to the vehicle. Customers benefit from these
enhancements to our service without removing the vehicle from service.
Strategy
Our objective is to be the leading provider of location-relevant and time-
sensitive information services and solutions to businesses and organizations
managing vehicles and mobile resources. Key elements of our strategy include:
. Establish @Road as the market leader in vehicle management services. We
believe our competitive advantages will establish us as the market leader
in providing vehicle management services to businesses and organizations.
Establishing this leadership position is a key element in successfully
penetrating new markets, creating new sources of revenues and growing our
overall business. We are one of the first companies to enter the vehicle
management services market with a comprehensive turnkey solution at a low
cost. We intend to aggressively grow our customer base and market
additional services to our existing customer base. We expect to expand
our existing distribution channels to continue to focus on small to mid-
size fleets and grow our direct sales force to target customers with
thousands of vehicles. Moreover, as wireless network coverage increases,
and new wireless networks are deployed, we expect to increase our selling
efforts into the worldwide market.
. Increase the value of our solution by expanding the range of services we
provide. We will add new features and functionality to our services to
enhance their value. We intend to offer services that synthesize the
information currently retrieved by our service. For example, we expect to
offer a service whereby customers can turn mileage data into a
maintenance schedule for their fleets. We expect to expand our use of
Internet content to provide business- and consumer-oriented commerce and
additional content to our customers. In addition, we are developing an
open platform architecture, with application program interfaces, APIs,
and enhanced web site features that will allow our partners to integrate
their applications with our services.
. Leverage partnerships to accelerate market acceptance. We believe that
leveraging the market presence, brand recognition, and distribution
resources of established vendors and wireless carriers will help us
establish broad business and consumer awareness and acceptance of our
services. We intend to partner with vehicle manufacturers, providers of
vehicle maintenance and support services, wireless telephone and personal
digital assistant manufacturers, wireless carriers, suppliers of consumer
services, Internet content and commerce providers, and other suppliers of
goods and services. We believe that the successful design and
implementation of our partnership strategy will facilitate the extension
of our services to new markets such as the consumer vehicle and mobile
device markets.
. Penetrate new markets and applications. We intend to use our core
competencies and relationships with key partners and customers to develop
solutions for additional markets. We believe our technology
27
<PAGE>
is well suited to many applications that can leverage location-relevant,
time-sensitive information and two-way messaging using wireless
communications and the Internet. To address expanding market
opportunities, we have designed our solution to be carrier- and
connectivity-independent, which will allow us to rapidly deploy our
solutions in additional geographic markets as coverage of digital wireless
packet-based data networks increases. In addition, we intend to move our
solution from commercial applications to consumer applications.
. Maintain technology leadership. We have developed and patented technology
that integrates GPS technology, wireless communications and the Internet.
We also have substantial experience in the design and deployment of
products and services incorporating these technologies. We believe that
our existing intellectual property, technological experience and expected
continued investment in research and development will provide us with
significant competitive advantages, enabling us to maintain our
technological leadership position.
Services
Our FleetASAP service integrates GPS, wireless communications and the
Internet to provide location, reporting, dispatch, messaging, and other
management solutions to our customers for managing and tracking their mobile
resources. Our service also allows two-way messaging between managers of
vehicles and their drivers. We believe that our services provide significant
value to our customers by reducing costs and increasing efficiency. We have
initially targeted companies with commercial vehicles.
The following features and benefits of FleetASAP give it a competitive
advantage over existing solutions:
. Cost-effective. FleetASAP is low-cost, leveraging infrastructure
developed by other companies and the U.S. government, including GPS,
wireless networks and the Internet. We further reduce costs by
outsourcing manufacture of our platform components. Our customers are not
required to make a substantial capital investment because the customer
data and solution software reside at our Internet Service Center, and the
service is accessible through the Internet.
. Ease of implementation and use. Our platform is shipped to the customer
fully configured and ready to install, which typically takes an
authorized technician less than one hour. Once our platform is installed,
our customers can use our service by logging on to our web site. The user
interface is intuitive to use, requires minimal training and can be
personalized to meet the requirements of each of our customers. FleetASAP
is designed to be available to our customers through the Internet 24
hours a day, seven days a week, with the exception of scheduled
maintenance. Additionally, we upgrade each vehicle's platform software
wirelessly, minimizing vehicle downtime.
. Robust reporting capabilities. FleetASAP reports offer our customers
comprehensive, detailed reporting of vehicle activity, either
individually, or for all or a selected group of a customer's vehicles.
Reports can be personalized by customers and downloaded for additional
sorting and analysis. A customer's preferences are stored in our Internet
Service Center and can be altered at any time to meet their changing
needs. The location of each vehicle in a customer's fleet can be
displayed on a map, making vehicle location and tracking simple. Map
views can be personalized by customers to graphically display different
information about their vehicles. Vehicle tracking information is stored
at our Internet Service Center, allowing vehicle managers to monitor
their vehicles over an extended period of time. Reports can also be used
to help our customers manage the maintenance requirements of their
vehicles.
. Return on investment. Our service is a low cost solution that results in
a variety of cost savings to our customers. With our service, customers
can more effectively route vehicles and increase productivity. Efficient
routing and dispatching saves fuel and time, decreases our customers'
costs and increases their customers' satisfaction. With the iDT, our
customers can reduce their communications costs, such as cellular and
paging fees, with two-way messaging between the manager and the vehicle.
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<PAGE>
. Scaleability. Our software architecture and platform are designed to
serve a growing number of users with increasing data transmission volumes
without compromising performance, delivery times or data accuracy of our
services. Because the three technology components of our solution are
designed to accommodate a practicality unlimited number of users, as in
the case of GPS, or can be expanded to accommodate additional users, as
in the case of wireless networks or the Internet, we believe that we can
support a significantly expanding customer base.
. GPS-determined location. FleetASAP uses GPS to determine location,
enabling reliable, accurate and cost-effective location and tracking of
our customers' vehicles. We believe GPS technology is more reliable than
other positioning technologies because of its proven accuracy, the large
number of deployed satellites and its ability to determine location
regardless of velocity and altitude. GPS uses pre-existing infrastructure
developed by the U.S. government, which reduces the cost of the service.
. Wireless data connectivity. FleetASAP currently uses the CDPD protocol to
transmit data to and from customer vehicles. We have agreements with four
major wireless carriers to provide CDPD service to our customers. CDPD
coverage includes more than 150 metropolitan areas in the U.S. Our
solution is designed to be tolerant of network difficulties, with the
ability to confirm receipt of data and retransmit data if errors are
detected. Additionally, if a customer's vehicle is out of CDPD coverage,
the iLM records up to two days of information which is then transmitted
to our Internet Service Center when the vehicle returns to CDPD coverage.
. Messaging capabilities. Our customers may enhance our FleetASAP service
by purchasing an optional two-way messaging feature, the iDT, that
enables our customers to communicate regularly with their vehicles. Our
customers can pre-program each iDT with a specific set of reply messages
that can be sent with the press of a button, minimizing driver
distraction while on the road. An audit trail of messages, including the
driver's acknowledgment that a message was received, is stored at our
Internet Service Center for fourteen days.
. StatWhere. Our customers may enhance our FleetASAP service by purchasing
connecting sensors and additional reporting functions. StatWhere allows
the iLM to report the status of an event on the vehicle. For example, a
sensor attached to a school bus door reports to the iLM whether the door
was open or closed.
. Fleet Resources. Our Fleet Resources web page contains links to a number
of value-added retail and informational sites that we believe serve
additional needs of our customers. For example, our customers can
purchase new tires, office supplies and several other goods, and obtain
current information about traffic conditions and fuel prices.
. Sturdy construction. The iLM and the iDT are designed and tested to
withstand the harsh environment of commercial vehicles, even off-road
vehicles, including vibration, shock, and extreme temperatures.
Customers
We market and sell FleetASAP to a broad range of customers that vary in
size, geographic location and industry. The number of vehicles utilizing our
services has grown from 135 as of December 31, 1998 to over 7,000 as of
December 31, 1999. Our customers' fleets range from two vehicles to over 350.
Currently we have customers in the following industries:
.Trucking companies .School buses
.Plumbing .Taxi cabs and limousines
.Commercial buses .Public works
.Construction .Landscaping
.Food and beverage distribution
.Waste management
.Delivery services .Industrial machinery
.Vehicle repair .Furniture delivery
.Courier services .Equipment rental
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Research and Development
We concentrate our research and development activities on services and
platform engineering. To enhance our existing services and to introduce new
services to our existing and potential customers, we focus on the following key
areas:
. Services. We intend to continue to develop our services by offering new
features while enhancing existing features. For example, we launched a
service enabling customers to create personalized vehicle identifiers in
December 1999 and a service enabling customers to view summary vehicle
activity reports in February 2000. We intend to dedicate substantial
resources to expand our software development activities.
. Platform. We intend to continue to develop and release platform upgrades
to add new service features as well as to enhance existing features. For
example, we released the second-generation iDT in July 1999 and we
released the second-generation iLM in December 1999. We also intend to
work with component suppliers, contract manufacturers and wireless
network carriers to integrate our platform into other devices and develop
our platform as a leading technology in the location-relevant information
services market.
As of December 31, 1999, we had 30 employees and consultants in research and
development.
Technology
Our technology efforts focus on enhancing reliability, availability and
features in our service solution while maintaining scaleability. Our
proprietary technologies are designed to work with technologies from other
companies, including our partners, competitors, and other third parties.
Although our current service utilizes our patented GPS chipset, our service has
been designed to work with other location technologies. Similarly, although we
offer an embedded wireless modem in our platform, our service is designed to
work with a wide range of wireless communications devices. Additionally,
although our service is currently based on delivering information through the
Internet from our Internet Service Center, the service is designed to provide
any content available from the Internet. We expect to develop additional
proprietary technology where feasible and to purchase or license technology
where cost-effective. Our technology efforts focus on the following areas:
. Location Technology. We have designed a patented GPS chipset and
algorithm with four times the processing power of most other commercial
GPS receivers. As a result, our platform determines its location in
approximately half the time required by most other commercial receivers.
In addition, we are in the process of integrating differential GPS, an
error-correction technology that generally increases the accuracy of
vehicle location to better than ten meters, which is a tenfold
improvement over GPS.
. Wireless Technology. Our services currently operate over CDPD networks.
We also have laboratory-tested different versions of our platform that
are compatible with other wireless technologies and protocols. Our goal
is to bring to market a platform that is independent of wireless
connectivity protocols and hardware, allowing our customers to connect
wirelessly to our Internet Service Center using various protocols and
wireless carriers, using our platform, the customer's existing wireless
telephone, or other wireless devices.
. Internet Technology. Although our solution involves complex aggregation
and processing of customer data, the customer can access all the
functionality of our service through an Internet browser. Because our
application, reporting and customer data software are independent of one
another, each can be modified or upgraded without affecting the others.
In order to expand the services we provide to our customers, we have
developed an Application Programming Interface, or API, that enables our
customers to integrate our vehicle location information into their
applications. We also expect to develop additional APIs that will enable
our customers to integrate our two-way messaging and landmark locations
into their applications.
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<PAGE>
. Information Technology. We have an information technology organization
distinct from our research and development organization that is dedicated
to building and maintaining our secure Internet Service Center. By
managing our solution at our Internet Service Center, we relieve our
customers of the technology and operations burden of managing the
integration of complex GPS, wireless data and Internet systems. Our
Internet Service Center is located in Sunnyvale, California and is backed
up by a second facility in Fremont, California. From our Internet Service
Center, we maintain a variable capacity connection to the Internet and
dedicated connections to the wireless networks we use. In the event of a
power failure, our systems would be powered by a backup power supply. In
addition, by the third quarter of this year we intend to establish a
remote backup facility to provide additional fault-tolerance, and
redundancy and to insure capacity for planned future growth.
Key Alliances and Relationships
We will continue to establish relationships with a number of companies to
accelerate the adoption of our services. We believe that establishing strategic
relationships will facilitate our technological leadership and provide early
access to emerging technologies and new customers. Some of our existing
relationships include the following:
. Wireless Carriers. We have established strategic relationships with AT&T
Wireless, GTE Wireless, Bell Atlantic Mobile and Ameritech to provide
wireless connectivity between @Road-enabled vehicles and the Internet. We
contract directly with AT&T Wireless for the provision of wireless
communications, which are bundled with our service. With GTE Wireless,
Bell Atlantic Mobile and Ameritech, our customers have separate contracts
for wireless communications with their carrier.
. Manufacturers. We have an agreement with Intel Corporation, which grants
Intel a royalty-bearing license to our GPS chipset technology. As part of
this agreement, Intel and @Road have agreed to cooperate on a variety of
development activities. In addition, one of our early investors, Orient
Semiconductor Electronics, manufactures and tests our iLM.
Sales and Marketing
Our sales and marketing objective is to achieve broad market penetration
through vertical marketing and targeted sales activities. As of December 31,
1999, our sales and marketing team consisted of 39 employees. We currently
market and sell our solution through a combination of direct sales, wireless
carrier partners and agents.
. Direct sales force. We have deployed our direct sales force throughout
the U.S. in all major CDPD markets. Our direct sales force calls on
potential customers with large fleets and works with our wireless carrier
partners and independent sales agents to increase our customer base.
. Wireless carrier partners. Our wireless carrier partners are AT&T
Wireless, Bell Atlantic Mobile, GTE Wireless and Ameritech. These
partners market and facilitate sales of our solution through their own
sales channels as part of their service offerings.
. Agent sales program. We recently launched an agent sales program, which
is designed to build a network of independent sales agents throughout the
U.S. to sell our service. The program provides independent sales
organizations fees for the sale, installation and ongoing support of our
solution. We believe that the agent sales program will substantially
increase the number of individuals and organizations selling the
FleetASAP service into the targeted customer base across the U.S.
Our marketing department is engaged in a wide variety of activities, such as
awareness and lead generation programs and product management. These activities
include public relations, seminars, direct mail, trade shows, and co-marketing
and co-branding with wireless carriers.
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Competition
We compete with companies that offer the ability to obtain location-relevant
information about their mobile resources. We also compete with alternative
means of communication between vehicles and their managers, including wireless
telephones, two-way radios, and pagers. We compete primarily on the basis of
price, ease of use, functionality, quality and geographic coverage of our
services. As the demand by businesses and consumers for location-relevant
information increases, we anticipate that the quality, functionality and
breadth of our competitors' products and services will improve and that new
competitors will enter our market. In addition, the widespread adoption of
industry standards may make it easier for new market entrants or existing
competitors to improve existing services or offer some or all of the services
we offer or may offer in the future. It is unclear to what extent network
infrastructure developers and key network operators will seek to provide
integrated GPS, wireless data and Internet solutions, including access devices
developed internally or through captive suppliers.
OmniTRACS is a service from Qualcomm that uses satellite communication
technology to manage fleets of trucks that travel extended distances between
urban areas, referred to as long-haul trucking. Other potential competitors
include wireless Internet companies, such as Phone.com and Research in Motion,
companies working on emergency-911 solutions, such as TruePosition, companies
with solutions that integrate location, wireless communications and call
centers, such as General Motors, and companies that provide wireless, location-
relevant applications, such as SignalSoft. 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. Further, the widespread adoption of industry standards may make it
easier for new market entrants or existing competitors to offer the services we
offer or may offer in the future.
Intellectual Property
We rely on a combination of patent, trade secret, trademark and copyright
laws, and nondisclosure and other contractual restrictions to protect our
proprietary technology. We have been granted two patents, one of which covers
our GPS chipset technology and another that covers the method and structure for
distributing information over a network. In addition, we have applied for three
patents to further protect and extend our technology leadership position.
Although we have applied for patent protection primarily in the U.S., we intend
to file patent applications in other countries where there is a strategic
technological or business justification. As part of our confidentiality
procedures, we generally enter into nondisclosure agreements with our
employees, consultants, distributors and corporate partners and limit access to
and distribution of our software, documentation and other proprietary
information.
It may be possible for a third party to obtain and use our technology
without authorization, or to develop similar technology, particularly because
we license portions of our technology to certain customers, strategic partners,
suppliers and distributors. In addition, our services are licensed in foreign
countries and the laws of these countries may treat the protection of
intellectual property rights differently from, and may not protect our
intellectual property to the same extent as, the laws of the U.S. We also rely
on technology and other intellectual property licensed from third parties and
use third party software that may not be available to us on commercially
reasonable terms, if at all, in the future. Some of our license agreements are
non-exclusive, and therefore, our competitors may have access to the same
technology that is licensed to us. We received a letter from the holder of two
patents, claiming that we infringe its patents, and requesting information
about our GPS chipset. We are currently in the process of reviewing these two
patents. The patent holder has indicated that it is willing to license these
patents to us. However, we cannot assure you that we would be able to license
these two patents on commercially reasonable terms, if at all. We may also
incur substantial legal fees and our management would be distracted if the
patent holder files a lawsuit against us. See "Risk Factors--Our success and
ability to compete depends upon our ability to secure and protect patents,
trademarks and other proprietary rights."
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Employees
As of December 31, 1999, we had 103 employees, 99 of whom were located in
the U.S. and four of whom were located in Chennai, India. We believe
relationships with our employees are good.
Legal Proceedings
We are not currently a party to any legal proceedings; however, from time to
time, we may become a party to various legal proceedings arising in the
ordinary course of our business.
Facilities
Our principal executive offices are located in Fremont, California. We lease
approximately 54,000 square feet under a lease that expires in February, 2005.
In addition, we lease 24,000 square feet in Fremont, California for our
engineering and information technology organization under a lease that expires
in December, 2000. We also lease space in Chennai, India for a portion of our
software engineering organization. We believe that our current facilities are
adequate to meet our needs through the end of 2000, at which time we may need
to lease additional space.
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MANAGEMENT
Executive Officers, Management and Directors
Our executive officers, directors and additional corporate management
members and their ages as of March 8, 2000 are as follows:
<TABLE>
<CAPTION>
Name Age Position(s)
---- --- ----------
<S> <C> <C>
Executive Officers and Directors
Krish Panu.............. 42 Chairman of the Board, Chief Executive Officer and President
Rodric Fan.............. 56 Director and Chief Technology Officer
Thomas Hoster........... 49 Chief Financial Officer and Vice President, Finance and Administration
David Manovich.......... 49 Vice President, Sales
Thomas Allen............ 46 Vice President, Information Technology and Management Systems
Kris Chellam............ 49 Director
Stuart Phillips......... 41 Director
Andrew Sheehan.......... 42 Director
T. Peter Thomas......... 53 Director
Additional Corporate Management
Julia Langley........... 42 Vice President, Corporate Development and Alliances
John Lankes............. 51 Vice President, Marketing
Amin Mufti.............. 45 Vice President, Business Development
Shirish Puranik......... 38 Vice President, Software Development
Michael Walker.......... 44 Vice President, Platform Engineering
</TABLE>
Krish Panu has served as our Chief Executive Officer, President and as a
director of @Road since February 1999 and Chairman of the Board since December
1999. Prior to joining @Road, he served as Vice President and General Manager
of the Logic Products division of Atmel Corporation, a manufacturer of advanced
semiconductors. He held various senior management positions at Atmel
Corporation from August 1991 to November 1998. From September 1989 to August
1991, he held the position of Vice President of Sales and Marketing at Catalyst
Semiconductor, a manufacturer of non-volatile memory products. Mr. Panu also
serves on the boards of directors of two privately held companies. Mr. Panu
holds an M.S. in computer engineering and an M.B.A. from Wayne State University
in Michigan.
Rodric Fan founded @Road and has been one of its directors since August
1996. Since February 1999, Mr. Fan has served as our Chief Technology Officer,
and from August 1996 to February 1999, he served as our Chief Executive Officer
and President. From May 1993 to August 1996 Mr. Fan was the Technical Director
for GPS-related projects and Global Star Satellites, and from May 1989 to May
1993 he was the Manager of the Satellite Orbit Control Division, at Space
Systems Loral, a producer of commercial communications and weather satellites.
Mr. Fan holds a B.E.S. in Electrical Engineering from Brigham Young University
and an M.S. in Electrical Engineering specializing in the areas of data
communications from Northwestern Polytec University.
Thomas Hoster has served as our Vice President, Finance and Administration
and Chief Financial Officer since November 1999. Prior to joining @Road, Mr.
Hoster was Senior Vice President and Chief Financial Officer of GetSmart, an
on-line provider of consumer financial services, from May 1998 to March 1999.
Prior to GetSmart, Mr. Hoster was Chief Financial Officer of ClickAction, a
provider of e-mail marketing services, formerly known as MySoftware Company,
from June 1996 to May 1998. Prior to that, Mr. Hoster held several finance and
administration positions at Octel Communications, a voice messaging company,
from December 1989 to June 1996. Mr. Hoster has a B.S.E. in Electrical
Engineering from Princeton University and an M.B.A. from Stanford University.
David Manovich has served as our Vice President, Sales since August 1999.
Prior to joining @Road, Mr. Manovich served as Partner at Union Atlantic, an
investment banking consulting firm, from January 1998 to August 1999. From
October 1995 to January 1996 and from February 1997 to January 1998, Mr.
Manovich
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worked at Apple Computer, a personal computer technology company, serving as
Executive Vice President of Worldwide Sales and Service, Senior Vice President
of International Sales, Vice President of Retail/Consumer Sales, Director of
Business Markets and Country Manager--UK and Ireland, and Director of US
Channel Sales. From March 1996 to February 1997, Mr. Manovich worked at Fujitsu
PC Corporation, a personal computer manufacturing company, serving as Vice
President of Sales. Mr. Manovich holds a B.S. in Business Administration and an
M.B.A. in Finance from the University of Montana.
Thomas Allen has served as our Vice President, Information Technology and
Management Systems since August 1999. From January 1996 to June 1999, Mr. Allen
served as Vice President of Network Engineering at Visa International, a
payment card company. From March 1984 to August 1995, Mr. Allen served as
General Manager at Southern California Edison, an electric utility company. Mr.
Allen holds a B.S. in Industrial Engineering from State University of New York
at Buffalo, an M.B.A. from San Jose State University and a Certificate in
Executive Management from the Peter F. Drucker Management Center at the
Claremont Graduate University.
Kris Chellam has served as a director of @Road since December 1999. Since
July 1998, Mr. Chellam has served as Senior Vice President, Finance and Chief
Financial Officer of Xilinx, a provider of programmable logic solutions. Prior
to joining Xilinx, he served at Atmel Corporation, a manufacturer of advanced
semiconductors, as Senior Vice President and General Manager of a product group
from March to July 1998 and as Vice President, Finance and Administration, and
Chief Financial Officer from September 1991 through March 1998. Mr. Chellam
became a member of the Institute of Chartered Accountants in England and Wales
in April 1975.
Stuart Phillips has served as a director of @Road since September 1998.
Since June 1997, Mr. Phillips has been a General Partner at U.S. Venture
Partners a venture capital firm. From October 1993 to June 1997, Mr. Phillips
served as Vice President of Central Engineering at Cisco Systems, an
internetworking company. Mr. Phillips also serves on the boards of directors of
CacheFlow, a manufacturer of Internet caching appliances, and several privately
held companies. He holds a B.S. in electronics from the University of Wales at
Cardiff, U.K.
Andrew Sheehan has served as a director since March 2000. Since April 1998,
Mr. Sheehan has been employed by and is a managing member of the general
partner of ABS Capital Partners III, a private equity fund. From 1985 to 1998,
Mr. Sheehan held various positions at BT Alex. Brown, an investment company,
most recently as managing director. Mr. Sheehan is also a director of Rainmaker
Systems, a provider of electronic customer relationship management services,
and several privately held companies. Mr. Sheehan received his B.A. from
Dartmouth College and his M.B.A. from the Wharton School of Business.
T. Peter Thomas has served as a director of @Road since September 1998.
Since November 1985, Mr. Thomas has been a general partner of Institutional
Venture Partners, a venture capital firm. Mr. Thomas also serves as a director
of Telcom Semiconductor and Atmel Corporation. Mr. Thomas holds a B.S. in
Electrical Engineering from Utah State University and an M.S. in Computer
Science from the University of Santa Clara.
Julia Langley has served as our Vice President of Corporate Development and
Alliances since January 2000. From March 1999 to January 2000, Ms. Langely
served as Senior Vice President, Corporate Business Development for Vadem, a
mobile technology company. From April 1995 to March 1999, Ms. Langely served
with Philips Electronics as Executive Vice President, Philips Consumer
Electronics Services, as Executive Vice President, Philips Consumer
Communications, Paging Line of Business, and as Senior Vice President,
Strategic Marketing and Business Development, Phillips Digital Video Group. Ms.
Langley holds a B.A. from Emory University; an M.B.A. from the Wharton School
of Business and a J.D. from the University of Georgia School of Law.
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<PAGE>
John Lankes has served as our Vice President, Marketing since May 1999.
Prior to joining @Road, Mr. Lankes served as Vice President of Wireless Data
Services for Southern New England Tele-communications Corporation from June
1995 to May 1999. From May 1991 to March 1993, Mr. Lankes was Vice President of
Marketing for AirTouch Teletrac, a wireless communications company. From
November 1982 to November 1986, Mr. Lankes was Vice President of Sales and
Marketing for the Great Lakes Region of Epson America, a technology company.
Mr. Lankes has a B.A. from the University of Detroit.
Amin Mufti has served as our Vice President, Business Development since
January 1997. From March 1994 to July 1996, Mr. Mufti was General Manager at
International Microcomputer Software, Mr. Mufti has a B.S. in Mechanical
Engineering and an M.S. in Aeronautical Engineering from Stanford University.
Shirish Puranik has served as our Vice President of Software Development
since July 1999. From August 1992 to July 1999, Mr. Puranik worked in the
Database Group of Oracle Corporation, most recently as Director of Product
Development. From February 1988 to August 1992, Mr. Puranik was an engineer in
the distributed database group at Digital Equipment Corporation. Mr. Puranik
has a B.S. in Electrical Engineering from the Indian Institute of Technology,
Bombay, an M.S. in Electrical Engineering from the University of Florida and an
M.S. in Engineering Management from Stanford University.
Michael Walker has served as our Vice President, Platform Engineering since
July 1999. From April 1997 to July 1999, Mr. Walker served as Vice President
Engineering at Silicon Wireless, a manufacturer of wireless communications
infrastructure. From August 1993 to April 1997, Mr. Walker served as Vice
President of Engineering and Vice President of Operations at Sierra Wireless, a
manufacturer of wireless data modems. Mr. Walker holds a B.A.Sc. in Electric
Engineering from Queen's University in Canada and an M.S. in Electrical
Engineering from Simon Fraser University.
Board Composition
We currently have authorized six directors. Each director is elected for a
period of one year at our annual meeting of stockholders and serves until the
next annual meeting or until their successor is duly elected and qualified. The
executive officers serve at the discretion of the board of directors. There are
no family relationships among any of our directors or executive officers.
Subsequent to the offering and our reincorporation in Delaware, our certificate
of incorporation will be amended to provide for the classification of the board
into three classes serving staggered terms. The class I directors, Krish Panu
and T. Peter Thomas, will serve an initial term until the 2001 annual meeting
of stockholders, the class II directors, Rodric Fan and Andrew Sheehan, will
serve an initial term until the 2002 annual meeting of stockholders, and the
class III directors, Kris Chellam and Stuart Phillips, will serve an initial
term until the 2003 annual meeting of stockholders. Each class will be elected
for three-year terms following its respective initial term.
Board Compensation
Except for reimbursement for reasonable travel expenses relating to
attendance at board meetings and the grant of stock options, directors are not
compensated for their services as directors. Our directors are eligible to
participate in our 1996 stock option plan and, beginning in 2000, in our 2000
stock option plan. Messrs. Thomas, Phillips, Chellam and Sheehan, our
nonemployee directors, received an option to purchase 37,500, 37,500, 82,500
and 37,500 shares of common stock respectively under our 1996 stock option plan
in 1999 and 2000. Beginning in 2000, the directors who are our employees may be
eligible to participate in our 2000 employee stock purchase plan and the
directors who are not employees of @Road will be eligible to participate in our
2000 directors' stock option plan.
Board Committees
The board currently has an audit committee and a compensation committee. The
audit committee reviews our annual audit and meets with our independent
auditors to review our internal controls and financial management practices.
The board's audit committee currently consists of Kris Chellam, T. Peter Thomas
and
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<PAGE>
Andrew Sheehan. The compensation committee recommends compensation for certain
of our personnel to the board and administers our stock plans. The compensation
committee currently consists of T. Peter Thomas, Andrew Sheehan and Stuart
Phillips.
Compensation Committee Interlocks and Insider Participation
The members of the compensation committee of our board of directors are
currently T. Peter Thomas, Stuart Phillips and Andrew Sheehan. None of T. Peter
Thomas, Stuart Phillips or Andrew Sheehan has at any time been an officer or
employee of @Road or any subsidiary of @Road.
Executive Compensation
The following table provides summary information regarding the compensation
received for services rendered to @Road during the fiscal year ended December
31, 1999 by the Chief Executive Officer and the only other executive officer
whose aggregate compensation during our last fiscal year exceeded $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------- ------------
Securities
Name and Principal Other Annual Underlying All Other
Position Salary ($) Bonus ($) Compensation ($) Options (#) Compensation($)
- ------------------ ---------- --------- ---------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Krish Panu, Chairman of
the Board, Chief
Executive Officer and
President.............. $168,462 -- $-- 3,375,000(1) $--
Rodric Fan, Director and
Chief Technology
Officer................ $138,910 -- $-- 150,000(2) --
</TABLE>
- --------
(1)Represents options to purchase 3,000,000 shares and 375,000 shares granted
as restricted stock award.
(2)Represents 150,000 shares granted as restricted stock award.
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<PAGE>
The following table provides summary information regarding stock options
granted to the chief executive officer and the other executive officer named in
the table above during the fiscal year ended December 31, 1999. Options were
granted pursuant to our 1996 stock option plan and are immediately exercisable
at the time of grant. No stock appreciation rights were granted to these
officers during the year.
The percentages shown below are based on a total of 7,047,575 shares subject
to options granted to all of our employees and consultants during the year
ended December 31, 1999. The exercise price per share of the options shown
below was equal to the fair market value of the common stock on the date of
grant as determined by our board of directors. The 5% and 10% assumed annual
rates of compounded stock price appreciation are mandated by the rules of the
SEC. There is no assurance that the actual stock price appreciation over the
ten-year option term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of the common stock appreciates over the
option term, no value will be realized from the option grants made to the chief
executive officer and the other named executive officer.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable Value
At Assumed Annual
Rates of Stock
Price
Appreciation For
Individual Grants Option Term
--------------------------------------------- -----------------
Percent Of
Number Of Total
Securities Options
Underlying Granted To Exercise
Options Employees In Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date 5% 10%
---- ---------- ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Krish Panu, Chairman of
the Board, Chief
Executive Officer &
President.............. 2,625,000 37.2% 0.067 2/22/2009 $110,760 $280,776
375,000 5.3 0.667 8/30/2009 157,520 399,313
Rodric Fan, Director and
Chief Technology
Officer................ -- -- -- -- -- --
</TABLE>
38
<PAGE>
Option Exercises and Holdings
The following table provides summary information concerning the shares of
common stock represented by outstanding stock options held by each of the named
officers as of December 31, 1999.
The value realized and the value of unexercised options represents the
difference between the fair market value of the shares as of December 31, 1999,
using an assumed initial public offering price of $ per share as the fair
market value, and the exercise price of the option.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Shares Options at the-Money Options at
Acquired December 31, 1999 , (1)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Krish Panu, Chairman of
the Board, Chief
Executive Officer and
President.............. 2,250,000 750,000 -- $
Rodric Fan, Director and
Chief Technical
Officer................ -- -- -- -- -- --
</TABLE>
Change-of-Control Agreements
We have entered into an agreement with Krish Panu that provides that
following a change of control transaction, subject to limitations, the vesting
of any stock option or restricted stock held by Mr. Panu shall be automatically
fifty percent vested. Additionally, if Mr. Panu's employment is terminated
involuntarily other than for cause within twelve months following a change of
control transaction, then subject to limitations, the vesting of any stock
option or restricted stock held by Mr. Panu shall be automatically fully
vested. We have entered into agreements with our remaining executive officers
and corporate management which provide that in the event of an involuntary
termination within:
. one year following a change of control transaction and the employee was
employed by us for less than one year prior to the change of control
transaction, the vesting of any stock option or restricted stock held by
the employee shall automatically be accelerated as though the employee
maintained his employment with us for twelve months following the
involuntary termination or
. one year following a change of control transaction and the employee was
employed by us for at least one year prior to the change of control
transaction, the vesting of any stock option or restricted stock held by
the employee shall automatically be accelerated as though the employee
maintained his employment with us for 24 months following the involuntary
termination.
Stock Plans
2000 Stock Option Plan. Our 2000 stock option plan was adopted by the board
of directors in March 2000 and will be submitted for approval by our
stockholders prior to completion of this offering. A total of 2,000,000 shares
of common stock has been reserved and are available for grant under the 2000
stock option plan as of the date of this offering. In addition, the 2000 stock
option plan provides that up to 9,825,000 shares of common stock that are
either reserved and available for issuance under our 1996 stock option plan, or
that will return to the 1996 stock option plan upon the cancellation of options
issued under that plan or upon repurchase of outstanding shares common stock
issued under the 1996 stock option plan in connection with the termination of
the holder's employment or consulting relationship with us, shall become
available for issuance under the 2000 stock option plan. The 2000 stock option
plan also provides for an automatic annual increase on the first day of each of
our fiscal years beginning in 2001 and ending in 2010 equal to the lesser of
2,500,000 shares, 4% of our outstanding common stock on the last day of the
immediately preceding fiscal year, or a lesser number of shares as determined
by the board of directors. The maximum aggregate number of shares of common
stock that may be sold under the Plan during its term is 50,250,000.
39
<PAGE>
The purposes of the 2000 stock option plan are to attract and retain the
best available personnel, to provide additional incentives to our employees and
consultants and to promote the success of our business. The 2000 stock option
plan provides for the granting to employees, including officers and directors,
of incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, and for the granting to employees and consultants,
including non-employee directors, of non-statutory stock options. To the extent
an option holder would have the right in any calendar year to exercise for the
first time one or more incentive stock options for shares having a total fair
market value in excess of $100,000, any excess options shall be treated as non-
statutory stock options. Unless terminated earlier, the 2000 stock option plan
will terminate in March, 2010.
The 2000 stock option plan may be administered by the board or a committee
of the board. The administrator determines the terms of options granted under
the 2000 stock option plan, including the number of shares subject to an option
and its exercise price, term and exercisability. In no event, however, may an
individual employee receive option grants under the 2000 stock option plan
during any one fiscal year of ours that would allow him or her to purchase more
than 2,500,000 shares.
The exercise price of all incentive stock options granted under the 2000
stock option plan must be at least equal to the fair market value of our common
stock on the date of grant. The exercise price of any incentive stock option
granted to an option holder who is a 10% stockholder must equal at least 110%
of the fair market value of the common stock on the date of grant. After the
effective date of this offering, the exercise price of non-statutory stock
options granted under the 2000 stock option plan will be the price determined
by the administrator. However, generally the exercise price of any non-
statutory stock option granted to named officer must equal at least 100% of the
fair market value of the common stock on the date of grant in order to qualify
the option as performance-based compensation under applicable tax law. Payment
of the option exercise price may be made in cash or other consideration as
determined by the administrator.
The administrator determines the term of options, which may not exceed 10
years, or 5 years in the case of an incentive stock option granted to a 10%
stockholder. Generally, an option may not be transferred by the option holder
other than by will or the laws of descent or distribution. However, after the
effective date of this offering, the administrator may grant non-statutory
stock options with limited transferability rights. Generally, each option may
be exercised during the lifetime of the option holder only by the option holder
or permitted transferee. We expect that options granted under the 2000 stock
option plan generally will vest at the rate of 1/4 of the total number of
shares subject to the options twelve months after the date of grant, and 1/48
of the total number of shares subject to the options each month thereafter.
If we merge with or consolidate into another corporation, or sell
substantially all of our assets, we would expect that the successor corporation
will assume the options or substitute equivalent awards. If the successor
corporation refuses to assume or substitute the options, each outstanding stock
option will terminate on the effective date of the transaction.
The administrator has the authority to amend or terminate the 2000 stock
option plan, but no action may be taken that impairs the rights of any holder
of an outstanding option without the holder's consent. In addition, we must
obtain stockholder approval of amendments to the plan as required by applicable
law.
1996 Stock Option Plan. Our 1996 stock option plan was adopted by the board
in September 1996 and was approved by the stockholders in September 1996. The
plan was amended at various times after September 1996, including amendments
prior to this initial public offering to increase the number of shares reserved
for issuance thereunder. In addition, the plan was also amended to provide that
up to 9,825,000 shares of stock which are either reserved and available for
issuance under the plan, or which would otherwise return to the plan upon the
cancellation of outstanding options or upon the repurchase of shares by us in
connection with the termination of the holder's employment or consulting
relationship with us, will become available for issuance under our 2000 stock
option plan.
40
<PAGE>
As of December 31, 1999, a total of 11,326,125 shares of common stock had
been reserved for issuance under the 1996 option plan. As of December 31, 1999,
options to purchase 5,099,312 shares of common stock with exercise prices
ranging between $0.07 and $1.33 had been exercised, all of which shares were
outstanding, options to purchase 3,681,888 shares of common stock at exercise
prices were outstanding and 2,544,925 shares remained available for future
option grants; however, no future grants will be made under the 1996 stock
option plan after the effective date of this offering.
The terms of the 1996 stock option plan are substantially similar to those
of the 2000 stock option plan except for the following:
. Unless the board terminates it earlier, the 1996 stock option plan will
terminate in September 2006.
. The 1996 stock option plan does not impose an annual limit on the number
of shares subject to the awards that may be granted under the plan.
. The exercise price of any stock option granted to an optionee who is a
10% stockholder must equal at least 110% of the fair market value of our
common stock on the date of grant, and all other non-statutory stock
options must have exercise prices equal to at least 85% of the fair
market value of our common stock on the date of grant.
. Options granted under the 1996 stock option plan are generally
nontransferable and may only be exercised during the lifetime of the
award-holder by the award-holder.
2000 Employee Stock Purchase Plan. Our 2000 employee stock purchase plan was
adopted by the board of directors in March 2000 and will be submitted for
approval by our stockholders prior to completion of this offering. The 2000
employee stock purchase plan becomes effective upon the effective date of this
offering. A total of 450,000 shares of common stock has been reserved for
issuance under the 2000 employee stock purchase plan, plus an automatic annual
increase on the first day of each of our fiscal years beginning in 2001 and
ending in 2010 equal to the lesser of 900,000 shares, 2% of our outstanding
common stock on the last day of the immediately preceding fiscal year, or a
lesser number of shares as determined by the board of directors. Unless
terminated earlier by the board of directors, the 2000 employee stock purchase
plan will terminate 10 years following the date of this offering.
The 2000 employee stock purchase plan is intended to qualify under Section
423 of the Internal Revenue Code and will be implemented by a series of
overlapping offering periods of approximately 24 months duration, with new
offering periods (other than the first offering period) commencing on August 1
and February 1 of each year. Each offering period will generally consist of 4
consecutive purchase periods of 6 months duration, at the end of which an
automatic purchase will be made for participants. The initial offering period
is expected to commence on the effective date of this offering and end on July
31, 2002; the initial purchase period is expected to begin on the effective
date of this offering and end on January 31, 2001.
The 2000 employee stock purchase plan will be administered by the board of
directors or by a committee appointed by the board. Our employees (including
officers and employee directors), or employees of any majority-owned subsidiary
designated by the board, are eligible to participate in the 2000 employee stock
purchase plan if they are regular employees who work at least 20 hours per week
and more than 5 months per year.
The 2000 employee stock purchase plan permits eligible employees to purchase
common stock through payroll deductions, which in any event may not exceed 20%
of an employee's total compensation. A participant may, on only one occasion
increase, and on only one occasion decrease, his or her payroll contribution
percentage during any purchase period.
The price at which stock is purchased under the 2000 employee stock purchase
plan is equal to the lower of 85% of the fair market value of the common stock
at the beginning of the offering period or at the end of the purchase period.
If the fair market value of the common stock on a purchase date is less than
the fair
41
<PAGE>
market value at the beginning of the offering period, each participant in that
offering period shall automatically be withdrawn from the offering period as of
the end of the purchase date and re-enrolled in the new 24 month offering
period beginning on the first business day following the purchase date.
Employees may end their participation in the 2000 employee stock purchase plan
at any time during an offering period, and participation ends automatically on
termination of employment.
An employee cannot be granted an option under the 2000 employee stock
purchase plan if immediately after the grant that employee would own stock, or
hold outstanding options to purchase stock, equaling 5% or more of the total
voting power or value of all classes of our stock or stock of our subsidiaries.
In addition, an employee cannot be granted an option under the 2000 employee
stock purchase plan if the option would give an employee rights to purchase
stock under the 2000 employee stock purchase plan at a rate that exceeds
$25,000 of fair market value of the stock for each calendar year in which the
option is outstanding. In addition, no employee may purchase more than 2,700
shares of common stock under the 2000 employee stock purchase plan in any one
purchase period.
If we merge or consolidate with or into another corporation or sell all or
substantially all of our assets, we expect that each right to purchase stock
under the 2000 employee stock purchase plan will be assumed or an equivalent
right substituted by the successor corporation. If our acquiror does not agree
to assume or substitute outstanding rights, the offering period then in
progress will be shortened so that employees' rights to purchase stock under
the 2000 employee stock purchase plan are exercised prior to the transaction.
Our board of directors has the power to amend or terminate the 2000 employee
stock purchase plan and to change or terminate offering periods as long as such
action does not adversely affect any outstanding rights to purchase stock
thereunder. However, the board may amend or terminate the 2000 employee stock
purchase plan or an offering period even if it would adversely affect
outstanding options in order to avoid our incurring adverse accounting charges.
2000 Directors' Stock Option Plan. The 2000 directors' stock option was
adopted by the board of directors in March 2000 and will be submitted for
approval by our stockholders prior to completion of this offering. It will
become effective upon the effective date of this offering. A total of 1,200,000
shares of common stock has been reserved for issuance under the 2000 directors'
plan, all of which remain available for future grants. The 2000 directors' plan
provides for the grant of non-statutory stock options to our non-employee
directors. The 2000 directors' plan is designed to work automatically without
administration. To the extent administration is necessary, it will be performed
by the board of directors. To the extent conflicts of interest arise, it is
expected that they will be addressed by abstention of any interested director
from both deliberations and voting regarding matters in which that director has
a personal interest. Unless terminated earlier, the 2000 directors' plan will
terminate 10 years from the effective date of this offering.
Under the directors' plan, each individual who first becomes a non-employee
director after the effective date of the directors' plan will receive an
automatic initial grant of an option to purchase 40,000 shares of common stock
upon appointment or election to the board. These automatic grants to purchase
40,000 shares will vest and become exercisable as to 1/4th of the total number
of shares subject to the option on the 12 month anniversary of the date of
grant and as to 1/48th of the total number of shares subject to the option each
month following the date of grant. The directors' plan also provides for
automatic annual grants of options to purchase 10,000 shares of common stock on
the date of each annual meeting of our stockholders to each non-employee
director who has served on the board for at least six months prior to the
meeting. The automatic grants to purchase 10,000 shares will vest and become
exercisable in installments of 1/12th of the total number of shares subject to
the option each month following the date of grant. All options granted under
the 2000 directors' plan will have a term of 10 years and an exercise price
equal to the fair market value of our common stock on the date of grant.
If we merge with or consolidate into another corporation, or sell all or
substantially all of our assets, each option outstanding under the directors'
plan will become immediately fully vested and exercisable. The board
42
<PAGE>
may amend or terminate the directors' plan, but any such amendment that would
impair the rights of any holder of an outstanding option will not affect those
outstanding options without the holder's consent. In addition, we must obtain
stockholder approval of amendments to the plan as required by applicable law.
Limitation of Liability and Indemnification Matters
As permitted by the Delaware General Corporation Law, we have included in
our amended and restated certificate of incorporation a provision to eliminate
the personal liability of our officers and directors for monetary damages for
breach or alleged breach of their fiduciary duties as officers or directors,
respectively, subject to certain exceptions. In addition, our bylaws provide
that we are required to indemnify our officers and directors under certain
circumstances, including those circumstances in which indemnification would
otherwise be discretionary, and we are required to advance expenses to our
officers and directors as incurred in connection with proceedings against them
for which they may be indemnified. We have entered into indemnification
agreements with our officers and directors containing provisions that are in
some respects broader than the specific indemnification provisions contained in
the Delaware law. The indemnification agreements require us, among other
things, to indemnify such officers and directors against certain liabilities
that may arise by reason of their status or service as officers and directors,
other than liabilities arising from willful misconduct of a culpable nature, to
advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified, and to obtain directors' and officers'
insurance if available on reasonable terms.
At present, we are not aware of any pending or threatened litigation or
proceeding involving any of our directors, officers, employees or agents in
which indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding that might result in a claim for such
indemnification. We believe that our charter provisions and indemnification
agreements are necessary to attract and retain qualified persons as directors
and officers.
43
<PAGE>
RELATED PARTY TRANSACTIONS
Since January 1, 1997, we have not been a party to any transaction or series
of similar transactions in which the amount involved exceeds $60,000 and in
which any director, executive officer, or holder of more than 5% of our common
stock had or will have a direct or indirect material interest other than:
. normal compensation arrangements which are described under "Management--
Executive Compensation" above; and
. the transactions described below.
Private Placement Transactions
Since January 1, 1997, we have issued shares of preferred stock for the
purchase of preferred stock in private placement transactions involving related
parties, as follows:
. An aggregate of 12,413,793 shares of series B preferred stock at $0.483
per share in September 1998 to twelve investors;
. An aggregate of 6,956,400 shares of series C preferred stock at $3.33 per
share in June 1999 to thirty-three investors; and
. An aggregate of 3,590,763 shares of series D preferred stock at $8.67 per
share in December 1999 and January 2000 to twenty-nine investors.
The table below summarizes the shares of preferred stock purchased by our
executive officers, directors and 5% stockholders and persons and entities
associated with them in the above private placement transactions. Shares held
by affiliated persons and entities have been aggregated.
<TABLE>
<CAPTION>
Investors Preferred Stock
- --------- ---------------------------
Series
Series B Series C D
--------- --------- -------
<S> <C> <C> <C>
ABS Capital Partners III, L.P and Andrew Sheehan.. 0 1,650,000 230,769
Admirals, L.P..................................... 0 1,500,000 576,922
Institutional Venture Partners and its affiliates,
including T. Peter Thomas........................ 5,586,207 1,440,000 692,307
U.S. Venture Partners and its affiliates,
including Stuart Phillips........................ 5,586,207 1,440,000 692,307
Kris Chellam...................................... 0 75,000 15,000
</TABLE>
44
<PAGE>
Transactions with Management
In connection with the exercise of options to purchase common stock granted
pursuant to our 1996 stock option plan, we have provided loans to the following
executive officers pursuant to notes secured by stock pledge agreements, which
are summarized below:
<TABLE>
<CAPTION>
Issue Note
Name Due Date Interest Rate Date Amount
- ---- -------- ------------- ----- ------
<S> <C> <C> <C> <C>
Krish Panu 12/16/2004 6.11% 12/16/99 $275,000
Krish Panu 2/23/2005 6.46 2/23/00 500,000
Rodric Fan 12/16/2004 6.11 12/16/99 200,000
Thomas Hoster 11/30/2004 6.11 12/1/99 450,000
David Manovich 12/16/2004 6.11 12/16/99 250,000
Thomas Allen 12/15/2004 6.11 12/15/99 100,000
John Lankes 12/16/2004 6.11 12/16/99 78,500
Julia Langley 2/22/05 6.46 2/22/00 250,000
Shirish Puranik 12/15/2004 6.11 12/15/99 260,000
Michael Walker 12/1/2004 6.11 12/1/99 100,000
</TABLE>
In March 2000, the board of directors approved the acceleration of the
vesting of a stock option held by Krish Panu to purchase 375,000 shares of
common stock.
We have entered into employment and change-of-control agreements with some
of our officers and directors. See "Management--Employment and Change-of-
Control Agreements."
We have entered into indemnification agreements with our officers and
directors containing provisions which may require us, among other things, to
indemnify our officers and directors against certain liabilities that may arise
by reason of their status or service as officers or directors, other than
liabilities arising from willful misconduct of a culpable nature, and to
advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified.
Transactions with Shareholders
Orient Semiconductor Electronics, which holds more than 5% of our common
stock, manufactured iLMs for us pursuant to purchase orders in the aggregate
amounts of approximately $21,000 in 1998 and $512,000 in 1999. At December 31,
1999, approximately $256,000 owed to Orient Semiconductor Electronics was
included in our accounts payable.
Registration Rights Agreements
Some of our shareholders are entitled to have their shares registered by us
for resale. See "Description of Capital Stock--Registration Rights."
45
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of December 31, 1999 and as adjusted to
reflect the sale of the common stock offered by us pursuant to this prospectus
and conversion of all outstanding shares of preferred stock into shares of
common stock by
. each of our directors, our chief executive officer and our one other
executive officer whose aggregate compensation during our last fiscal
year exceeded $100,000.
. all directors and executive officers as a group, and
. each person who is known by us to own beneficially more than 5% of our
common stock.
Percentage of beneficial ownership is based on 32,980,188 shares of common
stock outstanding as of December 31, 1999, together with options that are
exercisable within sixty days of December 31, 1999 for each person.
Except as otherwise noted, the address of each person listed in the table is
c/o @Road, Inc., 47200 Bayside Parkway, Fremont, CA 94538, and the persons
listed in the table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them, subject to
community property laws where applicable. Beneficial ownership is determined in
accordance with the rules of the SEC and includes voting and investment power
with respect to the shares.
<TABLE>
<CAPTION>
Percent
Beneficially Owned
----------------------
Number of Shares Before After
Name of Beneficial Owner Beneficially Owned Offering Offering
- ------------------------ ------------------ --------- ---------
<S> <C> <C> <C>
Krish Panu(1)...................... 3,375,000 9.9%
Institutional Venture Partners(2).. 7,718,514 23.4%
U.S. Venture Partners(3)........... 7,718,514 23.4%
Orient Semiconductor
Electronics(4).................... 2,902,500 8.8%
Admirals, L.P.(5).................. 2,076,922 6.3%
ABS Capital Partners III, L.P(6)... 1,880,769 5.7%
Rodric Fan (7)..................... 2,400,000 7.3%
Kris Chellam(8).................... 172,500 *
Stuart Phillips(9)................. 37,500 *
T. Peter Thomas(10)................ 37,500 *
All directors and executive
officers as a group (9
persons)(11)...................... 22,269,528 65.6%
</TABLE>
- --------
* Less than one percent of the outstanding shares of common stock.
(1) Represents 2,250,000 shares acquired by exercise of stock options and
1,125,000 shares issuable upon exercise of options and a stock purchase
right exercisable within 60 days of December 31, 1999.
(2) Represents 7,539,412 shares held by Institutional Venture Partners, VIII,
L.P., 55,862 shares held by Institutional Venture Partners Founders Fund I,
L.P., 98,102 shares held by Institutional Venture Management Fund, VIII,
L.L.C., and 25,138 shares held by Institutional Venture Management Fund
VIII-A, L.L.C. T. Peter Thomas, a director of @Road, is a general partner
of the general partner of each of these partnerships, shares voting and
dispositive power with respect to the shares held by each such entity, and
disclaims beneficial ownership of such shares in which he has no pecuniary
interest. Address is 3000 Sand Hill Road, Bldg. 2, Suite 290, Menlo Park,
California 94025.
(3) Represents 6,323,586 shares held by U.S. Venture Partners V, L.P., 692,308
shares held by U.S. Venture Partners VII, L.P., 154,576 shares held by U.S.
Venture Partners V Entrepreneur Partners, L.P., 351,310 shares held by U.S.
Venture Partners V International, L.P., and 196,734 shares held by 2180
Associates Fund V, L.P. Stuart Phillips, a director of @Road, is a general
partner of the general partner of each of these partnerships, shares voting
and dispositive power with respect to the shares held by each such
46
<PAGE>
entity, and disclaims beneficial ownership of such shares in which he has
no pecuniary interest. Address is 2180 Sand Hill Road, Suite 300, Menlo
Park, California 94025.
(4) Represents 2,250,000 shares held by Orient Semiconductor Electronics,
Limited and 652,500 shares held by Orient Semiconductor Electronics, Inc.
Address is c/o Edmond Tseng, 2700 Augstine Dr., #140, Santa Clara,
California 95054.
(5) Address is Galleon Management, 135 E. 57th Street, 26th Floor, New York,
New York 10022.
(6) Andrew Sheehan is a managing member of ABS Capital Partners III, LLC, the
general partner of ABS Capital Partners III, L.P., which owns such
shares. Mr. Sheehan disclaims beneficial ownership of these shares except
to the extent of his pecuniary interest. Mr. Sheehan has shared voting
power and shared investment power of these shares. Address is 1 South
Street, 25th Floor, Baltimore, Maryland, 21202.
(7) Represents 1,530,000 shares held by Fan Family Trust; 675,000 shares held
by R. C. Fan Management Company, L.P.; 60,000 shares held by Eric Fan;
60,000 shares held by Carey B. Fan; 60,000 shares held by David W. Fan;
and 15,000 shares held by Dorian Falcone.
(8) Includes 82,500 shares issuable upon exercise of options exercisable
within 60 days of December 31, 1999.
(9) Represents 37,500 shares issuable upon exercise of options exercisable
within 60 days of December 31, 1999. Excludes 7,718,514 shares held by
U.S. Venture Partners V, L.P. and its affiliates. See note (2). Address
is 2180 Sand Hill Road, Suite 300, Menlo Park, California 94025.
(10) Represents 37,500 shares issuable upon exercise of options exercisable
within 60 days of December 31, 1999. Excludes 7,718,514 shares held by
Institutional Venture Partners, VIII, L.P. and its affiliates. See note
(1). Address is 3000 Sand Hill Road, Bldg. 2, Suite 290, Menlo Park,
California 94025.
(11) Includes 987,499 shares issuable upon exercise of options exercisable
within 60 days of December 31, 1999 and 15,437,028 shares held by
affiliates of our directors and officers.
47
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon the completion of this offering, after giving effect to the conversion
of all outstanding shares of preferred stock into common stock and the filing
of our amended and restated certificate of incorporation, our authorized
capital stock will consist of 250,000,000 shares of common stock, $0.0001 par
value, and 10,000,000 shares of undesignated preferred stock, $0.0001 par
value.
Common Stock
As of December 31, 1999, there were 7,550,001 shares of common stock
outstanding, held of record by 29 stockholders. There will be shares of
common stock outstanding, assuming no exercise of the underwriter's over-
allotment option or exercise of outstanding options under the stock plans after
March 15, 2000, after giving effect to the sale of the shares of common stock
to the public offered hereby.
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Subject to
preferential rights with respect to any outstanding preferred stock, holders of
common stock are entitled to receive ratably such dividends as may be declared
by the board of directors out of funds legally available therefor. In the event
of liquidation, dissolution or winding up of @Road, the holders of common stock
are entitled to share ratably in all assets remaining after payment of
liabilities and satisfaction of preferential rights of any outstanding
preferred stock. The common stock has no preemptive or conversion rights or
other subscription rights. The outstanding shares of common stock are, and the
shares of common stock to be issued upon completion of this offering will be,
fully paid and non-assessable.
Preferred Stock
As of December 31, 1999, there were 25,430,187 shares of preferred stock
outstanding. Upon the closing of the offering, all outstanding shares of
preferred stock will be converted into common stock on a one-to-one basis and
automatically retired. Thereafter, the board of directors is authorized to
issue preferred stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any series or the
designation of such series, without further vote or action by the stockholders.
The issuance of preferred stock may have the effect of delaying, deferring
or preventing a change in control of @Road without further action by the
stockholders. The issuance of preferred stock with voting and conversion rights
may adversely affect the voting power of the holders of common stock, including
voting rights, of the holders of common stock. In certain circumstances, such
issuance could have the effect of decreasing the market price of the common
stock. As of the closing of the offering, no shares of preferred stock will be
outstanding and we currently have no plans to issue any shares of preferred
stock.
Registration Rights
As of December 31, 1999, the holders of 26,907,677 shares of common stock or
their transferees are entitled to certain rights with respect to the
registration of such shares under the Securities Act. These rights are provided
under the terms of an agreement between us and the holders of these registrable
securities. Subject to certain limitations in the agreement, the holders of at
least a majority of the registrable securities, excluding registrable common
stock held by Rodric Fan, may require, on two occasions beginning six months
after the date of this prospectus, that we use our best efforts to register the
registrable securities for public resale. If we register any of our common
stock either for our own account or for the account of other security holders,
the holders of registrable securities are entitled to include their shares of
common stock in such registration, subject to the ability of the underwriters
to limit the number of shares included in the offering. The holders of
registrable securities may also require us, not more than twice in any twelve-
month period, to register all or a portion of their registrable securities on
Form S-3 when use of such form becomes available to us, provided, among other
limitations, that the proposed aggregate selling price, net of any
underwriters' discounts or commissions, is at least $1,000,000. We must bear
all registration expenses, and the holders of the securities being registered
must bear all selling expenses relating to the registrable securities.
48
<PAGE>
Effect of Certain Certificate of Incorporation and Bylaw Provisions
In March 2000, our board of directors approved certain amendments to our
certificate of incorporation and bylaws to provide, among other things, that
our directors will be elected without the application of cumulative voting.
Such provision will be submitted to our stockholders for approval in April
2000 and shall become effective at the first meeting of stockholders following
the annual meeting of stockholders when we shall have had at least 800
stockholders. Such amendments also provide that, after the closing of the
offering contemplated hereby, any action required or permitted to be taken by
our stockholders may be taken only at a duly called annual or special meeting
of the stockholders. The bylaws also establish procedures, including advance
notice procedures with regard to the nomination, other than by or at the
direction of the board of directors, of candidates for election as directors.
The foregoing provisions could have the effect of making it more difficult
for a third party to effect a change in the control of the board of directors.
In addition, these provisions could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire, a majority of our outstanding voting stock.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is American Stock
Transfer and Trust Company.
49
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for our common stock.
Future sales of substantial amounts of common stock in the public market could
adversely affect prevailing market prices. Furthermore, since only a limited
number of shares will be available for sale shortly after this offering because
of certain contractual and legal restrictions on resale (as described below),
sales of substantial amounts of our common stock in the public market after the
restrictions lapse could adversely affect the prevailing market price and our
ability to raise equity capital in the future.
Upon completion of the offering, we will have outstanding shares of
common stock. Of these shares, the shares sold in the offering, plus any shares
issued upon exercise of the underwriters' over-allotment option, will be freely
tradable without restriction under the Securities Act, unless purchased by our
affiliates, as defined in Rule 144 under the Securities Act.
The remaining 32,980,188 shares of common stock outstanding are restricted
securities within the meaning of Rule 144 under the Securities Act. These
restricted shares may be sold in the public market only if registered or if
they qualify for an exemption from registration under Rules 144, 144(k) or 701
promulgated under the Securities Act, which are summarized below. Sales of the
restricted shares in the public market, or the availability of such shares for
sale, could adversely affect the market price of the common stock.
Our stockholders have entered into lock-up agreements generally providing
that they will not offer, sell, contract to sell or grant any option to
purchase or otherwise dispose of the shares of our common stock or any
securities exercisable for or convertible into our common stock owned by them
for a period of 180 days after the effective date of this offering without the
prior written consent of a designated representative of the underwriters. As a
result of these contractual restrictions, notwithstanding possible earlier
eligibility for sale under the provisions of Rules 144, 144(k) and 701, shares
subject to lock-up agreements will not be saleable until such agreements expire
or are waived by the designated underwriters' representative. Taking into
account the lock-up agreements, and assuming that Credit Suisse First Boston
Corporation does not release stockholders from these agreements, the following
shares will be eligible for sale in the public market at the following times:
. beginning on the effective date, only the shares sold in the offering
will be immediately available for sale in the public market;
. beginning 180 days after the effective date, approximately 517,845
shares will be eligible for sale pursuant to Rule 701 and approximately
24,526,435 additional shares will be eligible for sale pursuant to Rule
144.
. an additional 5,052,503 shares will be eligible for sale pursuant to
Rule 144 by December , 2000.
Shares eligible to be sold by affiliates pursuant to Rule 144 are subject to
volume restrictions as described below.
In general, under Rule 144 as currently in effect, and beginning after the
expiration of the lock-up agreements, 180 days after the effective date of this
offering, a person, or persons whose shares are aggregated, who has
beneficially owned restricted shares for at least one year would be entitled to
sell within any three-month period a number of shares that does not exceed the
greater of: (i) one percent of the number of shares of common stock then
outstanding; or (ii) the average weekly trading volume of the common stock
during the four calendar weeks preceding the sale. Sales under Rule 144 are
also subject to certain manner of sale provisions and notice requirements and
to the availability of current public information about us. Under Rule 144(k),
a person who is not deemed to have been an affiliate of ours at any time during
the three months preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years, is entitled to sell such shares
without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
Pursuant to the lock-up agreements, all our employees holding common stock
or stock options may not sell shares acquired upon exercise until 180 days
after the effective date of this offering. Beginning 180 days
50
<PAGE>
after the effective date of this offering, any of our employees, officers,
directors or consultants who purchased their shares pursuant to a written
compensatory plan or contract may be entitled to rely on the resale provisions
of Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under
Rule 144 without complying with the holding period requirements of Rule 144.
Rule 701 further provides that non-affiliates may sell such shares in reliance
on Rule 144 without having to comply with the holding period, public
information, volume limitation or notice provisions of Rule 144. In addition,
we intend to file registration statements under the Securities Act as promptly
as possible after the effective date of this offering to register shares to be
issued pursuant to our employee benefit plans. As a result, any options
exercised under our benefit plans after the effective date of this offering
statement will also be freely tradable in the public market, except that shares
held by affiliates will still be subject to the volume limitation, manner of
sale, notice and public information requirements of Rule 144 unless otherwise
resaleable under Rule 701. As of December 31, 1999, there were 3,681,888
outstanding options for the purchase of shares, 458,872 of which options were
vested and exercisable.
51
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated , 2000, we have agreed to sell to the underwriters named
below, for whom Credit Suisse First Boston Corporation, Chase Securities Inc.
and U.S. Bancorp Piper Jaffray Inc. are acting as representatives, the
following respective numbers of shares of common stock:
<TABLE>
<CAPTION>
Number
of
Underwriter Shares
----------- ------
<S> <C>
Credit Suisse First Boston Corporation................................
Chase Securities Inc. ................................................
U.S. Bancorp Piper Jaffray Inc. ......................................
----
Total...............................................................
====
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to additional shares at the initial public offering price
less the underwriting discounts and commissions. The option may be exercised
only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and the selling group members may allow a discount of $ per
share on sales to other broker/dealers. After the initial public offering, the
public offering price and concession and discount to broker/dealers may be
changed by the representatives.
The following table summarizes the compensation and estimated expenses we
will pay.
<TABLE>
<CAPTION>
Per Share Total
----------------------------- -----------------------------
Without With Without With
Over-allotment Over-allotment Over-allotment Over-allotment
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Underwriting Discounts
and Commissions paid by
us . . . . . . . . . .
....................... $ $ $ $
Expenses payable by us.. $ $ $ $
</TABLE>
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act relating
to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of Credit Suisse First Boston
Corporation for a period of 180 days after the date of this prospectus, except
issuances pursuant to the exercise of employee stock options outstanding on the
date hereof or pursuant to our dividend reinvestment plan.
Our officers and directors and all of our stockholders have agreed that they
will not offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any shares of our common stock or securities
convertible into or exchangeable or exercisable for any shares of our common
stock, enter into a transaction
52
<PAGE>
which would have the same effect, or enter into any swap, hedge or other
arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of our common stock, whether any such transaction is
to be settled by delivery of our common stock or such other securities, in cash
or otherwise, or publicly disclose the intention to make any such offer, sale,
pledge or disposition, without the prior written consent of Credit Suisse First
Boston Corporation for a period of 180 days after the date of this prospectus.
The underwriters have reserved for sale, at the initial public offering
price up to shares of the common stock for employees, directors and
certain other persons associated with us who have expressed an interest in
purchasing 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 such
persons purchase such reserved shares. Any reserved shares not so purchased
will be offered by the underwriters to the general public on the same terms as
the other shares.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments that the underwriters may be required
to make in that respect.
We have applied to list the shares of common stock on The Nasdaq Stock
Market's National Market under the symbol ARDI.
Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiation
between us and the representatives. The principal factors to be considered in
determining the public offering price include the following:
. the information set forth in this prospectus and otherwise available to
the representatives;
. market conditions for initial public offerings;
. the history and the prospects for the industry in which we will compete;
. the ability of our management;
. our prospects for future earnings;
. the present state of our development and our current financial condition;
. the general condition of the securities markets at the time of this
offering; and
. the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies.
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation
M under the Securities Exchange Act of 1934.
. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
. Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions.
. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by the
syndicate member is purchased in a stabilizing or syndicate covering
transaction to cover syndicate short positions.
53
<PAGE>
These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. These transactions may be
effected on The Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
A prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters
for sale to their online brokerage account holders. Internet distributions will
be allocated by the underwriters that will make Internet distributions on the
same basis as other allocations.
54
<PAGE>
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the common stock.
Representations of Purchasers
Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such common stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."
Rights of Action (Ontario Purchasers)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
Enforcement of Legal Rights
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or persons outside of Canada.
Notice to British Columbia Residents
A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common stock acquired on the same date and under
the same prospectus exemption.
Taxation and Eligibility for Investment
Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
legislation.
55
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Venture Law Group, A Professional Corporation, Menlo Park, California. Tae
Hea Nahm, a director of Venture Law Group, is our Secretary. The underwriters
have been represented by Wilson Sonsini Goodrich & Rosati, Palo Alto,
California. As of the date of this prospectus, certain attorneys of Venture Law
Group and an investment partnership affiliated with Venture Law Group own an
aggregate of 65,673 shares of our common stock and an option to purchase 15,000
shares of our common stock.
EXPERTS
The consolidated financial statements as of December 31, 1998 and 1999 and
for each of the three years in the period ended December 31, 1999 included in
this prospectus and the related consolidated financial statement schedule
included elsewhere in the registration statement have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their reports appearing herein
and elsewhere in the registration statement, and have been so included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement, including any amendments to the registration statement, on Form S-1
under the Securities Act with respect to the common stock offered by this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the
registration statement. For further information with respect to @Road and the
common stock offered by this prospectus, reference is made to the registration
statement and its exhibits, and the financial statements and notes filed as a
part of the registration statement. With respect to each such document filed
with the Commission as an exhibit to the registration statement, reference is
made to the exhibit for a more complete description of the matter involved. The
registration statement, including its exhibits and the financial statements and
notes filed as a part of the registration statement, as well as such reports
and other information filed with the Commission, may be inspected without
charge at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, NY 10048,
and the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of all or any part of the registration statement may be obtained
from the Commission upon payment of certain fees prescribed by the Commission.
These reports and other information may also be inspected without charge at a
web site maintained by the Commission at http://www.sec.gov.
56
<PAGE>
@ROAD, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report.............................................. 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 and Comprehensive Loss 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 for the Years Ended December
31, 1997, 1998 and 1999.................................................. F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
@Road, Inc.:
We have audited the accompanying consolidated balance sheets of @Road, Inc.
and subsidiary (the "Company") as of December 31, 1998 and 1999, and the
related consolidated statements of operations, stockholders' equity and
comprehensive loss, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of @Road, Inc. and subsidiary at
December 31, 1998 and 1999, 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 generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
March 23, 2000
F-2
<PAGE>
@ROAD, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and par value amounts)
<TABLE>
<CAPTION>
December 31,
-----------------
1998 1999
------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 5,356 $ 22,714
Short-term investments.................................... -- 13,939
Restricted short-term investments......................... -- 2,000
Accounts receivable (net of allowances of $0 and $131).... 62 807
Inventories............................................... 238 1,880
Deferred product costs.................................... 67 1,282
Prepaid expenses and other................................ 94 204
------- --------
Total current assets.................................... 5,817 42,826
Property and equipment, net................................. 174 1,566
Deferred product costs...................................... -- 594
Other assets................................................ 15 188
------- --------
Total assets............................................ $ 6,006 $ 45,174
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 51 $ 2,020
Accrued liabilities....................................... 100 1,345
Deferred revenue.......................................... 67 703
------- --------
Total current liabilities............................... 218 4,068
Deferred revenue............................................ -- 464
Other long-term liabilities................................. -- 34
------- --------
Total liabilities....................................... 218 4,566
Commitments and contingencies (Note 9)
Stockholders' equity:
Convertible preferred stock, $0.0001 par value, 26,927,886
shares authorized; shares issued and outstanding:
16,163,793 in 1998 and 25,430,187 in 1999................ 8,469 51,606
Common stock, par value $0.0001, 48,072,114 shares
authorized; shares issued and outstanding: 2,311,125 in
1998 and 7,550,001 in 1999............................... 7 18,590
Deferred stock compensation............................... -- (11,632)
Notes receivable from stockholders........................ -- (1,758)
Accumulated other comprehensive loss...................... -- (21)
Accumulated deficit....................................... (2,688) (16,177)
------- --------
Total stockholders' equity.............................. 5,788 40,608
------- --------
Total liabilities and stockholders' equity............ $ 6,006 $ 45,174
======= ========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
@ROAD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Revenues:
Service......................................... $ -- $ 4 $ 612
Product......................................... -- 64 294
------- ------- --------
Total revenues................................ -- 68 906
------- ------- --------
Costs and expenses:
Cost of service revenue......................... -- 27 681
Cost of product revenue......................... -- 87 1,777
Sales and marketing............................. 107 266 3,530
Research and development........................ 745 731 2,109
General and administrative...................... 250 457 2,129
Stock compensation (*).......................... -- -- 4,973
------- ------- --------
Total costs and expenses...................... 1,102 1,568 15,199
------- ------- --------
Loss from operations.............................. (1,102) (1,500) (14,293)
Interest income, net.............................. 98 90 804
------- ------- --------
Net loss.......................................... $(1,004) $(1,410) $(13,489)
======= ======= ========
Basic and diluted net loss per share.............. $ (0.45) $ (0.62) $ (4.88)
======= ======= ========
Shares used in calculating basic and diluted net
loss per share................................... 2,250 2,287 2,763
======= ======= ========
Pro forma basic and diluted net loss per share
(unaudited) (Note 1)............................. $ (0.59)
========
Shares used in calculating pro forma basic and
diluted net loss per share (unaudited) (Note 1).. 22,882
========
(*)Stock compensation:
Cost of service revenue......................... $ -- $ -- $ 17
Cost of product revenue......................... -- -- 52
Sales and marketing............................. -- -- 501
Research and development........................ -- -- 445
General and administrative...................... -- -- 3,958
------- ------- --------
Total......................................... $ -- $ -- $ 4,973
======= ======= ========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
@ROAD, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE LOSS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Notes Accumulated
Convertible Receivable Other Total
Preferred Stock Common Stock Deferred from Compre- Accumu- Compre-
------------------ ------------------ Stock Stock- hensive lated Stockholders' hensive
Shares Amount Shares Amount Compensation holders Loss Deficit Equity Loss
---------- ------- --------- -------- ------------ ---------- ----------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES,
January 1,
1997........... 3,750,000 $ 2,489 2,250,000 $ 3 $ -- $ -- $ -- $ (274) $ 2,218
Net loss........ (1,004) (1,004) $ (1,004)
---------- ------- --------- -------- -------- ------- ----- -------- -------- ========
BALANCES,
December 31,
1997........... 3,750,000 2,489 2,250,000 3 -- -- -- (1,278) 1,214
Net loss........ (1,410) (1,410) $ (1,410)
========
Issuance of
Series B
convertible
preferred stock
at $0.48 per
share, net of
issuance costs
of $20......... 12,413,793 5,980 5,980
Exercise of
stock options.. 61,125 4 4
---------- ------- --------- -------- -------- ------- ----- -------- --------
BALANCES,
December 31,
1998........... 16,163,793 8,469 2,311,125 7 -- -- -- (2,688) 5,788
Net loss........ (13,489) (13,489) $(13,489)
Change in net
unrealized loss
from short-term
investments.... (21) (21) (21)
--------
Comprehensive
loss........... $(13,510)
========
Issuance of
Series C
convertible
preferred stock
at $3.33 per
share, net of
issuance costs
of $21......... 6,956,400 23,167 23,167
Issuance of
Series D
convertible
preferred stock
at $8.67 per
share, net of
issuance costs
of $50......... 2,309,994 19,970 19,970
Common stock
issued for
consulting
services....... 50,689 43 43
Exercise of
stock options
and stock
purchase
rights......... 5,188,187 1,935 (1,758) 177
Deferred stock
compensation... 16,605 (16,605) --
Amortization of
deferred stock
compensation... 4,973 4,973
---------- ------- --------- -------- -------- ------- ----- -------- --------
BALANCES,
December 31,
1999........... 25,430,187 $51,606 7,550,001 $ 18,590 $(11,632) $(1,758) $ (21) $(16,177) $ 40,608
========== ======= ========= ======== ======== ======= ===== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
@ROAD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss......................................... $(1,004) $(1,410) $(13,489)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.................. 18 47 188
Loss on sale of property and equipment......... -- -- 6
Amortization of deferred stock compensation.... -- -- 4,973
Common stock issued for consulting services.... -- -- 43
Change in assets and liabilities:
Accounts receivable.......................... -- (62) (745)
Inventories.................................. (71) (166) (1,642)
Deferred product costs....................... -- (67) (1,809)
Prepaid expenses and other................... 1 (84) (110)
Accounts payable............................. 10 25 1,969
Accrued and other liabilities................ 28 33 1,279
Deferred revenue............................. -- 67 1,100
------- ------- --------
Net cash used in operating activities...... (1,018) (1,617) (8,237)
------- ------- --------
Cash flows from investing activities:
Purchase of property and equipment............... (62) (101) (1,621)
Proceeds from sale of property and equipment..... -- -- 35
Purchases of short-term investments.............. (500) -- (17,971)
Proceeds from maturities of short-term
investments..................................... 1,000 500 4,011
Purchase of restricted short-term investments.... -- -- (2,000)
Other assets..................................... -- -- (173)
------- ------- --------
Net cash provided by (used in) investing
activities................................ 438 399 (17,719)
------- ------- --------
Cash flows from financing activities:
Proceeds from sale of preferred stock............ -- 5,980 43,137
Proceeds from sale of common stock............... -- 4 177
------- ------- --------
Net cash provided by financing activities.. -- 5,984 43,314
------- ------- --------
Net increase (decrease) in cash and equivalents.... (580) 4,766 17,358
Cash and cash equivalents:
Beginning of year................................ 1,170 590 5,356
------- ------- --------
End of year...................................... $ 590 $ 5,356 $ 22,714
======= ======= ========
Supplemental disclosure of cash flow information--
Cash paid for interest............................ $ -- $ -- $ 25
======= ======= ========
Noncash financing activities--
Issuance of common stock for notes receivable.... $ -- $ -- $ 1,758
======= ======= ========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
1. Summary of Significant Accounting Policies
Organization--@Road, Inc. (the Company), was incorporated in July 1994 in
California and commenced operations on July 1, 1996. During 1999, the Company
completed the development of its service delivery platform and began
substantial sales and marketing efforts. The Company is a leading provider of
Internet based productivity enhancement services for companies with a mobile
workforce through the use of the proprietary global positioning system (GPS)
and wireless technologies.
Principles of Consolidation--The consolidated financial statements include
the company and its wholly-owned subsidiary. Intercompany accounts and
transactions are eliminated in consolidation.
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, liabilities,
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Cash Equivalents--The Company considers all highly liquid debt instruments
purchased with an original maturity of 90 days or less to be cash equivalents.
Short-Term Investments--Short-term investments represent highly liquid debt
instruments purchased with a maturity date at purchase of greater than 90 days
and are stated at fair value. The differences between amortized cost (cost
adjusted for amortization of premiums and accretion of discounts which are
recognized as adjustments to interest income) and fair value representing
unrealized holding gains or losses are recorded as accumulated other
comprehensive loss within stockholders' equity. While the Company's intent is
to hold debt securities to maturity, they are classified as available-for-sale
because the sale of such securities may be required prior to maturity. Any
gains and losses on the sale of debt securities are determined on a specific
identification basis.
Restricted short-term investments consist of a certificate of deposit with
an original maturity of greater than 90 days which is held as collateral under
the Company's line of credit agreement (see Note 6). The certificate of deposit
is classified as an available-for-sale as the sale of such security may be
required prior to maturity. At December 31, 1999, the fair value of the
restricted short-term investment approximated cost.
Concentration of Credit Risk--Financial instruments which potentially
subject the Company to concentrations of credit risk consist primarily of cash
equivalents, short-term investments and accounts receivable. The Company's cash
equivalents and short-term investments consist of checking and savings
accounts, money market accounts and highly liquid debt instruments with three
financial institutions. The Company sells its products primarily to companies
in the United States. The Company does not require collateral or other security
to support accounts receivable. To reduce credit risk, management performs
ongoing evaluations of its customers' financial condition.
Inventories--Inventories consist of raw materials, work in process and
finished goods, and are stated at the lower of cost (average cost) or market.
Property and Equipment--Property and equipment are stated at cost and
depreciated using the straight-line method over estimated useful lives of
approximately three to five years. Leasehold improvements are amortized over
the shorter of the lease term or their useful lives.
Long-Lived Assets--The Company evaluates long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. An impairment loss
F-7
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
would be recognized when the sum of the undiscounted future net cash flows
expected to result from the use of the asset and its eventual disposition is
less than its carrying amount.
Income Taxes--The Company accounts for income taxes under an asset and
liability approach. Deferred income taxes reflect the impact of temporary
differences between assets and liabilities recognized for financial reporting
purposes and such amounts recognized for income tax reporting purposes, net
operating loss carryforwards and other tax credits measured by applying
currently enacted tax laws. Valuation allowances are provided when necessary to
reduce deferred tax assets to an amount that is more likely than not to be
realized.
Revenue Recognition and Deferred Product Costs--The Company earns revenues
from products sold to customers (for which title transfers on shipment) and
from related customer service under contracts that generally provide for
service over periods of one to three years. Service revenue is recognized,
after product installation, in the period in which services are provided.
Product revenue is initially deferred until installation and thereafter is
recognized ratably over the minimum service contract period. Allowances for
sales returns are recorded at the time product revenue is recognized. Deferred
revenue also includes customer payments received prior to product installation.
The Company initially defers the cost of products sold to customers. Deferred
product costs are amortized, beginning after installation, ratably over the
minimum service contract period.
Advertising Costs--All advertising costs are expensed as incurred.
Advertising costs, which are included in sales and marketing expenses, were
$4,000, $3,000 and $179,000 for 1997, 1998 and 1999, respectively.
Research and development expenses are charged to operations as incurred.
Such expenses include product development costs and costs related to the
Company's internally developed software systems, which have not met the
capitalization criteria of Statement of Position 98-1, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use (SOP 98-1). During
1999, the Company capitalized approximately $242,000 of costs related to
internally developed software systems in accordance with SOP 98-1.
Foreign Currency Transactions--The functional currency of the Company's
foreign subsidiary is the U.S. dollar. Accordingly, all monetary assets and
liabilities are translated at the current exchange rate at the end of the year,
nonmonetary assets and liabilities are translated at historical rates and
revenues and expenses are translated at average exchange rates in effect during
the period. Transaction gains and losses have not been significant to date.
Stock-Based Awards--The Company accounts for stock-based awards to employees
using the intrinsic value method in accordance with Accounting Principles Board
Opinion (APB) No. 25, Accounting for Stock Issued to Employees.
The Company accounts for equity instruments issued to nonemployees in
accordance with the provisions of Statement of Financial Accounting Standards
("SFAS") No. 123, Accounting for Stock-Based Compensation, and Emerging Issues
Task Force ("EITF") Issue No. 96-18, Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services, which requires that the fair value of such instruments be
recognized as an expense over the period in which the related services are
received.
Net Loss per Common Share--Basic net loss per common share excludes dilution
and is computed by dividing net loss by the weighted average number of common
shares outstanding for the period (excluding shares subject to repurchase).
Diluted net loss per common share was the same as basic net loss per common
share for all periods presented since the effect of any potentially dilutive
securities is excluded as they are anti-dilutive because of the Company's net
losses.
F-8
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
Unaudited Pro Forma Net Loss per Common Share--Pro forma basic and diluted
net loss per common share is computed by dividing net loss by the weighted
average number of common shares outstanding for the period (excluding shares
subject to repurchase) plus the weighted average number of common shares
resulting from the assumed conversion upon the closing of the planned initial
public offering of outstanding shares of convertible preferred stock.
Certain Significant Risks and Uncertainties--The Company participates in a
dynamic high-technology industry and believes that changes in any of the
following areas could have a material adverse effect on the Company's future
financial position, results of operations or cash flows: advances and trends in
new technologies and industry standards; competitive pressures in the form of
new products and services or price reductions on current products and services;
changes in the overall demand for products and services offered by the Company;
market acceptance of the Company's products and services; development of sales
channels; changes in third-party manufacturers; changes in key suppliers;
changes in certain strategic relationships or customer relationships;
litigation or claims against the Company based on intellectual property,
patent, product, regulatory or other factors; risks associated with necessary
components and the Company's ability to attract and retain employees necessary
to support its growth.
Comprehensive Loss--Statement of Financial Accounting Standards (SFAS) No.
130, Reporting Comprehensive Income requires that an enterprise report, by
major components and as a single total, the change in its net assets during the
period from nonowner sources. For the years ended December 31, 1997 and 1998,
comprehensive loss was equal to net loss. For the year ended December 31, 1999,
accumulated other comprehensive loss is comprised of unrealized losses on
short-term investments of $21,000.
Segment Reporting--Effective January 1, 1999, the Company adopted SFAS No.
131, Disclosures About Segments of an Enterprise and Related Information. In
1999, the Company operated in a single reportable segment and will evaluate
additional segment disclosure requirements as it expands its operations.
Recently Issued Accounting Standard--In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. This statement requires companies to record derivatives on
the balance sheet as assets or liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. SFAS No. 133 will be effective for the Company's fiscal
year ending December 31, 2001. Management believes that this statement will not
have a significant impact on the Company's financial position, results of
operations or cash flows.
Reclassifications--Certain reclassifications have been made to the 1997 and
1998 financial statement presentation to conform to the 1999 presentation.
These reclassifications had no effect on net loss or stockholders' equity.
2. Short-Term Investments
Short term investments include the following available-for-sale securities
at December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
Unrealized Unrealized
Amortized Market Holding Holding
Cost Value Gains Losses
--------- ------- ---------- ----------
<S> <C> <C> <C> <C>
Commercial paper....................... $10,214 $10,215 $ 1 $ --
Corporate debt securities.............. 2,746 2,731 -- (15)
U.S. Government debt securities........ 1,000 993 -- (7)
------- ------- --- -----
Total................................ $13,960 $13,939 $ 1 $ (22)
======= ======= === =====
</TABLE>
F-9
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
3. Inventories
Inventories at December 31 consist of (in thousands):
<TABLE>
<CAPTION>
1998 1999
---- ------
<S> <C> <C>
Raw materials.................................................. $204 $1,095
Work in progress............................................... 21 338
Finished goods................................................. 13 447
---- ------
Total........................................................ $238 $1,880
==== ======
</TABLE>
4. Property and Equipment
Property and equipment at December 31 consist of (in thousands):
<TABLE>
<CAPTION>
1998 1999
---- ------
<S> <C> <C>
Computers and software....................................... $133 $1,603
Manufacturing and office equipment........................... 109 131
Furniture and fixtures....................................... -- 67
Leasehold improvements....................................... -- 19
---- ------
Total...................................................... 242 1,820
Accumulated depreciation and amortization.................... (68) (254)
---- ------
Property and equipment, net................................ $174 $1,566
==== ======
</TABLE>
5. Accrued Liabilities
Accrued liabilities at December 31 consist of (in thousands):
<TABLE>
<CAPTION>
1998 1999
---- ------
<S> <C> <C>
Accrued compensation and related benefits..................... $ 46 $ 924
Other......................................................... 54 421
---- ------
Total....................................................... $100 $1,345
==== ======
</TABLE>
6. Line of Credit
During 1999, the Company entered into a $2,000,000 revolving line of credit
agreement that expires in March 2000. The line of credit provides for issuance
of letters of credit of up to $2,000,000. Borrowings bear interest at the
restricted certificate of deposit rate plus 2% (6.4% at December 31, 1999) and
are collateralized by a restricted certificate of deposit (see Note 1). There
were no borrowings and letters of credit outstanding under this revolving line
of credit at December 31, 1999.
F-10
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
7. Stockholders' Equity
Preferred stock as of December 31, 1999 consists of (in thousands, except
share amounts):
<TABLE>
<CAPTION>
Outstanding
-------------------
Amount
(Net of Aggregate
Shares Issuance Liquidation
Designated Shares Costs) Preference
---------- ---------- -------- -----------
<S> <C> <C> <C> <C>
Series A........................ 3,750,000 3,750,000 $ 2,489 $ 2,500
Series B........................ 12,413,793 12,413,793 5,980 6,000
Series C........................ 6,956,400 6,956,400 23,167 23,188
Series D........................ 3,807,693 2,309,994 19,970 20,020
---------- ---------- ------- -------
26,927,886 25,430,187 $51,606 $51,708
========== ========== ======= =======
</TABLE>
Convertible Preferred Stock
The significant terms of the convertible preferred stock are as follows:
. Each share is convertible into one share of common stock (subject to
adjustments for events of dilution). Shares will automatically be
converted upon a public offering of common stock yielding proceeds in
excess of $15,000,000 or upon the approval (by vote or written consent)
of at least 75% of the then outstanding Series A, Series B, Series C and
Series D, voting together as a class.
. Each share has the same voting rights as the number of shares of common
stock into which it is convertible.
. If and when declared by the Board of Directors, the holders of Series A,
Series B, Series C and Series D convertible preferred stock are entitled
to receive noncumulative dividends at the rate of $0.06, $0.043, $0.30
and $0.78 per share per annum on each outstanding share of Series A,
Series B, Series C and Series D convertible preferred stock,
respectively.
. In the event of liquidation, dissolution or winding up of the Company,
the preferred stockholders of Series A, Series B, Series C and Series D
shall receive an amount equal to $0.67, $0.48, $3.33 and $8.67 per share,
respectively, plus an amount equal to all declared but unpaid dividends
on each share. Any remaining assets will be distributed among the holders
of Series A, Series B, Series C and Series D preferred stock and common
stock, pro rata, based on the number of shares of common stock held by
each stockholder on an as-converted basis. In total, the holders of
Series A, Series B, Series C and Series D preferred stock shall not be
entitled to receive more than $2.00, $1.45, $10.00 and $26.00 per share,
respectively.
Common Stock
At December 31, 1999, the Company has reserved shares of common stock for
issuance as follows:
<TABLE>
<S> <C>
Conversion of preferred stock................................... 25,430,187
Issuance under stock option plan................................ 6,226,813
Issuance under stock purchase right............................. 375,000
----------
32,032,000
==========
</TABLE>
F-11
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
Stock Option Plan
Under the Company's 1996 Stock Option Plan (the Plan), the Board of
Directors is authorized to grant to employees, officers, directors and
consultants up to 11,326,125 shares of common stock. These options generally
expire ten years from the date of grant and generally vest in installments over
a four-year period.
Stock Purchase Rights
During 1999, the Company granted to employees purchase rights for 525,000
shares of common stock at $1.33 per share. Of the shares issuable under the
purchase rights, 150,000 of the shares are subject to repurchase by the Company
at the original issuance price; the repurchase right lapses over a thirty-three
month period.
A summary of option and stock purchase right activity is as follows:
<TABLE>
<CAPTION>
Weighted
Average
Number of Exercise
Shares Price
---------- --------
<S> <C> <C>
Outstanding, January 1, 1997 (none exercisable).......... 1,665,000 $0.07
Granted (weighted average fair value of $0.01 per
share).................................................. 97,500 0.07
Canceled................................................. (7,500) 0.07
----------
Outstanding, December 31, 1997 (583,188 exercisable at a
weighted average exercise price of $0.07)............... 1,755,000 0.07
Granted (weighted average fair value of $0.01 per
share).................................................. 627,000 0.07
Exercised................................................ (61,125) 0.07
Canceled................................................. (189,375) 0.07
----------
Outstanding, December 31, 1998 (1,062,483 exercisable at
a weighted average exercise price of $0.07)............. 2,131,500 0.07
Granted (weighted average fair value of $2.34 per
share).................................................. 7,572,575 0.55
Exercised................................................ (5,188,187) 0.37
Canceled................................................. (459,000) 0.09
----------
Outstanding, December 31, 1999........................... 4,056,888 $0.57
==========
</TABLE>
At December 31, 1999, 2,544,925 shares were available for future grant under
the Option Plan.
Additional information regarding options and stock purchase rights
outstanding as of December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Outstanding Vested
------------------------------------- ----------------
Weighted Average Weighted Weighted
Remaining Average Average
Exercise Number Contractual Life Exercise Number Exercise
Price Outstanding (Years) Price Vested Price
------------ ----------- ---------------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
$0.07 2,032,063 8.33 $0.07 395,672 $0.07
0.67 786,950 9.69 0.67 49,700 0.67
1.33 1,237,875 9.87 1.33 388,500 1.33
--------- -------
$0.07--$1.33 4,056,888 9.06 $0.57 833,872 $0.69
========= =======
</TABLE>
F-12
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
Stock Compensation
During 1999, the Company issued 7,045,125 common stock options and stock
purchase rights to employees at a weighted average price of $0.59 per share,
which were at prices less than the fair value of its common stock. The weighted
average fair value of the common stock was $2.95 per share. Accordingly, the
Company recorded approximately $15,842,000 as the value of such options in
1999. Stock compensation of $4,436,000 was amortized to expense in fiscal 1999,
and at December 31, 1999, the Company had $11,406,000 in deferred stock
compensation related to such options.
During 1999, the Company issued nonstatutory common stock options to
consultants to purchase 147,200 shares of common stock of which options to
purchase 144,200 shares of common stock were outstanding at December 31, 1999.
Accordingly, the Company recorded $763,000 as the fair value of such options in
1999. Stock compensation of $537,000 was recognized as result of these options
in 1999. The fair value of the unvested portion of these options is being
amortized over the vesting period. The fair value attributable to the unvested
portion of these options is subject to adjustment based upon the future value
of the Company's common stock. The fair values of these options were determined
at the date of vesting using the methods specified by SFAS 123 with the
following weighted average assumptions during 1999: expected life, ten years;
risk free interest rate, 6%; volatility, 95%; and no dividends during the
expected term. Forfeitures are recognized as they occur.
Additional Stock Plan Information
As discussed in Note 1, the Company accounts for its stock-based awards
using the intrinsic value method in accordance with APB No. 25, Accounting for
Stock Issued to Employees, and its related interpretations. Accordingly, no
compensation expense has been recognized in the financial statements for
employee stock arrangements granted at fair market value.
SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123), requires
the disclosure of pro forma net income or loss had the Company adopted the fair
value method. Under SFAS 123, the fair value of stock-based awards to employees
is calculated through the use of option pricing models, even though such models
were developed to estimate the fair value of freely tradeable, fully
transferable options without vesting restrictions, which significantly differ
from the Company's stock option awards. These models also require subjective
assumptions, including expected time to exercise, which greatly affect the
calculated values. The Company's calculations were made using the minimum value
method with the following weighted average assumptions: expected life, five
years in 1997, 1998 and 1999; risk-free interest rate, 6% in 1997, 5% in 1998
and 6% in 1999; and no dividends during the expected term. The Company's
calculations are based on a single option valuation approach, and forfeitures
are recognized as they occur.
If the computed minimum values of the Company's stock-based awards to
employees had been amortized to expense over the vesting period of the awards
as specified under SFAS No. 123, loss attributable to common shareholders and
basic and diluted loss per share on a pro forma basis (as compared to such
items as reported) would have been (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Net loss:
As reported................................. $(1,004) $(1,410) $(13,489)
Pro forma................................... $(1,012) $(1,417) $(13,746)
Basic and diluted net loss per share:
As reported................................. $ (0.45) $ (0.62) $ (4.88)
Pro forma................................... $ (0.45) $ (0.62) $ (4.98)
</TABLE>
F-13
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
Receivable from Sales of Stock
At December 31, 1999, notes receivable from stockholders representing notes
receivable from certain officers and other employees of the Company, were
comprised of (dollars in thousands, except per share amounts):
<TABLE>
<CAPTION>
Stock Purchased
------------------- Interest
Issue Date Amount Number Per Share Rate
---------- ------ --------- --------- --------
<S> <C> <C> <C> <C>
December 1999.......................... $814 610,500 $1.33 6.11%
December 1999.......................... $905 1,357,500 $0.67 6.11%
December 1999.......................... $ 39 577,500 $0.07 6.11%
</TABLE>
These full recourse notes are secured by common stock and are due five years
from the issue dates. The stock sold in connection with these notes and other
stock sales for cash are subject to repurchase by the Company at the original
issuance price; this right generally lapses over a four-year period subject to
continued employment. At December 31, 1999, approximately 4,046,000 shares of
common stock were subject to this purchase right.
8. Net Loss per Share
The following is a reconciliation of the numerators and denominators used in
computing basic and diluted net loss per share (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Net loss (numerator), basic and diluted........... $(1,004) $(1,410) $(13,489)
======= ======= ========
Shares (denominator):
Weighted average common shares outstanding...... 2,250 2,287 3,974
Weighted average common shares outstanding
subject to repurchase.......................... -- -- (1,211)
------- ------- --------
Shares used in computation, basic and diluted... 2,250 2,287 2,763
======= ======= ========
Net loss per share, basic and diluted............. $ (0.45) $ (0.62) $ (4.88)
======= ======= ========
Shares used in computation, basic and diluted..... 2,763
Weighted average preferred stock outstanding...... 20,119
--------
Shares used in computing pro forma per share
amounts on a converted basis..................... 22,882
========
Pro forma net loss per share on a converted basis,
basic and diluted................................ $ (0.59)
========
</TABLE>
For the above mentioned periods, the Company had securities outstanding
which could potentially dilute basic earnings per share in the future, but were
excluded from the computation of diluted net loss per share in the periods
presented, as their effect would have been antidilutive. Such outstanding
securities consist of the following:
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1997 1998 1999
--------- ---------- ----------
<S> <C> <C> <C>
Convertible preferred stock.............. 3,750,000 16,163,793 25,430,187
Shares of common stock subject to
repurchase.............................. -- -- 4,046,000
Outstanding options and stock purchase
rights.................................. 1,755,000 2,131,500 4,056,888
Weighted average exercise price of
options and stock purchase rights....... $ 0.07 $ 0.07 $ 0.57
========= ========== ==========
</TABLE>
F-14
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
9. Commitments and Contingencies
Lease Commitments
The Company leases its principal facilities under a noncancelable operating
lease expiring in December 2000 (see Note 12). Future minimum rental payments
under operating leases, net of sublease income, are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ending
December 31,
------------
<S> <C>
2000............................................................ $280,000
2001............................................................ 45,000
2002............................................................ 42,000
--------
$367,000
========
</TABLE>
Rent expense was approximately $50,000, $51,000 and $225,000 (net of
sublease income of $0, $0, and $50,000) for 1997, 1998 and 1999, respectively.
Purchase Commitments
At December 31, 1999, the Company has noncancelable inventory purchase
commitments totaling approximately $720,000.
Contingencies
The Company has received a letter from the holder of two patents claiming
that the Company infringes the patents. The Company is in the process of
reviewing the patents; however, the ultimate outcome of this matter cannot be
determined at this time.
10. Income Taxes
No income taxes were provided for any years presented due to the Company's
net losses.
Net deferred tax assets at December 31 consist of (in thousands):
<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards..................... $ 1,167 $ 4,419
Credit carryforwards................................. 142 292
Accruals and reserves recognized in different
periods............................................. -- 614
------- -------
Total gross deferred tax assets before valuation
allowance......................................... 1,309 5,325
Valuation reserve...................................... (1,309) (5,325)
------- -------
Net deferred tax asset................................. $ -- $ --
======= =======
</TABLE>
At December 31, 1999, the Company has federal and state net operating loss
carryforwards of approximately $10,276,000 and $10,277,000, respectively,
expiring through 2019 and 2003, respectively.
At December 31, 1999, the Company also has research and development and
manufacturing investment credits of approximately $182,000 and $110,000
available to offset future federal and state income taxes, respectively. The
federal tax credit carryforward expires through 2019. The state tax credit
carryforward has no expiration.
Current federal and California tax law includes provisions limiting the
annual use of net operating loss and credit carryforwards in the event of
certain defined changes in stock ownership. The Company's capitalization
F-15
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
described herein may have resulted in such a change. Accordingly, the annual
use of the Company's net operating loss and credit carryforwards would be
limited according to these provisions. Management has not yet determined the
extent of such limitation. Such limitation may result in the loss of
carryforward benefits due to their expiration.
11. Related Party Transactions
In 1999 and 1998, the Company purchased approximately $512,000 and $21,000,
respectively, of inventory from a preferred stockholder. At December 31, 1999,
approximately $256,000 owed to the preferred stockholder was included in
accounts payable. At December 31, 1998, no amounts were payable to the
preferred stockholder.
12. Employee Benefit Plan
The Company sponsors a 401(k) Saving and Retirement Plan (the Plan) for all
employees who meet certain eligibility requirements. Participants may
contribute, on a pre-tax basis, between 1% and 15% of their annual
compensation, but not to exceed a maximum contribution amount pursuant to
Section 401(k) of the Internal Revenue Code. The Company is not required to
contribute, nor has it contributed, to the Plan for any of the years presented.
13. Subsequent Events
In January 2000, the Company sold 1,280,769 shares of Series D convertible
preferred stock to investors at $8.67 per share for proceeds of approximately
$11,100,000.
In January 2000, the Company entered into an additional non-cancelable
facilities operating lease expiring in 2005 requiring lease payments of
approximately $212,000 in 2000, $663,000 in 2001, $719,000 in 2002, $751,000 in
2003, $784,000 in 2004, and $66,000 in 2005.
In February 2000, the stockholders approved an increase in the number of
authorized shares to 75,000,000 and a three-for-two stock split of its common
and preferred stock outstanding. All share and per share information in the
accompanying consolidated financial statements have been adjusted to
retroactively give effect to the stock split for all periods presented.
In March 2000, the Company agreed, subject to certain conditions, to
purchase substantially all assets and certain related liabilities of
Differential Corrections, Inc. for cash of $4,000,000 and 76,923 shares of the
Company's Series D convertible preferred stock. The Company expects to complete
this purchase in April 2000.
In March 2000, the Board of Directors approved, subject to stockholder
approval, the following:
. Reincorporation of the Company in the state of Delaware with the
Company's name changed to At Road, Inc.
. An increase of authorized shares of common stock to 250,000,000 shares
and creation of newly undesignated preferred stock totaling 10,000,000
shares, contingent upon the approval of the reincorporation of the
Company in Delaware and the closing of the Company's initial public
offering.
. Adoption of the Company's 2000 Stock Option Plan (the 2000 Option Plan).
The 2000 Plan will become effective upon the closing of the Company's
initial public offering. A total of up to 2,000,000 shares will be
reserved for issuance under the 2000 Plan. In addition, up to 9,825,000
shares, if
F-16
<PAGE>
@ROAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
available for grant under the 1996 option plan will be granted under the
2000 plan. The number of shares reserved under the plan will automatically
be increased on the first day of each of the fiscal years beginning 2001
and ending 2010 in an amount equal to the lesser of 2,500,000 shares or
four percent of the shares outstanding on the last day of the preceding
year.
. Adoption of the Company's 2000 Employee Stock Purchase Plan (the ESPP).
The ESPP will become effective upon the closing of the Company's initial
public offering. A total of 450,000 shares of common stock will be
reserved for issuance under the ESPP. The number of shares reserved for
issuance under the ESPP will automatically increase on the first day of
each year beginning in 2001 and ending 2010 by an amount equal to the
lesser of 900,000 shares or two percent of the total shares outstanding
on the last day of the preceding year. Under the ESPP, shares of common
stock will be sold to employees at a price not less than 85% of the lower
of fair market value at the beginning of the two-year offering period or
the end of the six month purchase periods.
. Adoption of the Company's 2000 Directors' Stock Option Plan (the
Directors' Plan). The Directors' Plan will become effective upon the
closing of the Company's initial public offering. A total of up to
1,200,000 shares of common stock will be reserved for issuance for the
initial grant of nonstatutory stock options to each nonemployee director
to purchase 40,000 shares of common stock at the fair market value at the
grant date, as well as additional option grants for 10,000 shares to be
issued each subsequent year.
On March 23, 2000, the Company agreed, subject to certain conditions, to
purchase substantially all assets and certain related liabilities of Hynet
Technologies for 50,000 shares of the Company's common stock. The Company
expects to complete this purchase in April 2000.
* * * * *
F-17
<PAGE>
INSIDE BACK COVER
[@Road Logo]
<PAGE>
[@ROAD LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates except the SEC
registration fee and the NASD filing fee and the Nasdaq National Market listing
fee.
<TABLE>
<CAPTION>
Amount to
be Paid
----------
<S> <C>
SEC registration fee........................................... $27,627.60
NASD filing fee................................................ 10,965.00
Nasdaq National Market listing fee............................. *
Printing and engraving expenses................................ *
Legal fees and expenses........................................ *
Accounting fees and expenses................................... *
Blue Sky qualification fees and expenses....................... *
Transfer Agent and Registrar fees.............................. *
Miscellaneous fees and expenses................................ *
Total........................................................ $ *
</TABLE>
- --------
*to be filed by amendment
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 . Article six of
our certificate of incorporation, exhibit 3.2 hereto, and article six of our
bylaws, exhibit 3.3, provide for indemnification of our directors, officers,
employees and other agents to the maximum extent permitted by Delaware law. In
addition, we have entered into indemnification agreements, exhibit 10.1, with
our officers and directors. The underwriting agreement, exhibit 1.1, also
provides for cross-indemnification among At Road and the underwriters with
respect to certain matters, including matters arising under the Securities Act.
Item 15. Recent Sales of Unregistered Securities
Since August 1996 we have sold and issued the following securities:
1. On July 15, 1996, we issued 3,750,000 shares of our series A
preferred stock at $0.667 per share to ten investors for an aggregate cash
consideration of $2,500,000.
2. On September 15, 1998 we issued 11,224,137 shares of our series B
preferred stock to ten investors, and on September 25 1998, we issued an
additional 1,189,656 shares of our series B preferred stock to two
investors, both at $0.483 per share for an aggregate cash consideration of
$6,000,000.
3. On June 3, 1999, we issued 3,270,000 shares of our series C preferred
stock to five investors, and on June 18, 1999, we issued an additional
3,686,400 shares of our series C preferred stock to 28 investors, both at
$3.33 per share for an aggregate cash consideration of $23,188,000.
4. On December 17, 1999, we issued 2,309,994 shares of our series D
preferred stock to 26 investors, on January 6, 2000, we issued 692,307
shares of our series D preferred stock to one investor, and on January 28,
2000 we issued an additional 588,462 shares of our series D preferred stock
to two investors, all issuances at $8.67 per share for an aggregate cash
consideration of $31,119,946.
II-1
<PAGE>
5. From August 1996 to December 31, 1999, we granted 9,437,075 options
to purchase our common stock with a weighted average price of $0.39 to a
number of our employees, directors and consultants.
6. In December 1999, we granted an option to purchase 150,000 shares of
our common stock to our Chief Technology Officer and a right to purchase
375,000 shares of our common stock to our Chief Executive Officer each for
$1.33 per share, for aggregate consideration of $700,000.
7. In February 2000, we issued 375,000 shares of our common stock to our
Chief Executive Officer at $1.33 per share for a total of $500,000.
The issuances of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as transactions by an issuer not involving any public offering.
Certain issuances described in items 5 and 6 were deemed exempt from
registration under the Securities Act in reliance upon Rule 701 promulgated
under the Securities Act.
The recipients of securities in each such transaction represented their
intentions to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates issued in such transactions. All
recipients had adequate access, through their relationships with At Road, to
information about us.
II-2
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1* Form of Underwriting Agreement dated , 2000.
3.1 Amended and Restated Articles of Incorporation of the Registrant.
3.2 Amended and Restated Certificate of Incorporation of the Registrant, as
proposed for reincorporation in Delaware.
3.3 Amended and Restated Bylaws of the Registrant.
3.4 Amended and Restated Bylaws of the Registrant, as proposed for
reincorporation in Delaware.
4.1* Specimen Stock Certificate.
5.1* Opinion of Venture Law Group regarding the legality of the common stock
being registered.
10.1** CDPD Value Added Reseller Agreement between the Registrant and AT&T
Wireless Data, Inc. dated September 30, 1997.
10.2** Form of Wireless Network Services Agreement and Form of Purchase
Agreement for Goods.
10.3** Product License and Collaboration Agreement between the Registrant and
Intel Corporation dated January 28, 2000.
10.4** Product Purchase Agreement between the Registrant and Novatel Wireless
Technologies, Inc. dated January 1, 2000.
10.5** Product Purchase Agreement between the Registrant and Novatel Wireless
Technologies, Inc. dated April 1, 2000.
10.6** Design and Purchase Contract between the Registrant and Philsar
Electronics, Inc. dated April 11, 1997.
10.7** Joint Marketing Agreement between the Registrant and Cellco Partnership
dated June 25, 1999 and Amendment No. 1 dated October 12, 1999.
10.8 Sublease Agreement between the Registrant and Sterling Software
(Western), Inc. dated August 24, 1999.
10.9 Lease between Renco Equities IV as landlord and SEEQ Technology, Inc.
as tenant and First Addendum, each dated January 13, 1995, and First
Amendment to Lease dated April 18, 1995.
10.10 Sublease Agreement with LSI Logic Corporation dated January 25, 2000,
and Consent to Sublease with LSI Logic Corporation and Renco Equities
IV dated February 8, 2000.
Agreement between the Registrant and Elnet Technologies Ltd. dated
10.11 November 16, 1999.
10.12 1996 Stock Option Plan.
10.13 2000 Stock Option Plan.
10.14 2000 Employee Stock Purchase Plan.
10.15 2000 Directors' Stock Option Plan.
10.16 Form of Indemnification Agreement.
10.17 Asset Purchase Agreement between the Registrant and Differential
Corrections, Inc. dated March 8, 2000
10.18 Asset Purchase Agreement between the Registrant and Hynet Technologies
dated March 23, 2000
21.1 List of Subsidiaries.
23.1 Independent Auditors' Consent.
23.2* Consent of Venture Law Group.
24.1 Power of Attorney (see p. II-5).
</TABLE>
- --------
* To be supplied by amendment.
** Confidential treatment requested as to certain portions of this Exhibit.
II-3
<PAGE>
(b) Financial Statement Schedules
Schedule II--Valuation and Qualifying Accounts
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
Item 17. Undertakings
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Fremont, State of
California on March 24, 2000.
AT ROAD, INC.
/s/ Krish Panu
By: _________________________________
Krish Panu
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, Krish
Panu, Thomas C. Hoster and Rodric C. Fan and each of them, as his attorney-in-
fact, with full power of substitution, for him in any and all capacities, to
sign any and all amendments to this registration statement, including post-
effective amendments, and any and all registration statements filed pursuant to
Rule 462 under the Securities Act of 1933, as amended, in connection with or
related to the offering contemplated by this registration statement and its
amendments, if any, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming our signatures as they may be signed by our
said attorney to any and all amendments to said registration statement.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Krish Panu Chairman of the Board of March 24, 2000
______________________________________ Directors, President and
Krish Panu Chief Executive Officer
/s/ Thomas Hoster Vice President, Finance March 24, 2000
______________________________________ and Administration and
Thomas Hoster Chief Financial Officer
/s/ Rodric C. Fan Director and Chief March 24, 2000
______________________________________ Technology Officer
Rodric C. Fan
/s/ Kris Chellam Director March 24, 2000
______________________________________
Kris Chellam
/s/ Stuart Phillips Director March 24, 2000
______________________________________
Stuart Phillips
Director
______________________________________
Andrew Sheehan
/s/ T. Peter Thomas Director March 24, 2000
______________________________________
T. Peter Thomas
</TABLE>
II-5
<PAGE>
INDEPENDENT AUDITORS' REPORT ON SCHEDULE
To the Board of Directors and Stockholders of @Road, Inc.:
Our audits of the consolidated financial statements of @Road, Inc. and
subsidiary (the Company) for the years ended December 31, 1997, 1998, and 1999
also included the financial statement schedule of the Company, listed in Item
16(b) of this Registration Statement on Form S-1. The consolidated financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such consolidated financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
/s/ Deloitte & Touche LLP
San Jose, California
March 23, 2000
S-1
<PAGE>
SCHEDULE II
@ROAD, INC.
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1997, 1998, and 1999
(in thousands)
<TABLE>
<CAPTION>
Additions
Balance at and Write-offs
Beginning of Charges to and Balance at
Description Year Expenses Deductions End of Year
----------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
Year Ended December 31, 1997
Accounts receivable allowance... $ -- $ -- $ -- $ --
===== ===== ===== =====
Year Ended December 31, 1998
Accounts receivable allowance... $ -- $ -- $ -- $ --
===== ===== ===== =====
Year Ended December 31, 1999
Accounts receivable allowance... $ -- $ 131 $ -- $ 131
===== ===== ===== =====
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1* Form of Underwriting Agreement dated , 2000.
3.1 Amended and Restated Articles of Incorporation of the Registrant.
3.2 Amended and Restated Certificate of Incorporation of the Registrant, as
proposed for reincorporation in Delaware.
3.3 Amended and Restated Bylaws of the Registrant.
3.4 Amended and Restated Bylaws of the Registrant, as proposed for
reincorporation in Delaware.
4.1* Specimen Stock Certificate.
5.1* Opinion of Venture Law Group regarding the legality of the common stock
being registered.
10.1** CDPD Value Added Reseller Agreement between the Registrant and AT&T
Wireless Data, Inc. dated September 30, 1997.
10.2** Form of Wireless Network Services Agreement and Form of Purchase
Agreement for Goods.
10.3** Product License and Collaboration Agreement between the Registrant and
Intel Corporation dated January 28, 2000.
10.4** Product Purchase Agreement between the Registrant and Novatel Wireless
Technologies, Inc. dated January 1, 2000.
10.5** Product Purchase Agreement between the Registrant and Novatel Wireless
Technologies, Inc. dated April 1, 2000.
10.6** Design and Purchase Contract between the Registrant and Philsar
Electronics, Inc. dated April 11, 1997.
10.7** Joint Marketing Agreement between the Registrant and Cellco Partnership
dated June 25, 1999 and Amendment No. 1 dated October 12, 1999.
10.8 Sublease Agreement between the Registrant and Sterling Software
(Western), Inc. dated August 24, 1999.
10.9 Lease between Renco Equities IV as landlord and SEEQ Technology, Inc.
as tenant and First Addendum, each dated January 13, 1995, and First
Amendment to Lease dated April 18, 1995.
10.10 Sublease Agreement with LSI Logic Corporation dated January 25, 2000,
and Consent to Sublease with LSI Logic Corporation and Renco Equities
IV dated February 8, 2000.
Agreement between the Registrant and Elnet Technologies Ltd. dated
10.11 November 16, 1999.
10.12 1996 Stock Option Plan.
10.13 2000 Stock Option Plan.
10.14 2000 Employee Stock Purchase Plan.
10.15 2000 Directors' Stock Option Plan.
10.16 Form of Indemnification Agreement.
10.17 Asset Purchase Agreement between the Registrant and Differential
Corrections, Inc. dated March 8, 2000
10.18 Asset Purchase Agreement between the Registrant and Hynet Technologies
dated March 23, 2000
21.1 List of Subsidiaries.
23.1 Independent Auditors' Consent.
23.2* Consent of Venture Law Group.
24.1 Power of Attorney (see p. II-5).
</TABLE>
- --------
* To be supplied by amendment.
** Confidential treatment requested as to certain portions of this Exhibit.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
@ROAD, INC.
The undersigned, Krish Panu and Tae Hea Nahm, hereby certify that:
1. They are the duly elected President and Secretary, respectively, of
@Road, Inc., a California corporation.
2. The Articles of Incorporation of this corporation shall be amended and
restated to read in full as follows:
"ARTICLE I
The name of this corporation is @Road, Inc. (the "Corporation").
-----------
ARTICLE II
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
Upon the effective date of the filing of this Certificate of Amendment of
Amended and Restated Articles of Incorporation, every two (2) shares of this
Corporation's outstanding Common Stock and Preferred Stock shall be converted
and reconstituted into three (3) shares of the like class and series of the
Corporation's capital stock from which such shares were converted (the "Forward
-------
Stock Split"). In lieu of the issuance of fractional shares, the Corporation
- -----------
shall pay to the holder thereof in cash an amount equal to the fraction of a
share to which such holder is entitled multiplied by the fair market value of
such shares, as determined by the Corporation's board of directors. No further
adjustment of any preference or price set forth in this Article III shall be
made as a result of the result of the Forward Stock Split, as all share amounts
and amounts per share set forth in this Amended and Restated Certificate of
Incorporation have been appropriately adjusted to reflect the Forward Stock
Split.
(A) Classes of Stock. The Corporation is authorized to issue two classes
----------------
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
------------ ---------------
The total number of shares which the Corporation is authorized to issue is
Seventy-Five Million (75,000,000) shares, each with a par value of $0.0001 per
share. Forty-Eight Million Seventy-Two Thousand One hundred Fourteen
(48,072,114) shares shall be Common Stock and Twenty-Six Million Nine hundred
Twenty-Seven Thousand Eight Hundred Eighty-Six (26,927,886) shares shall be
Preferred Stock.
<PAGE>
(B) Rights, Preferences and Restrictions of Preferred Stock. The Preferred
-------------------------------------------------------
Stock authorized by these Amended and Restated Articles of Incorporation may be
issued from time to time in one or more series. The first series of Preferred
Stock shall be designated "Series A Preferred Stock" and shall consist of Three
------------------------
Million Seven Hundred Fifty Thousand (3,750,000) shares. The second series of
Preferred Stock shall be designated "Series B Preferred Stock" and shall consist
------------------------
of Twelve Million Four Hundred Thirteen Thousand Seven Hundred Ninety-Three
(12,413,793) shares. The third series of Preferred Stock shall be designated
"Series C Preferred Stock" and shall consist of Six Million Nine Hundred Fifty-
------------------------
Six Thousand Four Hundred (6,956,400) shares. The fourth series of Preferred
Stock shall be designated "Series D Preferred Stock" and shall consist of Three
------------------------
Million Eight Hundred Seven Thousand Six Hundred Ninety-Three (3,807,693)
shares. The rights, preferences, privileges, and restrictions granted to and
imposed on the Series A, Series B, Series C, and Series D Preferred Stock are as
set forth below in this Article III(B).
1. Dividend Provisions. Subject to the rights of series of Preferred
-------------------
Stock which may from time to time come into existence, the holders of shares of
Series A, Series B, Series C, or Series D Preferred Stock shall be entitled to
receive dividends, out of any assets legally available therefor, prior and in
preference to any declaration or payment of any dividend (payable other than in
Common Stock or other securities and rights convertible into or entitling the
holder thereof to receive, directly or indirectly, additional shares of Common
Stock of the Corporation) on the Common Stock of the Corporation, at the rate of
(a) $0.06 per share per annum on each outstanding share of Series A Preferred
Stock, (b) $0.043 per share per annum on each outstanding share of Series B
Preferred Stock, (c) $0.30 per share per annum on each outstanding share of
Series C Preferred Stock, and (d) $0.78 per share per annum on each outstanding
share of Series D Preferred Stock, payable quarterly when, as and if declared by
the Board of Directors. Such dividends shall not be cumulative.
2. Liquidation.
-----------
(a) Preference. In the event of any liquidation, dissolution or
----------
winding up of the Corporation, either voluntary or involuntary, subject to the
rights of series of Preferred Stock that may from time to time come into
existence, the holders of the Series A, Series B, Series C, and Series D
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets of the Corporation to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to (i)
$0.67 per share for each share of Series A Preferred Stock then held by them,
(ii) $0.48 per share for each share of Series B Preferred Stock then held by
them, (iii) $3.33 per share for each share of Series C Preferred Stock then held
by them, and (iv) $8.67 per share for each share of Series D Preferred Stock
then held by them, plus declared but unpaid dividends. If, upon the occurrence
of such event, the assets and funds thus distributed among the holders of the
Series A, Series B, Series C, and Series D Preferred Stock shall be insufficient
to permit the payment to such holders of the full aforesaid preferential
amounts, then, subject to the rights of series of Preferred Stock that may from
time to time come into existence, the entire assets and funds of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Series A, Series B,
-2-
<PAGE>
Series C, and Series D Preferred Stock in proportion to the preferential amount
each such holder is otherwise entitled to receive.
(b) Remaining Assets. Upon the completion of the distribution
----------------
required by Section 2(a) above and any other distribution that may be required
with respect to series of Preferred Stock that may from time to time come into
existence, the remaining assets of the Corporation available for distribution to
shareholders shall be distributed among the holders of the Series A, Series B,
Series C, and Series D Preferred Stock and the Common Stock pro rata based on
the number of shares of Common Stock held by each (assuming conversion of all
such Series A, Series B, Series C, and Series D Preferred Stock) until (i) with
respect to the holders of Series A Preferred Stock, such holders shall have
received an aggregate of $2.00 per share (including amounts paid pursuant to
Section 2(a) above), (ii) with respect to the holders of Series B Preferred
Stock, such holders shall have received an aggregate of $1.45 per share
(including amounts paid pursuant to Section 2(a) above), (iii) with respect to
the holders of Series C Preferred Stock, such holders shall have received an
aggregate of $10.00 per share (including amounts paid pursuant to Section 2(a)
above), and (iv) with respect to the holders of Series D Preferred Stock, such
holders shall have received an aggregate of $26.00 per share (including amounts
paid pursuant to Section 2(a) above); thereafter, subject to the rights of
series of Preferred Stock that may from time to time come into existence, if
assets remain in the Corporation, the holders of the Common Stock of the
Corporation shall receive all of the remaining assets of the Corporation pro
rata based on the number of shares of Common Stock held by each.
(c) Certain Acquisitions.
--------------------
(i) Deemed Liquidation. For purposes of this Section 2, a
------------------
liquidation, dissolution or winding up of the Corporation shall be deemed to
occur if the Corporation shall sell, convey, or otherwise dispose of or encumber
all or substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned subsidiary
corporation) or effect any other transaction or series of related transactions
in which more than fifty percent (50%) of the voting power of the Corporation is
disposed of, provided that this Section 2(c)(i) shall not apply to a merger
--------
effected exclusively for the purpose of changing the domicile of the
Corporation.
(ii) Valuation of Consideration. In the event of a deemed
--------------------------
liquidation as described in Section 2(c)(i) above, if the consideration received
by the Corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability:
(1) If traded on a securities exchange or The Nasdaq
Stock Market, the value shall be deemed to be the average of the closing prices
of the securities on such exchange over the thirty-day period ending three (3)
days prior to the closing;
-3-
<PAGE>
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the thirty-day period ending three (3) days prior to the
closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as determined by the Corporation's Board
of Directors.
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in Section 2(c)(ii)(A) to reflect the approximate fair
market value thereof, as mutually determined by the Corporation's Board of
Directors.
(iii) Notice of Transaction. The Corporation shall give
---------------------
each holder of record of Series A, Series B, Series C or Series D Preferred
Stock written notice of such impending transaction not later than ten (10) days
prior to the shareholders' meeting called to approve such transaction, or ten
(10) days prior to the closing of such transaction, whichever is earlier, and
shall also notify such holders in writing of the final approval of such
transaction. The first of such notices shall describe the material terms and
conditions of the impending transaction and the provisions of this Section 2,
and the Corporation shall thereafter give such holders prompt notice of any
material changes. The transaction shall in no event take place sooner than ten
(10) days after the Corporation has given the first notice provided for herein
or sooner than ten (10) days after the Corporation has given notice of any
material changes provided for herein; provided, however, that such periods may
be shortened upon the written consent of the holders of Preferred Stock that are
entitled to such notice rights or similar notice rights and that represent at
least a majority of the voting power of all then outstanding shares of such
Preferred Stock.
(iv) Effect of Noncompliance. In the event the
-----------------------
requirements of this Section 2(c) are not complied with, the Corporation shall
forthwith either cause the closing of the transaction to be postponed until such
time as the requirements of this Section 2 have been complied with, or cancel
such transaction, in which event the rights, preferences and privileges of the
holders of the Series A, Series B, Series C and Series D Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in Section
2(c)(iii) hereof.
3. Redemption. The Preferred Stock is not redeemable.
----------
4. Conversion. The holders of the Series A, Series B, Series C and
----------
Series D Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
-----------------
(a) Right to Convert. Subject to Section 4(c), each share of
----------------
Series A, Series B, Series C and Series D Preferred Stock shall be convertible,
at the option of the holder thereof, at any time after the date of issuance of
such share, at the office of the Corporation or any transfer agent for such
stock, into such number of fully paid and nonassessable shares of
-4-
<PAGE>
Common Stock as is determined by dividing (i) $0.67 in the case of the Series A
Preferred Stock, (ii) $0.48 in the case of the Series B Preferred Stock, (iii)
$3.33 in the case of the Series C Preferred Stock, and $8.67 in the case of the
Series D Preferred Stock, by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The initial Conversion Price per share shall be
$0.67 for shares of Series A Preferred Stock, $0.48 for shares of Series B
Preferred Stock, $3.33 for shares of Series C Preferred Stock, and $8.67 for
shares of Series D Preferred Stock. Such initial Conversion Price shall be
subject to adjustment as set forth in Section 4(d) below.
(b) Automatic Conversion. Each share of Series A, Series B, Series C
--------------------
or Series D Preferred Stock shall automatically be converted into shares of
Common Stock at the Conversion Price at the time in effect for such share
immediately upon the earlier of (i) except as provided below in Section 4(c),
the Corporation's sale of its Common Stock in a firm commitment underwritten
public offering pursuant to a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), which results in aggregate cash
--------------
proceeds to the Corporation of $15,000,000 (net of underwriting discounts and
commissions) or (ii) the date specified by written consent or agreement of the
holders of seventy-five percent (75%) of the then outstanding shares of Series
A, Series B, Series C and Series D Preferred Stock, voting together as a class.
(c) Mechanics of Conversion. Before any holder of Series A, Series B,
-----------------------
Series C or Series D Preferred Stock shall be entitled to convert the same into
shares of Common Stock, he or she shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for such series of Preferred Stock, and shall give written notice
to the Corporation at its principal corporate office, of the election to convert
the same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The Corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Preferred Stock, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the shares of such series of Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date. If the conversion is in
connection with an underwritten offering of securities registered pursuant to
the Securities Act, the conversion may, at the option of any holder tendering
such Preferred Stock for conversion, be conditioned upon the closing with the
underwriters of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive Common Stock upon conversion of such Preferred
Stock shall not be deemed to have converted such Preferred Stock until
immediately prior to the closing of such sale of securities.
(d) Conversion Price Adjustments of Preferred Stock for Certain Splits
------------------------------------------------------------------
and Combinations. The Conversion Price of the Series A, Series B, Series C and
- ----------------
Series D Preferred Stock shall be subject to adjustment from time to time as
follows:
-5-
<PAGE>
(i) Stock Splits and Dividends. In the event the Corporation
--------------------------
should at any time or from time to time after the date of the purchase of the
Series D Preferred Stock (the "Purchase Date") fix a record date for the
-------------
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
------------------------
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of each of the Series A, the Series B, the Series C and the
Series D Preferred Stock shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of each share of such series shall
be increased in proportion to such increase of the aggregate of shares of Common
Stock outstanding and those issuable with respect to such Common Stock
Equivalents with the number of shares issuable with respect to Common Stock
Equivalents.
(ii) Reverse Stock Splits. If the number of shares of Common
--------------------
Stock outstanding at any time after the Purchase Date is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for each of the Series A,
the Series B, the Series C and the Series D Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in outstanding shares.
(e) Other Distributions. In the event the Corporation shall declare a
-------------------
distribution payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, assets (excluding cash dividends) or
options or rights not referred to in Section 4(d)(i), then, in each such case
for the purpose of this Section 4(e), the holders of Series A, Series B, Series
C and Series D Preferred Stock shall be entitled to a proportionate share of any
such distribution as though they were the holders of the number of shares of
Common Stock of the Corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time there
-----------------
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or Section 2) provision shall be made so that the holders of the
Series A, Series B, Series C and Series D Preferred Stock shall thereafter be
entitled to receive upon conversion of such Preferred Stock the number of shares
of stock or other securities or property of the Corporation or otherwise, to
which a holder of Common Stock deliverable upon conversion would have been
entitled on such recapitalization. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 4 with
respect to the rights of the holders of such Preferred Stock after the
recapitalization to the end that the provisions of this Section 4 (including
adjustment of the
-6-
<PAGE>
Conversion Price then in effect and the number of shares purchasable upon
conversion of such Preferred Stock) shall be applicable after that event and be
as nearly equivalent as practicable.
(g) No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
(i) No fractional shares shall be issued upon the conversion
of any share or shares of the Series A, Series B, Series C or Series D Preferred
Stock, and the number of shares of Common Stock to be issued shall be rounded to
the nearest whole share. The number of shares issuable upon such conversion
shall be determined on the basis of the total number of shares of Series A,
Series B, Series C or Series D Preferred Stock the holder is at the time
converting into Common Stock and the number of shares of Common Stock issuable
upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment
of the Conversion Price of Series A, Series B, Series C or Series D Preferred
Stock pursuant to this Section 4, the Corporation, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of such Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Corporation
shall, upon the written request at any reasonable time of any holder of Series
A, Series B, Series C or Series D Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (A) such adjustment
and readjustment, (B) the Conversion Price for such series of Preferred Stock at
the time in effect, and (C) the number of shares of Common Stock and the amount,
if any, of other property which at the time would be received upon the
conversion of a share of such series of Preferred Stock.
(h) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Series A, Series B, Series C or Series D Preferred
Stock, at least ten (10) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
(i) Reservation of Stock Issuable Upon Conversion. The
---------------------------------------------
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A, Series B, Series C and Series D
Preferred Stock, such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares of such
series of Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of such series of Preferred Stock, in addition to
such other remedies as shall be available to the holder of such Preferred Stock,
the Corporation will take such corporate action as may, in the
-7-
<PAGE>
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval of any necessary amendment to these articles.
(j) Notices. Any notice required by the provisions of this
-------
Section 4 to be given to the holders of shares of Series A, Series B, Series C
or Series D Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, and addressed to each holder of record at his
address appearing on the books of the Corporation.
5. Voting Rights. The holder of each share of Series A, Series B,
-------------
Series C or Series D Preferred Stock shall have the right to one vote for each
share of Common Stock into which such Preferred Stock could then be converted,
and with respect to such vote, such holder shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common Stock, and
shall be entitled, notwithstanding any provision hereof, to notice of any
shareholders' meeting in accordance with the bylaws of the Corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote.
Fractional votes shall not, however, be permitted and any fractional voting
rights available on an as-converted basis (after aggregating all shares into
which shares of Series A, Series B, Series C or Series D Preferred Stock held by
each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward).
6. Protective Provisions. So long as at least 4,500,000 shares of
---------------------
Preferred Stock are outstanding (as adjusted for stock splits, stock dividends
or recapitalizations), except as otherwise required by applicable law, the
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least seventy percent (70%) of
the then outstanding shares of Preferred Stock, voting together as a class:
(a) effect a transaction described in Section 2(c)(i) above;
(b) alter or change the rights, preferences or privileges of the
shares of Series A, Series B, Series C or Series D Preferred Stock so as to
affect adversely the shares of such series;
(c) increase the total number of authorized shares of Series A,
Series B, Series C or Series D Preferred Stock;
(d) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security, having a preference over, or being on a parity with,
the Series A, Series B, Series C or Series D Preferred Stock with respect to
voting, dividends, conversion or upon liquidation;
(e) effect a reclassification or recapitalization of the
outstanding, capital stock of the Company; or
-8-
<PAGE>
(f) amend Section 4(b)(ii) above.
7. Status of Converted Stock. In the event any shares of Preferred
-------------------------
Stock shall be converted pursuant to Section 4 hereof, the shares so converted
shall be cancelled and shall not be issuable by the Corporation. The Articles
of Incorporation of the Corporation shall be appropriately amended to effect the
corresponding reduction in the Corporation's authorized capital stock.
8. Repurchase of Shares. In connection with repurchases by the
--------------------
Corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California General Corporation Law
shall not apply in whole or in part with respect to such repurchases.
(C) Common Stock.
------------
1. Dividend Rights. Subject to the prior rights of holders of all
---------------
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the Corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
------------------
up of the Corporation, the assets of the Corporation shall be distributed as
provided in Section 2 of Division (B) of this Article III.
3. Redemption. The Common Stock is not redeemable, except pursuant
----------
to contractual arrangements.
4. Voting Rights. The holder of each share of Common Stock shall
-------------
have the right to one vote, and shall be entitled to notice of any shareholders'
meeting in accordance with the bylaws of the Corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
ARTICLE IV
(A) The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
(B) The Corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) to the fullest
extent permissible under California law.
(C) Any amendment or repeal or modification of the foregoing provisions of
this Article IV by the shareholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification."
-9-
<PAGE>
* * *
3. The foregoing amendment has been approved by the Board of Directors of
this corporation.
4. The foregoing amendment has been approved by the holders of the
requisite number of shares of this corporation in accordance with Sections 902
and 903 of the California General Corporation Law. The total number of
outstanding shares entitled to vote with respect to the foregoing amendment was
5,083,293 shares of Common Stock, 2,500,000 shares of Series A Preferred Stock,
8,275,862 shares of Series B Preferred Stock, 4,637,600 shares of Series C
Preferred Stock and 2,393,842 shares of Series D Preferred Stock. The number of
shares voting in favor of the foregoing amendment equaled or exceeded the vote
required. The percentage vote required was (i) a majority of the outstanding
shares of Common Stock, voting separately as a class, (ii) 70% of the
outstanding shares of Series A, Series B, Series C and Series D Preferred Stock,
voting separately as a class and (iii) a majority of the outstanding shares of
Common Stock and Preferred Stock, voting as a class.
-10-
<PAGE>
The undersigned certify under penalty of perjury under the laws of the
State of California that the matters set forth in this Certificate are true and
correct of our own knowledge.
Executed at Fremont, California, on February 22, 2000.
/s/ Krish Panu
---------------------
Krish Panu, President
/s/ Tae Hea Nahm
----------------------------------
Tae Hea Nahm, Secretary
-11-
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AT ROAD, INC.
The undersigned, Krish Panu and Tae Hea Nahm, hereby certify that:
1. They are the duly elected and acting President and Secretary,
respectively, of At Road, Inc., a Delaware corporation.
2. The Certificate of Incorporation of this corporation was
originally filed with the Secretary of State of Delaware on March ___, 2000
under the name of At Road, Inc.
3. The Certificate of Incorporation of this corporation shall be
amended and restated to read in full as follows:
ARTICLE I
The name of this corporation is At Road, Inc. (the "Corporation").
ARTICLE I
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
ARTICLE II
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE III
(A) The Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation is authorized to issue is one hundred five
million (105,000,000) shares, each with a par value of $0.0001 per share. One
hundred million (100,000,000) shares shall be Common Stock and five million
(5,000,000) shares shall be Preferred Stock.
(B) The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate
pursuant to the applicable law of the State of Delaware and within the
limitations and restrictions stated in this Certificate of Incorporation, to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued series of Preferred Stock and the number
of shares constituting any such series and the designation thereof, or any of
them; and to increase or decrease the number of shares of such series then
outstanding. In case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status
<PAGE>
which they had prior to the adoption of the resolution originally fixing the
number of shares of such series.
ARTICLE IV
The number of directors of the Corporation shall be fixed from time to
time by a bylaw or amendment thereof duly adopted by the Board of Directors or
stockholders.
ARTICLE V
This Article VI shall become effective only when the Corporation
qualifies for an exemption from Section 2115 of the California Corporations Code
(the "Effective Time")
On or prior to the date on which the Corporation first provides notice
of an annual meeting of the stockholders following the Effective Time, the Board
of Directors of the Corporation shall divide the directors into three classes,
as nearly equal in number as reasonably possible, designated Class I, Class II
and Class III, respectively. Directors shall be assigned to each class in
accordance with a resolution of resolutions adopted by the Board of Directors.
At the first annual meeting of stockholders or any special meeting in lieu
thereof following the Effective Time, the terms of the Class I directors shall
expire and Class I directors shall be elected for a full term of three years.
At the second annual meeting of stockholders or any special meeting in lieu
thereof following the Effective Time, the terms of the Class II directors shall
expire and Class II directors shall be elected for a full term of three years.
At the third annual meeting of stockholders or any special meeting in lieu
thereof following the Effective Time, the terms of the Class III directors shall
expire and Class III directors shall be elected for a full term of three years.
At each succeeding annual meeting of stockholders or any special meeting in lieu
thereof, the directors elected to succeed the directors of the class whose terms
expire at such meeting shall be elected for a full term of three years.
Prior to the Effective Time, the provisions of the preceding paragraph
shall not apply, and all directors shall be elected at each annual meeting of
stockholders or any special meeting in lieu thereof to hold office until the
next annual meeting or special meeting in lieu thereof.
Notwithstanding the foregoing provisions of this Article VI, each
director shall serve until his or her successor is duly elected and qualified or
until his or her death, resignation, or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent Director.
ARTICLE VI
In the election of directors, each holder of shares of any class or
series of capital stock of the Corporation shall be entitled to one vote for
each share held. No stockholder will be permitted to cumulate votes at any
election of directors.
-2-
<PAGE>
ARTICLE VII
No action shall be taken by the stockholders of the Corporation other
than at an annual or special meeting of the stockholders, upon due notice and in
accordance with the provisions of the Bylaws of the Corporation (the "Bylaws"),
and no action shall be taken by the stockholders by written consent.
ARTICLE VIII
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
ARTICLE IX
(A) Except as otherwise provided in the Bylaws, the Bylaws may be altered
or amended or new Bylaws adopted by the affirmative vote of at least 66-2/3% of
the voting power of all of the then-outstanding shares of the voting stock of
the Corporation entitled to vote. The Board of Directors of the Corporation is
expressly authorized to adopt, amend or repeal Bylaws.
(B) The directors of the Corporation need not be elected by written ballot
unless the Bylaws so provide.
(C) Advance notice of stockholder nominations for the election of
directors or of business to be brought by the stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws.
ARTICLE X
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE XI
The Corporation shall have perpetual existence.
ARTICLE XII
(A) To the fullest extent permitted by the General Corporation Law of
Delaware, as the same may be amended from time to time, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director. If
the General Corporation Law of Delaware is hereafter amended to authorize, with
the approval of a corporation's stockholders, further reductions in the
liability of a corporation's directors for breach of fiduciary duty, then a
director of the Corporation shall not
-3-
<PAGE>
be liable for any such breach to the fullest extent permitted by the General
Corporation Law of Delaware, as so amended.
(B) Any repeal or modification of the foregoing provisions of this Article
XIII shall not adversely affect any right or protection of a director of the
Corporation with respect to any acts or omissions of such director occurring
prior to such repeal or modification.
ARTICLE XIII
(A) To the fullest extent permitted by applicable law, the Corporation is
also authorized to provide indemnification of (and advancement of expenses to)
such agents (and any other persons to which Delaware law permits the Corporation
to provide indemnification) through Bylaw provisions, agreements with such
agents or other persons, vote of stockholders or disinterested directors or
otherwise, in excess of the indemnification and advancement otherwise permitted
by Section 145 of the General Corporation Law of Delaware, subject only to
limits created by applicable Delaware law (statutory or non-statutory), with
respect to actions for breach of duty to a corporation, its stockholders, and
others.
(B) Any repeal or modification of any of the foregoing provisions of this
Article XIV shall not adversely affect any right or protection of a director,
officer, agent or other person existing at the time of, or increase the
liability of any director of the Corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to such repeal or
modification."
* * *
-4-
<PAGE>
The foregoing Amended and Restated Certificate of Incorporation has
been duly adopted by this Corporation's Board of Directors and stockholders in
accordance with the applicable provisions of Sections 228, 242 and 245 of the
General Corporation Law of the State of Delaware.
Executed at ______________________, on the ____ day of March, 2000.
________________________________________
Krish Panu, President
________________________________________
Tae Hea Nahm, Secretary
-5-
<PAGE>
Exhibit 3.3
AMENDED AND RESTATED
BYLAWS
OF
@ROAD, INC.
-i-
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - CORPORATE OFFICES...........................................................1
1.1 Principal Office.............................................................1
1.2 Other Offices................................................................1
ARTICLE II - MEETINGS OF SHAREHOLDERS...................................................1
2.1 Place Of Meetings............................................................1
2.2 Annual Meeting...............................................................1
2.3 Special Meeting..............................................................2
2.4 Notice Of Shareholders' Meetings.............................................2
2.5 Manner Of Giving Notice; Affidavit Of Notice.................................3
2.6 Quorum.......................................................................3
2.7 Adjourned Meeting; Notice....................................................3
2.8 Voting.......................................................................4
2.9 Validation Of Meetings; Waiver Of Notice; Consent............................5
2.10 Shareholder Action By Written Consent Without A Meeting......................5
2.11 Record Date For Shareholder Notice, Voting, Or Giving Consents...............6
2.12 Proxies......................................................................6
2.13 Inspectors Of Election.......................................................7
ARTICLE III - DIRECTORS.................................................................8
3.1 Powers.......................................................................8
3.2 Number Of Directors..........................................................8
3.3 Election And Term Of Office Of Directors.....................................8
3.4 Resignation And Vacancies....................................................8
3.5 Place Of Meetings; Meetings By Telephone.....................................9
3.6 Regular Meetings.............................................................9
3.7 Special Meetings; Notice.....................................................9
3.8 Quorum......................................................................10
3.9 Waiver Of Notice............................................................10
3.10 Adjournment.................................................................10
3.11 Notice Of Adjournment.......................................................10
3.12 Board Action By Written Consent Without A Meeting...........................11
3.13 Fees And Compensation Of Directors..........................................11
3.14 Approval Of Loans To Officers...............................................11
ARTICLE IV - COMMITTEES................................................................11
4.1 Committees Of Directors......................................................11
4.2 Meetings And Action Of Committees............................................12
ARTICLE V - OFFICERS 12
5.1 Officers.....................................................................12
</TABLE>
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<PAGE>
TABLE OF CONTENTS
-----------------
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
5.2 Election Of Officers........................................................13
5.3 Subordinate Officers........................................................13
5.4 Removal And Resignation Of Officers.........................................13
5.5 Vacancies In Offices........................................................13
5.6 Chairman Of The Board.......................................................13
5.7 President...................................................................13
5.8 Vice Presidents.............................................................14
5.9 Secretary...................................................................14
5.10 Chief Financial Officer.....................................................14
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS.......15
6.1 Indemnification Of Directors And Officers...................................15
6.2 Indemnification Of Others...................................................15
6.3 Payment Of Expenses In Advance..............................................16
6.4 Indemnity Not Exclusive.....................................................16
6.5 Insurance Indemnification...................................................16
6.6 Conflicts...................................................................16
ARTICLE VII - RECORDS AND REPORTS......................................................17
7.1 Maintenance And Inspection Of Share Register................................17
7.2 Maintenance And Inspection Of Bylaws........................................17
7.3 Maintenance And Inspection Of Other Corporate Records.......................18
7.4 Inspection By Directors.....................................................18
7.5 Annual Report To Shareholders; Waiver.......................................18
7.6 Financial Statements........................................................18
7.7 Representation Of Shares Of Other Corporations..............................19
ARTICLE VIII - GENERAL MATTERS.........................................................19
8.1 Record Date For Purposes Other Than Notice And Voting.......................19
8.2 Checks; Drafts; Evidences Of Indebtedness...................................20
8.3 Corporate Contracts And Instruments; How Executed...........................20
8.4 Certificates For Shares.....................................................20
8.5 Lost Certificates...........................................................20
8.6 Construction; Definitions...................................................21
ARTICLE IX - AMENDMENTS................................................................21
9.1 Amendment By Shareholders...................................................21
9.2 Amendment By Directors......................................................21
</TABLE>
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<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
@ROAD, INC.
ARTICLE I
CORPORATE OFFICES
-----------------
1.1 Principal Office.
----------------
The Board of Directors shall fix the location of the principal
executive office of the corporation at any place within or outside the State of
California. If the principal executive office is located outside such state and
the corporation has one or more business offices in such state, then the Board
of Directors shall fix and designate a principal business office in the State of
California.
1.2 Other Offices.
-------------
The Board of Directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
------------------------
2.1 Place Of Meetings.
-----------------
Meetings of shareholders shall be held at any place within or outside
the State of California designated by the Board of Directors. In the absence of
any such designation, shareholders' meetings shall be held at the principal
executive office of the corporation.
2.2 Annual Meeting.
--------------
The annual meeting of shareholders shall be held each year on a date
and at a time designated by the Board of Directors. In the absence of such
designation, the annual meeting of shareholders shall be held on the first day
of November. However, if such day falls on a legal holiday, then the meeting
shall be held at the same time and place on the next succeeding full business
day. At the meeting, directors shall be elected, and any other proper business
may be transacted.
<PAGE>
2.3 Special Meeting.
---------------
A special meeting of the shareholders may be called at any time by the
Board of Directors, or by the chairman of the board, or by the president, or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
Board of Directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the chairman of the board, the president, any vice president or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the shareholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will
be held at the time requested by the person or persons calling the meeting, so
long as that time is not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, then the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the Board of Directors may be held.
2.4 Notice Of Shareholders' Meetings.
--------------------------------
All notices of meetings of shareholders shall be sent or otherwise
given in accordance with Section 2.5 of these bylaws not less than ten (10) (or,
if sent by third-class mail pursuant to Section 2.5 of these bylaws, thirty
(30)) nor more than sixty (60) days before the date of the meeting. The notice
shall specify the place, date, and hour of the meeting and (a) in the case of a
special meeting, the general nature of the business to be transacted (no
business other than that specified in the notice may be transacted) or (b) in
the case of the annual meeting, those matters which the Board of Directors, at
the time of giving the notice, intends to present for action by the shareholders
(but subject to the provisions of the next paragraph of this Section 2.4 any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.
If action is proposed to be taken at any meeting for approval of (a) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California (the
"Code"), (b) an amendment of the articles of incorporation, pursuant to Section
902 of the Code, (c) a reorganization of the corporation, pursuant to Section
1201 of the Code, (d) a voluntary dissolution of the corporation, pursuant to
Section 1900 of the Code, or (e) a distribution in dissolution other than in
accordance with the rights of outstanding preferred shares, pursuant to Section
2007 of the Code, then the notice shall also state the general nature of that
proposal.
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<PAGE>
2.5 Manner Of Giving Notice; Affidavit Of Notice.
--------------------------------------------
Written notice of any meeting of shareholders shall be given either
(a) personally or (b) by first-class mail or (c) by third-class mail but only if
the corporation has outstanding shares held of record by five hundred (500) or
more persons (determined as provided in Section 605 of the Code) on the record
date for the shareholders' meeting, or (d) by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by mail or telegraphic or other written communication
to the corporation's principal executive office, or if published at least once
in a newspaper of general circulation in the county where that office is
located. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or other means of
written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, then all future notices or reports shall be deemed to have been
duly given without further mailing if the same shall be available to the
shareholder on written demand of the shareholder at the principal executive
office of the corporation for a period of one (1) year from the date of the
giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.6 Quorum.
------
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote thereat constitutes a quorum for the transaction of
business at all meetings of shareholders. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
2.7 Adjourned Meeting; Notice.
-------------------------
Any shareholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time by the vote of the majority of
the shares represented at that meeting, either in person or by proxy. In the
absence of a quorum, no other business may be transacted at that meeting except
as provided in Section 2.6 of these bylaws.
When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are
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<PAGE>
announced at the meeting at which the adjournment is taken. However, if a new
record date for the adjourned meeting is fixed or if the adjournment is for more
than forty-five (45) days from the date set for the original meeting, then
notice of the adjourned meeting shall be given. Notice of any such adjourned
meeting shall be given to each shareholder of record entitled to vote at the
adjourned meeting in accordance with the provisions of Sections 2.4 and 2.5 of
these bylaws. At any adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting.
2.8 Voting.
------
The shareholders entitled to vote at any meeting of shareholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 702 through 704 of the Code (relating to
voting shares held by a fiduciary, in the name of a corporation or in joint
ownership).
The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder at the meeting and before the voting has begun.
Except as provided in the last paragraph of this Section 2.8, or as
may be otherwise provided in the articles of incorporation, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote of the shareholders. Any shareholder entitled to vote on any
matter may vote part of the shares in favor of the proposal and refrain from
voting the remaining shares or, except when the matter is the election of
directors, may vote them against the proposal; but, if the shareholder fails to
specify the number of shares which the shareholder is voting affirmatively, it
will be conclusively presumed that the shareholder's approving vote is with
respect to all shares which the shareholder is entitled to vote.
If a quorum is present, the affirmative vote of the majority of the
shares represented and voting at a duly held meeting (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number or a vote by
classes is required by the Code or by the articles of incorporation.
At a shareholders' meeting at which directors are to be elected, a
shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which such shareholder normally
is entitled to cast) if the candidates' names have been placed in nomination
prior to commencement of the voting and the shareholder has given notice prior
to commencement of the voting of the shareholder's intention to cumulate votes.
If any shareholder has given such a notice, then every shareholder entitled to
vote may cumulate votes for candidates in nomination either (a) by giving one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which that shareholder's shares are
normally entitled or (b) by distributing the shareholder's votes on the same
principle among any or all of the candidates, as the shareholder thinks fit.
The candidates receiving the highest number of affirmative votes, up to the
number of directors to be elected, shall be elected; votes against any candidate
and votes withheld shall have no legal effect.
-4-
<PAGE>
2.9 Validation Of Meetings; Waiver Of Notice; Consent.
-------------------------------------------------
The transactions of any meeting of shareholders, either annual or
special, however called and noticed, and wherever held, shall be as valid as
though taken at a meeting duly held after regular call and notice, if a quorum
is present either in person or by proxy, and if, either before or after the
meeting, each person entitled to vote, who was not present in person or by
proxy, signs a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes thereof. The waiver of notice or consent
or approval need not specify either the business to be transacted or the purpose
of any annual or special meeting of shareholders, except that if action is taken
or proposed to be taken for approval of any of those matters specified in the
second paragraph of Section 2.4 of these bylaws, the waiver of notice or consent
or approval shall state the general nature of the proposal. All such waivers,
consents, and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by the Code to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.
2.10 Shareholder Action By Written Consent Without A Meeting.
-------------------------------------------------------
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take that action at a meeting at which all
shares entitled to vote on that action were present and voted.
In the case of election of directors, such a consent shall be
effective only if signed by the holders of all outstanding shares entitled to
vote for the election of directors. However, a director may be elected at any
time to fill any vacancy on the Board of Directors, provided that it was not
created by removal of a director and that it has not been filled by the
directors, by the written consent of the holders of a majority of the
outstanding shares entitled to vote for the election of directors.
All such consents shall be maintained in the corporate records. Any
shareholder giving a written consent, or the shareholder's proxy holders, or a
transferee of the shares, or a personal representative of the shareholder, or
their respective proxy holders, may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders has not been received, then the secretary shall give prompt notice
of the corporate action approved by the shareholders without a meeting. Such
notice shall be given to those shareholders entitled to vote who have
-5-
<PAGE>
not consented in writing and shall be given in the manner specified in Section
2.5 of these bylaws. In the case of approval of (a) a contract or transaction in
which a director has a direct or indirect financial interest, pursuant to
Section 310 of the Code, (b) indemnification of a corporate "agent," pursuant to
Section 317 of the Code, (c) a reorganization of the corporation, pursuant to
Section 1201 of the Code, or (d) a distribution in dissolution other than in
accordance with the rights of outstanding preferred shares, pursuant to Section
2007 of the Code, the notice shall be given at least ten (10) days before the
consummation of any action authorized by that approval.
2.11 Record Date For Shareholder Notice, Voting, Or Giving Consents.
--------------------------------------------------------------
For purposes of determining the shareholders entitled to notice of
any meeting or to vote thereat or entitled to give consent to corporate action
without a meeting, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such meeting nor more than sixty (60) days before any such
action without a meeting, and in such event only shareholders of record on the
date so fixed are entitled to notice and to vote or to give consents, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the Code.
If the Board of Directors does not so fix a record date:
(a) the record date for determining shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close of business on
the business day next preceding the day on which notice is given or, if notice
is waived, at the close of business on the business day next preceding the day
on which the meeting is held; and
(b) the record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, (i) when no prior
action by the board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action by the board has been taken, shall
be at the close of business on the day on which the board adopts the resolution
relating to that action, or the sixtieth (60th) day before the date of such
other action, whichever is later.
The record date for any other purpose shall be as provided in Article
VIII of these bylaws.
2.12 Proxies.
-------
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation. A proxy shall be deemed signed if the shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the shareholder or the shareholder's attorney-in-
fact. A validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (a) the person who executed the proxy
revokes it prior to the time of voting by delivering a writing to the
corporation stating that the proxy is revoked or by executing a
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<PAGE>
subsequent proxy and presenting it to the meeting or by voting in person at the
meeting, or (b) written notice of the death or incapacity of the maker of that
proxy is received by the corporation before the vote pursuant to that proxy is
counted; provided, however, that no proxy shall be valid after the expiration of
eleven (11) months from the date of the proxy, unless otherwise provided in the
proxy. The dates contained on the forms of proxy presumptively determine the
order of execution, regardless of the postmark dates on the envelopes in which
they are mailed. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Sections 705(e) and 705(f) of
the Code.
2.13 Inspectors Of Election.
----------------------
Before any meeting of shareholders, the Board of Directors may
appoint an inspector or inspectors of election to act at the meeting or its
adjournment. If no inspector of election is so appointed, then the chairman of
the meeting may, and on the request of any shareholder or a shareholder's proxy
shall, appoint an inspector or inspectors of election to act at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at a meeting pursuant to the request of one (1) or more shareholders
or proxies, then the holders of a majority of shares or their proxies present at
the meeting shall determine whether one (l) or three (3) inspectors are to be
appointed. If any person appointed as inspector fails to appear or fails or
refuses to act, then the chairman of the meeting may, and upon the request of
any shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy.
Such inspectors shall:
(a) determine the number of shares outstanding and the voting power
of each, the number of shares represented at the meeting, the existence of a
quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots or consents;
(c) hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
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<PAGE>
ARTICLE III
DIRECTORS
---------
3.1 Powers.
------
Subject to the provisions of the Code and any limitations in the
articles of incorporation and these bylaws relating to actions required to be
approved by the shareholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the Board of Directors.
3.2 Number Of Directors.
-------------------
The authorized number of directors of the corporation shall be six
(6). The number of directors may be changed by a duly adopted amendment to the
articles of incorporation or by an amendment to this bylaw adopted by the vote
or written consent of holders of a majority of the outstanding shares entitled
to vote; provided, however, that an amendment reducing the fixed number or the
minimum number of directors to a number less than five (5) cannot be adopted if
the votes cast against its adoption at a meeting, or the shares not consenting
in the case of an action by written consent, are equal to more than sixteen and
two-thirds percent (16-2/3%) of the outstanding shares entitled to vote thereon.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 Election And Term Of Office Of Directors.
----------------------------------------
Directors shall be elected at each annual meeting of shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
3.4 Resignation And Vacancies.
-------------------------
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the Board of Directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
Board of Directors may elect a successor to take office when the resignation
becomes effective.
Vacancies in the Board of Directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute a majority of the required quorum), or by the unanimous written
consent of all shares
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<PAGE>
entitled to vote thereon. Each director so elected shall hold office until the
next annual meeting of the shareholders and until a successor has been elected
and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to
exist (a) in the event of the death, resignation or removal of any director, (b)
if the Board of Directors by resolution declares vacant the office of a director
who has been declared of unsound mind by an order of court or convicted of a
felony, (c) if the authorized number of directors is increased, or (d) if the
shareholders fail, at any meeting of shareholders at which any director or
directors are elected, to elect the number of directors to be elected at that
meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors, but any such election
other than to fill a vacancy created by removal, if by written consent, shall
require the consent of the holders of a majority of the outstanding shares
entitled to vote thereon.
3.5 Place Of Meetings; Meetings By Telephone.
----------------------------------------
Regular meetings of the Board of Directors may be held at any place
within or outside the State of California that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of California that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting, regular or special, may be held by conference telephone
or similar communication equipment, so long as all directors participating in
the meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
3.6 Regular Meetings.
----------------
Regular meetings of the Board of Directors may be held without notice
if the times of such meetings are fixed by the Board of Directors.
3.7 Special Meetings; Notice.
------------------------
Special meetings of the Board of Directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone (including a voice messaging system or other system
or technology designed to record and communicate messages), facsimile,
electronic mail, or other electronic means, to each director or sent by first-
class mail or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telegram, facsimile, electronic mail or
other electronic means, it shall be delivered at least forty-eight (48) hours
before the time of the holding of the
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<PAGE>
meeting. Any oral notice given personally or by telephone, facsimile or
electronic mail may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose or the place of the meeting, if the meeting is to be held at the
principal executive office of the corporation.
3.8 Quorum.
------
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.10 of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the Board of Directors, subject to the provisions of
Section 310 of the Code (as to approval of contracts or transactions in which a
director has a direct or indirect material financial interest), Section 311 of
the Code (as to appointment of committees), Section 317(e) of the Code (as to
indemnification of directors), the articles of incorporation, and other
applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 Waiver Of Notice.
----------------
Notice of a meeting need not be given to any director (a) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or (b) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such director. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the Board of Directors.
3.10 Adjournment.
-----------
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting to another time and place.
3.11 Notice Of Adjournment.
---------------------
Notice of the time and place of holding an adjourned meeting need not
be given unless the meeting is adjourned for more than twenty-four (24) hours.
If the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section 3.7 of these bylaws, to
the directors who were not present at the time of the adjournment.
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<PAGE>
3.12 Board Action By Written Consent Without A Meeting.
-------------------------------------------------
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
Board of Directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board.
3.13 Fees And Compensation Of Directors.
----------------------------------
Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the Board of Directors. This Section 3.13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.14 Approval Of Loans To Officers.
-----------------------------
The corporation may make loans of money or property to, or guarantee
the obligations of, any officer or director of the corporation to the extent
permitted by applicable law. Without limiting the foregoing, the corporation
may, upon the approval of the Board of Directors alone, make loans of money or
property to, or guarantee the obligations of, any officer of the corporation or
its parent or subsidiary, whether or not a director, or adopt an employee
benefit plan or plans authorizing such loans or guaranties provided that (a) the
Board of Directors determines that such a loan or guaranty or plan may
reasonably be expected to benefit the corporation, (b) the corporation has
outstanding shares held of record by 100 or more persons (determined as provided
in Section 605 of the Code) on the date of approval by the Board of Directors,
and (c) the approval of the Board of Directors is by a vote sufficient without
counting the vote of any interested director or directors.
ARTICLE IV
COMMITTEES
----------
4.1 Committees Of Directors.
-----------------------
The Board of Directors may, by resolution adopted by a majority of
the authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee.
The appointment of members or alternate members of a committee requires the vote
of a majority of the authorized number of directors. Any committee, to the
extent provided in the resolution of the board, shall have all the authority of
the board, except with respect to:
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(a) the approval of any action which, under the Code, also requires
shareholders' approval or approval of the outstanding shares;
(b) the filling of vacancies on the Board of Directors or in any
committee;
(c) the fixing of compensation of the directors for serving on the
board or any committee;
(d) the amendment or repeal of these bylaws or the adoption of new
bylaws;
(e) the amendment or repeal of any resolution of the Board of
Directors which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the corporation, except at
a rate or in a periodic amount or within a price range determined by the Board
of Directors; or
(g) the appointment of any other committees of the Board of Directors
or the members of such committees.
4.2 Meetings And Action Of Committees.
---------------------------------
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and Section
3.12 (action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the Board of
Directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the Board of Directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the Board of Directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The Board of Directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
ARTICLE V
OFFICERS
--------
5.1 Officers.
--------
The officers of the corporation shall be a president, a secretary, and
a chief financial officer. The corporation may also have, at the discretion of
the Board of Directors, a chairman of the board, one or more vice presidents,
one or more assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
5.3 of these bylaws. Any number of offices may be held by the same person.
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<PAGE>
5.2 Election Of Officers.
--------------------
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board, subject to the rights, if any, of an
officer under any contract of employment. Any contract of employment with an
officer shall be unenforceable unless in writing and specifically authorized by
the Board of Directors.
5.3 Subordinate Officers.
--------------------
The Board of Directors may appoint, or may empower the president to
appoint, such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the Board of Directors may
from time to time determine.
5.4 Removal And Resignation Of Officers.
-----------------------------------
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
Board of Directors at any regular or special meeting of the board or, except in
case of an officer chosen by the Board of Directors, by any officer upon whom
such power of removal may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 Vacancies In Offices.
--------------------
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 Chairman Of The Board.
---------------------
The chairman of the board, if such an officer is elected, shall, if
present, preside at meetings of the Board of Directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
Board of Directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 President.
---------
Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the chairman of the board, if there is such an officer,
the president shall be the chief
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<PAGE>
executive officer of the corporation and shall, subject to the control of the
Board of Directors, have general supervision, direction, and control of the
business and the officers of the corporation. He or she shall preside at all
meetings of the shareholders and, in the absence or nonexistence of a chairman
of the board, at all meetings of the Board of Directors. The President shall
have the general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or these bylaws.
5.8 Vice Presidents.
---------------
In the absence or disability of the president, the vice presidents,
if any, in order of their rank as fixed by the Board of Directors or, if not
ranked, a vice president designated by the Board of Directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the Board of Directors, these bylaws,
the president or the chairman of the board.
5.9 Secretary.
---------
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the Board of
Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and shareholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the Board of
Directors, a share register, or a duplicate share register, showing the names of
all shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of the shareholders and of the Board of Directors required to be given
by law or by these bylaws. He or she shall keep the seal of the corporation, if
any, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors or by these bylaws.
5.10 Chief Financial Officer.
-----------------------
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts,
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disbursements, gains, losses, capital, retained earnings, and shares. The books
of account shall at all reasonable times be open to inspection by any director.
The chief financial officer shall deposit all money and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the Board of Directors. He or she shall
disburse the funds of the corporation as may be ordered by the Board of
Directors, shall render to the president and directors, whenever they request
it, an account of all of his or her transactions as chief financial officer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the Board of Directors or
these bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
--------------------------------------------------
AND OTHER AGENTS
----------------
6.1 Indemnification Of Directors And Officers.
-----------------------------------------
The corporation shall, to the maximum extent and in the manner
permitted by the Code, indemnify each of its directors and officers against
expenses (as defined in Section 317(a) of the Code), judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any proceeding (as defined in Section 317(a) of the Code), arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Article VI, a "director" or "officer" of the corporation
includes any person (a) who is or was a director or officer of the corporation,
(b) who is or was serving at the request of the corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or (c) who was a director or officer of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
6.2 Indemnification Of Others.
-------------------------
The corporation shall have the power, to the extent and in the manner
permitted by the Code, to indemnify each of its employees and agents (other than
directors and officers) against expenses (as defined in Section 317(a) of the
Code), judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding (as defined in Section 317(a) of the
Code), arising by reason of the fact that such person is or was an agent of the
corporation. For purposes of this Article VI, an "employee" or "agent" of the
corporation (other than a director or officer) includes any person (a) who is or
was an employee or agent of the corporation, (b) who is or was serving at the
request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (c) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
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<PAGE>
6.3 Payment Of Expenses In Advance.
------------------------------
Expenses incurred in defending any civil or criminal action or
proceeding for which indemnification is required pursuant to Section 6.1 or for
which indemnification is permitted pursuant to Section 6.2 following
authorization thereof by the Board of Directors shall be paid by the corporation
in advance of the final disposition of such action or proceeding upon receipt of
an undertaking by or on behalf of the indemnified party to repay such amount if
it shall ultimately be determined that the indemnified party is not entitled to
be indemnified as authorized in this Article VI.
6.4 Indemnity Not Exclusive.
-----------------------
The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the articles of
incorporation.
6.5 Insurance Indemnification.
-------------------------
The corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation against any liability asserted against or incurred by
such person in such capacity or arising out of such person's status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.
6.6 Conflicts.
---------
No indemnification or advance shall be made under this Article VI,
except where such indemnification or advance is mandated by law or the order,
judgment or decree of any court of competent jurisdiction, in any circumstance
where it appears:
(1) That it would be inconsistent with a provision of the articles of
incorporation, these bylaws, a resolution of the shareholders or an agreement in
effect at the time of the accrual of the alleged cause of the action asserted in
the proceeding in which the expenses were incurred or other amounts were paid,
which prohibits or otherwise limits indemnification; or
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
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<PAGE>
ARTICLE VII
RECORDS AND REPORTS
-------------------
7.1 Maintenance And Inspection Of Share Register.
--------------------------------------------
The corporation shall keep either at its principal executive office or
at the office of its transfer agent or registrar (if either is appointed), as
determined by resolution of the Board of Directors, a record of its shareholders
listing the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who hold at least one percent (1%) of such voting shares and have
filed a Schedule 14A with the Securities and Exchange Commission relating to the
election of directors, may (a) inspect and copy the records of shareholders'
names, addresses, and shareholdings during usual business hours on five (5)
days' prior written demand on the corporation, (b) obtain from the transfer
agent of the corporation, on written demand and on the tender of such transfer
agent's usual charges for such list, a list of the names and addresses of the
shareholders who are entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which that list has been
compiled or as of a date specified by the shareholder after the date of demand.
Such list shall be made available to any such shareholder by the transfer agent
on or before the later of five (5) days after the demand is received or five (5)
days after the date specified in the demand as the date as of which the list is
to be compiled.
The record of shareholders shall also be open to inspection on the
written demand of any shareholder or holder of a voting trust certificate, at
any time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as the holder of a voting trust
certificate.
Any inspection and copying under this Section 7.1 may be made in
person or by an agent or attorney of the shareholder or holder of a voting trust
certificate making the demand.
7.2 Maintenance And Inspection Of Bylaws.
------------------------------------
The corporation shall keep at its principal executive office or, if
its principal executive office is not in the State of California, at its
principal business office in California the original or a copy of these bylaws
as amended to date, which bylaws shall be open to inspection by the shareholders
at all reasonable times during office hours. If the principal executive office
of the corporation is outside the State of California and the corporation has no
principal business office in such state, then the secretary shall, upon the
written request of any shareholder, furnish to that shareholder a copy of these
bylaws as amended to date.
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<PAGE>
7.3 Maintenance And Inspection Of Other Corporate Records.
-----------------------------------------------------
The accounting books and records and the minutes of proceedings of the
shareholders, of the Board of Directors, and of any committee or committees of
the Board of Directors shall be kept at such place or places as are designated
by the Board of Directors or, in absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written form,
and the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form.
The minutes and accounting books and records shall be open to
inspection upon the written demand of any shareholder or holder of a voting
trust certificate, at any reasonable time during usual business hours, for a
purpose reasonably related to the holder's interests as a shareholder or as the
holder of a voting trust certificate. The inspection may be made in person or by
an agent or attorney and shall include the right to copy and make extracts. Such
rights of inspection shall extend to the records of each subsidiary corporation
of the corporation.
7.4 Inspection By Directors.
-----------------------
Every director shall have the absolute right at any reasonable time to
inspect all books, records, and documents of every kind as well as the physical
properties of the corporation and each of its subsidiary corporations. Such
inspection by a director may be made in person or by an agent or attorney. The
right of inspection includes the right to copy and make extracts of documents.
7.5 Annual Report To Shareholders; Waiver.
-------------------------------------
The Board of Directors shall cause an annual report to be sent to the
shareholders not later than one hundred twenty (120) days after the close of the
fiscal year adopted by the corporation. Such report shall be sent at least
fifteen (15) days (or, if sent by third-class mail, thirty-five (35) days)
before the annual meeting of shareholders to be held during the next fiscal year
and in the manner specified in Section 2.5 of these bylaws for giving notice to
shareholders of the corporation.
The annual report shall contain (a) a balance sheet as of the end of
the fiscal year, (b) an income statement, (c) a statement of changes in
financial position for the fiscal year, and (d) any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without audit from
the books and records of the corporation.
The foregoing requirement of an annual report shall be waived so long
as the shares of the corporation are held by fewer than one hundred (100)
holders of record.
7.6 Financial Statements.
--------------------
If no annual report for the fiscal year has been sent to shareholders,
then the corporation shall, upon the written request of any shareholder made
more than one hundred
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<PAGE>
twenty (120) days after the close of such fiscal year, deliver or mail to the
person making the request, within thirty (30) days thereafter, a copy of a
balance sheet as of the end of such fiscal year and an income statement and
statement of changes in financial position for such fiscal year.
If a shareholder or shareholders holding at least five percent (5%) of
the outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and for a
balance sheet of the corporation as of the end of that period, then the chief
financial officer shall cause such statement or statements to be prepared, if
not already prepared, and shall deliver personally or mail such statement or
statements to the person making the request within thirty (30) days after the
receipt of the request. If the corporation has not sent to the shareholders its
annual report for the last fiscal year, the statements referred to in the first
paragraph of this Section 7.6 shall likewise be delivered or mailed to the
shareholder or shareholders within thirty (30) days after the request.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or by the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
7.7 Representation Of Shares Of Other Corporations.
----------------------------------------------
The chairman of the board, the president, any vice president, the
chief financial officer, the secretary or assistant secretary of this
corporation, or any other person authorized by the Board of Directors or the
president or a vice president, is authorized to vote, represent, and exercise on
behalf of this corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this corporation. The
authority herein granted may be exercised either by such person directly or by
any other person authorized to do so by proxy or power of attorney duly executed
by the person having such authority.
ARTICLE VIII
GENERAL MATTERS
---------------
8.1 Record Date For Purposes Other Than Notice And Voting.
-----------------------------------------------------
For purposes of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any other lawful
action (other than action by shareholders by written consent without a meeting),
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty (60) days before any such action. In that case, only
shareholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided in the Code.
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<PAGE>
If the Board of Directors does not so fix a record date, then the
record date for determining shareholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable resolution
or the sixtieth (60th) day before the date of that action, whichever is later.
8.2 Checks; Drafts; Evidences Of Indebtedness.
-----------------------------------------
From time to time, the Board of Directors shall determine by
resolution which person or persons may sign or endorse all checks, drafts, other
orders for payment of money, notes or other evidences of indebtedness that are
issued in the name of or payable to the corporation, and only the persons so
authorized shall sign or endorse those instruments.
8.3 Corporate Contracts And Instruments; How Executed.
-------------------------------------------------
The Board of Directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the Board of Directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.4 Certificates For Shares.
-----------------------
A certificate or certificates for shares of the corporation shall be
issued to each shareholder when any of such shares are fully paid. The Board of
Directors may authorize the issuance of certificates for shares partly paid
provided that these certificates shall state the total amount of the
consideration to be paid for them and the amount actually paid. All certificates
shall be signed in the name of the corporation by the chairman of the board or
the vice chairman of the board or the president or a vice president and by the
chief financial officer or an assistant treasurer or the secretary or an
assistant secretary, certifying the number of shares and the class or series of
shares owned by the shareholder. Any or all of the signatures on the certificate
may be facsimile.
In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed on a certificate ceases to be that
officer, transfer agent or registrar before that certificate is issued, it may
be issued by the corporation with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.
8.5 Lost Certificates.
-----------------
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The Board of
Directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; in such
case, the
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<PAGE>
board may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.6 Construction; Definitions.
-------------------------
Unless the context requires otherwise, the general provisions, rules
of construction, and definitions in the Code shall govern the construction of
these bylaws. Without limiting the generality of this provision, the singular
number includes the plural, the plural number includes the singular, and the
term "person" includes both a corporation and a natural person.
ARTICLE IX
AMENDMENTS
----------
9.1 Amendment By Shareholders.
-------------------------
New bylaws may be adopted or these bylaws may be amended or repealed
by the vote or written consent of holders of a majority of the outstanding
shares entitled to vote; provided, however, that if the articles of
incorporation of the corporation set forth the number of authorized directors of
the corporation, then the authorized number of directors may be changed only by
an amendment of the articles of incorporation.
9.2 Amendment By Directors.
----------------------
Subject to the rights of the shareholders as provided in Section 9.1
of these bylaws, bylaws, other than a bylaw or an amendment of a bylaw changing
the authorized number of directors (except to fix the authorized number of
directors pursuant to a bylaw providing for a variable number of directors), may
be adopted, amended or repealed by the Board of Directors.
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<PAGE>
CERTIFICATE OF AMENDMENT
OF BYLAWS OF
@ROAD, INC.
The undersigned, Tae Hea Nahm, hereby certifies that:
1. I am the duly elected and incumbent Secretary of @Road, Inc., a
California corporation (the "Company").
-------
2. By action of the Board of Directors of the Company duly adopted
pursuant to Action by Unanimous Written Consent effective as of September 2,
1998, and by Action by Written consent of the Shareholders of the Company
effective September 4, 1998, the Bylaws of the Company were amended and restated
to read in their entirety as set forth in the form attached hereto.
3. The matters set forth in this certificate are true and correct of my
own knowledge.
Date: September 4, 1998
/s/ Tae Hea Nahm
-----------------------
Tae Hea Nahm, Secretary
<PAGE>
EXHIBIT 3.4
AMENDED AND RESTATED BYLAWS
OF
AT ROAD, INC.
(AS AMENDED AND RESTATED EFFECTIVE __________ __, ____)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - CORPORATE OFFICES................................................................................ 1
1.1 Registered Office............................................................................ 1
1.2 Other Offices................................................................................ 1
ARTICLE II - MEETINGS OF STOCKHOLDERS........................................................................ 1
2.1 Place of Meetings............................................................................ 1
2.2 Annual Meeting............................................................................... 1
2.3 Special Meeting.............................................................................. 2
2.4 Notice of Stockholder's Meetings; Affidavit of Notice........................................ 2
2.5 Advance Notice of Stockholder Nominees and Other Stockholder Proposals....................... 3
2.6 Quorum....................................................................................... 4
2.7 Adjourned Meeting; Notice.................................................................... 4
2.8 Conduct of Business.......................................................................... 4
2.9 Voting....................................................................................... 4
2.10 Waiver of Notice............................................................................. 5
2.11 Record Date for Stockholder Notice; Voting................................................... 5
2.12 Proxies...................................................................................... 5
ARTICLE III - DIRECTORS...................................................................................... 6
3.1 Powers....................................................................................... 6
3.2 Number of Directors.......................................................................... 6
3.3 Election, Qualification and Term of Office of Directors...................................... 6
3.4 Resignation and Vacancies.................................................................... 7
3.5 Place of Meetings; Meetings by Telephone..................................................... 7
3.6 Regular Meetings............................................................................. 7
3.7 Special Meetings; Notice..................................................................... 7
3.8 Quorum....................................................................................... 8
3.9 Waiver of Notice............................................................................. 8
3.10 Board Action by Written Consent Without a Meeting............................................ 8
3.11 Fees and Compensation of Directors........................................................... 9
3.12 Approval of Loans to Officers................................................................ 9
3.13 Removal of Directors......................................................................... 9
3.14 Chairman of the Board of Directors........................................................... 9
ARTICLE IV - COMMITTEES...................................................................................... 9
4.1 Committees of Directors...................................................................... 9
4.2 Committee Minutes............................................................................ 10
4.3 Meetings and Action of Committees............................................................ 10
ARTICLE V - OFFICERS......................................................................................... 11
5.1 Officers..................................................................................... 11
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
5.2 Appointment of Officers..................................................................... 11
5.3 Subordinate Officers........................................................................ 11
5.4 Removal and Resignation of Officers......................................................... 11
5.5 Vacancies in Offices........................................................................ 11
5.6 Chief Executive Officer..................................................................... 12
5.7 President................................................................................... 12
5.8 Vice Presidents............................................................................. 12
5.9 Secretary................................................................................... 12
5.10 Chief Financial Officer..................................................................... 13
5.11 Representation of Shares of Other Corporations.............................................. 13
5.12 Authority and Duties of Officers............................................................ 13
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS............................ 13
6.1 Indemnification of Directors and Officers................................................... 13
6.2 Indemnification of Others................................................................... 14
6.3 Payment of Expenses in Advance.............................................................. 14
6.4 Indemnity Not Exclusive..................................................................... 14
6.5 Insurance................................................................................... 14
6.6 Conflicts................................................................................... 15
ARTICLE VII - RECORDS AND REPORTS........................................................................... 15
7.1 Maintenance and Inspection of Records....................................................... 15
7.2 Inspection by Directors..................................................................... 16
7.3 Annual Statement to Stockholders............................................................ 16
ARTICLE VIII - GENERAL MATTERS.............................................................................. 16
8.1 Checks...................................................................................... 16
8.2 Execution of Corporate Contracts And Instruments............................................ 16
8.3 Stock Certificates; Partly Paid Shares...................................................... 16
8.4 Special Designation on Certificates......................................................... 17
8.5 Lost Certificates........................................................................... 17
8.6 Construction; Definitions................................................................... 18
8.7 Dividends................................................................................... 18
8.8 Fiscal Year................................................................................. 18
8.9 Seal........................................................................................ 18
8.10 Transfer of Stock........................................................................... 18
8.11 Stock Transfer Agreements................................................................... 18
8.12 Registered Stockholders..................................................................... 19
ARTICLE IX.................................................................................................. 19
</TABLE>
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<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
At Road, Inc.
ARTICLE I
CORPORATE OFFICES
1.1 Registered Office.
-----------------
The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street, Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.
1.2 Other Offices.
-------------
The Board of Directors may at any time establish other offices
at any place or places where the Corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
2.1 Place of Meetings.
-----------------
Meetings of stockholders shall be held at any place, within or
outside the State of Delaware, designated by the Board of Directors. In the
absence of any such designation, stockholders' meetings shall be held at the
registered office of the Corporation.
2.2 Annual Meeting.
--------------
(a) The annual meeting of stockholders shall be held each
year on a date and at a time designated by resolution of the Board of Directors.
At the meeting, directors shall be elected and any other proper business may be
transacted.
(b) Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be transacted by
the stockholders may be made at an annual meeting of stockholders (i) pursuant
to the Corporation's notice with respect to such meeting, (ii) by or at the
direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of the notice
provided for in this Section 2.2, who is entitled to vote at the meeting and who
has complied with the notice procedures set forth in this Section 2.2.
<PAGE>
(c) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (iii) of paragraph
(b) of this Section 2.2, the stockholder must have given timely notice thereof
in writing to the secretary of the Corporation, as provided in Section 2.5, and
such business must be a proper matter for stockholder action under the General
Corporation Law of Delaware.
(d) Only such business shall be conducted at an annual
meeting of stockholders as shall have been brought before the meeting in
accordance with the procedures set forth in these Bylaws. The chairman of the
meeting shall determine whether a nomination or any business proposed to be
transacted by the stockholders has been properly brought before the meeting and,
if any proposed nomination or business has not been properly brought before the
meeting, the chairman shall declare that such proposed business or nomination
shall not be presented for stockholder action at the meeting.
(e) Nothing in this Section 2.2 shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
2.3 Special Meeting.
---------------
(a) A special meeting of the stockholders may be called at
any time by the Board of Directors, the chairman of the board, the president or
by one or more stockholders holding shares in the aggregate entitled to cast not
less than [%] of the votes at that meeting.
(b) Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders, if such election is
set forth in the notice of such special meeting. Such nominations may be made
either by or at the direction of the Board of Directors, or by any stockholder
of record entitled to vote at such special meeting, provided the stockholder
follows the notice procedures set forth in Section 2.5.
2.4 Notice of Stockholder's Meetings; Affidavit of Notice.
-----------------------------------------------------
(a) All notices of meetings of stockholders shall be in
writing and shall be sent or otherwise given in accordance with this Section 2.4
of these Bylaws not less than 10 nor more than 60 days before the date of the
meeting to each stockholder entitled to vote at such meeting (or such longer or
shorter time as is required by Section 2.5 of these Bylaws, if applicable). The
notice shall specify the place, date, and hour of the meeting, and, in the case
of a special meeting, the purpose or purposes for which the meeting is called.
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the Corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
(b) If a special meeting is called by stockholders
representing the percentage of the total votes outstanding designated in Section
2.3(a), the request shall be in writing,
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specifying the time of such meeting and the general nature of the business
proposed to be transacted, and shall be delivered personally, or sent by
registered mail or by facsimile transmission to the chairman of the board, the
president, any vice president, or the secretary of the corporation. No business
may be transacted at such special meeting otherwise than specified in such
request. The officer receiving the request shall cause notice to be promptly
given to the stockholders entitled to vote, in accordance with the provisions of
this Section 2.4, that a meeting will be held at the time requested by the
person or persons calling the meeting, not less than 35 nor more than 60 days
after the receipt of the request. If the notice is not given within 20 days
after the receipt of the request, the person or persons requesting the meeting
may give the notice. Nothing contained in this Section 2.4(b) shall be construed
as limiting, fixing, or affecting the time when a meeting of stockholders called
by action of the Board of Directors may be held.
2.5 Advance Notice of Stockholder Nominees and Other Stockholder
------------------------------------------------------------
Proposals.
---------
Only persons who are nominated in accordance with the
procedures set forth in this Section 2.5 shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors or by any stockholder of the Corporation entitled to vote
for the election of directors at the meeting who complies with the notice
procedures set forth in this Section 2.5. Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the secretary of the Corporation. Stockholders may
bring other business before the annual meeting, provided that timely notice is
provided to the secretary of the Corporation in accordance with this section,
and provided further that such business is a proper matter for stockholder
action under the General Corporation Law of Delaware. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 90 days nor more
than 120 days prior to the anniversary date of the prior year's meeting;
provided, however, that in the event that (i) the date of the annual meeting is
more than 30 days prior to or more than 60 days after such anniversary date, and
(ii) less than 60 days notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such stockholder's notice shall set forth (a)
as to each person whom the stockholder proposes to nominate for election or re-
election as a directors, (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the Corporation which are
beneficially owned by such person and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934 (including, without
limitation, such person's written consent to being name in the proxy statement
as a nominee and to serving as a director if elected); (b) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of such business, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the proposal is made (i) the name and address of the stockholder, as they
appear on the Corporation's books, and of such beneficial owner and (ii) the
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class and number of shares of the Corporation which are owned of record by such
stockholder and beneficially by such beneficial owner. At the request of the
Board of Directors any person nominated by the Board of Directors for election
as a director shall furnish to the secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 2.5. The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by the Bylaws, and if he or she should so determine, he or
she shall so declare to the meeting and the defective nomination shall be
disregarded.
2.6 Quorum.
------
The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then either (a) the chairman of the meeting or (b)
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.
2.7 Adjourned Meeting; Notice.
-------------------------
When a meeting is adjourned to another time or place, unless
these Bylaws otherwise require, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the Corporation may transact any
business that might have been transacted at the original meeting. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.
2.8 Conduct of Business.
-------------------
The chairman of any meeting of stockholders shall determine
the order of business and the procedure at the meeting, including the manner of
voting and the conduct of business.
2.9 Voting.
------
(a) The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of Section
2.11 of these Bylaws, subject to the provisions of Sections 217 and 218 of the
General Corporation Law of Delaware (relating to
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voting rights of fiduciaries, pledgors and joint owners of stock and to voting
trusts and other voting agreements).
(b) Except as may be otherwise provided in the Certificate of
Incorporation, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder.
2.10 Waiver of Notice.
----------------
Whenever notice is required to be given under any provision of
the General Corporation Law of Delaware or of the Certificate of Incorporation
or these Bylaws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice unless so required by the Certificate of Incorporation or these
Bylaws.
2.11 Record Date for Stockholder Notice; Voting.
------------------------------------------
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than 60 nor less than 10 days before the date of such
meeting, nor more than 60 days prior to any other action. If the Board of
Directors does not so fix a record date:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(b) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
2.12 Proxies.
-------
Each stockholder entitled to vote at a meeting of stockholders
may authorize another person or persons to act for such stockholder by a written
proxy, signed by the stockholder and filed with the secretary of the
Corporation, but no such proxy shall be voted or
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acted upon after three years from its date, unless the proxy provides for a
longer period. A proxy shall be deemed signed if the stockholder's name is
placed on the proxy (whether by manual signature, typewriting, electronic or
telegraphic transmission or otherwise) by the stockholder or the stockholder's
attorney-in-fact. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Section 212(e) of the General
Corporation Law of Delaware.
ARTICLE III
DIRECTORS
---------
3.1 Powers.
------
Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the Certificate of Incorporation or these Bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the Corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the Board of
Directors.
3.2 Number of Directors.
-------------------
The number of directors constituting the entire Board of
Directors shall be 6.
Thereafter, this number may be changed by a resolution of the
Board of Directors or of the stockholders, subject to Section 3.4 of these
Bylaws. No reduction of the authorized number of directors shall have the effect
of removing any director before such director's term of office expires.
3.3 Election, Qualification and Term of Office of Directors.
-------------------------------------------------------
Except as provided in Section 3.4 of these Bylaws, and unless
otherwise provided in the Certificate of Incorporation, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
Certificate of Incorporation or these Bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his or her successor is elected and qualified
or until his or her earlier resignation or removal. Unless otherwise specified
in the Certificate of Incorporation, elections of directors need not be by
written ballot.
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3.4 Resignation and Vacancies.
-------------------------
Any director may resign at any time upon written notice to the
attention of the secretary of the Corporation. When one or more directors so
resigns and the resignation is effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in this section in the filling of other vacancies.
Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances, and
unless the Board of Directors otherwise determines, vacancies in the Board of
Directors resulting from one or more directors' death, resignation, retirement,
disqualification, removal from office or other cause, and newly created
directorships resulting from any increase in the authorized number of directors,
shall be filled only by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the Board of Directors, or by a sole
remaining director, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which they have been elected expires and until such director's
successor shall have been duly elected and qualified. No decrease in the number
of authorized directors constituting the Board of Directors shall shorten the
term of any incumbent director.
3.5 Place of Meetings; Meetings by Telephone.
----------------------------------------
The Board of Directors of the Corporation may hold meetings,
both regular and special, either within or outside the State of Delaware. Unless
otherwise restricted by the Certificate of Incorporation or these Bylaws,
members of the Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors, or any
committee, by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at the
meeting.
3.6 Regular Meetings.
----------------
Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board of Directors.
3.7 Special Meetings; Notice.
------------------------
Special meetings of the board of directors for any purpose or
purposes may be called at any time by the chairman of the board, the president,
any vice president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be
delivered personally or by telephone to each director or sent by first-class
mail or telegram, charges prepaid, addressed to each director at that director's
address as it is shown on the records of the Corporation. If the notice is
mailed, it shall be deposited in the United States mail at least four (4) days
before the time of the holding of the meeting. If the notice is delivered
personally or by telephone, telecopy,
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telegram, telex or other similar means of communication, it shall be delivered
at least twenty-four (24) hours before the time of the holding of the meeting,
or on such shorter notice as the person or persons calling such meeting may deem
necessary and appropriate in the circumstances. Any oral notice given personally
or by telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the place of the meeting, if the meeting is to be held at the
principal executive office of the Corporation.
3.8 Quorum.
------
At all meetings of the Board of Directors, a majority of the
authorized number of directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum is not present at any meeting of the Board of
Directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
A meeting at which a quorum is initially present may continue
to transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 Waiver of Notice.
----------------
Whenever notice is required to be given under any provision of
the General Corporation Law of Delaware or of the Certificate of Incorporation
or these Bylaws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors, or members of a committee of
directors, need be specified in any written waiver of notice unless so required
by the Certificate of Incorporation or these Bylaws.
3.10 Board Action by Written Consent Without a Meeting.
-------------------------------------------------
Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors, or of any committee thereof, may be taken
without a meeting if all members of the Board of Directors or committee, as the
case may be, consent thereto in writing and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or committee. Written
consents representing actions taken by the board or committee may be executed by
telex, telecopy or other facsimile transmission, and such facsimile shall be
valid and binding to the same extent as if it were an original.
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3.11 Fees and Compensation of Directors.
----------------------------------
Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. No such compensation shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
3.12 Approval of Loans to Officers.
-----------------------------
The Corporation may lend money to, or guarantee any obligation
of, or otherwise assist any officer or other employee of the Corporation or of
its subsidiary, including any officer or employee who is a director of the
Corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
Corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this Section 3.2 contained shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the Corporation
at common law or under any statute.
3.13 Removal of Directors.
--------------------
Unless otherwise restricted by statute, by the Certificate of
Incorporation or by these Bylaws, any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided, however,
that if the stockholders of the Corporation are entitled to cumulative voting,
if less than the entire Board of Directors is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect him if then cumulatively voted at an election of the entire Board of
Directors.
No reduction of the authorized number of directors shall have
the effect of removing any director prior to the expiration of such director's
term of office.
3.14 Chairman of the Board of Directors.
----------------------------------
The Corporation may also have, at the discretion of the Board
of Directors, a Chairman of the Board of Directors who shall not be considered
an officer of the Corporation.
ARTICLE IV
COMMITTEES
----------
4.1 Committees of Directors.
-----------------------
The Board of Directors may, by resolution passed by a majority
of the whole Board of Directors, designate one or more committees, with each
committee to consist of one or more of the directors of the Corporation. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified
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member at any meeting of the committee. In the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors or
in the Bylaws of the Corporation, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers that may require it; but no such committee shall have the
power or authority to (a) amend the Certificate of Incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
as provided in Section 151(a) of the General Corporation Law of Delaware, fix
the designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series),(b)
adopt an agreement of merger or consolidation under Sections 251 or 252 of the
General Corporation Law of Delaware, (c) recommend to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, (d) recommend to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or (e) amend the Bylaws of the Corporation; and,
unless the board resolution establishing the committee, the Bylaws or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger pursuant to Section 253
of the General Corporation Law of Delaware.
4.2 Committee Minutes.
-----------------
Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
4.3 Meetings and Action of Committees.
---------------------------------
Meetings and actions of committees shall be governed by, and
held and taken in accordance with, the provisions of Section 3.5 (place of
meetings and meetings by telephone), Section 3.6 (regular meetings), Section 3.7
(special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of
notice), and Section 3.10 (action without a meeting) of these Bylaws, with such
changes in the context of such provisions as are necessary to substitute the
committee and its members for the Board of Directors and its members; provided,
however, that the time of regular meetings of committees may be determined
either by resolution of the Board of Directors or by resolution of the
committee, that special meetings of committees may also be called by resolution
of the Board of Directors and that notice of special meetings of committees
shall also be given to all alternate members, who shall have the right to attend
all meetings of the committee. The Board of Directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
Bylaws.
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ARTICLE V
OFFICERS
--------
5.1 Officers.
--------
The officers of the Corporation shall be a chief executive
officer, a president, a secretary, and a chief financial officer. The
Corporation may also have, at the discretion of the Board of Directors, one or
more vice presidents, one or more assistant secretaries, one or more assistant
treasurers, and any such other officers as may be appointed in accordance with
the provisions of Section 5.3 of these Bylaws. Any number of offices may be held
by the same person.
5.2 Appointment of Officers.
-----------------------
The officers of the Corporation, except such officers as may
be appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
Bylaws, shall be appointed by the Board of Directors, subject to the rights, if
any, of an officer under any contract of employment.
5.3 Subordinate Officers.
--------------------
The Board of Directors may appoint, or empower the chief
executive officer or the president to appoint, such other officers and agents as
the business of the Corporation may require, each of whom shall hold office for
such period, have such authority, and perform such duties as are provided in
these Bylaws or as the Board of Directors may from time to time determine.
5.4 Removal and Resignation of Officers.
-----------------------------------
Subject to the rights, if any, of an officer under any
contract of employment, any officer may be removed, either with or without
cause, by an affirmative vote of the majority of the Board of Directors at any
regular or special meeting of the Board of Directors or, except in the case of
an officer chosen by the Board of Directors, by any officer upon whom such power
of removal may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to
the attention of the secretary of the Corporation. Any resignation shall take
effect at the date of the receipt of that notice or at any later time specified
in that notice; and, unless otherwise specified in that notice, the acceptance
of the resignation shall not be necessary to make it effective. Any resignation
is without prejudice to the rights, if any, of the Corporation under any
contract to which the officer is a party.
5.5 Vacancies in Offices.
--------------------
Any vacancy occurring in any office of the Corporation shall
be filled by the Board of Directors.
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5.6 Chief Executive Officer.
-----------------------
Subject to such supervisory powers, if any, as may be given by
the Board of Directors to the chairman of the board, if any, the chief executive
officer of the Corporation shall, subject to the control of the Board of
Directors, have general supervision, direction, and control of the business and
the officers of the Corporation. He or she shall preside at all meetings of the
stockholders and, in the absence or nonexistence of a chairman of the board, at
all meetings of the Board of Directors and shall have the general powers and
duties of management usually vested in the office of chief executive officer of
a corporation and shall have such other powers and duties as may be prescribed
by the Board of Directors or these Bylaws.
5.7 President.
---------
Subject to such supervisory powers, if any, as may be given by
the Board of Directors to the chairman of the board (if any) or the chief
executive officer, the president shall have general supervision, direction, and
control of the business and other officers of the Corporation. He or she shall
have the general powers and duties of management usually vested in the office of
president of a corporation and such other powers and duties as may be prescribed
by the Board of Directors or these Bylaws.
5.8 Vice Presidents.
---------------
In the absence or disability of the chief executive officer
and president, the vice presidents, if any, in order of their rank as fixed by
the Board of Directors or, if not ranked, a vice president designated by the
Board of Directors, shall perform all the duties of the president and when so
acting shall have all the powers of, and be subject to all the restrictions
upon, the president. The vice presidents shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the Board of Directors, these Bylaws, the president or the
chairman of the board.
5.9 Secretary.
---------
The secretary shall keep or cause to be kept, at the principal
executive office of the Corporation or such other place as the Board of
Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show the
time and place of each meeting, the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the
principal executive office of the Corporation or at the office of the
Corporation's transfer agent or registrar, as determined by resolution of the
Board Of Directors, a share register, or a duplicate share register, showing the
names of all stockholders and their addresses, the number and classes of shares
held by each, the number and date of certificates evidencing such shares, and
the number and date of cancellation of every certificate surrendered for
cancellation.
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The secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors required to be given
by law or by these Bylaws. He or she shall keep the seal of the Corporation, if
one be adopted, in safe custody and shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or by these
Bylaws.
5.10 Chief Financial Officer.
-----------------------
The chief financial officer shall keep and maintain, or cause
to be kept and maintained, adequate and correct books and records of accounts of
the properties and business transactions of the Corporation, including accounts
of its assets, liabilities, receipts, disbursements, gains, losses, capital
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. He or she shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, shall render to the president, the chief executive officer, or the
directors, upon request, an account of all his or her transactions as chief
financial officer and of the financial condition of the Corporation, and shall
have other powers and perform such other duties as may be prescribed by the
Board of Directors or the Bylaws.
5.11 Representation of Shares of Other Corporations.
----------------------------------------------
The chairman of the board, the chief executive officer, the
president, any vice president, the chief financial officer, the secretary or
assistant secretary of this Corporation, or any other person authorized by the
Board of Directors or the chief executive officer or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
Corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this Corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by the person
having such authority.
5.12 Authority and Duties of Officers.
--------------------------------
In addition to the foregoing authority and duties, all
officers of the Corporation shall respectively have such authority and perform
such duties in the management of the business of the Corporation as may be
designated from time to time by the Board of Directors or the stockholders.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
--------------------------------------------------
AND OTHER AGENTS
----------------
6.1 Indemnification of Directors and Officers.
-----------------------------------------
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<PAGE>
The Corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware, indemnify each of its
directors and officers against expenses (including attorneys' fees), judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with any proceeding, arising by reason of the fact that such person
is or was an agent of the Corporation. For purposes of this Section 6.1, a
"director" or "officer" of the Corporation includes any person (a) who is or was
a director or officer of the Corporation, (b) who is or was serving at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (c) who was a director
or officer of a Corporation which was a predecessor corporation of the
Corporation or of another enterprise at the request of such predecessor
corporation.
6.2 Indemnification of Others.
-------------------------
The Corporation shall have the power, to the maximum extent
and in the manner permitted by the General Corporation Law of Delaware, to
indemnify each of its employees and agents (other than directors and officers)
against expenses (including attorneys' fees), judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with any
proceeding, arising by reason of the fact that such person is or was an agent of
the Corporation. For purposes of this Section 6.2, an "employee" or "agent" of
the Corporation (other than a director or officer) includes any person (a) who
is or was an employee or agent of the Corporation, (b) who is or was serving at
the request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (c) who was an
employee or agent of a corporation which was a predecessor corporation of the
Corporation or of another enterprise at the request of such predecessor
corporation.
6.3 Payment of Expenses in Advance.
------------------------------
Expenses incurred in defending any action or proceeding for
which indemnification is required pursuant to Section 6.1 or for which
indemnification is permitted pursuant to Section 6.2 following authorization
thereof by the Board of Directors shall be paid by the Corporation in advance of
the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of the indemnified party to repay such amount if it
shall ultimately be determined that the indemnified party is not entitled to be
indemnified as authorized in this Article VI.
6.4 Indemnity Not Exclusive.
-----------------------
The indemnification provided by this Article VI shall not be
deemed exclusive of any other rights to which those seeking indemnification may
been titled under any Bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the Certificate of
Incorporation.
6.5 Insurance.
---------
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<PAGE>
The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of the General
Corporation Law of Delaware.
6.6 Conflicts.
---------
No indemnification or advance shall be made under this Article
VI, except where such indemnification or advance is mandated by law or the
order, judgment or decree of any court of competent jurisdiction, in any
circumstance where it appears:
(a) That it would be inconsistent with a provision of the
Certificate of Incorporation, these Bylaws, a resolution of the stockholders or
an agreement in effect at the time of the accrual of the alleged cause of the
action asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition
expressly imposed by a court in approving a settlement.
ARTICLE VII
RECORDS AND REPORTS
-------------------
7.1 Maintenance and Inspection of Records.
-------------------------------------
The Corporation shall, either at its principal executive
offices or at such place or places as designated by the Board of Directors, keep
a record of its stockholders listing their names and addresses and the number
and class of shares held by each stockholder, a copy of these Bylaws as amended
to date, accounting books, and other records.
Any stockholder of record, in person or by attorney or other
agent, shall, upon written demand under oath stating the purpose thereof, have
the right during the usual hours for business to inspect for any proper purpose
the Corporation's stock ledger, a list of its stockholders, and its other books
and records and to make copies or extracts therefrom. A proper purpose shall
mean a purpose reasonably related to such person's interest as a stockholder. In
every instance where an attorney or other agent is the person who seeks the
right to inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing that authorizes the attorney or other agent to so
act on behalf of the stockholder. The demand under oath shall be directed to the
Corporation at its registered office in Delaware or at its principal place of
business.
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<PAGE>
7.2 Inspection by Directors.
-----------------------
Any director shall have the right to examine the Corporation's
stockledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his or her position as a director. The Court of
Chancery is hereby vested with the exclusive jurisdiction to determine whether a
director is entitled to the inspection sought. The Court may summarily order the
Corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 Annual Statement to Stockholders.
--------------------------------
The Board of Directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
Corporation.
ARTICLE VIII
GENERAL MATTERS
---------------
8.1 Checks.
------
From time to time, the Board of Directors shall determine by
resolution which person or persons may sign or endorse all checks, drafts, other
orders for payment of money, notes or other evidences of indebtedness that are
issued in the name of or payable to the Corporation, and only the persons so
authorized shall sign or endorse those instruments.
8.2 Execution of Corporate Contracts and Instruments.
------------------------------------------------
The Board of Directors, except as otherwise provided in these
Bylaws, may authorize any officer or officers, or agent or agents, to enter into
any contract or execute any instrument in the name of and on behalf of the
Corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the Board of Directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 Stock Certificates; Partly Paid Shares.
--------------------------------------
The shares of the Corporation shall be represented by
certificates, provided that the Board of Directors of the Corporation may
provide by resolution or resolutions that some or all of any or all classes or
series of its stock shall be uncertificated shares. Any such resolution shall
not apply to shares represented by a certificate until such certificate is
surrendered to the Corporation. Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the Corporation by
the chairman
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<PAGE>
or vice-chairman of the Board of Directors, or the chief executive officer or
the president or vice-president, and by the chief financial officer or an
assistant treasurer, or the secretary or an assistant secretary of the
Corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he or she were such officer, transfer
agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares
as partly paid and subject to call for the remainder of the consideration to be
paid therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, upon the books and records of the
Corporation in the case of uncertificated partly paid shares, the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated. Upon the declaration of any dividend on fully paid shares, the
Corporation shall declare a dividend upon partly paid shares of the same class,
but only upon the basis of the percentage of the consideration actually paid
thereon.
8.4 Special Designation on Certificates.
-----------------------------------
If the Corporation is authorized to issue more than one class
of stock or more than one series of any class, then the powers, the
designations, the preferences, and the relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarized on the face or back of the certificate
that the Corporation shall issue to represent such class or series of stock;
provided, however, that, except as otherwise provided in Section 202 of the
General Corporation Law of Delaware, in lieu of the foregoing requirements there
may be set forth on the face or back of the certificate that the Corporation
shall issue to represent such class or series of stock a statement that the
Corporation will furnish without charge to each stockholder who so requests the
powers, the designations, the preferences, and the relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
8.5 Lost Certificates.
-----------------
Except as provided in this Section 8.5, no new certificates
for shares shall be issued to replace a previously issued certificate unless the
latter is surrendered to the Corporation and canceled at the same time. The
Corporation may issue a new certificate of stock or uncertificated shares in the
place of any certificate previously issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or the owner's legal representative, to give
the Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate or uncertificated shares.
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<PAGE>
8.6 Construction; Definitions.
-------------------------
Unless the context requires otherwise, the general provisions,
rules of construction, and definitions in the Delaware General Corporation Law
shall govern the construction of these Bylaws. Without limiting the generality
of this provision, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation and a
natural person.
8.7 Dividends.
---------
The directors of the Corporation, subject to any restrictions
contained in (a) the General Corporation Law of Delaware or (b) the Certificate
of Incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
Corporation's capital stock.
The directors of the Corporation may set apart out of any of
the funds of the Corporation available for dividends a reserve or reserves for
any proper purpose and may abolish any such reserve. Such purposes shall include
but not be limited to equalizing dividends, repairing or maintaining any
property of the Corporation, and meeting contingencies.
8.8 Fiscal Year.
-----------
The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors and may be changed by the Board of
Directors.
8.9 Seal.
----
The Corporation may adopt a corporate seal, which may be
altered at pleasure, and may use the same by causing it or a facsimile thereof,
to be impressed or affixed or in any other manner reproduced.
8.10 Transfer of Stock.
-----------------
Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 Stock Transfer Agreements.
-------------------------
The Corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the Corporation to restrict the transfer of shares of stock of the Corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
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<PAGE>
8.12 Registered Stockholders.
-----------------------
The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner, shall be entitled to hold liable for calls
and assessments the person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
----------
The Bylaws of the Corporation may be adopted, amended or
repealed by the stockholders entitled to vote; provided, however, that the
Corporation may, in its Certificate of Incorporation, confer the power to adopt,
amend or repeal Bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal Bylaws.
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<PAGE>
CERTIFICATE OF ADOPTION OF
AMENDED AND RESTATED BYLAWS
OF
At Road, Inc.
The undersigned hereby certifies that the undersigned is the
duly elected, qualified, and acting Secretary of At Road, Inc. (the
"Corporation"), and that the foregoing Amended and Restated Bylaws, comprising
20 pages, were adopted as the Bylaws of the Corporation on _____________, 2000,
by the Board of Directors of the Corporation.
Executed this _____ day of _________________, 2000.
_____________________________
Tae Hea Nahm, Secretary
<PAGE>
EXHIBIT 10.1
CDPD VALUE ADDED RESELLER AGREEMENT
This CDPD Value Added Reseller Agreement (this "Agreement"), dated as of
September 30th, 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 Vectorlink, Inc., a corporation organized under the
laws of the State of California, 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 Customer Equipment means all equipment (other than equipment
comprising portions of AT&T's CDPD network) necessary to enable Customer or its
End Users to receive the Service.
1.5 End User means the individuals or entities obtaining access to
Service from Customer.
CONFIDENTIAL & PROPRIETARY Page 1
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
<PAGE>
1.6 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.
1.7 Service means the CDPD communication service and associated support
services provided to Customer by AT&T.
1.8 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 within the Service Area as long as
the Customer Equipment is turned on and 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 in and attached to 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 an NEI Request Form, a sample of which is
attached as Exhibit E. 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, whenever possible, give
Customer prior written notice of such change. 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.
CONFIDENTIAL & PROPRIETARY Page 2
<PAGE>
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 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 violate any local
court order or regulation or would likely be offensive to the recipient or
recipients thereof.
CONFIDENTIAL & PROPRIETARY Page 3
<PAGE>
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.
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 by giving 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 attempt to notify Customer of
scheduled and unscheduled network outages that are expected to last more than
four (4) 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 AT&T policies and procedures for such connections.
Section 4. Customer Equipment
Customer will be responsible for the acquisition, programming,
installation, maintenance and repair of all 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 may increase the rates contained in the Service Plan from time
to time on sixty
CONFIDENTIAL & PROPRIETARY Page 4
<PAGE>
days (60) 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 thirty (30) days in advance of such
termination. 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.
5.2 Customer may obtain any rate that is available to a similarly situated
reseller of AT&T. Customer may at any time notify AT&T that it chooses to obtain
Service under a different Rate Sheet, provided that AT&T may, upon receipt of
notice of Customer's election, either revise Exhibit C to reflect such election
or terminate this Agreement and offer Customer a new agreement.
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. Should Customer reasonably dispute any portion of a
bill, it shall timely pay the undisputed amount. Customer shall 1) notify AT&T
in writing within fifteen (15) business days of receipt of a bill that Customer
disputes certain charges, 2) advise AT&T of the basis of its dispute and 3)
provide AT&T with such documentation as it may have to support its position.
Within fifteen (15) business days thereafter, AT&T shall provide Customer with a
written response supported by documentation. If AT&T's response indicates a
continuing dispute, within five (5) business days thereafter, Customer and AT&T
shall meet in a good faith effort to resolve the billing dispute. Both parties
agree that any claims or disputes under this Agreement will be submitted to non-
binding mediation prior to initiation of any formal legal process. Costs of
mediation will be shared equally.
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 submit certificates of resale for federal excise tax and
as 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 & PROPRIETARY Page 5
<PAGE>
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 or (b) 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, AT&T 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 AT&T will modify the Service Plan in
accordance with Customer's actual usage. If Customer is unable, during the sixty
(60) day period after AT&T's notice is sent, to satisfy the eligibility
criteria, AT&T 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, AT&T 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.
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.
CONFIDENTIAL & PROPRIETARY Page 6
<PAGE>
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 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
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
Section 10. No Warranties
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
CONFIDENTIAL & PROPRIETARY Page 7
<PAGE>
EQUIPMENT AND MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT THERETO. TO
THE EXTENT AT&T PROVIDES ACCESS TO INFORMATION PROVIDED BY OTHER SOURCES, 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 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.
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
CONFIDENTIAL & PROPRIETARY Page 8
<PAGE>
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.
CONFIDENTIAL & PROPRIETARY Page 9
<PAGE>
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
16.1 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 AT&T's prior written consent.
16.2 In all dealings with each other, End Users and third parties,
Customer and AT&T will be governed by the highest standards of honesty,
integrity, fair dealing and ethical conduct. Neither Party will engage in any
activity that may be harmful to the other Party's goodwill or may reflect
unfavorably on its marks, this prohibition includes, without limitation, the
commission of any unfair trade practice, the publication of any false,
misleading or deceptive advertising, or the commission of any fraud or
misrepresentation. Any breach of this provision shall give rise to termination
under section 7.2.1
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. Any
proceeding to enforce any rights or obligations hereunder shall be brought in
King County, Washington.
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
CONFIDENTIAL & PROPRIETARY Page 10
<PAGE>
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 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.
Vectorlink, Inc. AT&T Wireless Data, Inc.
d/b/a AT&T Wireless Services
By: /s/ Amin Mufti By: /s/ Kendra Van der Meulen
----------------------- ------------------------------
Title: VP Business Development Title: SVP & GM
----------------------- ---------------------------
Address: 41638 Christy Street Address: 10230 N.E. Points Dr.
Fremont, CA 94538 Kirkland, Washington 98033
Attn: Andy Willett
Attn: Amin Mufti (With copy to General Counsel)
CONFIDENTIAL & PROPRIETARY Page 11
<PAGE>
EXHIBIT A
Application
Customer provides and Automatic Vehicle Location (AVL) and Dispatch service to
businesses via the Internet. The purpose of this solution is to allow companies
to know the location of all vehicles in their fleet in real time. This allows
companies to make more efficient fleet management decisions.
End Users using the Customer solution track their vehicles by utilizing the
Internet. The application which tracts the vehicles actually resides on a server
at Customer's location. To get access to this server the End User would need to
have an Internet connection and some type of Internet browser such as Netscape.
The End User would then be given a password which would provide access to a
private page on the Customer web site. This page would contain the tracking and
dispatch application.
A GPS/CDPD unit is installed in the trunk of the vehicle to be tracked.
Optionally, the customer can choose the dispatch feature which provides and LCD
display that resides near the driver. The vehicle is periodically polled for its
location. The End User predefines how often a vehicle is polled based on
business requirements. The GPS unit provides the exact longitude and latitude of
the vehicle at the time of being polled. The CDPD modem then sends that data to
the AT&T CDPD network, which is then passed through the Internet to the Customer
server where the customer can view the plotted and mapped data via the web. The
application provides the exact location of the vehicle, a history of the routes
the vehicle has traveled, how fast the vehicle is traveling, etc. The End User
can also send dispatch messages to the driver of the vehicle using the same
wireless communications link. The driver can optionally respond to these
messages by using the keypad located on the LCD display.
Customer provides a turn-key solution to the End User which includes the
GPS/CDPD hardware, web based application software, AT&T network services,
installation and ongoing support. The web based tracking solution is provided on
a monthly subscription basis which includes a pre-determined amount of wireless
data usage. This amount will vary and is determined by the polling frequency
chosen by the End User. The End User may either purchase the GPS/CDPD modem or
have it added as part of the monthly subscription fee. The Customer server can
host multiple customers, each having their own private web page.
CONFIDENTIAL & PROPRIETARY Page 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*
- ----------
CONFIDENTIAL & PROPRIETARY Page 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.
CONFIDENTIAL & PROPRIETARY Page 14
<PAGE>
EXHIBIT C
Service Plan
Certificates of Resale provided for the following:
- -------------------------------------------------
Federal Excise Tax; and
States: California
Interconnection: Internet
- ---------------
Definitions:
-----------
AT&T Markets: Markets where AT&T operate wireless IP service, as indicated on
- ------------
Exhibit B.
Non AT&T Markets: Markets where Wireless IP service is available through AT&T's
- ----------------
intercarrier agreements, as indicated on Exhibit B.
UP.Link Gateway: Application layered gateway utilizing software provide by
- ---------------
Unwired Planet that provides protocol translation and proxy service to allow an
HDML device to communicate with HTML sites.
I. Standard VAR Rate Plan
Monthly Access Fee: [**] per Activated Number (not pro-rated).
- ------------------
Volume Discounts: As the volume of Customer's Numbers increases across all rate
- ----------------
plans, Customer will receive the following discounts.
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
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.
** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
II. Bucket Rate Plans
B30 Rate Plan. [**] per Number per month for [**] kilobytes of average* usage
- -------------
in AT&T's market. Any usage above the [**] kilobytes average or usage in non-
AT&T markets will be billed at [**] per kilobyte without exception.
B35 Rate Plan. [**] per Number per month for [**] kilobytes of average* usage
- -------------
in AT&T's market. Any usage above the [**] kilobytes average or usage in non-
AT&T markets will be billed at [**] per kilobyte without exception.
B40 Rate Plan. [**] per Number per month for [**] kilobytes of average* usage
- -------------
in AT&T's market. Any usage above the [**] kilobytes average or usage in non-
AT&T markets will be billed at [**] per kilobyte without exception.
*To determine average usage, AT&T will aggregate usage across all of the Numbers
in a particular Bucket Rate Plan.
III. Unlimited Usage Rate Plans
Limitations: To qualify for an Unlimited Usage Rate Plan, the Service address
- ------------
of the End User using the service must be in an AT&T Market.
Local Unlimited VAR (LUV): [**] per Number per month for unlimited usage in
- -------------------------
AT&T markets. Any usage in non-AT&T markets will be billed at [**] per kilobyte
without exception.
National Unlimited VAR (NUV). [**] per Number per month for unlimited usage
- ---------------------------
wherever Wireless IP Service is offered, whether in AT&T markets or non AT&T
markets.
Volume Discounts: As the volume of Customer's Numbers increases within these
- ----------------
rate plans, Customer will receive the following discounts.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
# of Active IPs Volume Discount*
- -------------------------------------------------------------------------------
LUV NUV
- -------------------------------------------------------------------------------
<S> <C> <C>
[**] [**] [**]
- -------------------------------------------------------------------------------
[**] [**] [**]
- -------------------------------------------------------------------------------
[**] [**] [**]
- -------------------------------------------------------------------------------
[**] [**] [**]
- -------------------------------------------------------------------------------
</TABLE>
* Volume discounts only apply to monthly access fees and not on usage fees.
** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Rate Changes: Unlimited rates are fixed for an initial twelve months term
- ------------
following activation. Increases after the initial twelve month term will be
preceded by 90 days advance notice.
IV. PocketNet Unlimited VAR (PUV) Rate Plan
Limitations: To qualify for the PUV Rate Plan, Customer must have an HDML based
- -----------
application which is described more specifically in Exhibit A.
Customer can either utilize the Wireless Data Division's (WDD) UP.Link Gateway
or provide their own UP.Link Gateway.
. If Customer chooses to utilize the WDD UP.Link gateway, Customer must
provide AT&T the URL address of their web server which will house the
information viewable by the HDML data devices accessing this server.
. If Customer chooses to utilize their own UP.Link Gateway, Customer must
provide AT&T the IP address of this UP.Link Gateway.
Pocketnet Unlimited VAR (PUV) Rate Plan: [*] per Number per month for
- ---------------------------------------
unlimited usage in AT&T markets. Any usage in non-AT&T markets and any usage
that does not go through an UP.LINK gateway will be billed at [*] per kilobyte
without exception.
Volume Discounts: As the volume of Customer's Numbers increases within the PUV
- ----------------
rate plan, Customer will receive the following discounts.
- --------------------------------------------------------------------------------
# of Active IPs Monthly Price
- --------------------------------------------------------------------------------
[*] [*]
- --------------------------------------------------------------------------------
V. VAR Government Rate Plans
Limitations: To qualify for a VAR Government Rate Plan, Customer must submit
- -----------
satisfactory proof that the entity receiving service under the plan is a
government agency and that each End User is a member of that government agency.
AT&T will make all such determinations as to eligibility in its sole discretion.
In addition, the Service address of the End User using Service must be in an
AT&T market.
Government Unlimited VAR (GUV): [*] per Number per month for unlimited usage
- ------------------------------
in AT&T markets. Any usage in non-AT&T markets will be charged at [*] per
kilobyte without exception.
* CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Volume Discounts: As the volume of Customer's Numbers increases, Customer will
- ----------------
receive the following discounts.
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
* Volume discounts only apply to monthly access fees and not on usage fees.
The following items apply for all VAR rate plans.
Reservation Fee: Customer may request a block of network addressess be reserved
- ---------------
to it prior to activation. AT&T will hold such addresses in a pool until
Customer requests activation. Customer will be charged [**] per month per
reserved, but not activated, Number. During any month in which a reserved Number
is activated, Customer will be charged only the applicable Access Fee plus any
applicable usage, and will not be charged a Reservation Fee.
Assignment Fee: A one time 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.
Billing Guidelines for Calls under All Rate Plans.
- -------------------------------------------------
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, AT&T 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. Discounts. All volume and off peak discounts will be applied to
---------
Customer's Account for the current billing cycle.
** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
5. Additional Charges: State surcharges may be charged to Customer in
------------------
addition to the charges under all Rate Plans.
6. Loss of Registration. Registration may be "lost" (i.e., involuntarily
--------------------
disconnected) for a variety of reasons, including atmospheric
conditions, topography, weak batteries, system over capacity, 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 one year of the date of this Agreement, a
minimum of 500 active Numbers.
Failure to Meet Minimum Number Requirements: In the event Customer fails to
- -------------------------------------------
achieve the minimum Number requirements at any time after the dates set forth in
this Exhibit C, 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 monthly access fee set forth in Exhibit C for each month 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
Promotional Tools: AT&T will provide Customer with up to two Numbers, at no
- -----------------
charge, with unlimited usage in AT&T markets, and up to [*] additional Numbers
at a rate of [*] per month, with unlimited usage 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 MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
EXHIBIT D
End User Disclosures
1. [END USER] EXPRESSLY UNDERSTANDS AND AGREES THAT IT HAS NO CONTRACTUAL
RELATIONSHIP WHATSOEVER WITH THE UNDERLYING WIRELESS SERVICE CARRIER AND THAT
[END USER] IS NOT A THIRD PARTY BENEFICIARY OF ANY AGREEMENT BETWEEN [CUSTOMER]
AND UNDERLYING CARRIER. IN ADDITION, [END USER] EXPRESSLY UNDERSTANDS AND AGREES
THAT THE UNDERLYING CARRIER SHALL HAVE NO LEGAL, EQUITABLE, OR OTHER LIABILITY
OF ANY KIND TO [END USER]. IN ANY EVENT, REGARDLESS OF THE FORM OF THE ACTION,
WHETHER FOR BREACH OF CONTRACT, WARRANTY, ENGLIGENCE STRICT LIABILITY IN TORT OR
OTHERWISE, [END USER's] EXCLUSIVE REMEDY AND THE TOTAL LIABILITY OF THE
UNDERLYING CARRIER ARISING IN ANY WAY IN CONNECTION WITH THIS AGREEMENT, FOR ANY
CAUSE WHATSOEVER, INCLUDING BUT NOT LIMITED TO ANY FAILURE OR DISRUPTION OF
SERVICE PROVIDED HEREUNDER, IS LIMITED TO PAYMENT OF DAMAGES IN AN AMOUNT EQUAL
TO THE PORTION OF THE MONTHLY CHARGES TO [END USER] FOR THE SERVICES RELATING TO
THE PERIOD OF SERVICE DURING WHICH SAID DAMAGES OCCUR.
2. [END USER] SHALL INDEMNIFY AND HOLD HARMLESS THE UNDERLYING WIRELESS
SERVICE CARRIER SUPPLYING SERVICES TO [CUSTOMER] AND ITS OFFICERS, EMPLOYEES,
AND AGENTS AGAINST ANY AN ALL CLAIMS, INCLUDING WITHOUT LIMITATION CLAIMS FOR
LIBEL, SLANDER, OR ANY PROPERTY DAMAGE, PERSONAL INJURY OR DEATH, ARISING IN ANY
WAY DIRECTLY OR INDIRECTLY IN CONNECTION WITH THIS AGREEMENT OR THE USE, FAILURE
TO USE, OR INABILITY TO USE THE NUMBER EXCEPT WHERE THE CLAIMS RESULT FROM THE
UNDERLYING CARRIER'S GROSS NEGLIGENCE OR SILLFULL MISCONDUCT. THIS INDEMNITY
SHALL SURVIVE THE TERMINATION OF THE AGREEMENT.
3. [END USER] HAS NO PROPERTY RIGHT IN ANY NUMBER ASSIGNED TO IT.
CONFIDENTIAL & PROPRIETARY Page 18
<PAGE>
EXHIBIT E
NEI Request Form
RESELLER
NEI ORDER FORM
Today's Date: ____________
================================================================================
Account Name: ________________________ Account #: ____________
================================================================================
Requester Name: _____________________________________________
Phone: ________________ Fax: ___________________
List the associated NEI's or the number of requested NEI's and fax to: Wireless
Data Support at, (206) 803-4708.
- ------------------------------------------------------------------
Please Check the appropriate box for your request:
- ------------------------------------------------------------------
Request an Allocation of NEIs # of NEIs: ____________
- ------------------------------------------------------------------
Request for Activated NEIs: # of NEIs: ___________
- ------------------------------------------------------------------
Request for Allocated NEIs to be Activated*
- ------------------------------------------------------------------
Deactivate Designated NEIs and Move to Allocated*
- ------------------------------------------------------------------
Deactivate Designated NEIs and Return to AT&T Wireless*
- ------------------------------------------------------------------
Change Service Address of Designated NEIs*
- ------------------------------------------------------------------
Change Rate Plan of Designated NEIs*
- ------------------------------------------------------------------
Change EID of Designated NEIs*
- ------------------------------------------------------------------
* Indicates additional information required below
Associated NEI's:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Secured (S)
Unsecured
Service Address (R) Dealer #
NEI: EID: City, State, Zip NEI (optional):
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
____________________________ ___________________
Customer Care Representative Date Completed
CONFIDENTIAL & PROPRIETARY Page 19
<PAGE>
[LETTERHEAD OF AT&T APPEARS HERE]
August 28, 1998
Amin Mufti
Vectorlink
42638 Christy Street
Fremont, CA 94538
Dear Amin:
Enclosed you will find AT&T's revised Exhibit C. The purpose for the revision is
we have made some changes and additions to our rate plans. This version of the
Exhibit will supersede your existing Exhibit C and will become part of the
binding VAR Agreement you have with AT&T.
Please review this and if you have any questions please give me a call at (425)
803-4655.
Sincerely,
/s/ John M. Russell
John. M. Russell
National VAR Account Manager
AT&T Wireless Services
<PAGE>
EXHIBIT 10.2
PURCHASE AGREEMENT FOR GOODS
BETWEEN
AMERITECH MOBILE (WIRELESS)
COMMUNICATIONS, INC.
AND
@ROAD, INC.
<PAGE>
PURCHASE AGREEMENT
FOR
GOODS
This Agreement is entered into as of July 15, 1999, ("Effective Date") between
_______________________________________________________________________________,
___________________________________________, and @Road, Inc., a California
corporation, with principal offices at 45635 Northport Loop East, Fremont, CA
94538, (hereinafter "Supplier").
In consideration of the mutual promises set forth herein, the parties agree as
follows.
PURPOSE
- -------
This Agreement is for the purchase of CDPD modems and GPS products and related
incidental services (hereinafter individually and collectively "Goods") by Buyer
in accordance with the terms and conditions contained herein.
AGREEMENT TERM
- --------------
This Agreement is effective for Purchase Orders placed from July 15, 1999,
through July 14, 2001 unless terminated earlier as set forth herein.
ACCEPTANCE
- ----------
All Goods shall be received by Buyer subject to Buyer's inspection and right of
rejection. Buyer assumes no liability for Goods produced or shipped in excess of
the quantity specified in any Purchase Order issued hereunder. Buyer shall have
thirty (30) working days (the "Inspection Period") after the Delivery Date (as
defined below in the Section entitled "Delivery") to inspect and test the Goods
shipped by Supplier. If the Buyer determines that any Goods fail to meet
Suppliers specifications set forth in Attachment C in any material way, the
Buyer may reject such Goods by notifying Supplier in writing of such rejection
and requesting a Returned Material Authorization ("RMA") number; provided, that
such written notification and request for an RMA number must be received by
Supplier during the Inspection Period. Within ten (10) days of receipt of the
RMA number, Buyer shall return the defective Goods to Supplier, insured and with
transportation prepaid, with a written description of the defect. Supplier will
at its option replace the returned Goods or issue Buyer a credit for the
returned Goods at no charge to Buyer (including return transportation and
related insurance costs) if Supplier confirms the defect. Goods not rejected
during the Inspection Period will be deemed accepted upon the expiration of the
Inspection Period.
AFFILIATES
- ----------
As used in this Agreement, the term "Affiliates" shall include Ameritech
Corporation and any business entity which is, directly or indirectly, at least
fifty percent (50%) owned by Ameritech
CONFIDENTIAL & PROPRIETARY
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
<PAGE>
Corporation. "Affiliate" also means any successor to Ameritech Corporation,
whether by change of name, dissolution, merger, consolidation, reorganization,
or otherwise.
ASSIGNMENT
- ----------
Neither party shall assign any right or obligation under this Agreement without
the other party's prior written consent; provided, however, that either party
shall have the right to assign its rights, obligations and privileges hereunder
to a merger partner, successor in business, or acquirer of all or substantially
all of such party's stock (or equivalent equity securities), business, or assets
without obtaining the other party's consent to such assignment. Any other
attempted assignment shall be void, except that either party may assign moneys
due or to become due to it, provided that (a) the assigning party gives the
other party at least thirty (30) days prior written notice of such assignment
and (b) such assignment does not impose upon the other party obligation to the
assignee other than the payment of such moneys.
Notwithstanding the foregoing, Buyer may assign this Agreement, in whole or in
part, to any of its Affiliates who agree in writing to be bound by the terms and
conditions of this Agreement. Upon such assignment and assumption of liability.
Thereto by the assignee the assignor shall be discharged of any liability under
this Agreement.
Without limiting the generality of the foregoing, this Agreement shall be
binding upon and shall inure to the benefit of the parties respective successors
and assigns.
AUTHORITY
- ---------
Supplier represents and warrants to Buyer that it is a corporation duly
organized; validly existing and in good standing under the laws of the State of
California. Supplier represents and warrants to Buyer that it has all requisite
power and authority and all material licenses, permits and other authorizations
necessary to carry, on its business as now conducted. Supplier represents and
warrants to Buyer that it has all requisite power and authority to execute,
deliver and perform this Agreement and the other agreements contemplated hereby
and to perform its obligations hereunder and thereunder. The execution, delivery
and performance by Supplier of this Agreement have been duly and validly
authorized by Supplier. No other corporate act or proceeding on the part of
Supplier, its Board of Directors or its shareholders is necessary to authorize
the execution, delivery or performance by Supplier of this Agreement.
BILLING RECORDS
- ---------------
Supplier shall maintain, at no additional charge to Buyer, in accordance with
generally accepted accounting principles, complete and accurate records related
to amounts billed to and payments made by Buyer hereunder. Supplier shall
provide Buyer supporting documentation concerning any alleged violation by
Supplier of the terms of this Agreement or concerning any disputed invoice or
payment within thirty (30) days after Buyer notifies Supplier of a dispute or,
at Buyer's option, Supplier shall permit Buyer, or Buyer's agent, to examine and
audit these records at Supplier's premises at all reasonable times to verify the
amounts in dispute; provided, that Buyer provides Supplier reasonable advance
notice of such audit. Payments made under this
<PAGE>
Agreement shall be subject to final adjustment as determined by such review.
Supplier shall retain such records for a period of three (3) years from the
expiration of this Agreement or such length of time as may be required by any
federal, state or local law, ordinance or regulation, whichever is longer.
CHANGES TO GOODS
- ----------------
Supplier may not make changes to the Goods or modify the drawings and
specifications relating thereto, or substitute products of a later design to
fill a Purchase Order, without Buyer's consent. As conditions to such consent,
such change, under normal and proper use, shall not affect the price, operation,
reliability or life of the Goods or the interchangeability of the Goods with
other goods, and Supplier shall notify Buyer in writing thereof not less than
ninety (90) days prior to the planned change. In the event Buyer and Supplier
fail to reach agreement upon any proposed change, modification, or substitution,
Buyer shall have the right to terminate any and all Purchase Orders, in whole or
in part, for Goods affected by such change, modification, or substitution,
without penalty or obligation of any kind.
Notwithstanding any notice requirement above to the contrary, in the event an
extremely unsatisfactory condition, including, by way of example and not of
limitation, a safety or fire hazard, requires immediate action, Supplier shall
immediately notify Buyer. For a period of five (5) years after the Delivery Date
of the Goods affected thereby ("Hazard Period"), as Buyer's sole remedy and
Supplier's exclusive liability, Supplier shall use commercially reasonable
efforts to replace or modify, at no charge to Buyer, all such Goods, including
spare parts, in Buyer's possession. The Buyer will return such Goods by
notifying Supplier in writing and requesting an RMA number; provided, that such
written notification and request for an RMA number must be received by Supplier
during the Hazard Period. Within ten (10) days of receipt of the RMA number,
Buyer shall return the defective units to Supplier, insured and with
transportation charges prepaid, with a written description of the defect. The
limited remedies set forth in this Section shall not apply if (i) the Goods have
been altered or modified, (ii) the Goods have been damaged by reason of
negligence not attributable to Supplier, or subjected by Buyer to computer or
electrical malfunction, or (iii) the Goods have been used, adjusted, installed,
maintained, or operated other than in accordance with instructions furnished by
Supplier, or with an application or in an environment other than that intended
or recommended by Supplier.
CHOICE OF LAW AND FORUM
- -----------------------
This Agreement and any claims arising hereunder or related hereto, whether in
contract or tort, shall be governed by the laws of Illinois. Any suit regarding
this Agreement must be brought in a court of competent jurisdiction in Cook
County, Illinois.
COMPLIANCE WITH LAWS
- --------------------
Supplier and all persons furnished by Supplier shall comply with the provisions
of the Fair Labor Standards Act, the Federal Occupational Safety and Health Act,
environmental laws (the subject of which may include, but shall not be limited
to, air, water, noise, soil, and land-fill areas), the rules and regulations of
the Federal Communications Commission and all other applicable
<PAGE>
federal, state and local laws, ordinances and regulations in the performance of
this Agreement, including the procurement of required permits and certificates.
"Performance" as used herein shall include, but not be limited to, Supplier's
furnishing, installation, removal, processing, transportation, use, disposal,
treatment, reclamation or other method of handling materials subject to this
Agreement which Supplier agrees to provide to Buyer pursuant to this Agreement.
Supplier shall maintain throughout the term of this Agreement all federal, state
and local licenses, permits, and certificates necessary to perform this
Agreement, which shall be promptly furnished to Buyer upon Buyer's written
request.
CONFIDENTIAL INFORMATION
- ------------------------
Any information, including but not limited to, specifications, drawings,
computer programs, technical or business information or other data in whatever
form (hereinafter "Information"), furnished by either party to the other,
whether in writing, orally or visually, under or in contemplation of this
Agreement or to which such party has access through its performance hereunder
shall be considered confidential and shall be subject to the following:
(a) The receiving party shall restrict disclosure of the Information
to the receiving party's employees with a "need to know" (i.e.,
employees that require the Information to perform their
responsibilities in connection with this Agreement or a Purchase
Order) and shall not disclose it to any other person or entity
without the prior written consent of the disclosing party;
(b) The receiving party shall use the Information only for purposes
of performing under this Agreement;
(c) The receiving party, shall advise those employees who access the
Information of their obligations with respect thereto;
(d) The receiving party shall copy the Information only as necessary
for those employees who are entitled to receive it and shall ensure
that all confidentiality notices are reproduced in full on such
copies; and
(e) The receiving party shall return all copies of such Information
to the disclosing party at the disclosing party's request.
The receiving party recognizes and agrees that the unauthorized use or
disclosure of the Information would cause irreparable harm to the disclosing
party for which it would have no adequate remedy at law, and that an actual or
contemplated breach of this Section shall entitle the disclosing party to obtain
immediate injunctive relief prohibiting such breach, in addition to any other
rights available to it. The obligations herein contained shall expressly survive
the termination or expiration of this Agreement.
The Information shall not be considered confidential and shall not be subject to
the foregoing if the receiving party can demonstrate that the Information:
<PAGE>
(a) Is or becomes available to the public through no breach of this
Agreement or a Purchase Order;
(b) Was previously known by the receiving party without any
obligation to hold it in confidence;
(c) Is received from a third party free to disclose such Information
without restriction;
(d) Is independently developed by the receiving party without the use
of the disclosing party's Information;
(e) Is approved for release by written authorization of the
disclosing party, but only to the extent of such authorization;
(f) Is required by law or regulation to be disclosed, but only to the
extent and for purposes of such required disclosure; or
(g) Is disclosed in response to a valid order of a court or lawful
request of a governmental agency, but only to the extent of and for
the purposes of such order or request, provided that the receiving
party first notifies the disclosing party of the order or request ten
(10) days prior to disclosure and permits the disclosing party to seek
an appropriate protective order.
DEFAULT
- -------
If either party fails to perform or observe, in any substantial way, any
material term or condition of this Agreement or a Purchase Order, such action
shall constitute a material breach of this Agreement. If the breaching party
fails to remedy or to undertake reasonable steps to remedy such material breach
within fifteen (15) days after receipt of written notice of the breach from the
non-breaching party, the non-breaching party may, without further notice, cancel
the then-remaining balance of this Agreement and/or any Purchase Order, as
applicable, without any further obligation thereunder whatsoever except as to
payment for Goods already received and accepted by Buyer. In the event the
Supplier is the party in default and the parties established a commitment,
purchase level or discount program, the quantity covered by such canceled
Purchase Order(s) shall be deducted from such commitment, purchase level or
volume required for discount entitlement. The rights provided to the non-
breaching party under this Section are not intended to constitute an election
of remedies, and, except as provided otherwise in this Agreement or the subject
Purchase Order, the non-breaching party shall be entitled to any additional
rights and remedies available to it at law or in equity.
Unless otherwise agreed by the parties in writing, this Agreement will terminate
upon the termination of the Wireless Network Services Agreement of even date
herewith between the Buyer and Supplier.
<PAGE>
DELAYS
- ------
Time is of the essence in Supplier's performance of its obligations under
Agreement. If Supplier has knowledge that anything prevents or threatens to
prevent timely performance under this Agreement, Supplier shall immediately
notify Buyer thereof, provided such notification shall not relieve Supplier of
the requirement set forth in the preceding sentence.
DELIVERY
- --------
Supplier shall deliver all Goods on the delivery date ("Delivery Date") and to
the site specified on the applicable purchase order and on Supplier's
acknowledgment thereof. Buyer may elect to advance or delay such Delivery Date
provided that Supplier has been given no less than ten (10) days written notice,
prior to the Delivery Date of such change.
ENTIRE AGREEMENT
- ----------------
The terms in this Agreement and the attachment(s) and specification(s) referred
to herein, which are incorporated herein by this reference, constitute the
entire agreement between the parties with respect to the subject matter hereof,
superseding all prior understandings and communications, oral or written. The
Parties acknowledge that this Agreement has been mutually negotiated. In
addition, neither party shall be bound by any terms additional to or different
from those in this Agreement that may appear subsequently in quotations,
acknowledgments, invoices or any other communications from Supplier or purchase
orders, invoices or like documents from Buyer. This Agreement may not be
modified except by a writing signed by both parties.
EQUAL OPPORTUNITY REQUIREMENTS
- ------------------------------
Supplier shall comply, to the extent applicable, with the Nondiscrimination
Provisions noted in Attachment B.
F.O.B.
- -----
All sales shall be F.O.B. origin. Risk of loss and title to the Goods shall pass
to the Buyer upon delivery of the Goods on the Delivery Date.
FORCE MAJEURE
- -------------
Neither Buyer nor Supplier shall be liable to the other for any delay or failure
in performance hereunder (other than a failure to pay monies) due to fires,
strikes, threatened strikes, stoppage of work, embargoes, requirements imposed
by governmental regulations, civil or military authorities, acts of God, the
public enemy or other causes which are beyond the reasonable control of the
party unable to perform (hereinafter "Force Majeure"). If a Force Majeure
occurs, the party delayed or unable to perform shall give immediate notice to
the other party. In the event Supplier is the party delayed or unable to
perform, Buyer may elect: (a) to terminate any affected Purchase Order relating
to Goods not already delivered without liability to Supplier, or (b) to suspend
performance under the affected Purchase Order for the duration of the Force
Majeure, during which period Buyer may buy elsewhere substitute goods and, if
applicable,
<PAGE>
allow Supplier to resume performance of such Purchase Order once the Force
Majeure ceases. In the event the parties establish a commitment, purchase level
or discount program, the quantity bought or for which commitments have been made
elsewhere shall be deducted from such commitment, purchase level or discount
program. Unless written notice of termination is given by Buyer, option (b)
shall be deemed selected.
GOODS AND PRICES
- ----------------
Goods which may be purchased pursuant to this Agreement and the prices
applicable thereto are set forth in Attachment A hereto.
HAZARDOUS/TOXIC MATERIALS
- -------------------------
Supplier shall identify to Buyer in advance of delivery, any toxic substances or
hazardous materials incorporated in or associated with the Goods provided
hereunder and shall advise Buyer of all precautions to be taken for their use
and disposal. When applicable, Supplier shall furnish Buyer a completed Material
Safety Data Sheet for any Goods furnished hereunder as required by any federal,
state, or local laws, ordinances or regulations. Any transportation or other
handling of hazardous or toxic materials by Supplier shall be performed in
accordance with all applicable federal, state and local laws, ordinances and
regulations.
HEADINGS
- --------
The Section headings inserted in this Agreement are for convenience only and
shall not affect the meaning or interpretation of this Agreement.
INDEMNITY
- ---------
Supplier shall defend, indemnify, and hold harmless Buyer, its Affiliates, their
officers, employees and agents from and against all losses, damages, expenses
(including attorneys' fees and costs), claims, suits and liabilities, whether
based in contract or tort (including strict liability), to the extent arising
out of our resulting from (a) Supplier's acts or omissions, or those of persons
furnished by it, (b) any defective Goods provided hereunder, (c) the failure of
Supplier or any Goods to fully comply with the terms and conditions of this
Agreement, or (d) assertions under Workers' Compensation or similar laws made by
persons furnished by Supplier. Buyer shall promptly notify Supplier of any
written claim or demand for which Supplier is responsible under this Clause.
Without limiting the generality of the foregoing, to the extent that any
services are performed in the State of Ohio it is expressly agreed that Supplier
hereby waives any immunity from its obligations to defend, indemnify and hold
harmless Buyer (or The Ohio Bell Telephone Company) against and from claims by
employees of Supplier, which immunity would otherwise arise by operation of Ohio
Revised Code (S)(S)4123.74 and 4123.741 and Section 35, Article II, Ohio
Constitution or any other statute or constitutional provision.
<PAGE>
INFRINGEMENT
- ------------
Supplier shall defend, indemnify and hold harmless Buyer and its Affiliates,
their officers, employees and agents from and against any suits, claims,
actions, losses, damages, expenses (including attorneys' fees and costs) or
liabilities that may result by reason of any alleged violation, infringement or
misappropriation of a United States patent, trade secret, copyright, trademark
or other proprietary right based on Buyer's use of the Goods (including the
receipt of any services) provided under this Agreement. Buyer shall promptly
notify Supplier of any claim of infringement, violation or misappropriation for
which Supplier is responsible and shall cooperate with Supplier to facilitate
the defense or settlement of such claim. Supplier or Supplier's attorney(s)
shall keep Buyer reasonably apprised of the continuing status of the claim,
including any lawsuit resulting therefrom, and shall permit Buyer, upon Buyer's
written request, to participate in the defense or settlement of such claim.
If use of the Goods shall be prevented or appears likely to be prevented by
court order or settlement resulting from any such claim, Supplier shall, at its
expense, either: (a) by license or release from claim of violation, infringement
or misappropriation, procure for Buyer and/or the Affiliates the right to
continue using the Goods; or (b) modify Goods so that they are functionally
equivalent to the original Goods but are no longer subject to a claim of
violation, infringement or misappropriation; or (c) remove such Goods from the
premises of Buyer and/or the Affiliates and replace same with equally suitable
goods free from claim of infringement or misappropriation; or (d) terminate this
Agreement and refund the full purchase price of the Goods if said action occurs
within (2) years of the Delivery Date of affected Goods, or if action takes
place after two (2) years of the Delivery Date, refund the purchase price of the
Goods, as depreciated over a three (3) year period. Unless otherwise agreed in
writing by Buyer, Supplier shall use its best efforts to procure the right for
Buyer and/or the Affiliates to use the Goods as provided in (a) above.
INSURANCE
- ---------
Supplier shall maintain during the term or, this Agreement: (a) Workers
Compensation insurance as prescribed by the law of the state in which Supplier's
obligations under this Agreement are performed, (b) Employer's Liability
insurance with limits of at least $2,000,000 for each occurrence, (c) Commercial
General Liability insurance (including, but not limited to, contractual and
products liability coverage) with combined single limits for each occurrence of
at least $2,000,000, and (d) if the use of motor vehicles is required,
Commercial Automobile Liability Insurance (including hired and non-owned
coverage) with combined single limits for each occurrence of at least $2,000,000
for bodily injury and property damage. Neither Supplier nor Supplier's
insurer(s) shall have a claim, right of action or right of subrogation against
Buyer based on any occurrence insured against, in whole or in part, under the
foregoing insurance. Supplier's policy shall be endorsed to name __________
_______________________ and its corporate Affiliates as additional insureds
and state: "____________________________________ is to be notified in writing
at least sixty (60) days prior to cancellation of or any material change in this
policy." At Buyer's request, Supplier shall furnish a copy of the endorsement
and certificates evidencing the foregoing insurance coverage prior to
commencement of performance hereunder
<PAGE>
and, if applicable, annually thereafter during the term of this Agreement.
Supplier's purchase of insurance shall not in any way limit Supplier's liability
under this Agreement.
INVOICES
- --------
Supplier shall render an invoice for each shipment of Goods. Invoices must
contain the following information: invoice number, invoice date, remittance
address, Purchase Order number, item number, payment terms, quantity,
description of Goods, unit, unit price and total price. Invoices shall be sent
to the address indicated in the Purchase Order.
LICENSES
- --------
Supplier hereby grants Buyer a non-exclusive, non-transferable (except as set
forth in the Sections entitled "Assignment" and "Licenses") license, without
rights to sublicense, to use the software embedded in the Goods ("Software"),
but only in connection with the operation of Goods. The Buyer shall not (i) copy
or use the Software except as expressly permitted herein, (ii) reproduce,
modify, or create derivative works of the Software, (iii) reverse engineer,
decompile, disassemble, or make any attempt to discover the source code of the
Software, or (iv) use or permit the Software to be used outside of the states
where Buyer provides wireless services and has a direct distribution channel.
The Buyer and any successor to the Buyer's title to the Goods shall have the
right to assign legal title to such Goods and to those rights in the Software
granted by this Section to any other person who subsequently acquires the right
to use the Goods, provided that any such assignee or sub-licensee agrees, in
writing or via electronic mail or other computer transmission, to abide by the
terms and conditions of this Agreement; provided, that Buyer shall not be
responsible for procuring such agreement of the assignee or sub-licensee.
No other licenses, express or implied, under any patents, trademarks, copyrights
or other proprietary rights are granted by Buyer to Supplier or by Supplier to
Buyer under this Agreement.
LIMITATION ON LIABILITY
- -----------------------
In no event shall either party be liable to the other party for any lost profits
or indirect, incidental, special or consequential damages, regardless of whether
or not a party has been advised of the possibility of such damages. The
foregoing notwithstanding, nothing in this section will limit a party's
obligations to indemnify fully the other under the sections of this Agreement
entitled "Indemnity" and "Infringement" for actions brought by third parties,
even if such actions include claims for indirect, incidental, special or
consequential damages. Except for the Indemnity and Infringement sections of
this Agreement, Supplier's liability arising under this Agreement shall not
exceed the aggregate payments received by Supplier from Buyer under this
Agreement.
<PAGE>
MINORITY/WOMEN OWNED ENTERPRISES
- --------------------------------
It is Ameritech's policy that minority and women owned business enterprises
should have the maximum opportunity to participate in the performance of its
contracts. Supplier shall use commercially reasonable efforts to further this
policy by awarding subcontracts to minority and women owned business enterprises
or by using such enterprises to provide goods and services incidental to this
Agreement, with a goal of awarding at least five percent (5%) of the contract
price to such enterprises. Upon request, Supplier shall furnish appropriate
information about its efforts to achieve this goal, including the identities of
such enterprises and amounts involved.
MOST FAVORED CUSTOMER
- ---------------------
Supplier warrants that the prices for Goods provided to Buyer under this
Agreement and the terms and conditions of this Agreement are not and shall not
be less favorable than the prices and/or terms and conditions extended to any of
Supplier's other customers generally similarly situated to Buyer with respect to
the same or like goods. In the event Supplier offers, during the term of this
Agreement, lower prices and/or more favorable terms and conditions to any such
customer with respect to the same or like goods than are offered to Buyer,
Supplier shall, retroactive to the date Supplier offered more favorable prices,
terms or conditions to any other customer, reduce the prices hereof
correspondingly and/or shall extend such terms and conditions to Buyer. Any
amounts charged to Buyer in excess of prices charged by Supplier to any other
customer for similar Goods or related services shall promptly be refunded or
credited to Buyer by Supplier.
NONEXCLUSIVITY
- --------------
This Agreement does not grant to Supplier any exclusive right or privilege to
provide to Buyer goods of the type contemplated herein, and Buyer reserves the
right to contract with other parties for the procurement of comparable goods.
NONWAIVER
- ---------
Failure of either party to insist on performance of any term or condition of
this Agreement or to exercise any right or privilege hereunder shall not be
construed as a waiver of such term, condition, right or privilege in the future.
NOTICES
- -------
Any notice which under the terms of this Agreement must or may be given or made
by either party hereunder shall be in writing and shall be delivered personally
or sent by express delivery service or by certified mail, return receipt
requested, addressed to the respective parties as follows:
<PAGE>
To Buyer:
with a copy to:
To Supplier: @Road, Inc.
45638 Northport Loop East
Fremont, CA 94538
Attn: Amin Mufti- Vice President
with a copy to: Venture Law Group
Attn: Tae Hea Nahm
2775 Sand Hill Road
Menlo Park, CA 94025
or to such other address as either party shall designate by proper notice.
Notices will be deemed to have been received as of the earlier of the date of
actual receipt or, in case of notices sent via US mall, three (3) days after
mailing. A signed receipt shall be obtained where a notice is delivered in
person.
OFFSET
- ------
Buyer's obligations under this Agreement shall be subject to deduction of any
valid claim of Buyer against Supplier arising from this or any other
transaction. Buyer shall not be obligated to make payments required hereunder to
the extent and for the duration that such payments are in dispute. Supplier
shall be deemed to have acknowledged and accepted the validity, of any claim if
it does not notify Buyer that it disputes such claim and also specifies with
particularity its reasons therefor within thirty (30) days from the date it
receives notice or knowledge thereof.
ORDERS
- ------
Purchase Orders shall be subject to all the terms and conditions of this
Agreement, and any terms and conditions on a Purchase Order which conflict with
the terms and conditions of this Agreement shall be deemed superseded and
deleted. Orders for Goods placed hereunder shall be either placed on Buyer's
Purchase Order form or, to the extent agreed upon by the parties, transmitted
electronically in accordance with such agreement of the parties. For Purchase
Orders transmitted electronically, Supplier shall make confirmation thereof in
the manner specified by Buyer and shall retain the Purchase Order transmission
for six (6) months from the fulfillment of such Purchase Order. No Purchase
Order shall be binding upon Supplier until Supplier accepts such Purchase Order
in writing.
<PAGE>
PAYMENT
- -------
All invoices are payable within forty-five (45) days of the date of Buyer's
receipt of the invoice; provided, that if Buyer disputes an invoice, Buyer shall
pay the undisputed portion within forty-five (45) days of receipt, and shall not
be obligated to pay the disputed portion until the parties have agreed on the
amount to be paid by Buyer. Supplier shall provide Buyer with documentation
evidencing the basis for charges in a form and level of detail satisfactory to
Buyer. The purchase price does not include any sales or use taxes nor any
duties, import levies or similar taxes that may be assessed against the Goods in
connection with this Agreement. The Buyer shall pay all sales or use taxes,
duties or import levies, if any are required to be paid on account of this
Agreement, which are imposed by the states (or subdivisions thereof), countries
or other governmental entities in which the applicable Goods are to be
installed. All amounts which are not paid by the Buyer as required by this
Agreement may be subject to a late charge equal to one percent (1.0%) per month
(or, if less, the maximum amount allowed by applicable law).
PRICE PROTECTION
- ----------------
Supplier may not increase the prices for Goods, as specified in this Agreement,
for a period of six (6) months from the Effective Date. Thereafter, Supplier
may, provided that sufficient supporting documentation is furnished to Buyer,
increase its prices no more than five percent (5%) once per any six (6) month
period. If Supplier intends to increase prices pursuant to this Section, then
Supplier must notify Buyer in writing no less than forty-five (45) days prior to
the effective date of such price increase.
Should Supplier decrease the purchase price for Goods, Supplier will give Buyer
a credit for the difference between the purchase price paid by Buyer and the new
reduced purchase price for Goods remaining in inventory held by Buyer in its
distribution channels.
PUBLICITY
- ---------
Supplier shall not identify, either expressly or by implication, Buyer or its
Affiliates or use any of their trademarks, trade names, service marks, other
proprietary marks, or reference this Agreement in any advertising, press
releases, publicity matters or other promotional materials without the prior
written permission of Buyer.
RELATIONSHIP OF THE PARTIES
- ---------------------------
A. This Agreement is not intended to and does not constitute, or give rise to,
a joint venture, partnership, corporation, or other formal business
association or organization of any kind between the parties, and the rights
and the obligations of the parties shall be only those expressly set forth
in this Agreement. The parties shall perform under this Agreement as
independent contractors and not as a representative, employee, agent, or
partner of the other party, and this Agreement shall not be construed as
creating any relationship between Buyer and Supplier's employees.
<PAGE>
B. Except where the context would require a different meaning, all references
to a party or the parties include as applicable each of their respective
parent companies, subsidiaries, affiliates and its and their directors,
officers, shareholders, employees, agents, successors, beneficiaries,
permitted assigns, legal representatives, general and limited partners, and
subcontractors; provided, however, that except as may be required by law,
all obligations and liabilities arising under this Agreement shall not be
individual or personal, but shall be borne by each party solely and only to
the extent of its legal capacity.
REMEDIES
- --------
The rights and remedies herein provided shall be cumulative and shall be in
addition to any other remedies available at law or in equity, except as
otherwise expressly limited or excluded by this Agreement.
SEVERABILITY
- ------------
If any provision of this Agreement shall be held invalid or unenforceable, such
provision shall be deemed deleted from this Agreement and replaced by a valid
and enforceable provision which so far as possible achieves the same economic
and other benefits for the parties as the severed provision was intended to
achieve, and the remaining provisions of this Agreement shall continue in full
force and effect.
SHIPPING
- --------
All Goods shall be packed, marked and shipped by Supplier, at no additional
charge, in containers which are suitable for prevention of damage under normal
handling during loading/unloading, shipping and storage and in accordance with
the requirements of the carrier and the commercially reasonable specifications
of Buyer. Supplier shall ship the Goods in the quantities and at the times
specified by Buyer in accordance with the routing instructions given by Buyer
and accepted by the Supplier. Supplier shall combine all shipments made on the
same day to the same destination and shall mark the shipping label with the
destination exactly as shown in the corresponding Purchase Order. The Purchase
Order number shall be marked on all packages, shipping papers and other
subordinate documents.
A packing memorandum must accompany each shipment and the package containing
such memorandum must be clearly identified. The packing memorandum must contain
the following information: shipping destination, date shipped, Purchase Order
number, item number, description of Goods, quantity ordered, quantity shipped,
number of cartons, weight, carrier, and the bill of lading number.
SPECIFICATIONS FOR GOODS/WARRANTY
- ---------------------------------
The Supplier warrants to Buyer that the Goods shall perform in accordance with
the specifications set forth in Attachment C hereto for a period of (i) twelve
(12) months after the Goods are first used or (ii) eighteen months after the
Deliver Date, whichever period is shorter in duration (the "Warranty Period").
The Buyer will have the right to emend the Warranty Period
<PAGE>
for an additional two (2) years by paying the fee, for each unit purchased
hereunder, set forth on Attachment A hereto. In addition, Supplier warrants that
any version of the Software shall properly perform Year 2000 Processing. "Year
2000 Processing" means processing by the Software, which is dependent upon usage
of calendar dates, including dates on or after January 1, 2000. Year 2000
Processing includes both software owned by Supplier and third party software
provided by Supplier that manages and/or manipulates data involving dates,
including single century formulas and multi-century formulas. Correct or proper
Year 2000 Processing means that the Software will not cause an abnormally ending
dating scenario within the application or result in incorrect values generated
involving such dates.
Except for breach of the Year 2000 Processing warranty, which is addressed in
the Section entitled Year 2000 Capability, if buyer notifies Supplier of any
breach of the warranty set forth in this Section during the Warranty Period (if
applicable), and if Supplier, which shall act reasonably and in good faith in
its inspection of all returned Goods, confirms such defect, Supplier's exclusive
liability, and the exclusive remedy of Buyer shall be, at Supplier's
commercially reasonable discretion, repair or replacement of the Goods at no
cost to Buyer. The Buyer may reject such Goods by notifying Supplier in waiting
of such rejection and requesting an RMA number; provided, that such written
notification and request for an RMA number must be received by Supplier during
the Warranty Period (if applicable). Within ten (10) days of receipt of the RMA
number, Buyer shall return the defective Goods to Supplier, insured and with
transportation prepaid, with a written description of the defect. The limited
warranties set forth in this Section shall not apply if (i) the Goods have been
materially altered or modified, (ii) the Goods have been subjected to
negligence by Buyer, computer or electrical malfunction, or (iii) the Goods have
been used, adjusted, installed, maintained, or operated other than in accordance
with instructions furnished by Supplier, or with an application or in an
environment other than that recommended by Supplier.
EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION, SUPPLIER PROVIDES NO WARRANTY,
EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, AND SPECIFICALLY DISCLAIMS ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO
ALL MATERIALS AND SERVICES PROVIDED TO BUYER.
SURVIVAL OF OBLIGATIONS
- -----------------------
The parties' obligations under this Agreement which by their nature are intended
to continue beyond the termination or expiration of this Agreement (including
without limitation all payment obligations incurred prior to such termination or
expiration) shall survive the termination or expiration of this Agreement.
SUSPENSION OF PERFORMANCE
- -------------------------
If bankruptcy proceedings are commenced with respect to Supplier and if this
Agreement has not been otherwise terminated, then Buyer may suspend all future
performance of this Agreement and/or any Purchase Order(s) hereunder until
Supplier assumes and provides adequate assurance of future performance or
rejects this Agreement or such Order(s) pursuant to (S)365 of the
<PAGE>
Bankruptcy Code or any successor provision. Any such suspension of further
performance by Buyer pending Supplier's assumption or rejection will not be a
breach of this Agreement and/or any Purchase Order(s) and will not affect
Buyer's right to pursue or enforce any of its rights under this Agreement or
such Order(s) or otherwise.
TAXES
- -----
Federal manufacturers or retailers excise taxes, and state and local sales or
use taxes, when applicable, shall be billed as separate items on Supplier's
invoice. If indicated in the Purchase Order, Goods purchased for resale are tax
exempt under one of the following tax exempt certificate numbers: Ohio: 99-
014808; Wisconsin: UT03161; Missouri: 12161080; Illinois: 1712-1582; Indiana:
0034035640012; Michigan: ME0102812.
TERMINATION
- -----------
Buyer may at any time and for any or no reason terminate this Agreement and/or
any Purchase Order(s), in whole or in part, by giving sixty (60) days written
notice to Supplier. Buyer's liability, to Supplier shall be limited to payment
for Goods which are ordered by Buyer prior to the effective date of termination
of this Agreement.
YEAR 2000 CAPABILITY
- --------------------
Supplier warrants that any version of the Software shall properly perform Year
2000 Processing. In the event of a breach of this warranty, Supplier agrees to
promptly remedy such breach at no additional charge to Ameritech by: (i)
correcting the version of the Software currently used by Ameritech so as to make
it capable of correctly performing Year 2000 Processing; (ii) providing
replacement Software for the Software which is equivalent in function to the
Software and which correctly performs Year 2000 Processing. If, after using best
efforts Supplier is unable to accomplish either of the foregoing options within
ninety (90) days of Buyer's notification to Supplier of any failure of the
Software to correctly perform Year 2000 Processing, Supplier shall indemnify and
hold Buyer harmless from and against any and all liability, loss, or expense
awarded by final judgement against Buyer arising from any third party claims
which alleges damages to the Software. Notwithstanding anything to the contrary
set forth in this agreement, Supplier's breach of this warranty, shall not be
subject to any provisions regarding limitations of Supplier's liability set
forth in this Agreement.
[Signature page(s) and Exhibits follow]
<PAGE>
@ROAD, INC.
Signature: /s/ Amin Mufti Signature: /s/
-------------------------- ---------------------------
Printed Name: Amin Mufti Printed Name:
----------------------- -----------------------
Title: VP Business Development Title:
------------------------------ -------------------------------
Date: 8/9/1999 Date: 8/31/99
------------------------------ -------------------------------
<PAGE>
ATTACHMENT A
PRICES
------
<TABLE>
<CAPTION>
Pricing
Part Number Item Description [**] [**]
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
RC-10 In-Vehicle GPS/CDPD Unit [**] [**]
RC-10-2Y* In-Vehicle GPS/CDPD Unit [**] [**]
A-GPS-M GPS Magnetic Mount Antenna [**] [**]
A-GPS-M-2Y* GPS Magnetic Mount Antenna [**] [**]
DU-10 Message Display Terminal [**] [**]
DU-10-2Y* Message Display Terminal [**] [**]
A-GPS/CELL-R Roof Mount GPS/Cellular Antenna [**] [**]
C-RC10-PA RC-10 Cigarette Lighter Adapter [**] [**]
C-RC10-P RC-10 Power Cable [**] [**]
C-RC10-S RC-10 Serial Programming Cable [**] [**]
C-DU10 RC-10/DU10 Connector Cable [**] [**]
W-EXTENDED-1Y RC-10 1 Year Extended Warranty [**] [**]
W-EXTENDED-2Y RC-10 2 Year Extended Warranty [**] [**]
</TABLE>
Notes:
RC-10 and RC-10-2Y Unit Prices include power cable, Part# C-RC10-P only.
Antennas sold separately.
DU-10 and DU10-2Y Unit Prices include connection cable to RC-10, Part #C-DU10.
*Unit Price requires 2 Year @Road Service Commitment.
** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
ATTACHMENT B
NONDISCRIMINATION PROVISIONS
----------------------------
During the performance of this Agreement, Contractor agrees to comply with
the following provisions, to the full extent that this Agreement is subject to
the applicable provisions of the following: Executive Order No. 11246, Executive
Order No. 11625, Executive Order No. 12138, Section 503 of the Rehabilitation
Act of 1973, the Vietnam-Era Veteran's Readjustment Assistance Act of 1974, the
Illinois Human Rights Act, the Indiana Civil Rights Law, the Michigan Civil
Rights Act, the Ohio Fair Employment Practice Law, the Wisconsin Fair Employment
Act, the rules, regulations and relevant orders of the agencies enforcing said
Orders and Statutes or charged with administering affirmative action/non-
discrimination requirements applicable to government contractors or
subcontractors, and any other applicable Federal, State, or local law imposing
obligations on government contractors or subcontractors.
Monetary amounts, contractual or purchasing relationships, and/or the
number of Contractor's employees, determine which provisions are applicable.
CLAUSES REQUIRED BY FEDERAL LAW
- -------------------------------
The following clauses are deemed part of this Agreement in accordance with
the table set forth below.
<TABLE>
<CAPTION>
Annual Clauses
------------------------------------------------
Contract Value 1 2 3 4 5 6
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Less than $2,500 X(a) X(a) X(b)
$2,500 or more X(a) X(a) X(b) X
$10,000 or more X X X(b) X X
$50,000 or more X X X(c) X(d) X X
</TABLE>
(a) Applies only to depositories of government funds or financial
institutions issuing U. S. savings bonds and notes.
(b) Applies only to depositories of government funds or financial
institutions issuing U. S. savings bonds and notes and which have 50
or more employees and are prime contractors or first-tier
subcontractors.
(c) Applies only to businesses having 50 or more employees.
(d) Applies only to businesses having 50 or more employees and which are
prime contractors or first-tier subcontractors.
<PAGE>
Clause 1: Equal Employment Opportunity
The Equal Employment Opportunity Clause set forth in (S) 202 of Executive
Order 11246 and reiterated at 41 C.F.R. (S) 60-1.4(a), is hereby
incorporated by reference pursuant to 41 C.F.R. (S) 60-1.4 (d).
Clause 2: Certification of Non-Segregated Facilities
The Contractor certifies that it does not and will not maintain any
facilities it provides for its employees in a segregated manner, or
permit its employees to perform their services at any location under its
control, where segregated facilities are maintained; and that it will
obtain a similar certification, prior to the award of any nonexempt
subcontract.
Clause 3: Certification of Affirmative Action Programs
The Contractor affirms that it has developed and is maintaining
Affirmative Action Plans as required by Parts 60-2, 60-250 and 60-741 of
Title 41 of the Code of Federal Regulations.
Clause 4: Certification of Filing of Employers Information Reports
The Contractor agrees to file annually on or before the 31st day of March
complete and accurate reports of Standard Form 100 (EEO-I) or such forms
as may be promulgated in its place.
Clause 5: Employment of Veterans
The Affirmative Action for Disabled Veterans and Veterans of The Vietnam
Era Clause, set forth in 41 C.FR. (S) 60-250.4 is hereby incorporated by
reference pursuant to 41 C.F.R. (S) 60-250.22.
Clause 6: Employment of the Handicapped
The Affirmative Action Clause for Handicapped Workers set forth at 4l
C.F.R. (S) 60-741.4 is hereby incorporated by reference pursuant to 41
C.F.R. (S) 60-741.22.
ADDITIONAL FEDERAL CLAUSES
- --------------------------
If this Agreement offers further subcontracting opportunities, the
following clause is hereby made a material term of this Agreement:
Utilization of Small Business Concerns and Small Disadvantaged Business
Concerns (Feb. 1990)
(a) It is the policy of the United States that small business concerns and
small business concerns owned and controlled by socially and economically
disadvantaged individuals shall have the maximum practicable opportunity to
participate in performing contracts let by any Federal agency, including
contracts and subcontracts for subsystems, assemblies, components, and related
services for major systems. It is further the policy of the United States that
its prime contractors establish procedures to ensure the timely payment of
amounts due pursuant to the terms of their subcontracts with small business
concerns and small business concerns owned and controlled by socially and
economically disadvantaged individuals.
<PAGE>
(b) Contractor hereby agrees to carry out this policy in the awarding of
subcontracts to the fullest extent consistent with efficient contract
performance. Contractor further agrees to cooperate in any studies or surveys as
may be conducted by the United States Small Business Administration or the
awarding agency of the United States as may be necessary to determine the extent
of Contractor's compliance with this clause.
(c) As used in this contract, the term "small business concern" shall mean
a small business as defined pursuant to Section 3 of the Small Business Act and
relevant regulations promulgated pursuant thereto. The term "small business
concern owned and controlled by socially and economically disadvantaged
individuals" shall mean a small business concern.
(1) which is at least 51 percent unconditionally owned by one or more
socially and economically disadvantaged individuals; or, in the case of any
publicly owned business, at least 51 percent of the stock of which is
unconditionally owned by one or more socially and economically disadvantaged
individuals; and
(2) whose management and daily business operations are controlled by
one or more of such individuals. This term also means a small business concern
that is at least 51 percent unconditionally owned by an economically
disadvantaged Indian tribe or Native Hawaiian organization, or a publicly owned
business having at least 51 percent of its stock unconditionally owned by one of
these entities which has its management and daily business controlled by members
of an economically disadvantaged Indian tribe or a Native Hawaiian organization,
and which meets the requirements of 13 C.F.R. Part 124. The Contractor shall
presume that socially and economically disadvantaged individuals include Black
Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans,
Subcontinent Asian Americans, and other minorities, or any other individual
found to be disadvantaged by the Administration pursuant to Section 8(a) of the
Small Business Act. The Supplier shall presume that socially and economically
disadvantaged entities also include Indian Tribes and Native Hawaiian
organizations.
(d) Contractors acting in good faith may rely on written representations
by their subcontractors regarding their status as either a small business
concern or a small business concern owned and controlled by socially and
economically disadvantaged individuals.
SMALL BUSINESS/DISADVANTAGED BUSINESS PLAN CLAUSE
- -------------------------------------------------
If the value of the goods or services to be provided by Contractor under
this Agreement is $500,000 or more, Contractor further agrees that it shall
adopt a Small Business and Small Disadvantaged Business Subcontracting Plan as
described in the clause set forth at Part 1, Section 52.219-9 of Title 48 of the
Code of Federal Regulations.
STATE CLAUSES
- -------------
If this Agreement relates to services to be performed for the State of
Illinois, its political subdivisions, or any municipal corporation within the
State of Illinois, the Equal Employment
<PAGE>
Opportunity clause set forth at 44 III. Adm. Code (S) 750, Appendix A shall be
deemed incorporated herein by reference pursuant to the language thereof.
If this Agreement relates to services to be performed for the State of
Michigan or its political subdivisions, the value of the contract is at least
$5,000, and Contractor has at least three (3) employees, the Non-discrimination
Clause for All-State Contractors adopted by the State Administrative Board on
January 17, 1967, as amended, shall be deemed incorporated herein by reference
pursuant to the language thereof.
<PAGE>
ATTACHMENT C
SPECIFICATIONS
--------------
@ROAD'S FLEET MANAGEMENT SOLUTION. The Goods operate exclusively as components
- ---------------------------------
of Supplier's Internet-based Fleet Management solution known as @Road
1. APPLICATIONS: Vtrack.com currently includes an Automatic Vehicle Location
------------
(AVL) application and an optional integrated 2-Way Messaging (Dispatch)
application ("Applications").
------------
2. OPERATION OF APPLICATIONS: The Applications are administered, web-hosted,
-------------------------
and operated by Supplier. Supplier is responsible for debugging the Applications
and regularly updating the Applications.
3. THIRD PARTY APPLICATIONS: Buyer acknowledges that Goods may not operate in
------------------------
conjunction with hardware accessories from third parties or support software
applications from third parties.
4. INTERNET BASED APPLICATION: Buyer acknowledges Supplier's application is
--------------------------
Interact based. Thus, the data of customers of Buyer who obtain Goods from Buyer
solely for such customers' internal business use, and not for further
distribution or resale ("End Users") is potentially susceptible to security
---------
breaches by third parties. The Applications utilize passwords to limit data
access to authorized End Users. However, this does not guarantee data security.
Thus Buyer will inform End Users of potential data security issues and Buyer and
End Users will hold Supplier harmless from any such data security breaches.
5. SUBSCRIBER SOFTWARE LICENSE AGREEMENT: Before the first use of the
-------------------------------------
Applications, End Users will be required to accept an on-line electronic
software license agreement. The text of the agreement will be available on-line.
6. EQUIPMENT SALE ONLY: Notwithstanding anything to the contrary in this
-------------------
Agreement, the Supplier shall have no obligation to provide the @Road service to
Buyer or to End Users hereunder. Any provision of the @Road service shall be set
forth in a separate agreement between Buyer and Supplier.
<PAGE>
The following form of agreements have been entered into between the Registrant
and the following parties:
Ameritech Mobile (Wireless) Communications, Inc.
Ameritech Mobile Communications, Inc.
Ameritech Mobile Phone Service of Illinois, Inc. and Ameritech Mobile Phone
Service of Chicago, Inc.
Cybertel Corporation
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
<PAGE>
WIRELESS NETWORK SERVICES AGREEMENT
This Services Agreement ("Agreement") is made as of July 15 1999, by and
between @Road, Inc., hereafter referred to as "@Road", a California corporation
with a principal place of business at 45635 Northport Loop East, Fremont, CA
94538, and _____________
WITNESSETH:
WHEREAS, Buyer desires to have @Road provide certain wireless data service
bureau operations and sales, marketing and technical support in the pursuit of
Buyer's business; and
WHEREAS, @Road has experience with providing networking and wireless data
operations and is prepared to provide to Buyer the services hereafter referred
to as the "Services" and described in Exhibit A, "Description of Services."
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
Section 1. Definitions
The terms defined in this Section I and any other capitalized terms defined in
other sections of this Agreement shall have the meanings herein stated.
"Application Software" means the @Road software to be licensed to End Users
as part of the Services, as identified in Exhibit A.
"End User" means the customer of Buyer using the Services.
"Excusable Downtime" means of the Scheduled Uptime, the aggregate number of
hours in any month during which the Application Server is not actually
available to process transactions initiated by End Users due to (i) action
or inaction by Buyer, (ii) failure of any Application Software other than
Application Software developed internally by @Road, which failure is not
attributable to @Road's failure to exercise due care, (iii) failure of any
telecommunications facilities, which failure is not attributable to @Road's
failure to exercise due care, (iv) failure of any hardware other than the
Application Server, which failure is not attributable to @Road's failure to
exercise due care, (v) failure of any external services, which failure is
not attributable to @Road's failure to exercise due care, or (vi) a Force
Majeure Event (as defined in Section 15 of this Agreement), which failure
is not attributable to @Road's failure to exercise due care.
"Application Server" means the computer server operated by @Road upon which
the Application Software resides and operates.
<PAGE>
"Peak Hours" means the hours during each day from 7:00 a.m. until 7:00 p.m.
Monday through Friday, Central Standard Time, excluding federal holidays.
"Non-Peak Hours" means the hours during each day that are not Peak Hours.
"Peak Hours Availability" means, for the Peak Hours, Service Uptime divided
by Scheduled Uptime less Excusable Downtime. For purposes of determining
whether @Road satisfies the Standards for Performance, Peak Hours
Availability will be measured based on a monthly average, to be calculated
once monthly within ten business days following the end of each calendar
month.
"Non-Peak Hours Availability" means, for the Non-Peak Hours, Service Uptime
divided by Scheduled Uptime less Excusable Downtime. For purposes of
determining whether @Road satisfies the Standards for Performance, Non-Peak
Hours Availability will be measured based on a monthly average, to be
calculated once monthly within ten business days following the end of each
calendar month.
"Purchase Agreement" means the purchase agreement the parties entered into
on July 15, 1999, pursuant to which agreement Buyer agrees to purchase, and
@Road agrees to sell to Buyer, certain equipment for use in connection with
the Services.
"Scheduled Downtime" means of the Peak Hours or Non-Peak Hours, as
applicable, the aggregate number of hours in any month during which the
Application Server is not actually available to process transactions
initiated by End Users due to such things as preventive maintenance, system
upgrades, etc. Scheduled Downtime must be mutually agreed to by the
parties.
"Scheduled Uptime" means of the Peak Hours or Non-Peak Hours, as
applicable, the aggregate number of hours in any month during which the
Application Server is scheduled to actually be available to process
transactions initiated by End Users.
"Service Uptime" means of the Peak Hours or Non-Peak Hours, as applicable,
the aggregate number of hours in any month during which the Application
Server is actually available to process transactions initiated by End
Users.
Other definitions are provided in the body of this Agreement.
Section 2. The Services
The services to be performed by @Road (the "Services") pursuant to this
Agreement are described in Exhibit A, "Description of Services," which is
incorporated into and forms a part of this Agreement. @Road will perform the
Services in a professional, workmanlike manner in compliance with all applicable
laws and regulations. The Services shall include the licensing of the
Application Software to End Users. The Services shall be provided for all
geographic territories where Buyer is presently or may in the future be licensed
to operate by the FCC.
<PAGE>
Section 3. Fees
3.1 Charges for Services. For the Services described in Exhibit A, Buyer
shall compensate @Road in accordance with the terms of Exhibit B, "Service
Pricing," which is incorporated into and made a part of this Agreement.
3.2 Taxes. In the event that a sales, use, excise or services tax
(including any universal service assessment due to the FCC) is assessed on the
provision of the Services or on @Road's charges to Buyer under this Agreement,
however levied or assessed (but excluding any taxes based on @Road's income),
Buyer will be responsible to pay the amount of any such tax. Buyer will also be
responsible for paying any excise taxes for data communication lines and
circuits that Buyer is responsible for providing under this Agreement. The
parties agree to cooperate reasonably with each other to determine more
accurately each party's tax liability and to minimize such liability to the
extent legally permissible. Each party shall provide and make available to the
other any resale certificate, information regarding out-of-state sales or use of
equipment, materials or services, and other exemption certificates or
information reasonably requested by either party.
3.3 @Road warrants that the prices for Services provided under this
Agreement and the terms and conditions of this Agreement are not, and, during
the Term, shall not be less favorable, in the aggregate, than the prices and
terms and conditions extended to any of @Road's other customers, similarly
situated to Buyer, now or in the future, with respect to the identical
configuration of services described in Exhibit A. In the event @Road provides
the Services to any other customer, during the Term, at lower prices and on the
same or more favorable terms and conditions, in the aggregate, as are set forth
in this Agreement, @Road shall offer such aggregate terms and conditions
(including, without limitation, such prices) to Buyer, effective on the first
date on which the Services are provided to such other customer at the more
favorable prices and terms and conditions.
Section 4. Limited Use of Software Licenses
All rights, title and interest in the Application Software, including, without
limitation, all copyrights, shall be the sole property, of @Road. @Road shall
provide licenses to use the Application Software to the End Users and @Road
shall be solely responsible for procuring and enforcing such agreements. No
license, express or implied, is granted to Buyer with respect to the Application
Software, except to the limited extent necessary for Buyer to use demonstration
units provided by @Road to Buyer to resell Services delivered by @Road under
this Agreement. Such limited license shall terminate immediately upon the
expiration, termination or cancellation of this Agreement for any reason
whatsoever, except as set forth herein. For purposes of this Agreement, the
Application Software shall be deemed "Confidential Information."
Section 5. Term
This Agreement will commence on the date first written above and, unless
otherwise terminated pursuant to Section 6, will continue for twenty four (24)
months (the "Initial Term") unless
<PAGE>
earlier terminated as provided below. Thereafter, the Agreement will be
automatically extended for additional twelve (12) month terms (each a "Renewal
Term") unless terminated by written notice from Buyer or @Road stating said
intent at least 120 days prior to the date of the termination of the Initial
Term or any Renewal Term. The Initial Term and the Renewal Terms may be
collectively referred to as the "Term."
Section 6. Termination
6.1 Termination by Buyer. Buyer may terminate this Agreement at any time upon
ninety (90) days prior written notice to @Road. Upon termination of this
Agreement under this Section 6.1, Buyer shall pay for @Road's reasonable
billable project related expenses incurred in rendering said Services to Buyer
up to the date of termination subject to Buyer's right to offset, if applicable.
Upon Buyer's request, @Road shall substantiate any amount due with proof
satisfactory to Buyer.
6.2 Termination for Cause. Upon written notice, either party may terminate this
Agreement in the event of a material breach by the other in addition to any
other remedies it may have. The party, seeking termination will provide the
other party with sufficient, reasonable written notice of such material breach
and the opportunity to cure same, as follows:
(a) at least thirty (30) days in the event of a failure to pay by Buyer any
amount due and payable under the Agreement when due, unless such deficiency
is cured within the notice period or unless such amount is part of a
Withheld Disputed Payment properly withheld in accordance with Section
12.2; and
(b) at least forty-five (45) days in the event of any other material
breach; provided, however, that if such breach cannot be cured within
forty-five (45) days, the non-breaching party may not terminate this
Agreement if the other party has made good faith efforts during such period
to implement a reasonable plan that is designed to cure the breach and is
continuing to diligently pursue the plan.
6.3 Termination for Insolvency. Upon written notice to the other party, this
Agreement may be terminated immediately by either party in the event the other
party (i) becomes insolvent, (ii) makes a general assignment for the benefit of
creditors, (iii) files a voluntary petition of bankruptcy, (iv) suffers or
permits the appointment of a receiver for its business or assets, (v) becomes
subject to any proceeding under any bankruptcy or insolvency law (unless such
proceeding is dismissed within thirty (30) days, in which case the written
notice of termination shall be ineffective), or (vi) has ceased to conduct its
business in the ordinary course.
6.4 Waiving Remedy. Either party may waive a remedy which inures to its benefit
and may, in addition, either (i) waive the underlying non-performance or breach,
or (ii) resort to its rights and remedies at law and equity; provided that such
waiver is in writing and specifically addresses the remedy being waived, and, if
applicable, the underlying non-performance or breach.
<PAGE>
6.5 Providing Information. In order to enable Buyer to explain the reasons for,
and corrective steps taken to remedy a failure, malfunction, or degradation of
the Services to the appropriate regulatory agency, at Buyer's request, @Road
shall provide, at no additional cost, all necessary information to the extent
that @Road has prepared or received such information in the ordinary course of
its business. @Road shall also provide any additional information and assistance
as may be reasonably requested, including the provision of witnesses, and Buyer
shall reimburse @Road for all costs reasonably incurred by @Road in providing
such additional information and assistance.
6.6 Cumulative Remedies. The remedies set forth herein shall be cumulative and
may be exercised singularly and concurrently.
6.7 Survival. The rights and obligations of the parties as set forth in
Sections 6.5, 6.7, 7.4, 8, 9, 12, 13, 14, 15.5, 15.6, 15.12, and all payment
obligations incurred prior to the termination of this Agreement, shall survive
expiration or termination of this Agreement for any reason.
6.8 Termination of Purchase Agreement. Unless otherwise agreed upon by the
parties in writing, this Agreement will terminate upon the termination of the
Purchase Agreement.
Section 7. Representations and Warranties
7.1 Representations and Warranties by Buyer. Buyer represents and warrants that
Buyer:
(a) has full power and authority, to undertake the obligations set forth in
this Agreement and that it is not a party to any agreement, nor will it enter
into any other agreement, that would be breached by or that would prohibit it
from entering into or performing this Agreement; and
(b) shall comply in all respects with all applicable laws and regulations
affecting the subject matter hereof.
7.2 Representations and Warranties by @Road. @Road represents and warrants that
@Road:
(a) has full power and authority to undertake the obligations set forth in this
Agreement and that it is not a party to any agreement, nor will it enter into
any other agreement, that would be breached by or that would prohibit it from
entering into or performing this Agreement;
(b) shall comply in all respects with all applicable laws and regulations
affecting the subject matter hereof;
(c) is the lawful owner or has the full right and authority to provide or to
grant the use of the Services for Buyer and its End Users; and that the Services
are and shall be, at the time of delivery and throughout the Term, free and
clear of any liens and encumbrances; and
<PAGE>
(d) will maintain in full force and effect all licenses and other agreements
with any third parties as necessary to provide the Services as identified in
Exhibit A.
7.3 Performance Representations and Warranties. @Road further represents and
warrants that:
(a) the Services, Application Software and all hardware and software necessary
to provide the Services shall perform in accordance with and meet the
requirements and Standards of Performance herein and in Exhibit A;
(b) any Services repaired or substituted under this Agreement shall be
warranted for the Term of the Agreement; and
(c) @Road shall perform the Services in a professional, workmanlike manner and
in accordance with the requirements set forth herein, including Exhibit A, and
that the Services will perform in accordance with the applicable documentation
for the Application Software.
7.4 Warranty Disclaimer. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, @ROAD,
DISCLAIMS ALL WARRANTIES AND REPRESENTATIONS, WHETHER EXPRESSED OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ALL WARRANTIES FOR:
(a) MERCHANTABILITY OR APPLICABILITY FOR A PARTICULAR PURPOSE;
(b) ANY SOFTWARE SECURITY FEATURES RELATING TO SECURITY OF THE END USER'S LINKS
TO THE SYSTEM AND INCLUDED IN THE APPLICATION SOFTWARE WHICH SECURITY FEATURES
ARE PROVIDED "AS IS" WITHOUT ANY WARRANTY WHATSOEVER. @ROAD EXPRESSLY DISCLAIMS
ALL WARRANTIES, EXPRESS, IMPLIED OR STATUTORY (TO THE EXTENT PERMITTED BY LAW),
AS TO ANY SUCH SECURITY FEATURES, INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE;
(c) LAPSES OF SERVICE ARISING FROM CAUSES BEYOND THE DIRECT CONTROL OF @ROAD,
INCLUDING, WITHOUT LIMITATION, DEFECTS IN PRODUCTS OR SERVICES PROVIDED TO @ROAD
OR BUYER BY ANY THIRD PARTY VENDORS NOT UNDER CONTRACT WITH @ROAD;
(e) LAPSES IN SERVICE CAUSED BY EQUIPMENT ON BUYER'S PREMISES WHICH IS NOT
PROVIDED OR MAINTAINED BY @ROAD OR ITS AGENTS; OR
(f) LAPSES ASSOCIATED WITH ANY ACT OR OMISSION ON THE PART OF BUYER'S EMPLOYEES
OR AGENTS.
Section 8. Indemnification
8.1 Indemnification by @Road.
<PAGE>
8.1.1 Scope of Indemnification. Subject to the provisions of Article 9 hereto,
@Road agrees to indemnify Buyer from any direct damages, liability or other
expenses (including, but not limited to, reasonable attorneys' fees and court
costs) incurred by Buyer and which arise out of or result from any claim, suit
or proceeding brought by a third party and based on (i) intentional wrongful
acts or willful misconduct of employees, contractors or agents of @Road; or (ii)
claims for injury to person or property caused by the negligence of employees,
contractors or agents of @Road.
8.1.2 Intellectual Property Indemnification. @Road shall defend, indemnify and
hold harmless Buyer from and against any claims, suits, loss, damage, cost
(including replacement cost), expense (including but not limited to reasonable
attorney's fees and costs) or liability that may result by reason of any claim
of infringement of any patent, copyright, trade secret, trade dress or trademark
rights or other proprietary right based on the performance and receipt of
Services provided to End Users and/or Buyer under this Agreement; provided
however, that such indemnification shall not apply to any claims which arise out
of or result from any infringement claim made by any person based upon any
combination of the Application Software with products of Buyer or another third
party, which combination is the basis for such claim and the Services would not
be infringing if used alone. Buyer shall promptly notify @Road of any claim of
infringement for which @Road is responsible hereunder and shall cooperate with
@Road to facilitate the defense of any such claim. If the use of the Services
shall be prevented or appears likely to be prevented by an injunction, court
order or settlement as a result of any such claim, @Road shall at its expense
use best efforts to either: (i) by license or release from claim of infringement
or misappropriation, procure for Buyer the right to continue using the Services
or, (ii) modify the Services so that they are functionally equivalent to the
original Services but are no longer subject to the claim of infringement or
misappropriation. In the event @Road cannot perform under either of the above
options, @Road shall refund to Buyer the full amount of any pre-payments for
discontinued Services paid for by Buyer but not provided by @Road prior to the
discontinuation of the Services.
8.1.3 Conditions for @Road's Indemnity, Obligations. @Road's obligations under
this section are subject to the following conditions and obligations of Buyer:
(1) Buyer agrees to notify @Road by certified mail, return receipt requested,
promptly upon receipt of written notice of any claim, suit, action or proceeding
identifying the Service, and for which Buyer may be entitled to indemnification
under this Agreement; (2) Buyer permits @Road to have the sole right to control
the defense and settlement of any such claim provided, that, @Road should keep
Buyer reasonably apprised of the continuing status of the claim, including any
lawsuit resulting therefrom, and shall permit Buyer, upon Buyers written
request, to participate, at Buyers expense, in the defense or settlement of such
claim, (3) Buyer provides reasonable assistance to @Road at @Road's expense, in
the defense of same, and (4) Buyer does not enter into any settlement agreement
or otherwise settle any such claim without @Road's express prior consent or
request.
8.2 Indemnification by Buyer.
<PAGE>
8.2.1 Scope of Indemnification. Subject to the provisions of Article 9 hereto,
Buyer agrees to indemnify @Road from any direct damages, liability or other
expenses (including, but not limited to, reasonable attorneys' fees and court
costs) incurred by @Road and which arise out of or result from any claim, suit
or proceeding brought by a third party and based on (i) intentional wrongful
acts or willful misconduct of employees, contractors or agents of Buyer; (ii)
claims for injury to person or property caused by the negligence of employees,
contractors or agents of Buyer; (iii) representation of the Services by Buyer in
a manner materially inconsistent with @Road's application descriptions and
capabilities; (iv) other use or distribution of the Services by Buyer
inconsistent with the terms of this Agreement; or (v) any taxes for which Buyer
is responsible for paying under Section 3.2.
8.2.2 Conditions for Buyer's Indemnification Obligations. Buyer's obligations
under this section are subject to the following conditions and obligations of
@Road: (1) @Road agrees to notify Buyer by certified mail, return receipt
requested, promptly upon knowledge of any claim, suit, action or proceeding for
which it may be entitled to indemnification under this Agreement; (2) @Road
permits Buyer to have the sole right to control the defense and settlement of
any such claim provided, that, Buyer should keep @Road reasonably apprised of
the continuing status of the claim, including any lawsuit resulting therefrom,
and shall permit @Road, upon @Road's written request, to participate, at @Road's
expense, in the defense or settlement of such claim; (3) @Road provides
reasonable assistance to Buyer at Buyer's expense, in the defense of same; and
(4) @Road does not enter into any settlement agreement or otherwise settle any
such claim without Buyer's express prior consent or request.
8.3 Exclusive Remedy. The indemnification rights and remedies of each party
pursuant to Sections 8.1 and 8.2, collectively shall be the exclusive remedies
of such party against the other party with respect to the claims to which such
indemnification or remedies relate.
Section 9. Limitation of Liability and Damages
9.1 General. In no event will either party be liable for any indirect,
incidental, special or consequential damages of any kind or nature whatsoever,
suffered by the other party, any End User, customer, vendor or any distributor,
including, without limitation, lost profits, business interruptions, or other
economic loss arising out of the performance or non-performance hereunder or any
use of or failure to be able to use the Services.
9.2 Limitation of @Road's Liabilities.
(a) @Road assumes no liability for trademark infringements involving any
marking or branding of the Services by Buyer and not approved by @Road.
(b) With respect to any damages suffered by Buyer, any End User,
customer, vendor or any distributor arising out of, or based upon, the
failure of the Application Software, @Road's aggregate liability to Buyer
under this Agreement shall be limited to the aggregate of the charges
paid by Buyer under this Agreement.
<PAGE>
(c) The provisions of Section 9.2 shall not apply to or in any way limit
@Road's indemnification obligations contained in Section 8.1.1 (i) or
8.1.2 above.
9.3 Limitation of Buyer's Liabilities. With respect to any damages suffered
by @Road, any End User, customer, vendor or any distributor arising out of, or
based upon this Agreement, Buyer's aggregate liability to @Road under this
Agreement shall be limited to the aggregate of the charges paid by Buyer under
this Agreement.
Section 10. Standards of Performance
10.1 Definition of Standards. The Standards of Performance and specifications
for the Service shall be defined as (i) Peak Hours Availability of 99.5% and
(ii) Non-Peak Hours Availability of 99.0%. Within ten (10) business days
following the end of each calendar month, @Road will report to Buyer measured
Peak Hours Service Availability and Non-Peak Hours Service Availability for the
preceding month. If the Standards of Performance are not met during such month,
@Road will identify the reasons for such failure to meet the Standards of
Performance, if known, and @Road and Buyer will use best efforts to mutually
agree upon an action plan to meet the Standards of Performance.
10.2 Substitute Service. The Standards of Performance are applicable to
replacement and substitute Services.
10.3 Written Notice. The Standards of Performance shall not be subject to
change or modification by either party without the prior written approval of the
other party.
10.4 System Maintenance. With the exception of emergencies, and subject to the
provisions of Exhibit A, all maintenance shall be scheduled upon agreement of
Buyer, shall be performed during Non-Peak Hours, and shall not be scheduled
without ten (10) days prior written notice to Buyer.
Section 11. Audit
11.1 By Buyer. Buyer shall have the right, with reasonable written notice to
@Road and at its expense, and subject to @Road's reasonable security rules, to
examine and audit, through a third party auditor reasonably acceptable to @Road,
any and all invoices and other records, regardless of form, created by @Road in
connection with any item billed by @Road to Buyer hereunder. @Road shall
maintain the foregoing records in accordance with generally accepted accounting
principles and retain the same for such period as may be required by law and, in
any event, not less than three (3) years from the issuance by @Road to Buyer of
the applicable bill. Any such audit shall be performed at Buyer's expense during
normal business hours; provided, that the cost of such audit (in addition to the
full amount of any underpayment) shall be promptly paid by @Road if such audit
reveals an overpayment by Buyer of more than five percent (5%) of the amounts
payable by Buyer to @Road in any six (6) month period.
<PAGE>
11.2 By @Road. @Road shall have the right, with reasonable written notice to
Buyer and at its expense, and subject to Buyer's reasonable security rules, to
examine and audit, through a third party auditor reasonably acceptable to Buyer,
any and all invoices and other records, regardless of form, created by Buyer in
connection with the Services. Buyer shall maintain the foregoing records in
accordance with generally accepted accounting principles and retain the same for
such period as may be required by law and, in any event, not less than three (3)
years from the issuance by Buyer to @Road of the applicable bill. Any such audit
shall be performed at @Road's expense during normal business hours; provided,
that the cost of such audit (in addition to the full amount of any underpayment)
shall be promptly paid by Buyer if such audit reveals an underpayment by Buyer
of more than five percent (5%) of the amounts payable by Buyer to @Road in any
six (6) month period.
11.3 Confidentiality. All information obtained by either party during such
audits shall be treated as Confidential Information in accordance with this
Agreement.
Section 12. Disputes
12.1 Injunctive Relief. If either party, individually or in concert with any
other person, breaches, or threatens to commit a breach of the confidentiality
provisions of this Agreement, the other party shall have the right to receive
immediate injunctive relief against such actual or threatened breach, and the
party against whom such relief is sought shall not urge as a defense that there
is an adequate remedy at law. This provision shall not affect any party's right
to seek or defend against injunctive relief on any other issue.
12.2 Payment Disputes. In the event of a good faith dispute regarding the
amount of fees or other charges due to @Road hereunder, Buyer may, at its
option, withhold payment of such disputed amount (the "Withheld Disputed
Payment") provided that within thirty (30) days after the earliest due date for
any fees or charges included in each Withheld Disputed Payment, Buyer has
delivered in writing to @Road (i) notice of its intention to withhold payment;
and (ii) a clear and complete description of all issues in dispute relating to
the Withheld Disputed Payments.
Section 13 Publicity.
Neither @Road nor Buyer shall use the name or any of the trademarks of the other
party, or disclose in any of its advertising or other materials that the other
party is providing or receiving service hereunder without prior written consent
from the other. Specifically, each party shall submit to the other party all
advertising, sales promotion, press releases and other publicity matters
relating to the Service performed under this Agreement wherein the name or any
mark of the other party is mentioned, or language used from which the connection
of the other party's name or mark therewith may be inferred or implied. Each
party further agrees not to publish or use any such advertising, sales
promotion, press releases, or publicity, materials without the other party's
prior written approval. Each party shall respond in writing to a request for
approval within five (5) business days of receipt of the request. Approval shall
be deemed granted if no response is provided within such five (5) business day
period. Notwithstanding anything to the contrary set forth in this Section 14,
no prior submission to or approval by Buyer shall be
<PAGE>
required in connection with the disclosure by @Road of the services provided in
the Agreement in any registration statement or report filed by @Road with the
Securities and Exchange Commission.
Section 14 Confidential Information
14.1 Any information, including but not limited to, specifications, drawings,
computer programs, technical or business information or other data in whatever
form (hereinafter "Information"), furnished by either party to the other,
whether in writing, orally or visually, under or in contemplation of this
Agreement or to which such party has access through its performance hereunder
shall be considered confidential and shall be subject to the following:
(a) The receiving party shall restrict disclosure of the information to
the receiving party's employees with a "need to know" (i.e., employees that
require the information to perform their responsibilities in connection with
this Agreement) and shall not disclose it to any other person or entity without
the prior written consent of the disclosing party;
(b) The receiving party shall use the information only for purposes of
performing under this Agreement;
(c) The receiving party shall advise those employees who access the
information of their obligations with respect thereto;
(d) The receiving party shall copy the Information only as necessary for
those employees who are entitled to receive it and shall ensure that all
confidentiality notices are reproduced in full on such copies; and
(e) The receiving party shall return all copies of such information to the
disclosing party at the disclosing party's request.
14.2 The receiving party recognizes and agrees that the unauthorized use or
disclosure of the information would cause irreparable harm to the disclosing
party for which it would have no adequate remedy at law, and that an actual or
contemplated breach of this Section shall entitle the disclosing party to obtain
immediate injunctive relief prohibiting such breach, in addition to any other
rights available to it. The obligations herein contained shall expressly survive
the termination or expiration of this Agreement.
14.3 The information shall not be considered confidential and shall not be
subject to the foregoing if the receiving party can demonstrate that the
information:
(a) Is or becomes available to the public through no breach of this
Agreement;
(b) Was previously known by the receiving party without any obligation to
hold it in confidence;
<PAGE>
(c) Is received from a third party fee to disclose such information
without restriction;
(d) Is independently developed by the receiving party without the use of
the disclosing party's information;
(e) Is approved for release by written authorization of the disclosing
party, but only to the extent of such authorization;
(f) Is required by law or regulation to be disclosed, but only to the
extent and for purposes of such required disclosure; or
(g) Is disclosed in response to a valid order of a court or lawful
request of a governmental agency, but only to the extent of and for the purposes
of such order or request, provided that the receiving party first notifies the
disclosing party of the order or request ten (10) days prior to disclosure and
permits the disclosing party to seek an appropriate protective order.
14.4 Limitation. @Road will not be in breach of its obligations under this
Section 14 if disclosure occurs as a result of corruption, loss or mis-
transmission of data or for the security of data during transmission via public
telecommunications facilities, provided that @Road has complied with its
obligations under Section 14.1. This Agreement shall not preclude Buyer from,
and Buyer shall not be in breach of its obligations under this Section 14 by,
disclosing the performance specifications or capabilities of the Services in
marketing the Services to End Users and the general public.
14.5 Other. Buyer agrees that, subject to payment to Buyer of a reasonable
fee to be mutually agreed upon by the parties, @Road will have the right to use,
sell, and otherwise distribute the aggregated End User data and information;
provided, however, that @Road shall not under any circumstances disclose the
names or identities of the End User. Upon written request from Buyer, @Road
shall provide Buyer with the End User data and information in the form in which
it is maintained by @Road.
Section 15. Miscellaneous
15.1 Force Majeure. Neither Buyer nor @Road shall be liable to the other for
any delay or failure in performance hereunder (other than a failure to pay
monies) due to fires, strikes, other labor disputes, embargoes, requirements
imposed by governmental regulations, civil or military authorities, acts of God,
the public enemy or other causes which are beyond the reasonable control of the
party unable to perform (hereinafter "force majeure"), provided that causes or
impacts related to the arrival of the next millennium shall not be considered a
force majeure. If a force majeure occurs, the party delayed or unable to
perform shall give immediate notice to the other party and the other party may
terminate the Agreement if the force majeure remains in effect for more than 60
days.
15.2 Relationship of the Parties. Nothing in this Agreement shall be deemed
to constitute a partnership or joint venture between the parties, nor shall
either party be deemed the agent of the
<PAGE>
other. This Agreement shall not be construed to create rights, expressed or
implied, on behalf of, or for the use of, any parties, aside from Buyer and
@Road; and, Buyer and @Road shall not be obligated, separately or jointly, to
any third parties or any third party beneficiaries by virtue of this Agreement.
Buyer acknowledges that @Road may perform services similar to the Services for
others and this Agreement shall not prevent @Road from providing such services.
@Road may perform its obligations through its affiliates or through the use of
agents, subcontractors or independent contractors; provided, however, that @Road
shall not be relieved of its obligations under this Agreement by use of such
affiliates or subcontractors.
15.3 Year 2000 Compliance. @Road warrants that all Services, shall be Year
2000 Compliant, as defined below. This warranty begins upon the performance of
the Service and shall continue during the term of this Agreement. Upon receiving
notice thereof, as Buyer's sole remedy under this Section 15.3, @Road shall
promptly correct any breach of this warranty, including correction of any
invalid data or information resulting therefrom. "Year 2000 Compliant" means
proper performance of any Service which is dependent upon or involves calendar
dates before, during and after the Year 2000, including both single century and
multi-century formulas, leap year capabilities and transition from the year 2000
to the year 2001. "Proper performance" means the Services will not cause an
abnormally ending scenario or generate incorrect values involving dates,
provided that all other hardware, software, firmware and other products used
with such Services properly exchange accurate date data with the Services.
15.4 Notices. Any notice which under the terms of this Agreement must or may
be given or made by any party hereunder shall be in writing and shall be
delivered personally or sent by express delivery service or by certified mail,
mail, return receipt requested, addressed to the respective parties as follows:
To Buyer:
with a copy to:
<PAGE>
To @Road:
Amin Mufti
VP Business Development
@Road, Inc.
45635 Northport Loop East
Fremont, CA 94538
With a copy to:
Venture Law Group
Attn: Tae Hea Nahm
2775 Sand Hill Road
Menlo Park, CA 94025
or to such other addresses either party shall designate by proper notice.
Notices will be deemed to have been received as of the earlier of the date
actual receipt or, in case of notices sent via U.S. mail, three (3) days after
mailing. A signed receipt shall be obtained where a notice is delivered in
person.
15.5 Non-Waiver. No term or provision hereof shall be deemed waived or any
breach excused, unless such waiver or consent shall be in writing and signed by
the party claimed by the other to have waived or consented. Any consent by any
party, to, or waiver of, a breach by the other, whether express or implied,
shall not constitute a consent to, waiver of, or excuse for any other different
or subsequent breach.
15.6 Partial Invalidity. If any term or provision of this Agreement shall be
found to be illegal or unenforceable, then notwithstanding such illegality, or
unenforceability, this Agreement shall remain in full force and effect and such
term or provision shall be deemed to be restated to reflect the original
intentions of the parties as nearly as possible in accordance with applicable
law.
15.7 Headings. The headings used in this Agreement are for reference purposes
only and shall not be deemed a part of this Agreement. This Agreement was
drafted with the joint participation of both parties and shall be construed
neither against nor in favor of either, but rather in accordance with the fair
meaning thereof. In the event of any apparent conflicts of inconsistencies
between this Agreement or any Schedule or Exhibit, to the extent possible such
provisions shall be interpreted to make them consistent, and if such is not
possible, the provisions of this Agreement shall prevail.
15.8 Entire Agreement. This Agreement, and the Exhibits and Schedules hereto,
all of which are incorporated by this reference, constitute the entire agreement
and understanding between the parties with respect to its and their subject
matter and may not be contradicted by evidence of any prior or contemporaneous
oral or written agreement.
15.9 Amendment. This Agreement may be amended or supplemented only by a
writing that refers specifically to this Agreement and is signed by duly
authorized representatives of both
<PAGE>
parties. Any terms and conditions varying from this Agreement and the Schedules
and Exhibits on any order or written notification from either party are void.
15.10 No Third Party Beneficiaries. The parties do not intend, nor will any
clause be interpreted, to create for any third party any obligations to or from
either @Road or Buyer hereunder.
15.11 Affiliates and Assigns. As used in this Agreement, the term
"Affiliates" shall include Ameritech Corporation and any business entity which
is, directly or indirectly, at least fifty percent (50%) owned by Ameritech
Corporation. "Affiliate" also means any successor to Ameritech Corporation,
whether by change of name, dissolution, merger, consolidation, reorganization or
otherwise. Neither party shall assign any right or obligation under this
Agreement without the other party's prior written consent which shall not be
unreasonably withheld provided, however, that either party shall have the right
to assign its rights, obligations and privileges hereunder to a merger partner,
successor in business, or acquirer of all or substantially all of such party's
stock, or equivalent equity securities business or assets without obtaining the
other party's consent to such assignment. Any other attempted assignment shall
be void, except that either party may assign moneys due or to become due to it,
provided that (a) the assigning party gives the other party at least thirty
(30) days prior written notice of such assignment and (b) such assignment does
not impose upon the other party obligations to the assignee other than the
payment of such moneys. Notwithstanding the foregoing, Buyer may assign this
Agreement, in whole or in part, to any of its Affiliates who agree in writing to
be bound by the terms and conditions of this Agreement. Upon such assignment and
assumption of liability thereto by the assignee the assignor shall be discharged
of any liability under this Agreement. Without limiting the generality of the
foregoing, this Agreement shall be binding upon and shall inure to the benefit
of the parties' respective successors and assigns.
15.12 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Illinois, as such laws are applied to
contracts which are entered into and performed entirely within the State of
Illinois.
15.13 Scope of Services. The Services provided under this Agreement are for
the benefit of Buyer and End Users located within the United States.
15.14 Nonperformance. To the extent any nonperformance by either party of its
obligations under this Agreement results from or is caused by the other party's
failure to perform its obligations under this Agreement, such nonperformance
shall be excused.
15.15 Limitation Period Upon Termination or Expiration. Neither party may
bring an action, regardless of form, arising out of this Agreement more than two
years after the cause of action has arisen or the date such cause of action was
or should have been discovered.
15.16 Insurance. @Road shall maintain during the term of this Agreement: (a)
Worker's Compensation insurance as prescribed by the law of the state in which
@Road's obligations under this Agreement are performed, (b) Employer's
Liability insurance with limits of at least $2,000,000 for each occurrence, (c)
Comprehensive General Liability insurance (including
<PAGE>
contractual liability) with combined single limits for each occurrence of at
least $2,000,000, and (d) if the use of motor vehicles is required,
Comprehensive Automobile Liability insurance with combined single limits for
each occurrence of at least $2,000,000 for bodily injury and property damage.
Neither @Road nor @Road's insurer(s) shall have a claim, right of action or
right of subrogation against Buyer or its affiliates based on any loss or
liability insured against under the foregoing insurance. @Road's policy shall be
endorsed to name Ameritech Corporation and its affiliates as additional insureds
and shall contain a clause stating that: "_______________________________
is to be notified in writing at least sixty (60) days prior to cancellation of
or any material change in this policy." @Road shall furnish a copy of the
endorsement and certificates evidencing the foregoing insurance coverage prior
to commencement of Services hereunder. @Road's purchase of insurance shall not
in any way limit @Road's liability under this Agreement.
15.17 Counterparts. This Agreement may be executed in counterparts. Each such
counterpart shall be an original and together shall constitute but one and the
same document.
15.18 Mutual Cooperation. @Road and Buyer each will use commercially
reasonable efforts to achieve the objectives of this Agreement.
15.19 Nonexclusivity. This Agreement does not grant to @Road any exclusive
right or privilege to provide Services to Buyer of the type contemplated herein,
and Buyer reserves the right to contract with other parties for the procurement
of comparable services.
15.20 Billing Records. @Road shall maintain in accordance with generally
accepted accounting principles complete and accurate records related to amounts
billed to and payments made by Buyer hereunder including, but not limited to,
records reflecting all labor hours, travel, and out-of-pocket expenses incurred
in connection with @Road's performance hereunder. @Road shall provide Buyer
supporting documentation concerning any disputed invoice or payment within
thirty (30) days after Buyer notifies @Road of a dispute. Payments made under
this Agreement shall be subject to final adjustment as determined by such
review. @Road shall retain such records for a period of three (3) years from the
expiration of this Agreement or such length of time as may be required by any
federal, state or local law, ordinance or regulation, whichever is longer.
<PAGE>
@ROAD, INC.
Signature: /s/ AMIN MUFTI Signature: /s/
----------------------- --------------------------
Printed Name: AMIN MUFTI Printed Name:
--------------------- -----------------------
Title: VP Business Development Title:
---------------------------- ------------------------------
Date: 8/9/1999 Date: 8/31/99
----------------------------- ------------------------------
<PAGE>
EXHIBIT A
DESCRIPTION OF SERVICES
-----------------------
. Services Overview. @Road will provide data center service bureau
-----------------
operations, sales and marketing assistance, technical support and product
training as part of the Ameritech's offering of its Ameritech Vehicle Location
Service (VLS) to the End Users. This Description of Services ("DOS") will cover
in detail each aspect of the Services to be provided by @Road pursuant to the
Wireless Network Services Agreement. This DOS also describes each party's
responsibilities in relation to each other and to third parties whose software,
hardware and maintenance will be an integral part of this DOS. @Road shall
notify Ameritech in writing of the identity of any such third parties.
@Road will operate for Ameritech a specific software application ("@Road")
for providing a Vehicle Location Service ("VLS"). This software application
shall be the "Application Software." The VLS will consist of a computer server
that collects information from a combination radio modern/GPS receiver designed
specifically for use with the VLS. The VLS will allow End Users remote access to
the Application Software through an HTML browser running on a desktop computer
for viewing the vehicle locations and generating vehicle location reports.
@Road will provide components including data center facilities, internet
connectivity to the VLS Computer Server, Computer Server Hardware and
Application Software. The specific deliverables and responsibilities of the
parties are discussed in detail in the remainder of this DOS.
. Data Center Facilities. @Road will provide Data Center Facilities ("DCF")
----------------------
either directly or through a third party in which the VLS Computer Server and
Application Software will reside. The DCF will include, at a minimum, the
following;
. Diesel generator backup power
. Rack-amount equipment
. UPS power on each rack
. Secure, key card access to the building and separate key card
access to the facility
. A/C facilities separate and redundant from building system
. Internet Connection. The DCF and the Ameritech CDPD network will be
-------------------
connected via the internet.
. Hardware. @Road will supply a minimum of two Internet-connected routers
--------
within the DCF. They will be configured such that a failure of one of the
routers will still allow the other router to manage Internet data traffic.
<PAGE>
. Facilities. @Road will provide rack space and UPS power for the @Road
----------
routers in the DCF along with space for any other ancillary equipment required
to provide Internet connectivity.
. Physical Installation. @Road or a third party contracted by @Road will
---------------------
perform all physical installation of equipment in the DCF.
. Network Provisioning. @Road will retain responsibility for the ongoing
--------------------
maintenance and service charges for the Internet connectivity to the DCF.
Ameritech will retain responsibility for the ongoing maintenance and service
charges for the Internet connectivity to the Ameritech CDPD network.
. Monitoring and Administration. @Road will provide 24 hour by 7 day
-----------------------------
monitoring of the routers in the DCF. Anytime that @Road becomes aware that the
routers are not functioning properly and is or might become customer affecting,
@Road will notify the designated Ameritech representative(s) within 15 minutes
of becoming aware of the problem, and the Problem Resolution and Escalation
Procedures set forth in Section 5.1 shall apply. Ameritech will provide @Road
contact information for reporting any detected problems.
. Vehicle Location Service. The Vehicle Location Service ("VLS") is the
------------------------
provisioning, support and ongoing maintenance of a server running the
Application Software. @Road provides geographic position data collection from
vehicles equipped with the @Road, Inc. Model RC-10 CDPD/GPS radio unit. @Road
also provides an Internet accessible map display screen viewable with Netscape
and Microsoft Interneact browsers loaded with a browser plug-in supplied by
Autodesk, Inc.
. Facilities. All VLS computer server hardware and associated components
----------
will reside at the DCF.
. Hardware. @Road will provide a computer server ("@Road Server") to run
--------
the VLS Ameritech will purchase the RC-10 vehicle units from @Road and re-sell
them to End Users.
. Hardware Installation and Maintenance. @Road will perform any required
-------------------------------------
installation and maintenance of the @Road Server. Ameritech is responsible for
any required installation of the RC-10 units purchased from Ameritech by End
Users. IP addresses for the @Road Server are assigned by @Road. Ameritech will
assign the IP addresses for the RC-10 units.
. Software. @Road will supply all of the necessary, software for the
--------
@Road Server.
. Software Installation. @Road will be responsible for all @Road Server
---------------------
software installation.
<PAGE>
. Monitoring and Support. @Road will monitor the @Road Server on a 7
----------------------
day by 24 hour basis. Anytime that @Road becomes aware that the @Road Server is
not functioning properly and is or will become customer affecting, @Road will
notify, the designated Ameritech representative(s) within 15 minutes of becoming
aware of the problem, and the Problem Resolution and Escalation Procedures set
forth in Section 5.1 shall apply. Ameritech will provide @Road contact
information for reporting problems.
. Customer Provisioning. Ameritech will be responsible for managing
---------------------
the overall provisioning process of any new Ameritech End User. @Road will be
responsible for updating the @Road Server to allow access by any Ameritech End
User.
The activation and installation process for VLS is described in Exhibit D,
VLS Activation & install Process. The configuration form that will be used to
collect customer information for provisioning new accounts on the @Road Server
is attached as Exhibit E. Any changes to this form will be mutually agreed to
between @Road and Ameritech. When provisioning a new End User, Ameritech will
fax or email the completed Configuration Form to @Road.
. Customer Deactivation. Ameritech will be responsible for managing
---------------------
the overall deactivation process. The VLS customer Deactivation Form is attached
as Exhibit F. Any changes to this form will be mutually agreed to between @Road
and Ameritech. When a customer requests a deactivation from the VLS Service,
Ameritech will complete the deactivation form and fax or email the completed
form to @Road. @Road will be responsible for removing access by the End User to
the Vehicle Location Service server.
. End User Support. @Road will provide Level 1 Technical Support
----------------
("L1TS") to End Users. The L1TS function accepts calls from End Users or the
Ameritech Wireless Data Call Center ("AWDCC") with questions or problems on the
VLS and RC-10 units. @Road will perform problem isolation, and will escalate to
the appropriate third party (including Ameritech) if it is determined that the
problem cannot be resolved by @Road. If @Road determines that a reported problem
is isolated to the Ameritech CDPD Network, @Road will contact the AWDCC to
report the problem. The AWDCC will be responsible for contacting the appropriate
Ameritech Technical Support Personnel to ensure that the problem is resolved.
The AWDCC will be responsible for contacting @Road to provide notification once
the problem has been resolved.
@Road will accept support calls from 7am until 7pm, Monday through Friday,
Central Standard Time. During off hours and weekends, @Road will provide support
through an answering service designated by @Road. The answering service will
accept the End User's call, and will record the End User's name, company name
and phone number at a minimum. The answering service will then send a page to
the @Road designated on-call technician. The answering service will either
provide the on-call technician with the customer name and phone number via
alpha-numeric page or the on-call technician will call into the answering
service to retrieve it. The on-call technician will then provide a return phone
call to the End User within two hours that the End User placed the call to the
answering service.
<PAGE>
. Problem Resolution and Escalation Procedures. @Road will perform the
--------------------------------------------
following procedures to resolve support problems. The category of the problem
reported, as determined by the End User, will determine the escalation procedure
used for resolution.
- Category l - End User reports an unusual abort or shutdown but is
able to restart; End User requests a feature or change to existing
operation - service for the End User remains in operation.
- Category 2 - End User reports one or more RC-10 units are not
functioning or that access to or a feature of the @Road Server is not
functioning properly - service for the End User is down or is
significantly impaired.
- Category 3 - End User reports that one or more RC-10 units are not
functioning or that access to or a feature of the @Road Server is not
functioning properly and L1TS determines that either all or part of the
@Road Server is down - service for an entire customer account or all
customer accounts is down or is significantly impaired.
Category 1. Category 1 calls will be analyzed by the @Road Technical Support
- ----------
Representative ("TSR") to determine if the problem is part of the capabilities
of the Application Software. The problem will be resolved following the process
described in this Description of Services. If the problem was a temporary
service stoppage, error message or feature request, the problem or feature
request will be documented and forwarded to the @Road Manager of Technical
Support. If necessary, Category 1 problem resolution work is superseded by the
existence of Category 2 or Category 3 problems until the Category 2 or 3 problem
is resolved and the End User(s) is (are) up and running.
Category 2. For all Category 2 calls, L1TS personnel will work immediately and
- ----------
diligently to attempt to resolve the problem within 2 hours. L1TS personnel will
continue to work during normal business hours on the problem until resolved.
Category 2 problems will be transferred to the next work shift for ongoing work
if the outage is not resolved at the close of shift. @Road will provide
reasonable and best efforts to ensure that all Category 2 issues are completely
resolved within 1 business day. Category 2 problem resolution work is superseded
by the reporting of Category 3 problems if the determination is made that the
Category 2 problem is not related to the Category 3 problem.
Category 3. Category 3 problems are treated with top priority. If L1TS detects a
- ----------
Category 3 problem, they are instructed to immediately notify all other on-shift
L1TS personnel including the L1TS manager on duty. If the problem has not been
resolved within 30 minutes, the Manager of Technical Support ("MTS") for @Road
will be contacted regardless of the time of day. If not available, progressively
higher levels of management will be contacted. All work by any technical support
person will be suspended and all available resources will be committed to the
problem working around the clock until resolved. @Road will provide reasonable
and best efforts to ensure that all Category 3 issues are completely resolved
within 1 day.
<PAGE>
. Scheduled Maintenance and Upgrade Procedures. Network, software and
--------------------------------------------
hardware components of the VLS may require scheduled maintenance to, among other
reasons, improve performance, add features or maintain a current and supportable
infrastructure. @Road and Ameritech will use the following procedure for
scheduling maintenance downtime and for putting new software releases into
service.
Step 1 -- @Road will determine that some combination of hardware, software
or network components must be scheduled for maintenance or replacement. If
@Road determines the maintenance can be performed without material or
visible affect on End Users and thus End Users will incur no downtime from
the upgrade, @Road will proceed with the upgrade at its discretion. If
@Road determines that the maintenance will have a material or visible
affect on End Users including, but not limited to, new features or changes
to End User operation or incur End User downtime, the maintenance procedure
will move to Step 2.
Step 2 -- @Road will send a written notice to Ameritech outlining the
reason for the upcoming scheduled maintenance ("Maintenance Notice"). If
the maintenance work will include new features visible to End Users or
changes to End User operation, @Road will outline the features of the
upgrade including, if known, any potential problems which may be
encountered during or after the upgrade in the Maintenance Notice. Within
the Maintenance Notice, @Road will provide information for Ameritech to
access a test server running the upgraded software. From the time of the
Maintenance Notice, Ameritech has 30 calendar days to perform any testing
of the upgrade. @Road L1TS will be available to Ameritech by telephone or
email to review test results and discuss test progress. At the earliest
possible time, but no longer than 30 days from the date of the Maintenance
Notice, Ameritech will inform @Road in waiting of the acceptance or
rejection of the upgrade. If the upgrade is rejected, Ameritech will
document those problems or features which led to the rejection. If the
upgrade is accepted, the process will move to Step 3. If no response is
received, @Road will consider the upgrade accepted.
Step 3 -- @Road will inform Ameritech in writing of the scheduled
maintenance downtime ("Downtime Notice"). In the Downtime Notice, @Road
will specify the time and date of the maintenance where the date is no less
than 10 calendar days from the date of issue of the Downtime Notice. In the
Downtime Notice, @Road will specify the period of time the service will be
down. This specified period will be considered Excused Downtime.
Ameritech may request a change to the date, time or period by responding in
writing within 5 calendar days from the date of the Downtime Notice. If
Ameritech requests a rescheduling of the maintenance, @Road and Ameritech
will determine a mutually acceptable time, date and period. @Road will then
issue a Revised Downtime Notice and proceed with the maintenance at the
specified time.
<PAGE>
. VLS Sales Training. @Road will provide one (1) day of VLS sales training
------------------
at no additional cost to Ameritech sales and technical support personnel for
each Ameritech market which offers the Services hereunder. Thereafter, @Road
will provide additional reasonable training to Ameritech, provided that
Ameritech reimburses @Road for all reasonable travel, lodging, and meal expenses
@Road incurs in connection with providing such training.
. Facilities and Personnel. @Road will provide a full time, dedicated Sales
------------------------
Support Representative ("SSR") to Ameritech for the purpose of training the
Ameritech sales force on an as-needed basis and assisting with customer sales
activity, at no additional cost to Ameritech. The @Road SSR will provide the
sales training at locations provided by Ameritech.
. Covered Markets. @Road will provide training in the metropolitan areas of
---------------
all of Ameritech's CDPD coverage areas.
. Scheduling. Ameritech and @Road will work together to schedule training
----------
times that are mutually acceptable.
<PAGE>
EXHIBIT B
@ROAD SERVICE PRICING
---------------------
Plan Update Rate Pricing (per month)
Basic AVL
Basic AVL [*] [*]
AWL & 2-Way Messaging [*] [*]
AWL & 2-Way Messaging [*] [*]
* CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Exhibit D
VLS Activation and Install Process
1. Ameritech Rep sells VLS application
2. Ameritech Rep obtains credit approval on customer
3. Customer signs Ameritech CDPD Activation Form
4. Customer gives VLS Configuration Form to customer
5. Customer completes VLS Configuration Form and faxes it to Ameritech Rep
6. Ameritech Rep obtains IP address(es) for customer
7. Ameritech Rep determines if customer or Ameritech will install RC-l0
units
8. If Ameritech is doing the install, Ameritech Rep determines
installation facility and schedules installation date
9. Ameritech Rep reviews Configuration Form for completeness, adds IP
address(es) and installation facility (if needed) to the form and faxes
the form to @Road and installation facility
10. @Road configures the VLS server with customer information and programs
the RC-10 GPS units with CDPD IP address(es)
11. @Road verifies each unit is operational and all customer specified
information is entered into the VLS server correctly
12. @Road ships RC-10 units to customer or installation facility as
indicated on the configuration form
13. Installation facility or customer installs equipment
14. Installer calls @Road to verify units are reporting in and operational
15. Customer signs completed installation form
<PAGE>
[LOGO OF @ROAD]
Exhibit E-Account Configuration Form
<TABLE>
<S> <C> <C>
Contact Company Name Account ID
Information (Existing Customers)
______________________ _____________________________
Contact Name Telephone
______________________ _____________________________
Email Fax
______________________ _____________________________
Account Username * Password *
Information
*10 characters
Alphanumeric
Case sensitive
______________________ _____________________________
Admin Password *
_____________________________
---------------------------------------------------------------------------
Vehicle Vehicle Name Type of Vehicle Other I.D. (License Plate)
Information
---------------------------------------------------------------------------
Name Displayed
on the website ---------------------------------------------------------------------------
** 8 characters
Alphanumeric ---------------------------------------------------------------------------
Case sensitive
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Signature Date
------------------------------------------------------------ ---------------
</TABLE>
Please fax the form back to @Road at (510)353.6021.
If you have any questions, please contact Elizabeth Ong at (510)888.1638 x 308
<PAGE>
[LOGO OF @ROAD]
Exhibit F - Account De-Activation Form
<TABLE>
<CAPTION>
<S> <C> <C>
Customer Company Name Account ID
Information (Existing customers)
______________________ _____________________________
Contact Name Telephone
______________________ _____________________________
Email Fax
______________________ _____________________________
Reason for De-Activation:
De-Activation Effective Date: _____________________
IP's To Be De-Activated or ALL
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Carrier Date
Signature __________________________________________________ _______________
Name ____________________________________________________
</TABLE>
Please fax the form back to @Road at (510)353.6021.
If you have any questions, please contact Elizabeth Ong at (510)668.1638 x 308
<PAGE>
EXHIBIT 10.3
Product License
And
Collaboration
Agreement
Between
Intel Corporation
And
@Road, Inc.
January 28, 2000
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Section Page
- -------------------------------------------------------------------------
<S> <C>
1. Definitions....................................................... 3
2. Responsibilities of the Parties................................... 3
3. License Grants and Terms.......................................... 4
4. Ownership......................................................... 5
5. Compensation...................................................... 6
6. Maintenance and Support Obligations............................... 7
7. Warranties........................................................ 7
8. Indemnification................................................... 8
9. Term and Termination.............................................. 9
10. Confidentiality and Non-Disclosure................................10
11. General Provisions................................................10
</TABLE>
Exhibits
Exhibit "A" - @ROAD Products and Specifications
Exhibit "B" - Marketing Collaboration
Exhibit "C" - RESERVED
Exhibit "D" - RESERVED
Exhibit "E" - Certificate of Originality
Page 2
<PAGE>
This agreement (hereinafter referred to as the or this "Agreement") is entered
this 28 day of January, 2000 (hereinafter referred to as the "Effective Date"),
by and between INTEL Corporation, a Delaware corporation having a place of
business at 5000 W. Chandler Blvd, Chandler, Arizona 85226 ("hereinafter
referred to as "INTEL") and @Road, Inc., a California company with a principal
place of business at 47370 Fremont Boulevard, Fremont, CA 94538 (hereinafter
referred to as "@ROAD"). INTEL and @ROAD may be referred to herein in the
singular or plural as a Party or the Parties.
1. DEFINITIONS
1.1 "Documentation" means manuals and other written materials supplied to INTEL
by @ROAD, in any medium, relating maintenance, installation, operation, or
training of the @ROAD Products which @ROAD supplies to customers in the
normal course of business.
1.2 "INTEL Products" means all hardware and Software products design and
manufactured by or for INTEL based upon the @ROAD Hardware Design or @ROAD
Software, including derivatives created pursuant to this Agreement, and
marketed, sold, distributed, licensed, or otherwise transferred by INTEL in
the normal course of business for automotive applications.
1.3 "@ROAD Hardware" means the GPS chip set defined in Exhibit A, and future
semiconductor component or components used by @ROAD in it's products which
offer the same or similar functionality to the extent that @ROAD has the
right to grant INTEL the rights set forth herein.
1.4 "@ROAD Hardware Design" means the design for the @ROAD Hardware described
in the Manufacturing Package.
1.5 "@ROAD Products" means the @ROAD Software and @Road Hardware.
1.6 "@ROAD Software" means all Software, including all Updates and
Enhancements, in Object Code and Source Code formats, necessary to operate
the @ROAD Hardware, and all future software from @ROAD which offer the same
or similar functionality.
1.7 "Manufacturing Package" means the manufacturing documentation for the @ROAD
Hardware provided by @ROAD to Intel pursuant to Section 2.2 below, as
identified in Exhibit A attached hereto, including revisions to other
manufacturing documentation ("Engineering Change Order" or "ECO") made by
@ROAD.
1.8 "Object Code" means computer-programming code in machine-readable and
machine-executable form.
1.9 "Software" means computer-programming code in Object Code and Source Code
formats.
1.10 "Source Code" means computer-programming code in human-readable form and
related design documentation, including all comments, build tools,
libraries, and any procedural code.
1.11 "Updates and Enhancements" means all modifications, improvements, or
additions to @ROAD Software that corrects the @ROAD Software or enhances
the @ROAD Software's functionality, and new releases of such product made
available by @ROAD to at least two other third parties in Object Code and
Source Code formats.
2. Responsibilities of the Parties
2.1 @ROAD will support reasonable customization and engineering support
requests by INTEL and INTEL's customers at least as well as it supports
such requests from its other customers. Prior to undertaking such
customization or engineering activity, @ROAD and INTEL will agree in
writing upon the terms under which such activity will be conducted and the
non-recurring engineering charges to be paid by INTEL for such activity as
an amendment to this Agreement. As a
Page 3
<PAGE>
minimum, @ROAD agrees that all Intellectual property developed by
@ROAD under contract and the medium of expression thereof will, at
INTEL's option and sole discretion, be owned by INTEL or licensed to
INTEL under terms no less restrictive than the terms of this
Agreement.
2.2 @ROAD will deliver to Intel the Manufacturing Package and @ROAD
Software in a format or formats reasonably satisfactory to INTEL not
less than 90 calendar days from the Effective Date.
2.3 @ROAD will deliver with @ROAD Software and any and all Updates and
Enhancements thereof with a Certificate of Originality in the format
set forth in Exhibit E for each version of @ROAD Software and/or each
Update and Enhancement. Failure by @ROAD to deliver Certificates of
Originality shall be deemed for purposes of warranties set forth in
Section 7.5 that such Licensed Product is delivered free of any third-
party software or content.
2.4 If @ROAD makes any pre-production release of the @ROAD Products, the
Manufacturing Package, including any Update and Enhancement to @ROAD
Software or modifications or engineering change orders the
Manufacturing Package, it will deliver such alpha or beta version or
pre-production release to INTEL within a reasonable time following
internal release, but in no event later than delivered by @ROAD to any
other customer.
2.5 Direct communication between INTEL's and @ROAD's technical
representatives will be ongoing during the term of this Agreement.
However, communication with INTEL's technical representatives may be
limited at INTEL's sole discretion. Terms and conditions regarding
support for a technical information or assistance may be specified
under a separate written agreement between INTEL and @ROAD. Nothing
herein shall be construed as obligating INTEL to provide a particular
level of support to @ROAD.
2.6 INTEL and @ROAD will engage in the collaborative marketing activities
set forth in Exhibit B.
2.7 INTEL will make available to @ROAD INTEL Products which INTEL sells to
two or more third parties at prices as favorable to @ROAD as paid by
other similarly situation customers, timing, volume, and
specifications considered.
3. LICENSE GRANTS AND TERMS
3.1 License Grants
--------------
3.1.1 Subject to the terms and conditions of this Agreement. @ROAD grants to
INTEL a worldwide, non-exclusive, perpetual, irrevocable (unless
terminated in accordance with Section 9.2 (b) of this Agreement),
royalty-free license, with rights to sublicense pursuant to Section
3.2.2. under copyrights, trade secrets and any other intellectual
property rights in the Manufacturing Package and @ROAD Software to
use, copy, have copied, create derivatives of the Manufacturing
Package and/or @ROAD Software, without limitation.
3.1.2 Subject to the terms and conditions of this Agreement, @ROAD grants to
INTEL a worldwide, non-exclusive, perpetual, irrevocable (unless
terminated in accordance with Section 9.2(b) of this Agreement),
royalty-free license, with rights to sublicense pursuant to Section
3.2.2, under any or all @ROAD copyrights, trade secrets, patents, and
any other Intellectual property rights in the @ROAD Software to use,
copy, have copied, import, distribute, perform or display or otherwise
transfer @ROAD Software, and/or any derivative or modification thereof
created by Intel, it's employees, contractors, agents, or
representatives pursuant to the license grant in Section 3.1.1 of this
Agreement, in Object Code format, for, with, or as part of Intel
Products without limitation.
3.1.3 Subject to the terms and conditions of this Agreement, @ROAD grants to
INTEL a worldwide, non-exclusive, perpetual, irrevocable (unless
terminated in accordance with Section 9.2 (b) of this Agreement),
royalty-bearing license, with rights to sublicense pursuant to Section
3.2.2, under any or all @ROAD copyrights, trade secrets, patents and
any other intellectual property right in the
Page 4
<PAGE>
@ROAD Hardware to use, make, have made, sell, offer to sell, import,
distribute, perform or display or otherwise transfer Intel Products,
alone or in combination with other products, without limitation.
3.1.4 Subject to the terms and conditions of this Agreement, @ROAD grants
to INTEL a worldwide, non-exclusive, perpetual (unless terminated in
accordance with Section 9.2 (b) of this Agreement) royalty-free
license, with rights to sublicense pursuant to 3.2.2, under copyrights
in the Documentation which @ROAD owns or has authority to grant
licenses of the scope set forth herein to copy, have copied, create
derivatives of, modify, distribute, perform, or display the
Documentation and copies and derivatives thereof, in whole or in part,
without limitation.
3.2 General License Terms
---------------------
3.2.1 @ROAD waives on its behalf and on behalf of its subcontractors,
vendors, contractors, suppliers, and consultants any and all moral
rights in the Manufacturing Package and Documentation.
3.2.2 INTEL may sublicense its rights under Section 3.1.1, 3.1.3 and 3.1.4
above to contractors performing services on behalf INTEL and under
Section 3.1.2 to customers under terms no less restrictive or
enforceable than set forth herein.
3.2.3 Notwithstanding any other provision hereof and without limiting the
obligations of contractors with respect to confidentiality under
Section 3.2.2. INTEL's access to the Manufacturing Package and
Documentation shall not create any obligation on the part of INTEL to
limit or restrict the assignment of its employees or contractors.
Nothing in this Agreement shall be construed as preventing employees
of INTEL or contractors for INTEL who have had access to Manufacturing
Package and/or Documentation from drawing upon or using any skills,
knowledge, talent or experience of a general nature acquired in the
course of working with the Manufacturing Package and/or Documentation.
This Agreement does not preclude INTEL from evaluating, acquiring from
third parties not a party to this Agreement, or independently
developing, marketing similar technologies or products, or making and
entering into similar arrangements with other companies.
3.2.4 Except as expressly set forth herein, neither Party grants or conveys
any right, title, or interest in intellectual property, whether
express, implied, statutory or by estoppel.
4. OWNERSHIP
4.1 Subject to the licenses granted to INTEL pursuant to this Agreement,
and except as set forth in Section 2.4 above, @ROAD or @ROAD's
suppliers shall have exclusive right, title, and interest in all
intellectual property, including, without limitation, patents,
copyrights, trade secrets and other types or forms of Intellectual
property, in @ROAD Products developed, authored, or created by @ROAD
or @ROAD's employees, suppliers, contractors, agents, or
representatives.
4.2 INTEL or its suppliers shall have exclusive right, title, and interest
in all intellectual property, including, without limitation, patents,
copyrights, trade secrets and other types or forms of Intellectual
property, in and to derivatives of the @ROAD Products developed,
authored, or created by INTEL or INTEL's employees, suppliers,
contractors, agents, or representatives.
4.3 @ROAD and INTEL will jointly own, without rights of accounting, any
intellectual property, including, without limitation, patents,
copyrights, trade secrets and other types or forms of Intellectual
property, in derivatives of the @ROAD Products authored, created, or
reduced to practice with the subsequent participation of both parties,
their employees, suppliers, contractors, agents, or representatives.
Page 5
<PAGE>
5. COMPENSATION
5.1 INTEL will reimburse @ROAD's costs of transferring the Manufacturing
Package and @ROAD Software to INTEL under this Agreement up to a maximum of
one hundred thousand dollars ($100,000) US. Payment will be made via
certified check or wire transfer within 45 calendar days following the
close of Intel manufacturing quarter in which transfer of the Manufacturing
Package and @ROAD Software occurs.
5.2 INTEL and @ROAD agree that INTEL will pay to @ROAD a royalty for each unit
of Intel Product sold, distributed or otherwise transferred by INTEL in an
amount not-to-exceed [*] US to be negotiated within forty-five (45)
calendar days following the Effective Date. If the Parties are unable in
good faith to negotiate a royalty amount, the royalty for each unit of
INTEL Product sold, distributed, or otherwise transferred by INTEL will be
the not-to-exceed amount set forth above.
5.3 INTEL will make payment of the royalty described in Section 5.2 within
forty-five (45) calendar days following close of the INTEL manufacturing
quarter in which the INTEL Product is sold, distributed, licensed, or
otherwise transferred by INTEL.
5.4 For the avoidance of doubt, INTEL Products and Updates and Enhancements
distributed, licensed or otherwise transferred by INTEL free of charge for
promotional or design-in activities, including for use internal to INTEL,
and alpha, beta, prototype, customer evaluation, and demonstration versions
of INTEL Products and Updates and Enhancements, are exempt from any royalty
fees.
5.5 INTEL will submit to @ROAD quarterly, within forth-five days following the
close of each INTEL manufacturing quarter, a royalty report identifying the
quantity of INTEL Products sold, distributed, or otherwise transferred by
INTEL for revenue during the INTEL manufacturing quarter, together with a
certified check or wire transfer representing royalties, if any, owed by
INTEL in connection therewith.
5.6 All reports and royalty payments, whether prepaid or recurring, will be
sent by INTEL to @ROAD as follows:
Reports/Certified Check Wire Transfer Instructions
@ROAD, Inc. To be provided by @ROAD
47370 Fremont Boulevard
Fremont, CA, 94538
Attention: Office of Controller
5.7 INTEL will keep data containing data reasonably required for verification
of the royalty fees to be paid. If @ROAD reasonably believe that INTEL's
payments are inaccurate, @ROAD, at @ROAD's own expense, may select an
independent auditor (agreeable to INTEL) to audit the relevant INTEL
records relating to the number of copies distributed by INTEL solely at
INTEL premises and only during normal INTEL business hours. Such auditor
shall be required to execute an appropriate non-disclosure agreement as a
condition to access to INTEL data and will be permitted to report to @ROAD
only the number of units of @ROAD Hardware actually distributed, and the
amount due and payable to @ROAD. @ROAD will hold such information in
confidence for INTEL and will not disclose such information to any third
party without the prior written consent of INTEL. Audits will occur not
more than once each twelve (12) calendar month period, and will be limited
in scope to the period since the previous audit, if any, or a period of the
twelve (12) calendar months prior to the audit, whichever is shorter. @ROAD
shall bear the cost
* CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
Page 6
<PAGE>
of such audits. If such audit discloses an underpayment, INTEL shall
promptly pay the underpayment to @ROAD.
5.8 All payments shall be made free and clear without deduction for any and all
present and future taxes imposed by any taxing authority. In the event that
@ROAD is prohibited by law from making such payments unless such deductions
are made or withheld therefrom, then @ROAD shall pay such additional
amounts as are necessary in order that the net amounts received by INTEL,
after such deduction or withholding, equal the amounts which would have
been received if such deduction or withholding had not occurred. @ROAD
shall promptly furnish INTEL with a copy of an official tax receipt or
other appropriate evidence of any taxes imposed on payments made under this
Agreement, including taxes on any additional amounts paid. In cases other
than taxes referred to above, including but not limited to sales and use
taxes, stamp taxes, value added taxes, property taxes and other taxes or
duties imposed by any taxing authority on or with respect to this
Agreement, the costs of such taxes or duties shall be borne by @ROAD. In
the event that such taxes or duties are legally imposed initially on INTEL
or INTEL is later assessed by any taxing authority, then INTEL will be
promptly reimbursed by @ROAD for such taxes or duties plus any interest and
penalties suffered by INTEL.
5.9 Except as specifically set forth in this Section 5. or unless otherwise
agreed by the Parties in writing, INTEL will owe @ROAD no royalty or other
compensation for performance by either Party of this Agreement, including,
without limitation, the exercise by INTEL of the license grants set forth
in Section 3 this Agreement.
6. MAINTENANCE AND SUPPORT OBLIGATION
6.1 @ROAD will assign a technical manager to ensure timely and effective
communication of support and maintenance issues with INTEL. As a minimum,
such technical contact will be available @ROAD's normal business hours to
receive and act upon INTEL's maintenance and support requests.
6.2 @ROAD will immediately notify INTEL of any bugs, errors, or errata in @ROAD
Products and/or errors in Manufacturing Package as they become known or
suspected. Without limiting the foregoing, @ROAD will give INTEL written
notification of bugs, errors, or errata in the @ROAD Products and/or
Manufacturing Package, with preliminary analysis of the bug, error, or
errata within five (5) calendar days, including, without limitation the
nature of the bug, error, or errata, any patches or work arounds, and the
expected corrective action date. @ROAD will give INTEL regular (not less
than weekly) written updates on status of failure analysis and corrective
action and final written report when failure analysis is complete and
corrective action is implemented.
6.3 @ROAD will deliver to Intel Updates and Enhancements within a reasonable
time following internal release, but in no event later than the earlier of
ten (10) calendar days following internal release or delivery by @ROAD to
any other customer or licensee.
6.4 @ROAD will deliver to Intel engineering changes, corrections, or revisions
to the Manufacturing Package not later than internal release to it's
internal or external manufacturing lines.
7. WARRANTIES
7.1 Each Party warrants and represents to the other that it has all authority
to enter into this Agreement and to perform the obligations hereunder.
7.2 @ROAD warrants and represents that it has all right, title, and interest
and/or license rights in the @Road Products necessary to grant the licenses
set forth herein and has not taken any action or suffered any action to be
taken with respect to the @ROAD Products which would restrict or affect the
rights of INTEL and its sublicensees hereunder.
Page 7
<PAGE>
7.3 @ROAD warrants and represents that no third party has any ownership right
in, title to, or lien on any Intellectual property in the Manufacturing
Package and/or @ROAD Products licensed under this Agreement to the best of
its knowledge and belief.
7.4 @ROAD warrants and represents that the Manufacturing Package contains all
information and know-how used by @ROAD or its foundries to manufacture of
the @ROAD Products. Furthermore, @ROAD warrants and represents that the
Manufacturing Package contains all documentation necessary for a person
reasonably skilled in the design and manufacture of semiconductor component
or system products to manufacture @ROAD Products which conforms with the
Documentation.
7.5 @ROAD warrants and represents that the information contained in any
Certificate of Originality, delivered by @ROAD in the form set forth in
Exhibit E hereto is current, accurate, and complete as of the Effective
Date to the best of its information and belief. Furthermore, @ROAD warrants
and represents that it has used best efforts to verify that the information
set forth in Exhibit E is current, accurate, and complete as of the
Effective Date.
7.6 @ROAD warrants and represents that @ROAD Software (including firmware) is
free of any harmful code, defined for purposes of this Agreement as any
computer code, programming instruction, or set of instructions which have
been designed with the ability to damage, interfere with, or otherwise
adversely affect computer programs, data files, or hardware, without the
consent or intent of the computer user, including without limitation, self-
replicating and self-propagating programming instructions commonly referred
to as viruses and worms.
7.7 @ROAD warrants and represents that the license and other terms set forth in
this Agreement are no less favorable than those offered by @ROAD to any
other individual, company, or other entity. INTEL will be entitled to
audit @Roads relevant books and records to verify compliance with this
warranty.
7.8 EXCEPT AS EXPRESSLY SET FORTH HEREIN, NEITHER PARTY MAKES ANY WARRANTIES,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE @ROAD PRODUCTS, THE
MANUFACTURING PACKAGE, INCLUDING ANY UPDATES AND ENHANCEMENTS, THE
DOCUMENTATION, OR ANY OTHER SOFTWARE OR INFORMATION, OTHER THAN THOSE
EXPRESSLY SET FORTH IN THIS SECTION 7, AND EACH PARTY EXPRESSLY DISCLAIMS
ANY SUCH WARRANTIES, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
8. INDEMNIFICATION AND LIMITATION OF LIABILITY
8.1 @ROAD will defend, indemnify INTEL and hold INTEL harmless from and against
any and all loss, cost, liability and expense (including attorney's fees)
arising in any way from any claim made or threatened against INTEL relating
to the @ROAD Products, the Manufacturing Package, or Documentation.
Licensee's duties under this Section 8 extend to any matters arising out of
any claim made or threatened that Manufacturing Package, or Documentation
or Intel Products made or have made Intel in accordance with the
Manufacturing Package or Documentation infringe any copyright, patent,
trade secret or other intellectual property right.
8.2 INTEL agrees to promptly notify @ROAD of any such claim made or threatened
and will provide information, assistance, and cooperation in defending the
suit or proceeding (at @ROAD's expense). INTEL agrees to allow @ROAD the
opportunity to control the defense or settlement of any suit or proceeding
provided @ROAD permits INTEL to participate in the defense or settlement
thereof at Intel's expense.
8.3 If INTEL Products made or have made by or on behalf of Intel in accordance
with the Manufacturing Package or Documentation, or any portion thereof, is
found to infringe the
Page 8
<PAGE>
intellectual property rights of any third party and its use is enjoined,
@ROAD will, at INTEL's option and at @ROAD's expense use best efforts to
procure for INTEL a license or right to continue to exercise INTEL's
license rights with respect to Intel Products, and if no license is
available or if INTEL determines that a license is not available on
commercially reasonable terms, INTEL may terminate this Agreement without
prejudice to any other right either Party may have under this Agreement.
8.4 IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT,
SPECIAL, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND,
INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS, LOSS OF USE, OR INTERRUPTION
OF BUSINESS, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE TOTAL
LIABILITY OF EITHER PARTY UNDER THIS AGREEMENT WILL NOT EXCEED THE GREATER
OF AMOUNTS PAID BY INTEL AS ROYALTIES PURSUANT TO SECTION 5 OF THIS
AGREEMENT OR FIVE MILLION DOLLARS ($5,000,000) U.S. THESE LIMITATIONS SHALL
APPLY NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY HEREUNDER.
9. TERM AND TERMINATION
9.1 Term
----
This Agreement will be effective for an initial term of five (5) years from
the Effective Date and will automatically renew for successive one year
terms unless either Party provides written notice of non-renewal not less
than one hundred and eighty (180) calendar days before expiration of the
initial term or any subsequent renewal term.
9.2 Termination:
------------
(a) INTEL may terminate this contract for its convenience at any time upon
sixty (60) calendar days written notice.
(b) Either Party shall have the right to terminate this Agreement should
the other Party materially default in the performance of any of its
obligations if, within thirty (30) days after written notice, the
defaulting Party has failed to cure the default.
9.3 Effect of Termination
---------------------
(a) Except as expressly set forth below, Sections 3, 4, 5, 7, 8, 9, 10, 11
of this Agreement will survive expiration or earlier termination of
this Agreement.
(b) Notwithstanding the foregoing, the licenses set forth in Section 3
will terminate if Intel elects to terminate this Agreement for its
convenience pursuant to Section 9.2(a) above.
(c) Furthermore, in the event of termination of this Agreement for
material breach by INTEL in accordance with Section 9.2(b) above, and
except as set forth herein, @ROAD may revoke the license grants set
forth in Section 3 above. Notwithstanding anything in this Section
9.3(c) to the contrary, INTEL may continue to distribute the Intel
Products in inventory, with @ROAD Software or INTEL derivatives
thereof, until its inventory of Intel Products is depleted, or until
all customer orders received by INTEL before written notice of
termination. Furthermore, INTEL may continue to use, copy and create
derivatives of the Manufacturing Package in source code format for
customer support purposes and may compile and distribute derivatives
of the @ROAD Software in object code format as necessary to correct
bugs in @ROAD Software distributed to customers pursuant to this
Agreement. Revocation shall not affect the rights of INTEL customers
under valid sublicenses executed prior to termination of this
Agreement.
Page 9
<PAGE>
10. PUBLICITY
10.1 The Parties hereto shall keep the terms of this Agreement confidential and
shall not now or hereafter divulge these terms to any third party except:
(a) with the prior written consent of the other Party; or
(b) to any governmental body having jurisdiction to call therefor; or
(c) subject to (d) below, as otherwise may be required by law or legal
process, including to legal and financial advisors in their capacity of
advising a party in such matters; or
(d) during the course of litigation so long as the disclosure of such terms
and conditions are restricted in the same manner as is the confidential
information of other litigating parties and so long as (a) the
restrictions are embodied in a court-entered Protective Order and (b)
the disclosing Party informs the other Party in writing in advance of
the disclosure; or
(e) in confidence to legal counsel, accountants, banks and financing
sources and their advisors solely in connection with complying with
financial transactions.
10.2 It may become necessary during the course of this Agreement for one Party
to disclose to the other information which the disclosing Party considers
confidential ("Confidential Information"). Disclosure of such Confidential
Information shall be governed by the terms of Corporate Non-Disclosure
Agreement number 3383441, dated September 4, 1999. Notwithstanding the
foregoing, @ROAD acknowledges that INTEL may from time to time require
@ROAD to execute a more restrictive form of non-disclosure agreement or as
a precondition to receipt of selected INTEL confidential information.
11. GENERAL PROVISIONS
11.1 INTEL and @ROAD are independent contractors. Nothing in this Agreement will
be construed to make INTEL and @ROAD partners or joint venturers, or to
make INTEL and @ROAD liable for the obligations, acts, or activities of the
other.
11.3 Any change, modification or waiver to this Agreement must be in writing and
signed by an authorized representative of each Party.
11.4 All notices and requests required or made under this Agreement must be in
writing and will be deemed given if personally delivered or by courier,
overnight delivery service or 48 hours after mailing as postage prepaid,
certified or registered mail to the addresses listed on the cover page to
this Agreement or to such other address as may be noticed as follows:
Page 10
<PAGE>
INTEL: @ROAD:
INTEL Corporation @ROAD, Inc.
5000 West Chandler Blvd. 47370 Fremont Boulevard
Chandler, AZ 85226 Fremont, CA, 94538
Attn.: Contract Management Attn.: Office of the President
M/S: CH6-404
With copies to: With copies to:
INTEL Corporation Venture Law Group
2200 Mission College Blvd. 2800 Sand Hill Road
Santa Clara, CA 95052-8119 Menlo Park, CA 94025
Attn.: General Counsel Attn.: Tae Hea Nahm
11.5 Neither Party may assign this Agreement or any portion of this Agreement
to any other Party without the other's prior written consent: provided,
--------
however, that 1) INTEL will have the right to assign and/or delegate it's
-------
rights, obligations, and privileges hereunder to it's subsidiaries and
affiliates: and 2) @ROAD will have the right to assign this Agreement and
its rights, obligations and privileges hereunder to a merger partner,
successor in business or acquiror of all or substantially all of @ROAD's
business or assets without obtaining any consent to such assignment from
INTEL. This Agreement will be binding on the Parties, their assignees, or
successors in interest.
11.6 In the event of a conflict between the terms of this Agreement and the
following Exhibits, which are incorporated herein by reference, the terms
and conditions of this Agreement will prevail:
Exhibit "A" - @ROAD Products and Specifications
Exhibit "B" - Marketing Collaboration
Exhibit "C"- RESERVED
Exhibit "D" - RESERVED
Exhibit "E" - Certificate of Originality
11.7 Regardless of which of us may have drafted this Agreement, no rule of
strict construction shall be applied against either Party. If any
provision of this Agreement is determined by a court to be unenforceable,
we will deem the provision to be modified to the extent necessary to
allow it to be enforced to the extent permitted by law, or if it cannot
be modified, the provision will be severed and deleted from this
Agreement, and the remainder of the Agreement will continue in effect.
11.8 The laws of the State of California, excluding its choice of law
provisions shall govern any claim by either Party arising under this
Agreement.
11.9 This Agreement is intended to be the entire agreement of the Parties with
respect to matters contained herein, and supercedes all prior or
contemporaneous agreements and negotiations, written or oral, with
respect to those matters. Furthermore, this Agreement supercedes the
terms of any license distributed by @ROAD with the @ROAD Software,
provided that, Intel may, in its sole discretion, exercise any right set
forth in such license which is more favorable than rights granted INTEL
under this Agreement.
11.10 The Parties agree to cooperate to execute any subsequent document or
documents reasonably necessary to carry out the intent of this
Agreement.
11.11 No waiver of any breach or default shall constitute a waiver of any
subsequent breach or default.
Page 11
<PAGE>
11.12 This Agreement may be executed in two (2) or more counterparts, all of
which, taken together, shall be regarded as one and the same instrument.
AGREED:
INTEL CORPORATION @ROAD, INC.
/s/ Michael Iannitti Jr. /s/ Krish Panu
- ------------------------- -----------------------------
Signature Signature
Michael Iannitti Jr. Krish Panu
- ------------------------- -----------------------------
Printed Name Printed Name
Director - Icco Chairman and CEO
- ------------------------- -----------------------------
Title Title
1-31-00 2-3-00
- ------------------------- -----------------------------
Date Date
<PAGE>
EXHIBIT "A"
@ROAD Products and Specifications
A.
B.
C.
D.
E.
NOTE: In addition to the foregoing descriptions and specifications,
@ROAD specification sheets in effect at the time of this
Agreement or thereafter modified for the @ROAD Products are
hereby incorporated into this Exhibit A by reference.
Page 13
<PAGE>
EXHIBIT "B"
MARKETING COLLABORATION
@ROAD and INTEL will cooperatively participate in marketing activities related
to promotion of @ROAD Products and Intel Products as follows:
1. @ROAD and Intel will meet regularly to discuss cooperative marketing
strategies for mutually agreed target segments ("Target Segments"). Such
meetings would review overall industry and market trends, product
requirements for Target Segments and any changes thereto, specific customer
requirements when appropriate, co-advertisements, joint press releases, web
communications and other media communications related to the optimized
@ROAD Products with both INTEL and @ROAD named, and other topics of mutual
benefit.
2. The parties will use reasonable efforts to engage in cooperative marketing
activity, including without limitation:
(a) joint participation at trade shows, industry conferences, seminars and
associated hospitality suites:
(b) participation by Intel in @ROAD sales force and technical training
sessions;
(c) participation by @ROAD in INTEL sales force and technical training
sessions:
(d) membership in mutually agreed industry initiatives; and
(e) joint visits to mutually agreed customers, subject to any third party
confidentiality obligations, to review product requirements as well as
advocating the combination of @ROAD Products and INTEL Products as
complete solutions.
3. The parties will provide internet links between their respective Web sites
as mutually agreed.
4. @ROAD and INTEL will exercise their respective reasonable efforts to
reference sell one another's products through their respective direct and
indirect sales channels for appropriate sales opportunities in the Target
Segments. The parties agree to share sales leads as appropriate, subject to
any confidentiality obligations with third parties. This provision is not
intended to limit the right or ability of either party to reference sell
the products of other third parties.
5. INTEL and @ROAD will discuss other mutually agreeable promotional
activities (e.g., announcements, advertisements, web-based communications)
as appropriate.
6. Each party will be responsible for its own expenses related to such
cooperative marketing activities, unless otherwise agreed in writing.
Page 14
<PAGE>
EXHIBIT "C"
RESERVED
Page 15
<PAGE>
EXHIBIT "D"
RESERVED
Page 16
<PAGE>
EXHIBIT "E"
CERTIFICATE OF ORIGINALITY
[To be completed by @ROAD for each @ROAD Software module before delivery to
Intel]
This questionnaire must be completed for the @ROAD Software for INTEL,
One questionnaire can cover one complete product, even if that product includes
multiple modules. However, a separate questionnaire must be completed for the
code and another for its related documentation (if any).
Please do not leave any questions blank. Write "not applicable" or "N/A" if a
question is not relevant to the furnished software material.
1. Name of the software material (provide complete identification, including
version, release and modification numbers for programs and documentation):
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
2. Was the software material or any portion thereof written by any party other
than @ROAD or @ROAD's employees working within their job assignment?
Yes ________ No _________
If yes, provide the following information:
(a) Indicate if the whole software material or only a portion thereof was
written by such party, and identify such portion:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(b) Specify for each involved party:
(i) Name:
_______________________________________________________________
(ii) @ROAD:
_______________________________________________________________
(iii) Address:
_______________________________________________________________
_______________________________________________________________
(iv) If the party is a @ROAD employee, how did it acquire title to
the software material (e.g., software material was written by
@ROAD's employees as part of their job assignment)?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(v) If the party is an individual, did s/he create the software
material while employed by or under contractual relationship
with another party?
Page 17
<PAGE>
Yes ________ No _________
If Yes, provide name and address of the other party and explain
the nature of the obligations:
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(c) How did @ROAD acquire title to the software material written by the
other party?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
3. Was the software material or any portion thereof derived from any third
party's pre-existing materials?
Yes ________ No _________
If yes, provide the following information for each of the pre-existing
materials:
(a) Name of the materials:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(b) Owner:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(c) How did @ROAD get the right to use the pre-existing material(s)?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
4. Identify below, or in an attachment, any other circumstances which might
affect INTEL's ability to reproduce and market this software product,
including:
(a) Confidentiality or trade secrecy of pre-existing materials:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(b) Known or possible royalty obligations to others:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(c) Pre-existing materials developed for another party or customer
(including government) where @ROAD may not have retained full rights
to the material:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
Page 18
<PAGE>
(d) Materials acquired from a person or @ROAD contractor possibly not
having title to them:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(e) Other circumstances:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
5. Copies of any approved copyright registration forms or filings have been
attached hereto.
@ROAD, INC.
__________________________________
Signature
__________________________________
Printed Name
__________________________________
Title
__________________________________
Date
Page 19
<PAGE>
Oplinger, Penny L
To: Smith, Ron J; Myers, Cheryl L; Heeb, Jay; Someshwar, Ashok; Casey,
Mark
Subject: Delegation of Authority
To: Distribution
From: Terry Gillett/by Penny Oplinger
Subject: Delegation of Authority
-----------------------
I will be out of the office on Monday, January 31, 2000. During my absence, Mike
Iannitti will act on my behalf and have full signature authorization for my
organization. Mike can be reached at 554-0678 or through Penny Oplinger at 554-
5134.
/s/ Terry Gillett /s/ Mike Iannitti
----------------- -----------------
Terry Gillett Mike Iannitti
<PAGE>
EXHIBIT 10.4
Product Purchase Agreement
Between
@Road, Inc.
And
Novatel Wireless Technologies, Inc.
This agreement is made by @Road, Inc. and Novatel Wireless Technologies, Inc.
and is effective as of January 1, 2000. The terms and conditions contained in
this Agreement shall govern the production, purchase, warranty and support of
the product mentioned below as "Product". In the event of any conflict between
this Agreement and the terms and conditions of an order, as defined below, this
Agreement shall govern. Novatel Wireless Technologies, Inc shall be referred as
Novatel and @Road, Inc. shall be referred as @Road.
1.0 Product
1.1 Product supplied to @Road is Expedite CDPD 0.6- Watt radio modem. The
unit includes the communications board, top and bottom shield covers
and a 50-ohm RF connector for antenna connection.
1.2 Novatel may, at its discretion, implement changes in the Product,
modify the drawings and its specifications, or substitute a Product of
more recent design; provided, however, that any such changes,
modifications or substitutions, under normal and proper use shall not
materially and adversely affect functional performance, form or fit of
the product. Novatel agrees to provide @Road with 60 days written
notice of such changes.
2.0 Pricing
2.1 Novatel agrees to supply the Expedite CDPD modems, to @Road at a unit
price of [*] during the entire term of this Agreement, which shall run
from January 1, 2000 to March 31, 2000.
2.2 The price is FOB Novatel's facility in Carlsbad, California. The price
includes normal packing for domestic and international shipments. All
duties, insurance, special packing costs and expenses, and all
Federal, Provincial, State and local excise, sales, use and other
similar taxes are for Customer's account and will appear as additional
items on invoices.
2.3 Novatel reserves the right to create additional FOB locations as
additional contract manufactures are selected.
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
* CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
1 of 4
<PAGE>
3.0 Forecast, Purchase Order and Liability
3.1 @Road has provided a 3-month purchase order to Novatel. The volume
required are:
January 2000 2000
February 2000 4000
March 2000 5000
3.2 Payments terms will be:
January volume full payment made in advance
February volume [*] 30 days in advance and the remainder upon
delivery.
March volume [*] 30 days in advance and the remainder upon
delivery.
3.3 If there is more than a 20% negative variance in the @Road purchase
order and quarter to date numbers, @Road will be responsible for
making payments of $30 per unit on the variance between the purchase
order and the actual consumption.
3.4 If there is more than a 20% negative variance in Novatel's ability to
ship vs. the quarter to date purchase orders, Novatel will be
responsible for making payments of $30 per unit on the variance
between the purchase orders and the actual shipments.
4.0 Warranty.
4.1 Warranties shall be defined in Schedule `A'
4.2 @Road will be responsible for sending units to Novatel's facility in
Carlsbad if warranty repairs are required. If product is determined to
be no fault found, @Road will be responsible for all freight costs to
and from Carlsbad.
5.0 Miscellaneous
5.1 This agreement cannot be assigned to a third party without the written
consent of @Road and Novatel.
5.2 All modems sold to @Road must be for internal consumption and cannot
be resold on the market.
5.3 @Road agrees to include the Novatel logo for @Road marketing
materials. This will be defined jointly by the two marketing
departments at a later date.
* CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
2 of 4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
Novatel Wireless Technologies, Inc. @Road, Inc.
/s/ Robert Corey /s/ Krish Panu
- ------------------------------- ----------------------------
Robert Corey Krish Panu
President and CEO President and CEO
3 of 4
<PAGE>
Schedule `A'
------------
1. Novatel Wireless warrants for a period of 1 year from delivery at the FCA
point that its Products are free from defects in material and workmanship,
conform to Novatel Wireless specifications and that the software shall be
free from errors which materially affect performance. THESE WARRANTIES ARE
EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE. NOVATEL WIRELESS SHALL IN NO EVENT BE LIABLE FOR
SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, OF ANY KIND OR
NATURE DUE TO ANY CAUSE.
2. Novatel Wireless' obligations are limited to correction of such failure, by
implementation of the module swap warranty procedure whenever practicable and
are conditioned upon the Product having been maintained in accordance with
Novatel Wireless specifications and the Product not having been modified by
any party other than Novatel Wireless except as expressly permitted in
writing.
3. The foregoing warranties do not extend to (i) nonconformity's, defects or
errors in the Product due to accident, abuse, misuse or negligent use of the
Product or use in other than a normal and customary manner, environmental
conditions not conforming to Novatel Wireless' specifications, or failure to
follow prescribed operating maintenance procedures, (ii) defects, errors or
nonconformity's in the Product due to modifications, alterations, additions
or Product changes not made or authorized to be made by Novatel Wireless,
(iii) normal wear and tear, or (iv) damage caused by force of nature or act
of any third party.
4 of 4
<PAGE>
EXHIBIT 10.5
Product Purchase Agreement
Between
@Road, Inc.
And
Novatel Wireless Technologies, Inc.
This agreement is made by @Road, Inc. and Novatel Wireless Technologies, Inc.
and is effective as of April 1, 2000. The terms and conditions contained in this
Agreement shall govern the production, purchase, warranty and support of the
product mentioned below as "Product". In the event of any conflict between this
Agreement and the terms and conditions of an order, as defined below, this
Agreement shall govern. Novatel Wireless Technologies, Inc shall be referred as
Novatel and @Road, Inc. shall be referred as @Road.
1.0 Product
1.1 Product supplied to @Road is Expedite CDPD 0.6- Watt radio modem. The
unit includes the communications board, top and bottom shield covers
and a 50-ohm RF connector for antenna connection.
1.2 Novatel may, at its discretion, implement changes in the Product,
modify the drawings and its specifications, or substitute a Product of
more recent design; provided, however, that any such changes,
modifications or substitutions, under normal and proper use shall not
materially and adversely affect functional performance, form or fit of
the product. Novatel agrees to provide @Road with 60 days written
notice of such changes.
2.0 Pricing
2.1 Novatel agrees to supply the Expedite CDPD modems, to @Road at a unit
price of [*] during the entire term of this Agreement, which shall run
from April 1, 2000 to June 30, 2001.
2.2 The price is FOB Novatel's facility in Carlsbad, California. The price
includes normal packing for domestic and international shipments. All
duties, insurance, special packing costs and expenses, and all
Federal, Provincial, State and local excise, sales, use and other
similar taxes are for Customer's account and will appear as additional
items on invoices.
2.3 Novatel reserves the right to create additional FOB locations as
additional contract manufactures are selected.
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
* CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
1 of 4
<PAGE>
3.0 Forecast, Purchase Order and Liability
3.1 @Road has provided a 12-month rolling forecast to Novatel. This
forecast will be updated at the beginning of each calendar month. The
following changes to the quantity forecasts will be allowed:
Time Line Stocking agreement
1 to 90 days no variance
91 to 150 days 50% variance
3.2 @Road will issue purchase orders for the 90-day time frame with
deliveries in increments of 500 units.
3.3 Payments terms will be full payment made upon the delivery.
3.4 If there is more than a 20% negative variance in the @Road forecast
vs. the quarter to date numbers included in schedule B, @Road will be
responsible for making payments of $30 per unit on the variance
between the forecast and the actual consumption.
3.5 If there is more than a 20% negative variance in Novatel's ability to
ship vs. the quarter to date purchase orders, Novatel will be
responsible for making payments of $30 per unit on the variance
between the purchase orders and the actual shipments.
4.0 Warranty
4.1 Warranties shall be defined in Schedule 'A'
4.2 @Road will be responsible for sending units to Novatel's facility in
Carlsbad if warranty repairs are required. If product is determined to
be no fault found, @Road will be responsible for all freight costs to
and from Carlsbad.
5.0 Miscellaneous
5.1 This agreement cannot be assigned to a third party without the written
consent of @Road and Novatel.
5.2 All modems sold to @Road must be for internal consumption and cannot
be resold on the market.
5.3 @Road agrees to include the Novatel logo for @Road marketing
materials. This will be defined jointly by the two marketing
departments at a later date.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
Novatel Wireless Technologies, Inc. @Road, Inc.
/s/ Robert Corey /s/ Krish Panu
- ------------------------------ ---------------------
Robert Corey Kris Panu
President and CEO President and CEO
2 of 4
<PAGE>
Schedule 'A'
------------
1. Novatel Wireless warrants for a period of 1 year from delivery at the FCA
point that its Products are free from defects in material and workmanship,
conform to Novatel Wireless specifications and that the software shall be
free from errors which materially affect performance. THESE WARRANTIES ARE
EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. NOVATEL WIRELESS SHALL IN NO EVENT BE LIABLE FOR
SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, OF ANY KIND OR
NATURE DUE TO ANY CAUSE.
2. Novatel Wireless' obligations are limited to correction of such failure, by
implementation of the module swap warranty procedure whenever practicable
and are conditioned upon the Product having been maintained in accordance
with Novatel Wireless specifications and the Product not having been
modified by any party other than Novatel Wireless except as expressly
permitted in writing.
3. The foregoing warranties do not extend to (i) nonconformity's, defects or
errors in the Product due to accident, abuse, misuse or negligent use of
the Product or use in other than a normal and customary manner,
environmental conditions not conforming to Novatel Wireless'
specifications, or failure to follow prescribed operating maintenance
procedures, (ii) defects, errors or nonconformity's in the Product due to
modifications, alterations, additions or Product changes not made or
authorized to be made by Novatel Wireless, (iii) normal wear and tear, or
(iv) damage caused by force of nature or act of any third party.
3 of 4
<PAGE>
Schedule B
<TABLE>
<CAPTION>
Year 2000 Year 2001
PERIOD MONTH QTY TOTAL PERIOD MONTH QTY TOTAL
- ------ ----- --- ----- ------ ----- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Q2 2000 Apr 5,000 Q1 2001 Jan 5,000
May 5,000 Feb 5,000
Jun 6,000 16,000 Mar 5,000 15,000
Q3 2000 Jul 7,000 Q2 2001 Apr 5,000
Aug 7,000 May 5,000
Sep 6,000 20,000 Jun 5,000 15,000
Q4 2000 Oct 10,000
Nov 10,000
Dec 5,000 25,000
15 MONTH TOTAL 91,000
</TABLE>
4 of 4
<PAGE>
EXHIBIT 10.6
DESIGN AND PURCHASE CONTRACT
----------------------------
Dated April 11, 1997
Revised on May 12, 1997
Revised on June 4, 1997
Between
Philsar Electronics, Inc. 81 Metcalfe St., Ottawa, Canada, K1P 6K7
(fax: 1-613-567-5578; E-mail: [email protected])
(herein "Philsar")
And
Vectorlink, Inc. 41638 Christy St., Fremont, California, 94538, USA,
(fax: 1-510-353-6021; E-mail: [email protected])
(herein "Vectorlink")
1. Product
The item which is the subject of this agreement is the "VRF1" down converter
ASIC to be developed jointly by Vectorlink and Philsar, as more particularly
described in Schedule A (herein the "Product").
2. Background
The VRF1 is to be architected by Vectorlink with proprietary architecture to
work in concert with the Vectorlink 12 channel GPS digital signal processing
chip.
3. Scope of Design Work
Philsar will implement the architecture into a single down converter chip, using
Philsar proprietary RF technology, according to the specifications in Schedule
A and according to the timetable set out in Schedule B. Design work shall
include the production of 25 prototype copies of the Product.
4. Payment of Design Costs
Vectorlink will pay Philsar a portion of the NRE costs in respect of the
Product. The portion of NRE cost to be paid by Vectorlink is $70,000 USD which
shall be payable against Philsars' invoices in the amounts and according to the
timetable set out in Schedule C.
5. Post Contract Design Changes
Vectorlink may request modifications or alterations to the scope of the design
work at any time prior to the taping out of the design of the Product.
Vectorlink shall have 30 days fol-
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 1
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
<PAGE>
lowing delivery of the prototype Product to request further design work. Philsar
shall not be obligated to accept any modification or alteration request nor
perform any additional design work, remedial or otherwise, unless and until a
mutually agreeable supplementary NRE budget has been established.
6. Intellectual Property
6.1. Vectorlink Ownership
Vectorlink retains ownership in the system architecture of the VRF1 chip, which
includes the following Vectorlink proprietary properties:
1- Frequency plan with unambiguous carrier phase down converting
2- Cascadable LO frequency to facilitate relative phase measurement,
3- Cascadable down converter chips to facilitate phase measurement at the
digital signal processing chip for purpose of attitude determination.
6.2. Philsar Ownership
Philsar shall retain ownership of the Mask Work Plots and other representations
of the chip topography of the Product. Nothing in this agreement shall confer
upon Vectorlink any right or license, express or implied, in respect of the
Product Mask Work Plots or chip topography.
6.3. Indemnity
Except in the case where the specifications in Schedule A were provided by
Vectorlink, Philsar shall indemnify Vectorlink with respect to any claim, action
or proceeding against Vectorlink alleging that the Product infringes any patent,
copyright, trademark or other intellectual property of a third party in Canada
or the United States. In addition to its obligation to indemnify, Philsar may,
at its option, (i) defend the action or proceeding, (ii) procure the right for
Vectorlink to use the Product, (iii) replace or modify the Product to be free of
the infringement claim, or (iv) require Vectorlink to return the Product and
refund the purchase price plus a reasonable allowance for use, damage and
obsolescence. This indemnity shall apply only if Vectorlink gives Philsar prompt
notice of the claim, action or proceeding, cooperates fully with Philsar in
its defence and settlement thereof and only to the extent that the claim, action
or proceeding relates specifically and directly to the Product. It shall not
apply merely because the Product was incorporated by Vectorlink into an item in
respect of which the action or proceeding was brought.
7. Production Purchase Commitments
7.1. Minimum Purchase Commitment
Vectorlink agrees to purchase and Philsar agrees to sell a minimum of 25,000
units of the Product during the Production Period. For the purposes of this
paragraph, "Production Period" means the 12 months next following the month in
which the prototypes are delivered
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 2
<PAGE>
or any additional post delivery design work that is requested pursuant to
paragraph 4 is completed. If Vectorlink fails to take delivery of the full
25,000 units during the Production Period, Vectorlink shall pay Philsar, as
liquidated damages and not as penalty, the sum of US$250,000 less an allowance
equal to US$10.00 for each unit that Vectorlink does purchase during the
Production Period. If Vectorlink fails to Purchase more than 3,000 units in any
3 month period during the Production Period, then, Philsar may, after a 30
notice to remedy, deem that Vectorlink intends to purchase the balance of the
Production Period and invoice Vectorlink accordingly.
7.2. Price
The unit price for the production Product shall be calculated according to the
price quantity matrix set out in Schedule D. At any time after the 24th month
following delivery of the Prototype Philsar may change the price quantity matrix
in Schedule D upon 30 days notice to Vectorlink but Vectorlink may elect to
terminate rather than accept the new price.
7.3. Terms of Sale
Vectorlink shall provide Philsar with Purchase Orders specifying quantity and
delivery date with price as set out in Schedule D. All Purchase Orders shall be
delivered to Philsar not less than 30 days prior to the delivery date specified
therein. All Product shall be sold and delivered for factory and Vectorlink
shall assume title and risk at that point even if Philsar selects the shipper.
Payment of the purchase price is due 30 days after delivery. Vectorlink is
liable for all sales taxes, duties and like charges that may be imposed on the
sale or delivery of the goods and services to be provided by Philsar under this
agreement. Vectorlink shall pay interest at the rate of 1% per month on all
overdue mounts.
8. Exclusivity
Vectorlink shall have the exclusive right to purchase the Product for 24 months
after the receipt of first production delivery, unless the agreement is
terminated earlier.
The exclusivity is subject to Vectorlink notifying Philsar that it wishes to
proceed with production pursuant to paragraph 7.1.
After this 24 month period, Philsar may sell the chip to third parties. However,
Philsar agrees to give to Vectorlink a preference in terms of cost and delivery
schedule over eventual third party customers, according to an agreement to be
arrived at between both no later than 21 months after the first production
quantity order from Vectorlink.
Philsar may not licence the Vectorlink proprietary properties to any third party
without the prior approval from Vectorlink.
9. Announcement and Advertising
Vectorlink and Philsar will jointly announce the product at a mutually agreeable
time with mutually agreeable contents.
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 3
<PAGE>
Following such announcement and taking the exclusivity to Vectorlink of item 8,
Philsar may advertise the existence of this agreement and of the resulting chip
in trade journals or other public media and shall give prior notice to
Vectorlink of any advertisement that names or otherwise identifies Vectorlink.
Following the initial announcement, Vectorlink may advertise the existence of
this agreement and of the resulting chip in trade journals or other public
media.
10. Warranties and Limitation of Liability
10.1. Design
Philsar shall design a chip that meets the specifications in Schedule A. Philsar
makes no representations or warranties that the Product shall be usable by
Vectorlink or at all. All NRE costs paid by Vectorlink during the design phase
shall be deemed to be earned by Philsar upon receipt by Vectorlink of Product
that meet the specifications of Schedule A. Philsar shall be able to rely upon
any drawings, test results or specifications provided by Vectorlink for
incorporation into the design of the Product. Vectorlink warrants that any
software provided by it to Philsar in connection with this agreement will be
free of viruses, worms or similar programs or instructions.
10.2. Production
Philsar will replace any items of the Product which do not meet the
specifications of Schedule A. Philsar's liability in respect of such defective
items shall be limited to replacement only and shall not extend to any direct,
indirect or consequential loss or damage resulting from the use of defective
items by Vectorlink or the customers of Vectorlink, whether or not such defects
are latent. Philsar shall be under no obligation to accept warranty claims from
Vectorlink's customers. The foregoing warranties ace exhaustive of Philsar's
warranties to Vectorlink and Vectorlink's customers and in lieu of any other
warranty express or implied including, without limitation, any warranty of
merchantability or fitness for purpose.
10.3. Prototype Testing
Within the context of this contract, Philsar will prepare a document describing
test procedures that will be performed on the prototypes, including functional
and performance tests. Philsar will be responsible to perform the functional
tests at its facility. Functional testing definition is included as schedule E
of this document.
Two evaluation boards will be provided by Philsar with provisions to interface
with Vectorlink's development receiver. The evaluation boards will have the
functionality of the brass boards delivered by Philsar, plus the added
functionality of dual AGC and power control.
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 4
<PAGE>
11. Vectorlink use to Conform with Laws
Vectorlink represents and warrants to Philsar that the Product and any item into
which it may become incorporated by or on behalf of Vectorlink will not be used,
sold or delivered by Vectorlink in violation of the laws of Canada or the
jurisdiction in which Vectorlink is situate or to which it or its parent may be
subject. In the event that Philsar has reasonable grounds to believe that such
violation has occurred or is about to occur, Philsar may terminate the contract
and stop further shipments but such stoppage or termination shall not remove
Vectorlink's liability to pay for any Product already delivered.
12. Force Majeure
Philsar or Vectorlink shall be excused from failure to perform its obligations
under this agreement if such failure is due to events beyond its control. Such
events include, but are not limited to strikes, accidents, fires, wars,
government actions and interruptions in the delivery of parts, raw materials or
Product.
If such an event occurs, Philsar or Vectorlink may elect to terminate the
agreement, in which case the provisions of paragraph 11 shall apply, or suspend
it for a period of up to 30 days. The party terminating the agreement shall
promptly notify the other party of the occurrence of such an event and its
election. Vectorlink shall remain liable for timely payment for Product already
in transit.
13. Termination
Philsar may terminate this agreement if Vectorlink fails to pay any amount
payable by it hereunder or otherwise perform its obligations or an event of
force majeure occurs. In addition to any other remedies available to Philsar at
law or in equity upon termination, Vectorlink shall remain liable for all
Product already in transit and, except in the case of termination for force
majeure, for Philsar's reasonable expenses with respect to any work in progress
at the time of termination.
Vectorlink may terminate this agreement if Philsar fails to deliver according to
Schedule A, Schedule B or otherwise perform its obligation or an event of force
majeure occurs. Vectorlink's liability shall be limited in accordance with
Schedule B and Schedule C.
14. Notices
All notices shall be in writing and sent by fax or E-mail to the addresses set
out on page 1. All notices shall be deemed to have been received on the next
business day after they were sent.
15. Governing Law
This agreement shall be governed by the laws of Ontario, Canada without regard
to any
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 5
<PAGE>
conflict of law principles and any proceedings to resolve disputes shall be
heard by the courts of Ontario.
16. Headings
The parties agree that the headings are for convenience only and do not form
part of this agreement.
17. Entire Agreement
Except for the Non-Disclosure Agreement between the parties dated April 7, 1997
and any purchase order delivered by Vectorlink, which are incorporated into this
agreement by reference, this agreement contains the entire agreement between
the parties.
Dated at Ottawa, Canada this 4th day of June 1997.
Philsar Electronics, Inc Vectorlink, Inc.
/s/ Luc Lussier /s/ Rodric C. Fan
- ----------------------------- -------------------------------------
per: Luc Lussier, President per: Rodric C. Fan, President 6/11/97
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 6
<PAGE>
Schedule A
Product
Specifications
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 7
<PAGE>
The VRF1 ASIC is an integrated ASIC front end dual conversion L-band RF receiver
developed for a Global Positioning System (GPS) Receiver application. The device
is packaged in a TQFP package and is designed to operate from a 3 volt supply.
The input is the L1 (1575.42 MHz) GPS signal. The output is a downconverted,
bandpass 2-bit quantized signal ready for digital signal processing.
The VRF1 contains a low noise amplifier (LNA), two frequency multipliers
(mixer), voltage controlled oscillator (VCO), fixed frequency dividers,
automatic gain control, crystal oscillator and proper filter and input matching
impedances.
FEATURES
. Fully Integrated GPS receiver
. Total Gain of over 120 dB
. Integrated LNA
. Supply voltage range + 2.7 to +3.7 V DC
. Low Profile TQFP Package
. Sign and Magnitude digital outputs
. Cascadable for multi-Rx fronts ends
. On chip PLL and oscillators
. C/A Code compatible
APPLICATIONS
GPS (Global Positioning System)
STRUCTURE
Bipolar Silicon Monolithic IC
ABSOLUTE MAXIMUM RATINGS
(Non Simultaneous)
Max Supply Voltage +5V
Max RF Input +15dBm
Max voltage on any pin tbd
Storage temperature -65C to +150C
Operating Junction Temperature tbd
10.2028 MHz Ref. Input 1.5 Vpp
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 8
<PAGE>
Product Description
The block diagram of the VRF1 ASIC is shown in Figure 1 below. The VRF1 ASIC
consists of a number of functional blocks as described below.
LNA Options
External LNA
Internal LNA
1st RF Strip
External 2nd IF Filter
1st IF Strip
External 1st IF Filter
2nd IF Strip
AGC Control
Analog to Digital Converter
Phase Locked Loop Synthesizer
Loop Filter and Resonator
Reference Outputs
Crystal Oscillator Options
Power Down Capability
Power On Reset Function
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 9
<PAGE>
(Image)
Figure 1 - Preliminary Block Diagram of the VRF1
Note: The pin-out may be modified up to the Critical Design Review
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 10
<PAGE>
Electrical Characteristics
The Electrical Characteristics are guaranteed over the following operating
conditions
Temperature -40(Degrees)C to + 85(Degrees)C
Supply Voltage +2.7 to +3.7V
Test Conditions (Unless Otherwise stated):
Supply Voltage: +2.7 to +3.7V
Test Temperature: +25(Degrees)C
Table 1: Electrical Characteristics
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
CHARACTERISTIC SYMBOL MIN TYP MAX UNITS TEST CONDITIONS
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
POWER SUPPLY
Normal Mode
DC current drain Icc 35 60 mA PD Set High
Stand-by Icc 1 mA PD set low
- -----------------------------------------------------------------------------------------------------------------------------------
LNA1
Input Signal Frequency /f/in1 1575.42 MHz
Output Frequency (1st IF) /f/in1 1575.42 MHz
Noise Figure FLNA1 2.5 3.5 dB
Input Impedance Z\\inLNA1\\ 50 Omega VSWR = 2.0 max
Output Impedance Z\\0\\LNA1 50 Omega VSWR = 2.0 max
Output Third Order Intercept Point II3P\\LNA1in\\ -10 -2 dBm
Output 1dB Gain Comp Point P1\\LNA1in\\ -20 -12 dBm
Radiated LO Emission LOLNA1 -40 dBm Output Power at 1530MHz at
Gain GLNA1 12 18 dB Pin 30
- -----------------------------------------------------------------------------------------------------------------------------------
1st RF STRIP
Input signal frequency /f/in 1400 1575.42 1750 MHz
Output Frequency (1st IF) f1 45.0 MHz LO1 = 1530.42 MHz
Conversion Gain G1 20 30 dB fin=1575.42MHz+/- 50MHz
Noise Figure F1 2.5 5 8 dB Zs = 50Omega
Input Impedance Z\\in\\ 50 Omega VSWR = 2.0
Differential Output Impedance Z\\0\\1 600 Omega VSWR = 2.0
RF Input Image Rejection IR1 20 30 dB\\c\\
Input 1dB Gain Compression P1\\in\\ -50 -40 dBm Referred to the input
Point
LO Radiated Emission LO1 dBm Output Power at 1530MHz at
-10 Pin 34
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
page 11
<PAGE>
<TABLE>
<CAPTION>
Table 1: Electrical Characteristics
- --------------------------------------------------------------------------------------------------------------------------
CHARACTERISTIC SYMBOL MIN TYP MAX UNITS TEST CONDITIONS
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1st IF STRIP
Input Frequency (1st IF) fl 45.0 MHz LO1 = 1530.42 MHz
Output Frequency (2nd IF) f2 6.014 MHz LO2 = 51.014 MHz
Conversion Gain G2 20 30 dB f1=45.0 MHz
Differential Input Impedance Z1\\in\\ 600 kOmega
Differential Output Impedance Z1\\out\\ 1 5 Omega
Input Compression Point P2 75 mVrms
IF Strip 3dB Bandwidth BW1 50 55 MHz
--------------------------------------------------------------------------------------------------------------------------
2nd IF STRIP
Input Frequency IF2 6.014 MHz
Output Frequency IF2 6.014 MHz
IF2 Output Amplitude VIF2 100 mV\\pp\\
IF2 1dB Bandwidth BW2 6.5 7 8 MHz
Maximum Gain G3 75 dB
Gain Control Range G\\AGC-R\\ 30 40 dB
AGC Time Constant /t/AGC 1 3 ms
Output Variation over 30dB Range G3B 1 2 dB
Input Control Voltage 0.5 2.5 V
2 BIT ADC
Sign Duty Cycle 50 %
Magnitude Duty Cycle 25 30 35% % at 100 mV\\pp\\
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 12
<PAGE>
<TABLE>
<CAPTION>
Table 1: Electrical Characteristics
- -----------------------------------------------------------------------------------------------------------------------------------
CHARACTERISTIC SYMBOL MIN TYP MAX UNITS TEST CONDITIONS
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
PLL SYNTHESIZER
LO1 Phase Noise P\\n\\ 1530.42 MHz
1 kHz - 68 - 65 dBc/Hz Note: Does not include
10 kHz - 75 - 70 dBc/Hz spurious signals
100 kHz - 90 - 85 dBc/Hz
1 MHz - 110 - 100 dBc/Hz
5 MHz - 120 - 100 dBc/Hz
10 MHz - 120 - 100 dBc/Hz
f\\LO\\ 1400 1530 1700 MHz
VCO Free Running Frequency P\\spur\\ - 50 dBc
VCO Spurious Note:
f\\ref\\
Reference Input T\\Iock\\ 10.2028 MHz fLO1=150xf\\ref\\
PLL Lockup Time 5 10 msec
1530
REFERENCE OSCILLATOR f\\ref\\
Reference Oscillator Frequency 10.2028 MHz Fundamental Mode Crystal
V\\refin\\ 70 mV\\rms\\ Note:
Input Reference Signal Level 100 External Reference, AC coupled
Note:
Reference Output V\\refout\\ 70
Level 100 mV\\rms\\
Output Impedance 600 Omega
Output Non-Inverting relative
to Reference Oscillator Must drive 4 loads of input
Output Driving Capability impedence
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 13
<PAGE>
<TABLE>
<CAPTION>
Table 1: Electrical Characteristics
- -------------------------------------------------------------------------------------------------------------------------------
CHARACTERISTIC SYMBOL MIN TYP MAX UNITS TEST CONDITIONS
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
DIGITAL INTERFACES Note All Digital interfaces are
3V TTL levels unless otherwise
specified
2 BIT ADC
Sample Clock Input Frequency 7.6521 9 MHz Typically f\\CLK38\\/5
Sign Output 3V TTL 3V TTL Note:
Magnitude Output 3 V TTL 3V TTL Note
Sample Clock to Sign/Mag Output t\\MAG\\ 20 ns
Sample Clock Level 3V TTL
AGC CONTROL(TBD)
POWER CONTROL
Power Down Time t\\PD\\ 3 mus Note: For Each of 3 Modes
Power Up Time t\\PU\\ 20 ms
CLOCK OUTPUTS
CLK10 f\\REF\\ 10.2028 MHz f\\REF\\
CLK38 f\\CLK38\\ 38.2605 MHz 3.75xf\\REF\\
CLK51 f\\CLK51\\ 51.014 MHz 5xf\\REF\\
Note: Clock Output are
100 mV rms / 600omega
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 14
<PAGE>
Schedule B
Time Table
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 15
<PAGE>
The target delivery dates are shown in Table 2 below.
Table 2: Time Table
-------------------------------------------------------------------
Event Description Target Completion
Date
===================================================================
Contract Award December 23, 1996
-------------------------------------------------------------------
Detailed Specification Sheet January 10, 1997
-------------------------------------------------------------------
Preliminary Design Review February 5, 1997
-------------------------------------------------------------------
Critical Design Review May 15, 1997
-------------------------------------------------------------------
Tape Out June 30, 1997
-------------------------------------------------------------------
First Shipment of 25 Untested Part August 30, 1997
Accelerated Schedule (see Note 1 below)
-------------------------------------------------------------------
First Shipment of 25 Untested Part September 15, 1997
Normal Schedule
-------------------------------------------------------------------
Shipment of 2 Test Sets (see Note 3 below) September 30, 1997
-------------------------------------------------------------------
Shipment of 25,000 minimum First Purchase* 12 Weeks ARO
-------------------------------------------------------------------
Volume Production Orders 10 - 12 Weeks ARO
-------------------------------------------------------------------
* These target dates assume no second design cycle. Should such second
cycle be warranted, new target dates will be accepted by both parties.
Note 1
There may be an option to have a first shipment of parts using a special
ordering process to speed-up first delivery. This process will add $25,000
(twenty five thousand dollars) to the NRE cost of the project.
Note 2
These dates may vary by up to 30 days for unintended reasons. In such a
case, these target dates will be deemed as met for contractual purpose.
Note 3
These Test Sets will include:
- Test PCB Evaluation Board,
- Documentation Package including data sheets and a brief description
of the board set up and use requirements
- Successful Test Report including test data verifying all
specification items of the VRF1 GPSRx ASIC Specification in
Schedule A.
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 16
<PAGE>
Schedule C
Payment
Schedule
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 17
<PAGE>
The Schedule of Payments for the Project is shown in Table 3 below:
<TABLE>
<CAPTION>
Table 3: Schedule of Payment
---------------------------------------------------------------------------------------------------------
Event Target Date Payment in
US Dollars
=========================================================================================================
<S> <C> <C>
Contract Award December 23, 1996 -
---------------------------------------------------------------------------------------------------------
Detailed Specifications January 10, 1997 [**]
---------------------------------------------------------------------------------------------------------
Preliminary Design Review February 5, 1997 [**]
---------------------------------------------------------------------------------------------------------
Critical Design Review May 15, 1997 [**]
---------------------------------------------------------------------------------------------------------
Tape Out to Production June 30, 1997 [**]
---------------------------------------------------------------------------------------------------------
Shipment of Prototypes - Normal Schedule September 15, 1997
---------------------------------------------------------------------------------------------------------
Shipment of Prototypes - Accelerated Schedule August 30, 1997
---------------------------------------------------------------------------------------------------------
Shipment of 2 Test Sets September 30, 1997 [**]
---------------------------------------------------------------------------------------------------------
Start of Shipment of 25,000 minimum First Purchase* November 1, 1997 [**]
---------------------------------------------------------------------------------------------------------
Total Contract Value [**]
or [**] for
accelerated
schedule
---------------------------------------------------------------------------------------------------------
</TABLE>
* This target date assumes no second design cycle and a 12 week delay ARO.
Should such second cycle be warranted, new target dates will be accepted by
both parties. The payment schedule is to be consistent with item 7.3 of
this agreement.
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 18
** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Schedule D
Price/Quantity
Matrix
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 19
<PAGE>
The Unit Price of the parts will vary according to the cumulative number of
parts ordered, as shown in table 4 below:
Table 4: Price/Quantity Matrix
- ---------------------------------------------------------------
Quantity Unit Price in US dollars
===============================================================
Initial 25 Untested Prototypes included in design costs
- ---------------------------------------------------------------
Minimum Initial Purchase of [*] [*]
- ---------------------------------------------------------------
[*] [*]
- ---------------------------------------------------------------
[*] [*]
- ---------------------------------------------------------------
[*] [*]
- ---------------------------------------------------------------
[*] [*]
- ---------------------------------------------------------------
These prices are fixed for the period covering the first 24 months following
delivery of the functional prototypes.
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 20
[*] CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Schedule E
Functionality
Tests
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 21
<PAGE>
Functionality Test Areas
After receiving the Prototypes from the Foundry, Philsar will perform, in its
facilities or under its direct supervision a series of tests to ensure the
functionality of the prototypes.
1. Temperature Ranges
The tests will be performed at 3 temperature ranges:
1.1. at -40 degrees Celsius
1.2. at +25 degrees Celsius
1.3. at +85 degrees Celsius
2. Test to be performed
The following components will be tested, each measuring a specific aspect of the
component for conformance to specifications of Table 5 below:
Table 5: Functional Test to be Performed by Philsar
- ------------------------------------------------------------------------------
No Component under test Aspects to be measured
==============================================================================
1 LNA Gain
Linearity
- ------------------------------------------------------------------------------
2 Mixer / LNA2 Conversion Gain
Linearity
Image Suppression
- ------------------------------------------------------------------------------
3 VCO Frequency Range
(On Spectrum Analyzer only) Phase Noise
- ------------------------------------------------------------------------------
4 Frequency Dividers Functionality
Output Clocks Divide Ratios
- ------------------------------------------------------------------------------
5 PLL Acquire Lock over Temperature Range
- ------------------------------------------------------------------------------
6 AGC Gain Range
Compression Ratio
Output Level
- ------------------------------------------------------------------------------
7 A/D Functionality, Magnitude / Sign, 30% duty
cycle at nominal level
Linearity
- ------------------------------------------------------------------------------
8 Crystal Oscillator Frequency, Power
- ------------------------------------------------------------------------------
9 Power Control 3 Functional Modes
- ------------------------------------------------------------------------------
A Report will be submitted to Vectorlink describing the results of the tests.
Philsar - Vectorlink Design and Purchase Contract
Revised June 1997
Page 22
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EXHIBIT 10.7
[LOGO OF BELL ATLANTIC MOBILE APPEARS HERE]
CONTRACT NO. ###-##-####
JOINT CDPD MARKETING AGREEMENT
between
VECTORLINK, INC.
and
BELL ATLANTIC MOBILE
================================================================================
PRIVATE
The information contained herein is proprietary and should not be disclosed to
unauthorized persons. It is meant solely for use by authorized Bell Atlantic
Mobile employees and persons employed, retained or consulted by them.
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
<PAGE>
JOINT MARKETING AGREEMENT
THIS JOINT MARKETING AGREEMENT, Contract No. ###-##-####, is made by
and between Cellco Partnership, a Delaware General Partnership, doing business
as Bell Atlantic Mobile, located at 180 Washington Valley Road, Bedminster, NJ
07921 (hereinafter "Bell Atlantic Mobile"), and VECTORLINK, INC., a California
corporation, with its principal place of business at 45635 Northport Loop East,
Fremont, CA 94538 ("Company").
W I T N E S S E T H
WHEREAS, Bell Atlantic Mobile has the ability to offer its current and
prospective customers its wireless data Cellular Digital Packet Data ("CDPD")
services; and
WHEREAS, Company develops and distributes certain software and
hardware to provide wireless products, services and application solutions to
satisfy particular customer requirements; and
WHEREAS, the parties have determined that it will be beneficial to
each of them to enter into a definitive agreement to market to their respective
customers and prospective customers technological solutions which meet those
customers' needs and which, to the extent practicable, combine each other's
products and services to provide total wireless data solutions utilizing CDPD
applications; and
WHEREAS, solutions for the customers and prospective customers of Bell
Atlantic Mobile or Company may require the use of software designed for specific
applications ("Application Software"), which may be provided by Company or by
one or more third parties ("Third-Party Providers"), such as value-added
resellers ("VARs"), independent software vendors ("ISVs") or systems
integrators;
NOW, THEREFORE, in consideration of the mutual promises and covenants
of the parties as hereinafter set forth, Bell Atlantic Mobile and Company agree
as follows:
ARTICLE 1 - DEFINITIONS
"Affiliate" of a person or entity (the "primary party") means another
person or entity which falls within any one or more of the following categories:
(i) a person or entity that is controlled by, controls or is under the same
control as the primary party, or (ii) a subsidiary (whether or not consolidated)
of the primary party, or (iii) an entity of which the primary party is a
subsidiary (whether or not consolidated), or (iv) a person or entity which has a
material ownership interest in the primary party or which manages a significant
portion of the primary party's day-to-day operations, or (v) an entity in which
the primary party has a material ownership interest or which has a significant
portion of its day-to-day operations managed by the primary party.
"Bell Atlantic Mobile Market Area" means the area designated as the
Bell Atlantic Mobile Market Area in Exhibit A hereto.
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"Bell Atlantic Mobile Services" includes Existing Bell Atlantic Mobile
Services and Customized Bell Atlantic Mobile Services.
"Bell Atlantic Mobile Technology" means CDPD.
"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.
"Company Market Area" means the area(s) designated as the Bell
Atlantic Mobile Primary Serving Markets as listed in Exhibit A
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"Company Products" means all products and services offered by Company
to Customers or Prospects from time to time, whether such products or services
are offered to Customers or Prospects directly by Company or indirectly through
third parties or subcontractors, and whether or not Company is the ultimate
supplier or manufacturer of such products or services. The Company Products
include, without limitation, Existing Company Products and Customized Company
Products.
"Customer" means, at any time, any current customer or client of the
party in question.
"Customized Bell Atlantic Mobile Services" means services which can be
provided by Bell Atlantic Mobile using the Bell Atlantic Mobile Technology, but
which are not at the time included in the Existing Bell Atlantic Mobile
Services.
"Customized Company Products" means products which can be provided by
Company using technology available to it, but which are not at the time included
in the Existing Company Products.
"Direct Sales Channel" means for any entity all individuals employed
by such entity for the purpose of sales and all sales facilities operated by
such entity (such as communication store outlets, in the case of Bell Atlantic
Mobile), but shall not include independent companies of such entity.
"Existing Bell Atlantic Mobile Services" means the CDPD services which
Bell Atlantic Mobile markets generally from time to time.
"Existing Company Products" means the products which Company markets
generally from time to time.
"Proposal" means any proposal, or any response to requests for
proposal, bid or information, or similar method of offering or marketing
wireless data solutions which do, or reasonably could, include both Bell
Atlantic Mobile Services and Company Products and (to the extent applicable)
Application Software.
"Prospect" means any Customer or potential Customer to whom a party
hereto has made, or is considering making, a Proposal.
To "Reasonably Recommend" a product or service means to recommend and
promote such product or service to a Prospect in a manner reasonably designed to
influence the Prospect to purchase the product or service; provided, that an
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obligation to Reasonably Recommend a product or service does not include any
obligation: (a) to promote any product or service if there exists a good faith
belief that the Prospect's requirements would not be addressed as well by such
product or service as they would by some competing product or service or (b) to
continue promoting the product or service if the Prospect indicates an
unwillingness to consider using it.
"Solutions" means actual or proposed total wireless data solutions to
meet the needs of Prospects, which solutions utilize CDPD applications.
ARTICLE 2 - JOINT-PROMOTION AND PROPOSALS
2.7 Recommendation of Bell Atlantic Mobile Services and Company
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Products. During the term of this Agreement, Company, through its Direct
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Sales Channel, shall Reasonably Recommend the Bell Atlantic Mobile Services
in the Company Market Area. During the term of this Agreement, Bell
Atlantic Mobile, through its Direct Sales Channel, may, but is not required
to, Reasonably Recommend the Company Products in the Bell Atlantic Mobile
Market Area.
2.2 Company Proposals. From time to time during the term of this
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Agreement, whenever Company is considering making a Proposal involving CDPD
which, in Company's reasonable judgment, may benefit from the inclusion of
Bell Atlantic Mobile Services, Company
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shall so notify Bell Atlantic Mobile. Upon receipt of such notice, Bell
Atlantic Mobile shall promptly provide to Company all sales, marketing and
technical support necessary to enable Company to include in its Proposal,
to the extent reasonably practical, Solutions using Bell Atlantic Mobile
Services.
2.3 Bell Atlantic Mobile Proposals. From time to time during the term
------------------------------
of this Agreement, whenever Bell Atlantic Mobile is considering making a
Proposal which, in Bell Atlantic Mobile's reasonable judgment, may benefit
from the inclusion of Company Products, Bell Atlantic Mobile may so notify
Company. Upon receipt of such notice, Company shall promptly provide to
Bell Atlantic Mobile all sales, marketing and technical support necessary
to enable Bell Atlantic Mobile to include in its Proposal, to the extent
reasonably practical, Solutions using Company Products. Bell Atlantic
Mobile may request Company's support, but Bell Atlantic Mobile shall be
under no obligation to recommend Solutions containing Company Products to
Bell Atlantic Mobile's Prospects.
2.4 Responsibilities Upon Acceptance of Proposals Which Include Bell
----------------------------------------------------------------
Atlantic Mobile Services and Company Products.
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(a) Upon a Prospect's acceptance of a Company Proposal which includes
Bell Atlantic Mobile Services or a Bell Atlantic Mobile Proposal which
includes Company Products, Company and Bell Atlantic Mobile shall cooperate
with each other in implementing the Proposal, which cooperation shall be
deemed a joint marketing effort hereunder.
(b) Should the Proposal be one which contemplates that Company or a
Third-Party Provider is the prime contractor to the Customer, Bell Atlantic
Mobile may choose to act as a subcontractor pursuant to a subcontracting
agreement to be entered into between Company or such Third-Party Provider
and Bell Atlantic Mobile. Should the Proposal be one which contemplates
that Bell Atlantic Mobile or a Third-Party Provider is the prime contractor
to the Customer, Company shall act as a subcontractor pursuant to a
subcontracting agreement to be entered into between Bell Atlantic Mobile or
such Third-Party Provider and Company. Upon entry into a subcontracting
agreement or similar form of agreement relating to an accepted Proposal,
such agreement shall thereafter govern the rights and obligations of the
parties thereto with respect to the subject matter thereof, except as the
parties may otherwise agree in writing.
(c) Should the Proposal be one which contemplates that each of Company
and Bell Atlantic Mobile (and, if appropriate, one or more Third-Party
Providers) shall separately contract with the Customer, then each of
Company and Bell Atlantic Mobile shall negotiate in good faith to enter
into its own contract with such Customer (each, a "Customer Contract").
When both Company and Bell Atlantic Mobile have entered into such Customer
Contracts, neither of them shall have any obligations to one another with
respect to the subject matter thereof other than the obligation of
reasonable coordination with each other to implement the agreed upon
Solution; provided, that if either of them, by acts or omissions
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constituting bad faith or gross negligence under the Customer Contract by
which such party is bound, directly or indirectly causes the other party to
suffer any losses or damages, the party causing such loss or damage shall
be liable to the party which has been harmed to the extent that the loss or
damage was reasonably foreseeable.
2.5 Training Regarding Bell Atlantic Mobile Services and Technology.
---------------------------------------------------------------
During the term hereof, in order to enhance Company's ability to Reasonably
Recommend Bell Atlantic Mobile Services and its ability to create Proposals
which could include Bell Atlantic Mobile Services, and thereby to further
advance both parties' purposes hereunder, Bell Atlantic Mobile shall make
available to Company information designed to enhance Company's
understanding of the functions and advantages of the Bell Atlantic Mobile
Services and the Bell Atlantic Mobile Technology.
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2.6 Training Regarding Company Products and Technology. During the
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term hereof, in order to enhance Bell Atlantic Mobile's ability to
Reasonably Recommend Company Products and its ability to create Proposals
which could include Company Products, and thereby to further advance both
parties' purposes hereunder, Company shall make available to Bell Atlantic
Mobile information designed to enhance Bell Atlantic Mobile's understanding
of the functions and advantages of the Company Products.
2.7 Obligation to Reasonably Recommend. During the term hereof,
----------------------------------
Company shall not recommend any provider of CDPD other than Bell Atlantic
Mobile to any Customer or potential Customer in the Bell Atlantic Mobile
Market Area, except in such instances in which: (a) Company has first
Reasonably Recommended Bell Atlantic Mobile Services and the Company
Customer has refused to deal with Bell Atlantic Mobile, or (b) Company
believes in good faith that it is unable to Reasonably Recommend the Bell
Atlantic Mobile Services to such Customer or potential Customer for any of
the reasons set forth in the definition of "Reasonably Recommend" elsewhere
in this Agreement and, to the extent practical, it has notified Bell
Atlantic Mobile of that reason and given Bell Atlantic Mobile an
opportunity to respond.
2.8 Telemarketing Services
----------------------
In the event Company conducts telemarketing services on behalf of Bell
Atlantic Mobile, the following shall apply:
(a) Company agrees to conduct its telemarketing services on behalf of
Bell Atlantic Mobile, in accordance with all applicable Federal, State and
local laws and regulations governing advertising, marketing practices and
the transaction of its business by telephone. These include, but, are not
limited to, the Telephone Consumer Protection Act of 1991, the
Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 and the
Telemarketing Sales Rule of 1995, all Consumer Protection Acts, all
tariffs, and any rules and procedures of any governmental body or Bell
Atlantic Mobile relating to the sale of CRS or the sale, lease,
installation, warranty service or repair of Equipment, as well as the laws
and regulations of the United States Postal Service, Federal Communications
Commission, Federal Trade Commission and the Federal Reserve Board.
Further, to the extent Company records or monitors its calls, it will
give appropriate notification and gain consent of participants in such
calls to such monitoring and recording. Company shall provide Bell Atlantic
Mobile with a plan and an audited report to demonstrate it is complying
with these laws, rules and regulations.
(b) When making outbound telemarketing calls on behalf of Bell
Atlantic Mobile, Company shall only use representatives who have attended
and completed training by Bell Atlantic Mobile in Bell Atlantic Mobile
specific practices and procedures and the Bell Atlantic Mobile price plans
Company is authorized to offer. After completion of the Bell Atlantic
Mobile training, the representative shall be fully capable of handling Bell
Atlantic Mobile calls in a professional, knowledgeable manner, and in
strict conformance with Bell Atlantic Mobile's practices and procedures.
The representatives shall also be knowledgeable about applicable Bell
Atlantic Mobile price plan offers. Training provided by Bell Atlantic
Mobile will be based on the applicable portions of Bell Atlantic Mobile's
Training manual, including but not limited to, Bell Atlantic Mobile's
products, services, price plans and coverage areas. Company employees who
attend the training will be asked to sign a Bell Atlantic Mobile attendance
sheet
(c) No contract between Bell Atlantic Mobile and a Subscriber shall
exist until the Service Form is accepted and approved by Bell Atlantic
Mobile and the service has been activated.
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Company will provide its outbound calling list to Bell Atlantic Mobile
for approval ("Preapproved List"). The list provided by Company will be on
a 3.5 disk in Excel format and should include the customer's name and
address, phone number and social security number (if available). Bell
Atlantic Mobile will review the list and indicate which customers should
not be called either because they are Bell Atlantic Mobile's current
customers or are on Bell Atlantic Mobile's "Do Not Call List"). Bell
Atlantic Mobile will normally return the list to Company within one (1)
week after receipt. Company agrees that it shall also maintain and honor a
"Do Not Call" List.
(d) Company shall not use a Voice Response Unit during its performance
under this Agreement.
(e) In the event Company is providing similar services to other
wireless providers in markets not covered by this Agreement, Company agrees
that its operators who handle Bell Atlantic Mobile calls will not share the
same working areas as Company operators who handle other wireless
providers' calls. Further, Company shall ensure that other wireless
providers: (1) will not be allowed access to Bell Atlantic Mobile
documentation, (2) will not be allowed access to the area(s) where
representatives are handing Bell Atlantic Mobile calls, and (3) will not
have the ability to listen in to operator's who are handling Bell Atlantic
Mobile's calls. Further, Company employees shall be instructed to keep Bell
Atlantic Mobile information secure when not in use. Company shall also
ensure that its employees are aware of the restrictions contained in the
Agreement executed by the parties concerning Company's employees obligation
not disclose Bell Atlantic Mobile information. Prior to implementation,
Company will provide to Bell Atlantic Mobile for Bell Atlantic Mobile's
prior approval, Company's plan to ensure that Company will comply with this
Section 2.8.
(f) Company will bear all costs for providing telemarketing services,
including, but not limited to:
(1) The time spent by its representatives during Bell Atlantic
Mobile training; (2) all costs related to fulfillment of the
Subscriber's order, and (3) all costs relating to the furnishing and
maintaining of adequate and appropriate equipment, personnel ancillary
services, office facilities, support facilities and all necessary
hardware and software required to perform telemarketing sales.
ARTICLE 3 - TECHNOLOGY DEVELOPMENT AND OWNERSHIP
3.1 Technology Development. Bell Atlantic Mobile and Company may
----------------------
cooperate with each other from time to time in developing new technology,
new applications of existing technology and/or new products or product
lines in order to further their mutual interests hereunder. Except as
otherwise provided herein, neither party shall be under any obligation to
the other to engage in such development.
3.2 New Technology Ownership. In each event when the parties desire
------------------------
to work together to develop new technology or new products, they shall
negotiate to reach agreement on the ownership rights of each of them in the
technology or products which are to be developed.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF COMPANY AND BELL
ATLANTIC MOBILE
4.1 Company hereby represents and warrants to Bell Atlantic Mobile as
follows:
4.1.1 Sufficient Rights; No Infringement. Company owns the
----------------------------------
entire right, title and interest in and to the Company
Products, or has sufficient rights therein, to utilize the
Company Products for the purposes set forth herein.
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The Company Products to be used in accordance with any
arrangements contemplated by this Agreement do not
infringe or violate any United States patents or any
copyright, trademark, trade secret or other intellectual
property rights and there are no claims of any such
infringement or violation.
4.1.2 Authority. Company has the requisite authority to enter
---------
into this Agreement and to perform all of its obligations
hereunder.
4.2 Bell Atlantic Mobile hereby represent and warrants to company as
follows:
4.2.1 Sufficient Rights: No Infringement. Bell Atlantic Mobile
----------------------------------
owns the entire right, title and interest in and to the
Bell Atlantic Mobile Services and Bell Atlantic Mobile
Technology, or has sufficient rights therein, to utilize
the Bell Atlantic Mobile Services and the Bell Atlantic
Mobile Technology for the purposes set forth herein.
Neither the Bell Atlantic Mobile Services nor the Bell
Atlantic Mobile Technology is to be used in accordance
with any arrangements, contemplated by this Agreement
infringe or violate any United States patents or any
copyright, trademark, trade secret or any other
intellectual property rights and there are no claims of
any such infringement or violation.
4.2.2 Authority. Bell Atlantic Mobile has the requisite
---------
authority to inter into this Agreement and to perform all
of its obligations hereunder.
ARTICLE 5 - RELATIONSHIP OF THE PARTIES
Each of the parties hereto will act as, and will be, independent
contractors in all aspects of their performance of this Agreement.
Neither party will act or have authority to act as an agent for the
other party for any purpose whatsoever. Nothing in this Agreement will
be deemed to constitute or create a joint venture, partnership,
franchise, pooling arrangement, or other formal business entity or
fiduciary relationship between Company and Bell Atlantic Mobile.
ARTICLE 6 - NON-DISCLOSURE
6.1 Non-Disclosure of Agreements. Neither party will make any
----------------------------
disclosure regarding the terms of this Agreement or the business
arrangements described herein without obtaining the prior written consent
of the other party; provided, however, that (i) the parties may communicate
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with Customers and Prospects to the extent reasonably required to perform
hereunder (but will obtain prior written approval of the other party hereto
before identifying such party in advertisements, mass mailings or general
publicity); (ii) each party will be permitted to make such disclosures as
are required by legal or regulatory requirements applicable to, and beyond
the reasonable control of, the party; and (iii) either party may disclose
the terms of this Agreement and the business arrangements described herein
to employees of their affiliates who have a need to know.
6.2 Confidential Information. The parties recognize that in the
------------------------
course of negotiating and performing this Agreement both parties have had
and will continue to have access to certain confidential or proprietary
information belonging to the other and each desires that any such
confidential and proprietary information remain confidential. Each party
agrees that, both during the term hereof and for a period of two (2) years
after the termination of this Agreement such party will use the same means
it uses to protect its own confidential proprietary information, but in no
event less than reasonable means, to prevent the disclosure and to protect
the confidentiality of both (i) written information received from the other
party which is marked or identified as confidential, and (ii) oral or
visual information identified as confidential at the time of disclosure
which is summarized in writing and provided to the other party in such
written form promptly after
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such oral or visual disclosure ("Confidential Information"). The foregoing
------------------------
will not prevent either party from disclosing Confidential Information
which belongs to such party that is (i) already known by the recipient
party without an obligation of confidentiality, (ii) publicly known or
becomes publicly known through no unauthorized act of the recipient party,
(iii) rightfully received from a third party, (iv) independently developed
by the recipient party without use of the other party's Confidential
Information, (v) disclosed without similar restrictions to a third party by
the party owning the Confidential Information, (vi) approved by the other
party for disclosure, or (vii) required to be disclosed pursuant to a
requirement of a governmental agency or law so long as the disclosing party
provides the other party with notice of such requirement prior to any such
disclosure. Nothing herein shall restrict Company from disclosing to a
third party that it has an exclusive relationship with Bell Atlantic
Mobile.
6.3 Remedies. Each party acknowledges that the other would suffer
--------
irreparable damage in the event of any breach of the provisions of this
Article 6. Accordingly, in such event, a party will be entitled to
temporary, preliminary and final injunctive relief, as well as any other
applicable remedies at law or in equity against the party who has breached
or threatened to breach this Article 6.
6.4 No Rights Granted. Nothing contained in this Agreement shall be
-----------------
construed as granting or conferring any rights by license or otherwise in
any Confidential Information disclosed to the receiving party. All
Confidential Information shall remain the property of the disclosing party
and shall be returned by the receiving party to the disclosing party upon
request. All notes, abstracts, memoranda, or other documents prepared by
receiving party which contain Confidential Information or any discussion
thereof, shall be destroyed or returned to the disclosing party upon
written request. If the parties hereto decide to enter into any licensing
arrangement regarding any Confidential Information or present or future
patent claims disclosed hereunder, it shall only be done on the basis of a
separate written agreement between them. No disclosure of any Confidential
Information hereunder shall be construed a public disclosure of such
Confidential Information by either party for any purpose whatsoever.
6.5 Limitation on Obligations. The furnishing of Confidential
-------------------------
Information hereunder shall not obligate either party to enter into any
further agreement of negotiation with the other or to refrain from entering
into an agreement or negotiation with any other party.
ARTICLE 7 - TERM AND TERMINATION
7.1 Term and Termination.
--------------------
(a) Subject to the termination provisions below, this Agreement shall
take effect upon execution of this Agreement by the parties and shall
continue for a period of one (1) year from the date hereof. Thereafter,
this Agreement may be extended for four (4) additional one-year terms
unless terminated by either party within sixty (60) days of the expiration
of the then current Term. The initial Term, including all renewal Terms,
shall not exceed five years.
(b) This Agreement may be terminated by either party with or without
cause by giving thirty (30) days' prior written notice to the other (to the
attention of the person signing this Agreement on behalf of such other
party). Upon material breach or default under this Agreement by either
party, if the other party gives notice of such breach or default and the
same is not reasonably susceptible of cure within thirty (30) days, then
without limitation of any other remedy available hereunder, the non-
defaulting party may terminate this Agreement immediately by delivery of a
notice of termination simultaneously with the notice of default or at any
time thereafter. This Agreement may be immediately terminated without prior
written notice at the option of Bell Atlantic Mobile in the event that
Company violates any of the conditions of Article 6 relating to the
Confidential Information of Bell Atlantic Mobile or Company shall have
ceased business, been adjudged bankrupt or insolvent, made an assignment
for the benefit of creditors, and/or filed for a petition in bankruptcy or
reorganization.
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(c) Following expiration or termination of this Agreement, except for
the obligations of the parties set forth in Section 7.3 below, the parties
will have no further obligation or responsibility to each other.
7.2 No Waiver. The right of either party to terminate this Agreement
---------
hereunder shall not be affected in any way by its waiver of or failure to
take action with respect to any previous default.
7.3 Survival of Obligations upon Expiration of Term or Termination of
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Agreement. (a) All obligations of the parties arising hereunder and
---------
relating to any Proposal or joint Customer relationship existing on the
date of expiration or termination (other than obligations to recommend or
jointly market each others products and services) shall continue in full
force and effect subsequent to and notwithstanding the termination or
expiration of this Agreement until all such obligations are satisfied in
full. The termination or expiration of this Agreement shall in no way
affect the rights and obligations of Bell Atlantic Mobile and Company under
any then existing subcontracting agreement or similar form of agreement
between the parties, except to the extent set forth therein.
(b) All representations, warranties and covenants of the parties set
forth in Section 4 and Section 8 shall survive the termination of this
Agreement for a period of two (2) years (the "Two-Year Period"); provided,
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however. (i) if a claim or allegation of infringement of any U.S. patent or
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any trademark, copyright, trade secret or other intellectual property right
is made during the Two-Year Period, then, with respect to such claim or
allegation, the indemnification provisions of Sections 8.1 and 8.2 shall
survive beyond the Two-Year Period and (ii) if a claim or demand covered by
Section 8.3 is made within the Two-Year Period, then, with respect to such
claim or demand, the indemnification provisions of Section 8.3 shall
survive beyond the Two-Year Period.
ARTICLE 8 - INDEMNIFICATION
8.1 (a) Company shall defend, indemnify, and hold harmless Bell
Atlantic Mobile, Bell Atlantic Mobile's parent and affiliated companies,
and Bell Atlantic Mobile's customers (each, an "Indemnified Party") for any
loss, damage, expense or liability that may result by reason of any
infringement or claim or allegation of infringement of any U.S. patent or
any trademark, copyright, trade secret or other intellectual property
rights by any Company Products furnished by Company hereunder or as
contemplated hereby and to pay costs, expenses, attorney's fees and damages
resulting from any claim, suit, settlement or judgment provided that
Company is notified promptly in writing of the claim or suit and at
Company's request and at its expense is given control of said suit and at
Company's expense, all reasonable requested assistance for defense of same.
If a settlement or judgment involves a license, then Company shall obtain
for Indemnified Party and pay the cost of the license, so that Company
Products furnished hereunder or as contemplated hereby will be licensed.
(b) If the use, manufacture or sale of any Company Product furnished
hereunder is claimed to infringe any U.S. patent or any trademark,
copyright, trade secret or other intellectual property rights, at
Indemnified Party's option and at no expense to Indemnified Party, Company
shall obtain for the Indemnified Party the right to use or sell said
product(s) or technology or shall substitute an equivalent product
reasonably acceptable to Indemnified Party and extend this indemnity
thereto or shall accept the return of the product(s) and reimburse
Indemnified Party the purchase price therefor. This indemnity extends to
any claim or suit based upon any infringement or alleged infringement of
any patent, trademark, copyright, trade secret or other intellectual
property rights by the reasonably foreseeable alteration by Indemnified
Party of any Company Products furnished by Company and by the foreseeable
combination of any Company Products furnished by Company and other
elements.
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(c) Bell Atlantic Mobile shall, at Company's expense, respond to, and
assist Indemnified Party to respond to, informal and formal allegations,
notifications and claims of infringement in connection with the Company
Products furnished hereunder or as contemplated hereby and will assist
Indemnified Party to evaluate the merits of any such allegations,
notifications or claims.
(d) Company further agrees to coordinate, form, and cooperate in a
joint defense with other vendors that supply products to Indemnified Party
that are alleged to commonly or in combination with the Company Products
furnished hereunder or as contemplated hereby, infringe. The joint defense
shall, at its expense, retain independent outside counsel acceptable to
Indemnified Party to coordinate defense activities. Indemnified Party
retains the right to implead Company in the event of a suit.
8.2 (a) Bell Atlantic Mobile shall defend, indemnify, and hold
Company harmless, and Company's customers ("Indemnified Party") for any
loss, damage, expense or liability that may result by reason of any
infringement or claim or allegation of infringement of any U.S. patent or
any trademark, copyright, trade secret or other intellectual property
rights by Bell Atlantic Mobile's CDPD service furnished by Bell Atlantic
Mobile hereunder or as contemplated hereby and to pay costs, expenses,
attorney's fees and damages resulting from any claim, suit, settlement or
judgment provided that Bell Atlantic Mobile is notified promptly in writing
of the claim or suit and at Bell Atlantic Mobile's request and at its
expense is given control of said suit and at Bell Atlantic Mobile's
expense, all reasonable requested assistance for defense of same. If a
settlement or judgment involves a license, then Bell Atlantic Mobile shall
obtain for Indemnified Party and pay the cost of the license, so that the
CDPD service furnished hereunder or as contemplated hereby will be
licensed.
(b) If the use, manufacture or sale of Bell Atlantic Mobile's CDPD
Service furnished hereunder is claimed to infringe any U. S. patent or any
trademark, copyright, trade secret or other intellectual property rights,
at Indemnified Party's option and at no expense to Indemnified Party, Bell
Atlantic Mobile shall obtain for the Indemnified Party the right to use or
sell said product(s) or technology or shall substitute an equivalent
service.
(c) Company shall at Bell Atlantic Mobile's expense, respond to, and
assist Indemnified Party to respond to, informal and formal allegations,
notifications and claims of infringement in connection with the service
furnished hereunder or as contemplated hereby and will assist Indemnified
Party to evaluate the merits of any such allegations, notifications or
claims.
8.3 Payment of Taxes and Indemnification. (a) Neither Party nor their
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officers and directors and its associated personnel and employees (all
hereinafter designated "employees") shall be deemed to be employees 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
solely responsible for the withholding or payment of all Federal, State and
local Personal Income Taxes, Social Security, Unemployment and Sickness
Disability Insurance and other payroll taxes with respect to its employees,
including contributions from them when and as required by law.
(b) Company shall defend, indemnify, and save harmless Bell Atlantic
Mobile and its successors and assigns and its employees and Companys 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,
specifically including, but not limited to, employees of the Company,
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 negligent acts or omissions of the Company,
its employees or persons furnished by the Company whether negligent or
otherwise.
(c) Company shall defend Bell Atlantic Mobile at Bell Atlantic
Mobile's request, against any such liability, claim or demand. The
foregoing indemnification shall apply whether Company or Bell Atlantic
Mobile defends such suit or claims and whether the death, injury or
property
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damage is caused by the sole acts or omissions of Company or by the
concurrent acts or omissions of Bell Atlantic Mobile or Company hereunder.
Bell Atlantic Mobile agrees to notify Company promptly of any written claim
or demands against Bell Atlantic Mobile for which Company is responsible
hereunder.
ARTICLE 9 - GENERAL
9.1 Assignment. This Agreement is personal to each party hereto and
----------
neither may assign or otherwise transfer its rights or delegate its duties
hereunder without the prior written consent of the other, which consent
shall not be unreasonably withheld; provided, however, either party may
-------- -------
upon written notice to the other assign any of its rights or obligations
hereunder to (i) an Affiliate of the assigning party or (ii) the purchaser
of or successor in interest to all or substantially all of the assigning
party's assets, unless (with respect to an assignment by Company) in the
reasonable judgment of Bell Atlantic Mobile the assignee is a competitor of
Bell Atlantic Mobile, in which case the assignment by Company shall not be
valid or binding between the parties without Bell Atlantic Mobile's prior
written consent.
9.2 Amendment. This Agreement and the Schedules and Exhibits attached
---------
hereto shall not be deemed or construed to be modified, amended, or waived,
in whole or in part, except by written agreement duly executed by the
parties to this Agreement.
9.3 Severability. In the event any provision hereof shall be deemed
------------
invalid or unenforceable by any court or governmental agency of competent
jurisdiction, such provision shall be deemed severed from this Agreement
and all remaining provisions shall be afforded full force and effect as if
such severed provision had never been a provision hereof.
9.4 Execution. At the time of execution of this Agreement, the
---------
parties shall cause their authorized officers to execute two original
copies of this Agreement. One executed copy together with one initialed
copy of each schedule and attachment hereto shall be maintained by the
parties at their respective offices.
9.5 Compensation. Bell Atlantic Mobile shall pay Company Compensation
------------
("Commission") upon the sale of both Bell Atlantic Mobile Services and
Company Products to any Customer procured through the joint efforts of
Company in accordance with the attached Exhibit B, which may be amended by
Bell Atlantic Mobile from time to time, provided that Company is in full
compliance with the terms and conditions herein. Bell Atlantic Mobile, may
from time to time, add, delete or modify any Bell Atlantic Mobile services
and the Commission paid for same. Each Customer shall be deemed effective
upon activation by Bell Atlantic Mobile.
Any Compensation or other fee paid by Bell Atlantic Mobile under this
Agreement shall not be contested by Company unless Company shall provide
Bell Atlantic Mobile, in writing within five (5) business days of issuance
of said Compensation or fee, notice that Company in good faith believes
payment to be incorrect, a detailed statement of the reason why the Company
believes there is an error, and all documentation including but not limited
to: Service orders, inventory reports, canceled checks, installment sales
contracts, etc., in support of Company's belief. Any objections not raised
by Company in this manner will be deemed waived. If this Agreement is
terminated for any reason, Bell Atlantic Mobile may withhold payment of
Compensation then due until all matters relating to the termination of the
agency, including equipment, and matters under any other agreement between
the parties, are settled. Company agrees that at any time, regardless of
whether this Agreement is in effect or not, any past due monies owed to
Bell Atlantic Mobile by Company under this Agreement or any other agreement
between the parties may be offset against commissions or other monies due
Company. If there are insufficient amounts owed Company by Bell Atlantic
Mobile to effect such reduction, Company shall pay any remaining sums to
Bell Atlantic Mobile immediately upon demand.
10
<PAGE>
9.6 Injunctive Relief. The parties recognize and agree that money
-----------------
damages are an inadequate remedy for breach of the provisions contained in
Article 9.17 and Article 6 above, and further recognize that such breach
would result in irreparable harm to the party against whom such breach is
committed. Therefore, in the event of a breach or threatened breach of any
such provision, the breaching party may be enjoined from engaging in any
activity proscribed by such provision by a court of competent jurisdiction.
Injunctive relief pursuant to this Section shall be in addition to all
remedies available at law or in equity to a party arising from a breach of
such provisions by the other party.
9.7 Excused Performance. The parties shall not be liable for any
-------------------
failure to perform under this Agreement or any default due to fire,
electrical failure, flood or similar act of God, embargo, or governmental
restrictions which prevent the parties from performing in the normal and
usual course of their businesses, provided they undertake diligent action
to cure such failure and mitigate damage.
9.8 Headings. The headings of this Agreement are intended solely for
--------
the convenience of reference and shall be given no effect in the
construction of this Agreement.
9.9 Number, Gender. The masculine, feminine, singular and plural of
--------------
any word or words shall be deemed to include and refer to the gender and
number appropriate in the context.
9.10 Notices. Except as otherwise provided in this Agreement, all
-------
notices or other communications which are required or permitted hereunder
shall be in writing and shall be valid and sufficient if delivered by: a)
registered or certified mail, postage prepaid; b) hand delivery; c)
overnight courier prepaid; or d) via facsimile transmission upon electronic
confirmation of receipt, as follows:
To Bell Atlantic Mobile:
180 Washington Valley Road
Bedminster, NJ 07921
Attn.: Robert J. Hirsh, Director
Wireless Data Distribution
Phone: (908) 306-7520
Facsimile: (908) 306-7541
With a Copy to: Bell Atlantic Mobile
180 Washington Valley Road
Bedminster, NJ 07921
Attn.: Frances Dommeleers
Staff Director, Contracts
Phone: (908) 306-7197
Facsimile: (908) 306-4304
To Company: VECTORLINK, INC.
45635 Northport Loop East
Fremont, CA 94538
Attn.: Mr. Amin Mufti
Vice President, Business Development
Phone: 510 668-1638
Facsimile:
9.11 Counterparts. This Agreement may be signed in two or more
------------
counterparts, each of which shall be considered an original and which
shall, taken together, constitute this Agreement.
11
<PAGE>
9.12 No Third Party Beneficiaries. Nothing in this Agreement is
----------------------------
intended or shall be construed or interpreted to give any person or entity
other than the parties hereto any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
9.13 Governing Law. Except to the extent explicitly provided
-------------
elsewhere in this Agreement, the interpretation and enforcement of this
Agreement and all matters arising out of or relating to it shall be
governed by New York law without regard to its conflict of laws provisions
except for New York General Obligations Law Section 5-1401.
9.14 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings,
whether written or oral, between the parties with respect to such subject
matter, and there are no representations, understandings or agreements
relating to this Agreement that are not fully expressed in this Agreement.
9.15 Procedure. (a) Each party shall appoint an individual from its
---------
organization to interface with the other party on any issues arising out of
this Agreement, and shall promptly notify the other party of such
appointment.
(b) Bell Atlantic Mobile and Company will jointly conduct an annual
meeting to review performance and set objectives for the new year.
9.16 No Representations. Bell Atlantic Mobile shall not make any
------------------
representations or warranties to third parties on behalf of Company, and if
any such representations or warranties are made they shall have no force or
effect on Company. Company shall not make any representations or warranties
to third parties on behalf of Bell Atlantic Mobile, and if any such
representations or warranties are made they shall have no force or effect
on Bell Atlantic Mobile.
9.17 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 ARTICLE 6.2. Each party shall submit to the other
party advertising, sales promotion, press releases and other publicity
matters relating to the other party wherein such party's name or marks is
mentioned or language from which the connection of said names or marks
therewith may be inferred or implied. A party shall not publish or use such
advertising, sales promotion, press releases, or publicity matters without
the other party's prior written approval
9.18 Trademark Guidelines. Each party hereto shall comply with the
--------------------
other party's reasonable written guidelines with respect to the use of such
other party's trademarks and/or service marks and for quality control in
connection with such party's trademarked products and/or service-marked
services.
Company shall not register or otherwise use the Licensed Marks or any
portion of the Licensed Marks as an Internet domain name or other Internet
address.
9.19 DAMAGES. NO SPECIAL, CONSEQUENTIAL OR INDIRECT DAMAGES MAY BE
-------
AWARDED TO EITHER PARTY IN CONNECTION WITH ANY ACTION, CLAIM, PROCEEDING OR
SUIT ARISING HEREUNDER.
12
<PAGE>
ARTICLE 10 - ACKNOWLEDGEMENTS AND REPRESENTATIONS.
Company acknowledges that it has not received or relied upon, any
guaranty, express or implied, as to the amount of commissions or other
revenue that it may earn as a result of its relationship with Bell Atlantic
Mobile. Company represents and warrants that:
(a) the execution, delivery and/or performance of this Agreement will
not conflict with or result in any breach of any provision of the charter
or by-laws of Company or any agreement, contract or legally binding
commitment or arrangement to which Company is a party, and
(b) Company is not subject to any limitation or restriction
(including, without limitation, noncompetition, and confidentiality
arrangements) which would prohibit, restrict or impede the performance of
any of Company's obligations under this Agreement.
This Agreement does not constitute a joint venture, partnership,
employment, or similar relationship among the parties, and, unless
authorized in writing, neither Bell Atlantic Mobile nor Company shall make
any express or implied agreements, guarantees or representations, or incur
any indebtedness or obligations, in the name of or on behalf of the other.
ARTICLE 11 - INDEPENDENT INVESTIGATION
BELL ATLANTIC MOBILE AND COMPANY ACKNOWLEDGE THEY HAVE READ THIS
AGREEMENT AND UNDERSTAND AND ACCEPT THE TERMS, CONDITIONS, AND COVENANTS
CONTAINED HEREIN AS BEING REASONABLY NECESSARY TO MAINTAIN BELL ATLANTIC
MOBILE'S HIGH STANDARDS FOR SERVICE. COMPANY ACKNOWLEDGES AND UNDERSTANDS THAT
BELL ATLANTIC MOBILE MAY AT ANY TIME ALSO BE ENGAGED DIRECTLY OR INDIRECTLY
THROUGH ITS DIRECT SALES FORCE, COMPANIES, OTHER RETAILERS, OR OUTLETS OF ANY
KIND, IN SOLICITING POTENTIAL SUBSCRIBERS FOR THE SERVICE OR OTHER SERVICES OR
PRODUCTS OR FOR THE SALE, LEASE, INSTALLATION, REPAIR, OR SERVICING OF EQUIPMENT
IN THE MARKET. COMPANY ALSO ACKNOWLEDGES AND UNDERSTANDS THAT BELL ATLANTIC
MOBILE MAY SELL THE SERVICE TO OTHERS WHO MAY RESELL IT. COMPANY HAS
INDEPENDENTLY INVESTIGATED THE SERVICE OR EQUIPMENT SALES BUSINESS AND THE
PROFITABILITY (IF ANY) AND RISKS THEREOF AND IS NOT RELYING ON ANY
REPRESENTATION, GUARANTEE, OR STATEMENT OF BELL ATLANTIC MOBILE OTHER THAN AS
SET FORTH IN THIS AGREEMENT.
IN PARTICULAR, COMPANY ACKNOWLEDGES THAT BELL ATLANTIC MOBILE HAS NOT
REPRESENTED: (A) COMPANY'S PROSPECTS OR CHANCES FOR SUCCESS SELLING SERVICES
UNDER THIS AGREEMENT: (B) THE TOTAL INVESTMENT THAT COMPANY MAY NEED TO MAKE TO
OPERATE UNDER THIS AGREEMENT (BELL ATLANTIC MOBILE DOES NOT KNOW THE AMOUNT OF
THE TOTAL INVESTMENT THAT MAY BE REQUIRED FOR THIS PURPOSE); OR (C) THAT IT WILL
LIMIT ITS EFFORTS TO SELL SERVICE OR ESTABLISH OTHER COMPANIES OR RETAILERS IN
THE AREA.
COMPANY ALSO ACKNOWLEDGES THAT BELL ATLANTIC MOBILE HAS NOT
REPRESENTED TO IT THAT: (A) BELL ATLANTIC MOBILE WILL PROVIDE LOCATIONS OR
ASSIST COMPANY TO FIND LOCATIONS TO PROMOTE THE SALE OF SERVICE UNDER THIS
AGREEMENT; (B) BELL ATLANTIC MOBILE WILL PURCHASE ANY PRODUCTS MADE BY COMPANY
THAT ARE IN ANY WAY ASSOCIATED WITH THE SERVICE SOLD BY COMPANY UNDER THIS
AGREEMENT; (C) COMPANY WILL DERIVE INCOME FROM THE SALE OF BELL ATLANTIC
MOBILE'S SERVICES UNDER THIS AGREEMENT, OR BELL ATLANTIC MOBILE WILL REFUND ANY
PAYMENTS MADE BY COMPANY TO BELL ATLANTIC MOBILE UNDER THIS AGREEMENT; OR (D)
BELL ATLANTIC MOBILE WILL PROVIDE A SALES OR MARKETING PROGRAM THAT WILL ENABLE
COMPANY TO DERIVE INCOME UNDER THIS AGREEMENT.
13
<PAGE>
COMPANY FURTHER ACKNOWLEDGES THAT BELL ATLANTIC MOBILE HAS NOT MADE
ANY REPRESENTATIONS. REGARDING: (A) THE QUANTITY OR QUALITY OF SERVICE TO BE
SOLD BY COMPANY OTHER THAN AS STATED IN THIS AGREEMENT; (B) THE PROVISION BY
BELL ATLANTIC MOBILE TO COMPANY OF TRAINING AND MANAGEMENT ASSISTANCE; (C) THE
AMOUNT OF PROFITS, NET OR GROSS, THAT COMPANY CAN EXPECT FROM ITS OPERATIONS
UNDER THIS AGREEMENT; (D) THE SIZE (OTHER THAN THE GEOGRAPHIC AREA), CHOICE
POTENTIAL, OR DEMOGRAPHIC NATURE OF THE MARKET IN WHICH BELL ATLANTIC MOBILE'S
SERVICE IS AVAILABLE OR THE NUMBER OF OTHER RETAILERS OR COMPANYS THAT ARE OR
MAY IN THE FUTURE OPERATE IN THAT AREA, OR (E) THE TERMINATION, TRANSFER OR
RENEWAL PROVISIONS OF THIS AGREEMENT OTHER THAN AS SET FORTH IN THE AGREEMENT.
COMPANY ACKNOWLEDGES THAT IT UNDERSTANDS THAT IT WILL NOT OBTAIN ANY EXCLUSIVE
RIGHTS UNDER THIS AGREEMENT EITHER WITH RESPECT TO TERRITORY OR OTHERWISE, AND
UNDERSTANDS THAT BELL ATLANTIC MOBILE MAY APPOINT OTHER COMPANYS OR RETAILERS IN
THE MARKET AFFECTED BY THIS AGREEMENT. COMPANY ALSO ACKNOWLEDGES THAT BELL
ATLANTIC MOBILE CANNOT CALCULATE IN ADVANCE THE TOTAL AMOUNT THAT BELL ATLANTIC
MOBILE WILL PAY TO COMPANY UNDER THIS AGREEMENT AS THAT AMOUNT DEPENDS ON THE
QUANTITY OF SERVICE THAT SUBSCRIBERS PURCHASE FROM BELL ATLANTIC MOBILE.
ARTICLE 12 - LIMITED LIABILITY
NEITHER PARTY SHALL BE LIABLE TO OTHER PARTY FOR ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT, PUNITIVE, OR SPECIAL DAMAGES, INCLUDING, BUT NOT LIMITED
TO LOST PROFITS, LOST BUSINESS, OR OTHER COMMERCIAL OR ECONOMIC LOSS, WHETHER
SUCH DAMAGES ARE CLAIMED FOR BREACH OF CONTRACT, NEGLIGENCE OR OTHERWISE AND
WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
13. DISPUTE RESOLUTION AND ARBITRATION.
13.1. Coverage. This Section 13 governs all disputes, claims, or
--------
causes of action between the parties. It applies not only to all
alleged disputes, claims, or causes of action arising out of or
relating to this Agreement, but to all other alleged disputes, claims,
or causes of action between the parties that may currently exist or
that may in the future arise for any reason.
13.2. Written Notice Required. Neither party may pursue any
-----------------------
alleged dispute, claim, or cause of action against the other party,
except to the extent that emergency injunctive relief or a temporary
restraining order may be necessary, without first providing written
notice of such alleged dispute, claim, or cause of action to such
other party.
13.3. Negotiation Required. Within thirty days of any written
--------------------
notice of an alleged dispute, claim, or cause of action, the parties
shall meet in person or by telephone and attempt in good faith to
negotiate a resolution of the alleged dispute, claim, or cause of
action. If the party receiving the notice refuses to meet, this thirty
day period will be deemed to have expired upon the date of such
refusal, if it is sooner than thirty (30) days.
13.4. When Arbitration May Be Initiated. Except as provided in
---------------------------------
Subsections 13.2 and 13.6, no arbitration or action may be commenced
with respect to any alleged dispute, claim, or cause of action until
the period prescribed in Subsection 13.3 has expired. If, upon the
expiration of such period (or such longer period to which the parties
may have agreed in writing in seeking in good faith to negotiate a
resolution of the alleged dispute, claim, or cause of action) no
negotiated resolution has been reached, the party that gave notice may
initiate arbitration.
14
<PAGE>
13.5. Tolling and Confidentiality During Negotiation. From the
----------------------------------------------
date of any written as prescribed notice in Subsection 13.2 until
expiration of the negotiation period as prescribed in Subsection 13.4,
any statutes of limitations applicable to the alleged dispute, claim,
or cause of action described in such notice shall be tolled. No
admission, statement, or document by either party made as part of an
attempt in good faith to negotiate pursuant to Subsection 13.3 may be
used in any fashion in any arbitration or action. Any such admission,
statement, or document by either party shall be deemed confidential
and made pursuant to any applicable settlement privilege. The making
of any such admission, statement, or document shall not, however,
preclude the admission of any evidence that would otherwise be
admissible in an arbitration or action.
13.6. Arbitration. Arbitration shall be the exclusive means of
-----------
resolving any alleged dispute, claim, or cause of action between the
parties that cannot be resolved by negotiation as prescribed in
Subsection 13.3. Neither party may commence any action in any court
except to enforce this obligation to arbitrate, enforce any
arbitration award, or in aid of arbitration to the extent that
emergency injunctive relief or a temporary restraining order may be
necessary to prevent irreparable injury or preserve the status quo
pending decision of an issue by an arbitrator or arbitrators.
13.7. Arbitration Rules. Any arbitration and counterclaim in
-----------------
arbitration between the parties shall be initiated under and governed
by the Wireless Industry Arbitration Rules (the "WIA Rules") of the
American Arbitration Association (the "AAA"), as modified by this
Agreement and any other written modification to which both parties
agree.
13.7.1. Any arbitration shall be held in New York City.
13.7.2. If either party commences arbitration in the
manner described above, the dispute will be subject to expedited,
binding arbitration before three (3) independent arbitrators
familiar with the wireless telecommunications industry. Such
arbitration shall be held in New York City, New York pursuant to
the American Arbitration Association ("AAA") Rules in effect at
the time of the dispute. Each party shall select one (1)
arbitrator within twenty (20) days of initiation of arbitration.
The two (2) arbitrators selected shall in turn select a third
arbitrator. If the arbitrators selected by the parties cannot
agree on a third arbitrator, the third arbitrator shall be
selected from the AAA's Commercial Panel, Telecommunications
Panel or Large/Complex Case Panel as provided by the WIA Rules.
13.7.3. No fast track arbitration as defined in the WIA
Rules shall be available or applied to either party.
13.7.4. No arbitration pursuant to this Section 13 may
proceed on a class basis, or be consolidated with any other
arbitration, without the written consent of both parties.
13.7.5. Any arbitration award may be reviewed pursuant to
Rule L-6 of the WIA Rules.
13.7.6. Judgment may be entered on any final arbitration
award in any court of competent jurisdiction.
13.7.7. No arbitration award may include any award of
attorney's fees (except as may be required by any statute
preempting the Federal Arbitration Act to such extent), punitive
damages, exemplary damages, or treble or other multiple damages.
No arbitration award may reform or amend this Agreement.
15
<PAGE>
13.7.8. Any arbitration award must include a statement by
the arbitrator or arbitrators of the reasons for the award.
13.8. Severance. If any action or judicial proceeding is
---------
commenced involving the parties, and any alleged dispute, claim, or
cause of action arises between the parties in such action or
proceeding, such alleged dispute, claim, or cause of action shall be
severed for resolution pursuant to the provisions of this Agreement.
If any third party not subject to the provisions of this Agreement is
a necessary party to any alleged dispute, claim, or cause of action
between the parties, and such third party refuses to consent to
arbitration pursuant to this Agreement, all issues that can be
resolved without such third party shall remain subject to this
Agreement and be severed and resolved before any other issues.
13.9. The Federal Arbitration Act Applies. This Agreement
-----------------------------------
involves interstate commerce and is subject to the Federal Arbitration
Act, 9 U.S.C. (S)(S) 1-16. The Federal Arbitration Act preempts any
inconsistent state or local law, rule, or regulation concerning
arbitration.
13.10. Confidentiality. In addition to the provisions of
---------------
Subsection 13.5, neither party shall disclose to any third party any
admission, statement, or document of the other produced or used in
negotiation or arbitration, or disclose to any third party the
proceedings or outcome of any negotiation or arbitration. This
Subsection 13.10 shall not preclude disclosure to an arbitrator or
arbitrators or the AAA or, to the extent such persons agree to be
bound by this Subsection 13.10, to the parties' parents, subsidiaries,
affiliates, officers, directors, and professional advisors. This
Subsection 13.10 also shall not preclude any disclosure required by
law or disclosure to any third party of the fact and amount of any
final arbitration award.
13.11. Waiver of Trial by Jury. In the event that the Resolution
-----------------------
of Disputes/Arbitration Clause is deemed to be not enforceable, with
respect to any judicial action which may arise under or with respect
to this Agreement, or any relationship or dealings between the parties
that arise out of or by virtue of this Agreement, each party agrees to
waive trial by jury. Company consents to the bringing of any such
action under this Agreement to New York.
ARTICLE 14 - CLEAR DISCLOSURE
Company will only be permitted to activate Customers on Bell Atlantic
Mobile service under the following terms and conditions:
Company shall ensure that each Customer activated by Company has read
and understands the terms and conditions of the Data Service Order under which
Bell Atlantic Mobile will provide service to the Customer.
Company shall indemnify, defend, and hold Bell Atlantic Mobile
harmless from any and all claims, demands and causes of action whatsoever
asserted against Bell Atlantic Mobile due to a claim that the Customer was not
informed that service activated under the Bell Atlantic Mobile Data Service
Order was subject to its terms and conditions.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement in counterparts on the day and year written below.
CELLCO PARTNERSHIP
by Bell Atlantic Mobile, Inc.
its managing general partner VECTORLINK, INC.
By: /s/ Gary Schulman By: /s/ Amin Mufti
--------------------------------- ------------------------------
(REGIONAL PRESIDENT)
Title: Executive Vice President & COO Title: VP Business Development
--------------------------------- ----------------------------
Name: Jack D. Plating By Gary Schulman Name: Amin Mufti
--------------------------------- -----------------------------
Date: 6/25/99 Date: 6/23/99
--------------------------------- -----------------------------
17
<PAGE>
TABLE OF EXHIBITS
-----------------
1) EXHIBIT A: AUTHORIZED LOCATIONS
2) EXHIBIT B: COMPENSATION
3) EXHIBIT C: NON-DISCRIMINATION COMPLIANCE AGREEMENT
4) EXHIBIT D: COOPERATIVE ADVERTISING PROGRAM AGREEMENT
5) EXHIBIT E: ADVERTISING GUIDELINES FOR SALES AGENTS
18
<PAGE>
EXHIBIT A
AUTHORIZED LOCATIONS TO DO BUSINESS: WASHINGTON/BALTIMORE MSAs and
LICENSED RSAs
================================================================================
BELL ATLANTIC MOBILE PRIMARY SERVING MARKETS
- --------------------------------------------------------------------------------
Market Name
- --------------------------------------------------------------------------------
MSAs Licensed
- --------------------------------------------------------------------------------
Washington, DC-MD MSA
Baltimore, MD MSA
- --------------------------------------------------------------------------------
RSAs Licensed
- --------------------------------------------------------------------------------
Delaware 1 - KENT Virginia 10 - FREDERICK (B1)
Maryland 2 - KENT Virginia 11 - MADISON
Maryland 3 - FREDERICK Virginia 12 - CAROLINE
================================================================================
19
<PAGE>
2. SPECIFIC LOCATIONS IN WHICH COMPANY IS AUTHORIZED TO DO BUSINESS:
45635 Northport Loop East
Fremont, CA 94538
This Agreement shall be effective upon execution by Bell Atlantic Mobile.
Bell Atlantic Mobile
20
<PAGE>
EXHIBIT B
COMPANY COMMISSION SCHEDULE
---------------------------
I. Subject to the terms set forth in Paragraph II, III, and IV below and subject
to change on notice from BAM, the following commission schedule applies:
BAM ("BAM") will pay Company a commission ("Commission") for CDPD Activations in
the Area as set forth in Exhibit A. Company will receive a Residual Usage
Commission for new Subscribers enrolled on BAM's Internet Service or other CDPD
price plans.
Upon the sale of both BAM Services and Company's products to any Customer
procured through the joint efforts of Company and BAM, and provided Company has
committed through Customer's contract to provide:
. successful installation of host software and hardware with backend
connectivity
. successful installation of mobile software and hardware with wireless
connectivity
. successful configuring of all software and hardware to BAM Network
specifications
. providing customer with first line Help Desk support
. thorough training of host and mobile system users
. submission of necessary information to BAM for Subscriber to receive IP
Address
1. RESIDUAL USAGE COMMISSION
-------------------------
====================================================================
Service Activation Co-op Residuals
Commission Advertising Allowance
--------------------------------------------------------------------
CDPD Plans $0 $0 [*]
====================================================================
Upon the sale of BAM's CDPD Services, BAM shall each month pay to Company a
Commission equal to [*] of BAM's collected monthly revenues in BAM's Area
resulting from the sale of BAM CDPD Services only to each Customer ("Residual").
Such monthly revenue shall not include taxes, surcharges or other fees, Access,
Port Charges or Visiting Charges. In no event will BAM have any obligation to
pay in excess of the Residual of its revenue to Company. BAM shall have no
obligation to pay a Residual to Company with respect to services provided by
other CDPD carriers outside of the BAM Market Area, regardless of whether such
services are provided at BAM's request or whether BAM receives any Commission
with respect to such services.
Residual shall be payable monthly following the month in which revenues are
received. BAM shall give Company reasonable financial information relating to
Customers covered by this Commission Agreement for the purpose of ascertaining
the amount of Commission due to Company. The Residual will continue to be paid
for the initial term of this Agreement for the period of time that the
Subscriber remains a BAM Subscriber. Such period of time not to exceed three (3)
years for any given subscriber including any period for which Residual was paid
to Company under any previous agreement between BAM and Company. If any new or
existing Subscriber fails to remain on BAM's CDPD service, for any reason,
Residual payments for that Subscriber shall cease. In the event that this
Agreement expires or is terminated by BAM or Company, for any reason, Residual
payments for all Subscribers shall cease. All Residual payments shall be
adjusted for Subscriber "bad debt" (funds on which Company has been paid
Residuals, but which are then not collected by BAM) and "fraudulent" usage.
BAM shall have no obligation to pay Residual Usage Commission to Company with
respect to services provided by other CDPD carriers outside of the BAM Area,
regardless of whether such services are provided at BAM's request or whether BAM
receives any Commission with respect to such services.
21
* CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
2. CHARGE BACK
-----------
If a New Subscriber enrolled by Company does not remain on BAM's CDPD
service for at least one hundred eighty (180) days or, if during that
period the New Subscriber's account is not in good standing, then BAM shall
charge back one hundred [100%] percent of the Residual paid for that
Subscriber. Good standing shall be defined as those customers whose bill
has been paid on an "account current" status according to BAM's polices.
3. CO-OP ADVERTISING ALLOWANCE
---------------------------
For each New Subscriber enrolled, a specified Co-op Advertising Allowance
will be accrued in a fund managed by BAM according to the specified
Commission Schedule. These funds will be paid out to the Company to help
defray advertising and other marketing expenses. A plan outlining specific
fund uses will be agreed to in writing beforehand by BAM and the Company.
BAM and the Company will track all funds accrued and the follow Co-op
policy defined within their local respective BAM region. No Co-op
Advertising Allowance will be paid on Residual Usage Commission.
4. OTHER TERMS
-----------
In the event that Company (intentionally or unintentionally) receives or
attempts to receive any Residual, hereunder for any Subscriber more than
once, Company understands and agrees that no payments whatsoever shall be
due from BAM.
The recapture of Residual Usage Commissions owed by Company to BAM, for
amounts exceeding the accrued Residual Usage Commissions owed to Company by
BAM, shall survive the expiration or termination of this Agreement.
Commissions paid are subject to change on notice from BAM.
5. AUTHENTICATABLE EQUIPMENT
-------------------------
All new Activations shall be made on authenticatable Equipment with random
A-key, supportable by the BAM network. Company shall not receive Commission
for new Subscribers who activate on non-authenticatable equipment.
22
<PAGE>
II. Any termination of this Agreement by BAM for cause or due to a breach by
Company, shall result in a forfeiture of any and all rights to a Residual.
However, the charge back of a Residual referred to in this Exhibit B shall
survive the expiration or termination of this Agreement.
III. Payment of a Residual, is subject to verification and Company hereby agrees
and understands that no Residual, payment whatsoever shall be due or payable by
BAM if any of the following occurs: (1) the Subscriber does not remain on BAM's
CDPD service for the applicable time period; (2) the Subscriber's account is not
in good standing; (3) Company has not followed all of BAM's rules and procedures
regarding the enrollment of Subscribers; or (4) Company (intentionally or
unintentionally) receives or attempts to receive payments hereunder for any
Subscriber more than once.
IV. In the event that BAM makes any payment to Company of any Residual,
hereunder, and such payments are at a later date determined to have been
erroneously made (pursuant to the terms and conditions of this Agreement), BAM
reserves the right to charge back such erroneous payment(s) to Company as a
credit against amounts owed to Company by BAM.
If there are insufficient amounts owed Company by BAM to effect such reduction,
Company shall pay any remaining sums to BAM immediately upon demand.
23
<PAGE>
EXHIBIT C
RESERVED ACCOUNTS
24
<PAGE>
Affirmative Action Exhibit D
[LOGO OF BELL ATLANTIC MOBILE APPEARS HERE]
An Equal Opportunity Employer
NON-DISCRIMINATION COMPLIANCE AGREEMENT
To the extent this contract is subject to them, Contractor shall comply with the
applicable provisions of the following: Exec. Order No. 11246, Exec. Order No.
11625, Exec. Order No. 12138, Exec. Order No. 11701, Exec. Order No. 11758,
Section 503 of the Rehabilitation Act of 1973, Section 402 of the Vietnam Era
Veterans' Readjustment Assistance Act of 1974 and the rules, regulations and
relevant Orders of the Secretary of Labor pertaining to the Executive Orders and
Statutes listed above. The following table describes the clauses which are
included in the contract.
Annual Contract Value Clauses
--------------------- -------
Under $2,500 5*
$2,500 - $10,000 5*, 8
$10,000 - $50,000 1,2,5*,6,7,8,9
$50,000 - $500,000 1,2,3**,4**,5,6,7,8,9
Over $500,000 1,2,3**,4**, 5,6,7,8,9***
1. Equal Employment Opportunity Provisions
In accordance with Executive Order 11246, dated September 24, 1965, and
Subpart 22.8 of Subchapter D of Chapter 1 of Title 48 of the Code of
Federal Regulations as may be amended from time to time, the parties
incorporate herein by this reference the regulations and contract clauses
required by those provisions to be made a part of government contracts and
subcontracts.
2. Certification of Non-segregated Facilities
The Contractor certifies that it does not and will not maintain any
facilities it provides for its employees in a segregated manner, or permit
its employees to perform their services at any location under its control
where segregated facilities are maintained; and that it will obtain a
similar certification prior to the award of any nonexempt subcontract.
3. Certification of Affirmative Action Program
The Contractor affirms that it has developed and is maintaining an
Affirmative Action Plan as required by Subpart 22.8 of Subchapter D. of
Chapter 1 of Title 48 of the Code of Federal Regulations.
4. Certification of Filing of Employer Information Reports
The Contractor agrees to file annually on or before the 31st of March
complete and accurate reports on Standard Form 100 (EEO-1) or such forms
as may be promulgated in its place.
5. Utilization of Small Business Concerns and Small Disadvantage Business
Concerns
(a) It is the policy of the United States that small business concerns
owned and controlled by socially and economically disadvantaged
individuals shall have the maximum practicable opportunity to participate
in performing contracts let by any Federal agency.
(b) The Contractor hereby agrees to carry out this policy in the awarding
of subcontractors to the fullest extent consistent with efficient contract
performance. The Contractor further agrees to cooperate in studies or
surveys as may be conducted by the United States Small Business
Administration or the awarding agency of the United States as may be
necessary to determine the extent of the Contractor's compliance with this
clause.
(c) As used in this contract, the term "small business concern" shall mean
a small business as defined pursuant to Section 3 of the Small Business
Act and relevant regulations promulgated pursuant thereto. The term "small
business concern owned and controlled by socially and economically
disadvantaged individuals" shall mean a small business concern.
(1) Which is at least 51 percent owned by one or more socially and
economically disadvantaged individuals; or, in the case of any
publicly owned business, at least 51 percent of the stock of
which is owned by one or more socially and economically
disadvantaged individuals; and
*Applies only if contract has further subcontracting opportunities.
**Applies only to businesses with 50 or more employees,
***Contractor must also adopt and comply with a small business disadvantaged
business subcontracting plan pursuant to Title 48 of the Code of Federal
Regulations.
25
<PAGE>
(2) Whose management and daily business operations are controlled by
one or more of such individuals;
The Contractor shall presume that socially and economically disadvantaged
individuals include Black Americans, Hispanic American, Native Americans,
Asian-Pacific Americans, Asian-Indian Americans and other minorities, or
any other individual found to be disadvantaged by the Administration
pursuant to section 8(a) of the Small Business Act.
(d) Contractors acting in good faith may rely on written representations
by their subcontractors regarding their status as either a small business
concern or a small business concern owned and controlled by socially and
economically disadvantaged individuals.
6. Utilization of Women-Owned Small Businesses
(a) "Women-Owned small businesses," as used in this clause, means
businesses that are at least 51 percent owned by women who are United
States citizens and who also control and operate the business.
"Control," as used in this clause, means exercising the power to make
policy decision.
"Operate," as used in this clause, means being actively involved in the
day-to-day management of the business.
(b) It is the policy of the United States that women-owned small
businesses shall have the maximum practicable opportunity to participate
in performing contracts awarded by any Federal agency.
(c) The Contractor agrees to use its best efforts to give women-owned
small business the maximum practicable opportunity to participate in the
subcontracts it awards to the fullest extent consistent with the efficient
performance of its contract.
7. Affirmative Action for Special Disabled Veterans and Veterans of the Vietnam
Era
In accordance with Exec. Order 11701, dated January 24, 1973, and subpart
22.13 of Subchapter D of Chapter 1 of Title 48 of the Code of Federal
Regulations, as may able amended from time to time, the parties
incorporate herein by the reference the regulations and contract clauses
required by those provisions to be made a part of Government contracts and
subcontracts.
8. Affirmative Action for Handicapped Workers
In accordance with Exec. Order 11758, dated January 15, 1974, and Subpart
221.4 of Subchapter D of Chapter 1 of Title 48 of the code of Federal
Regulations as may be amended from time to time, the parties incorporate
herein by this reference the regulations and contract clauses required by
those provisions to be made a part of Government contracts and
subcontracts.
9. Employment Reports on Special Disabled Veterans and Veterans of the Vietnam
Era
(a) The contractor agrees to report at least annually, as required by the
Secretary of Labor, on:
(1) The number of special disabled veterans and the number of
veterans of the Vietnam era in the workforce of the contractor by
job category and hiring location; and
(2) The total number of new employees hired during the period covered
by the report, and of that total, the number of veterans of the
Vietnam era.
(b) The above items shall be reported by completing the form entitled
"Federal Contractor Veterans" Employment Report VETS-100."
(c) Reports shall be submitted no later than March 31 of each year
beginning March 31, 1988.
(d) The employment activity report required by paragraph (a)(2) of this
section shall reflect total hires during the most recent 12-month period
as of the ending date selected for the employment profile report required
by paragraph (a)(1) of this section. Contractors may select an ending
date: (1) as of the end of any pay period during the period January
through March 1st of the year the report is due, or (2) as of December 31,
if the contractor has previous written approval form the Equal Employment
Opportunity Commission to do so for purposes of submitting the Employer
Information Report EEO-1 (Standard Form 100).
(e) The count of veterans reported according to paragraph (a) above shall
be based on voluntary disclosure. Each contractor subject to the reporting
requirements at 38 U.S.C. 2012(d) shall invite all special disabled
veterans and veterans of the Vietnam era who wish to benefit under the
affirmative action program at 38 U.S.C. 2012 to identify themselves to the
contractor. The invitation shall state that the information is voluntarily
provided, that the information will be kept confidential, that disclosure
or refusal to provide the information will not subject the applicant or
employee to any adverse treatment, and that the information will be used
only in accordance with the regulations promulgated under 38 U.S.C. 2012.
Nothing in this paragraph (e) shall relieve a contractor from liability
for discrimination under 38 U.S.C. 2012.
26
<PAGE>
[LOGO OF BELL ATLANTIC MOBILE APPEARS HERE]
CONTRACT NO. ###-##-####
JOINT CDPD MARKETING AGREEMENT
between
VECTORLINK, INC.
and
BELL ATLANTIC MOBILE
================================================================================
PRIVATE
The information contained herein is proprietary and should not be disclosed to
unauthorized persons. It is meant solely for use by authorized Bell Atlantic
Mobile employees and persons employed, retained or consulted by them.
<PAGE>
AMENDMENT NO, 1
This AMENDMENT No. 1 (the "Amendment") is made and entered into by and
between Cellco Partnership, a Delaware general partnership, doing business as
Bell Atlantic Mobile (hereinafter "BAM") and VECTORLINK, INC. (hereinafter
"Company") for attachment to the Joint CDPD Marketing Agreement No. ###-##-####
dated June 25, 1999 (the "Agreement").
1. This Amendment is an integral part of 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 Name of the Agent in the Preamble and all sections of the
Agreement shall be changed to: @Road, Inc.
3. Exhibit A, AUTHORIZED LOCATIONS TO DO BUSINESS shall be amended by
adding the following MSAs and RSAs:
=========================================================================
BELL ATLANTIC MOBILE PRIMARY SERVING MARKETS
-------------------------------------------------------------------------
Market Name
=========================================================================
MSAs Licensed
-------------------------------------------------------------------------
New York/New Jersey MSA Glen Falls, NY MSA
Philadelphia, PA-NJ MSA Burlington, VT MSA
Pittsburgh, PA MSA Providence, RI MSA
Allentown, PA-NJ MSA New Haven, CT MSA
New Brunswick, NJ MSA Worcester, MA MSA
Wilmington, DE-NJ MSA Pittsfield, MA MSA
Long Branch, NJ MSA Bridgeport, CT MSA
Reading, PA MSA Charlotte, NC MSA
Trenton, NJ MSA Springfield, MA MSA
Atlantic City, NJ MSA Greenville, SC MSA
Vineland, NJ MSA New Bedford, MA MSA
Boston, MA MSA Columbia, SC MSA
Manchester, NH MSA New London-Norwich, CT MSA
Poughkeepsie, NY MSA Hickory, NJ MSA
Albany, NY MSA Anderson, SC MSA
Orange, NY MSA Hartford, CT MSA
-------------------------------------------------------------------------
<PAGE>
=========================================================================
RSAs Licensed
-------------------------------------------------------------------------
Delaware 1 - KENT Connecticut 2 - WlNDHAM
New York 5 - OTSEGO North Carolina 1 - CHEROKEE
New Jersey 1 - HUNTERDON North Carolina 2 - YANCEY
New Jersey 2 - OCEAN North Carolina 3 - ASHE
New Jersey 3 - SUSSEX North Carolina 4 - HENDERSON
Pennsylvania 2 - MCKEAN North Carolina 5 - ANSON
Pennsylvania 6 - LAWRENCE (B2) Rhode Island 1 - NEWPORT
Pennsylvania 7 - JEFFERSON South Carolina 1 - OCONEE
Pennsylvania 9 - GREENE South Carolina 2 - NEWBERRY
Pennsylvania 11 - HUNTINGDON South Carolina 3 - CHEROKEE
Massachusetts 2 - BARNSTABLE South Carolina 7 - CALHOUN
New Hampshire 2 - CARROLL South Carolina 9 - LANCASTER
Vermont 1 - FRANKLIN Virginia 1 - LEE
Vermont 2 - ADDISON Georgia 2 - DAWSON
West Virginia 1 - MASON
West Virginia 2 - WETZEL
=========================================================================
4. This Amendment shall be effective when executed by both parties.
5. 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 @ROAD, INC
By: /s/ Gary Schulman By: /s/ Amin Mufti
------------------------------- -----------------------------
Name: Gary Schulman Name: Amin Mufti
------------------------------- -----------------------------
Title: Regional President Title: VP Business Development
------------------------------- -----------------------------
Date: 10/12/99 Date: 10/8/1999
------------------------------- -----------------------------
<PAGE>
EXHIBIT 10.8
SUBLEASE AGREEMENT
------------------
1. Parties. This Sublease Agreement (hereinafter referred to as the
-------
"Sublease"), entered into this 24th day of August, 1999 is made by and between
STERLING SOFTWARE (WESTERN); INC., a Delaware corporation (hereinafter called
"Sublessor") on the one hand, and @ROAD, INC., a California corporation
(hereinafter referred to as "Sublessee") on the other hand.
2. Subleased Premises. Sublessor hereby subleases to Sublessee and
------------------
Sublessee hereby subleases from Sublessor for the Term (hereinafter defined), at
the rental, and upon all of the terms and conditions set forth in this Sublease,
that certain office space containing approximately 24,000 rentable square feet
comprising a portion of the building known as Building 2B of Spinnaker One
Office Park (hereinafter the "Building"), having a street address of 47370
Fremont Boulevard, Fremont, State of California, 94538, said space being more
particularly identified and described on Exhibit "A" attached hereto and
-----------
incorporated herein by reference (hereinafter called the "Subleased Premises").
3. Term.
----
3.1 Term. The term of this Sublease shall commence on the date (the
----
"Commencement Date") which is the later of: (i) September 15, 1999, or (ii) upon
receipt of a written Consent to Sublease from Prime Lessor as detailed in
Section 3.2 below. The term of this Sublease shall end at midnight on December
30, 2000 (the "Term"), unless sooner terminated pursuant to any provision
hereof.
3.2 Improvements to Subleased Premises Prior to Commencement Date.
-------------------------------------------------------------
Sublessee shall be permitted access to the Subleased Premises only after the
Prime Lessor (hereinafter defined) has executed and delivered to Sublessor and
Sublessee the Prime Lessor's Consent to Sublease form attached hereto as Exhibit
-------
"C". In addition to the foregoing, Sublessor shall not be subject to any
- ---
liability to Sublessee in the event Sublessor is unable to obtain the Prime
Lessor's consent to this Sublease. If Sublessee occupies all or any portion of
the Subleased Premises for purposes of making improvements to the Subleased
Premises or otherwise prior to the Commencement Date or prior to Prime Lessor
executing and delivering to Sublessor and Sublessee the Prime Lessor's Consent
to Sublease form attached hereto as Exhibit "C", such occupancy by Sublessee
-----------
shall be subject to all provisions of this Sublease, and such occupancy shall
not advance the termination date, and Sublessee shall have no obligation to pay
Base Rental for such period prior to the Commencement Date.
4. Rental.
------
4.1 Base Rent. From and after the Commencement Date Sublessee shall
---------
pay to Sublessor annual rent for the Subleased Premises during the Term in the
amount of TWO HUNDRED FORTY FOUR THOUSAND EIGHT HUNDRED AND NO/100 ($244,800.00)
----------------------------------------------------------------------
DOLLARS, said annual rent to be paid in equal monthly installments in the amount
- -------
of TWENTY THOUSAND FOUR HUNDRED AND 00/100 ($20,400.00) DOLLARS (the foregoing
------ -----------------------------------------------------
being hereinafter sometimes referred to as the "Base Rental"). The monthly Base
Rental shall be paid by Sublessee, together with Costs (as hereinafter defined),
in advance on the first day of each month, as an independent covenant to pay
rent, without advanced notice, demand, offset, abatement or deduction of any
kind. If the Term does not begin on the first day or end on the last day of a
calendar month, the Base Rental and Costs for that partial month shall be
prorated by multiplying the monthly Base Rental and Costs by a fraction, the
numerator of which is the number of days of the partial month included in the
Term and the denominator of which is the total number of days in the full
calendar month. All Rental (hereinafter defined) shall be payable in lawful
money of the United States to Sublessor at the office of Sublessor as follows:
Sterling Software (Western), Inc., 5800 Tennyson Parkway, Plano, Texas 75024,
- -----------------------------------------------------------------------------
Attention: Director of Facilities, or to such other persons or at such other
- ---------------------------------
places as Sublessor may designate in writing from time to time. The sum of
----------
Twenty Thousand Four Hundred and no/100 Dollars ($20,400.00) is due and shall be
- --------------------------------------------------------------------------------
paid in advance by Sublessee to Sublessor upon the execution of this Sublease,
- -----------------------------------------------------------------------------
which amount shall be applied to the Base Rental payment due on November 1,
1999. On before September 15, 1999, Sublessee shall pay Sublessor the sum of Ten
Thousand Eight Hundred Eighty and No/100
<PAGE>
Dollars ($10,880.00) as pro rata Base Rental for the period from September 15,
1999 through September 30, 1999. Sublessee's obligation to pay Base Rental and
Costs in accordance with the Sublease shall begin on the Commencement Date
regardless of whether (i) the move-in of Sublessee's furniture, fixtures,
machinery, equipment and personal property and construction of the Sublessee's
improvements is complete and/or (ii) Sublessee has actually occupied the
Subleased Premises at such time. For purposes of this Sublease, the term
"Rental" shall mean, collectively, Base Rental, Costs and all other sums payable
by Sublessee to Sublessor under this Sublease, all of which are hereby deemed
and designated as rent pursuant to the terms of this Sublease.
4.2. Costs. In addition to the Base Rental, Sublessee agrees to pay
-----
Sublessor all Costs (as defined in the Prime Lease; hereinafter referred to as
"Costs") due under the Prime Lease on or before the dates when due under the
terms of the Prime Lease. Sublessor agrees to deliver to Sublessee copies of all
notice and statements received by Sublessor from Prime Lessor with respect to
the billing of such Costs. Additionally, Sublessee shall be solely responsible
for all telephone and utility costs for the Premises which are not included in
the Costs under the Prime Lease. All Costs (as defined in the Prime Lease),
telephone and utility costs which Sublessee is required to pay hereunder are
additional rentals, and should Sublessee fail to pay such Costs, telephone or
utility costs, Sublessor shall have the same remedies as Sublessor has for the
non-payment of Rental.
4.3 Free Rent. Sublessor agrees, in consideration for Sublessor not
---------
removing any walls or touching up any paint in the Subleased Premises, to
provide Sublessee with a one time credit for thirty (30) days of free rent. Such
one time credit for said thirty (30) days of free rent shall total Twenty
Thousand Four Hundred and no/100 Dollars ($20,400.00) and shall be credited
against the installment of Rental due hereunder by Sublessee to Sublessor on
October 1, 1999.
5. Late Payment Interest Charges. All Rental and other amounts of money
-----------------------------
payable by Sublessee to Sublessor under Section 4 or otherwise due from
Sublessee to Sublessor under this Sublease, shall be paid on or before the due
date thereof. In the event any installment of Base Rental, Costs, or other
charges to be paid by Sublessee hereunder is not paid when due, Sublessee, from
and after the fifth (5th) day after the date when due, shall pay interest on the
amount due equal to eighteen percent (18%) per annum, so long as said amount
remains unpaid (but in no event shall the amount of such late charge exceed an
amount based upon the highest legally permissible rate chargeable at any time by
Sublessor under the circumstances). Should Sublessee make a partial payment of
past due amounts, the amount of such partial payment shall be applied first to
reduce all accrued and unpaid interest charges, in order of their maturity, and
then to reduce all other past due amounts, in order of their maturity.
Acceptance by Sublessor of a late payment, and the cashing of a check, in an
amount less than that which is currently due shall in no way affect Sublessor's
rights under this Sublease and in no way be an accord and satisfaction. This
provision does not prevent Sublessor from declaring the non-payment of Base
Rental, Costs, or other charges to be paid hereunder when due an Event of
Default hereunder. Sublessee agrees to pay said late payment interest
immediately upon demand. It is acknowledged by the parties hereto that the late
payment by Sublessee to Sublessor of Rental or any other sums due hereunder will
cause Sublessor to incur costs not contemplated by this Sublease, the exact
amount of which would be extremely difficult and impractical to ascertain. Such
costs include, but are not limited to processing, clerical and accounting
charges, lost interest, and late charges which may be imposed on Sublessor by
the terms of the Prime Lease. All Rental and other amounts of money payable by
Sublessee to Sublessor under this Sublease shall be paid on or before the due
date thereof, and if not so paid, in addition to the above interest charge, a
late charge of five (5%) percent of the amount due (which late fee represents an
agreed upon charge for the administrative expense and burden suffered and
incurred by Sublessor as the result of such late payment and not payment for the
use of money) shall be due on the first (1st) day after such unpaid or
delinquent amount shall be due and unpaid. Sublessee acknowledges that the
charges under this Section are reasonable charges for damages Sublessor will
suffer as a result of the failure by Sublessee to make timely payments of
amounts due under this Sublease.
-2-
<PAGE>
6. Use and Occupancy.
-----------------
6.1 Use. The Subleased Premises shall be used and occupied only by
---
Sublessee's employees for general industrial, warehousing and office purposes,
including, without limitation, research and development and assembly, and for no
other purpose.
6.2 Compliance with Law.
-------------------
(a) Sublessee acknowledges and agrees that Sublessee is leasing
the Subleased Premises on an "AS IS," "WHERE IS," and "WITH ALL FAULTS" basis,
and subject to the Prime Lease. Sublessee accepts the Subleased Premises in
their existing condition, without representation or warranty, express or
implied, in fact or by law, and no representation, statement or warranty,
express or implied, has been made by or on behalf of Sublessor as to such
condition, or as to the use that may be made of said Subleased Premises. In no
event shall Sublessor be liable for any defect in the Subleased Premises
(whether latent or patent) or for any limitation on their use. All alterations,
decorations, installations, additions or improvements in or to the Subleased
Premises shall be made at Sublessee's sole cost and expense, shall be subject to
Prime Lessor's consent (if and to the extent any such matter if done by
Sublessor under the Prime Lease would be subject to Prime Lessor's consent) and
shall comply with all of the terms and conditions of the Prime Lease, including,
without limitation, Section 9 of the Prime Lease applicable to the making of
Alterations. Sublessee shall be responsible for replacing any damaged or stained
ceiling tiles in the Subleased Premises and may deduct the cost, not to exceed
One Thousand Five Hundred and no/100 Dollars ($1,500.00), of such replacement
from Sublessee's second month's rental payment upon providing Sublessor with
invoices from the contractors who performed such replacement which document the
completion of such ceiling tile replacement. Sublessor agrees, at its sole cost
and expense, prior to the Commencement Date, to have the carpets in the
Subleased Premises professionally steam cleaned, to provide full janitorial
service to the Subleased Premises, and to have its maintenance contractor
inspect the HVAC systems for the Subleased Premises and make such repairs as are
necessary to deliver the HVAC systems to Sublessee in good repair and working
order in accordance with the specifications for such equipment.
(b) All alterations, additions, improvements or installations (herein
collectively referred to as "Alterations" or individually referred to as an
"Alteration") which may be made to the Subleased Premises by Sublessee, shall,
upon the expiration or sooner termination of the Term, by lapse of time or
otherwise, become the property of Sublessor and remain upon and be surrendered
with the Subleased Premises, unless the terms of the Prime Lease require any
Alterations of Sublessee to be removed at the end of the term of the Prime
Lease, in which case Sublessee shall remove such Alterations and restore all
damage caused by such removal at Sublessee's cost. Personal property of
Sublessee that shall remain in the Subleased Premises upon the expiration or
earlier termination of the Term shall be deemed abandoned, shall thereupon
become the property of Sublessor and Sublessor may dispose of such property any
way Sublessor sees fit without liability to Sublessee. At the expiration or
earlier termination of the Term, Sublessee shall, at Sublessee's sole cost and
expense, deliver possession of the Subleased Premises to Sublessor broom clean
and free of debris, ordinary wear excepted. Sublessee shall specifically have no
right to remove any personal property, fixtures, trade fixtures or other items
owned by Sublessor in or about the Subleased Premises. Notwithstanding any other
term or provision of this Sublease to the contrary, provided that no Event of
Default of Sublessee hereunder remains outstanding and uncured, Sublessee may
remove any personal property or trade fixtures purchased and installed by
Sublessee in the Subleased Premises.
(c) Sublessee shall, at Sublessee's expense, comply promptly with all
applicable statutes, ordinances, rules, regulations, codes, orders, restrictions
of record, and requirements in effect during the Term or any part of the Term
hereof regulating the use of the Subleased Premises, including, without
limitation, the Americans With Disabilities Act of 1990 and all amendments,
rules and regulations promulgated in connection therewith, except to the extent
the Prime Lessor is expressly required by the terms of the Prime Lease to comply
with such statutes, ordinances, rules, regulations, codes, orders, restrictions
of record or requirements at Prime Lessor's cost. Sublessee shall not use or
permit the use of the Subleased Premises in any manner that will
-3-
<PAGE>
tend to create waste, odors, noise, heat, cold, vibration or a nuisance, or
which shall tend to disturb Sublessor or other tenants of the Building.
6.3 Condition of Subleased Premises. Sublessee hereby accepts the
-------------------------------
Subleased Premises in their condition existing as of the date of the execution
hereof, subject to all applicable zoning, municipal, county and state laws,
ordinances, codes and regulations governing and regulating the use of the
Subleased Premises, and accepts this Sublease subject to all matters disclosed
hereby and by any exhibits attached hereto. Sublessee acknowledges that neither
Sublessor nor Sublessor's agents have made any representation or warranty as to
the suitability of the Subleased Premises or any improvements thereto for the
conduct of Sublessee's business.
6.4 Compliance with Prime Lease.
---------------------------
(a) Sublessee agrees that it will occupy the Subleased Premises
in accordance with the terms of the Prime Lease and will not suffer to be done
or omit to do any act which may result in a violation of or a default under any
of the terms and conditions of the Prime Lease, or render Sublessor liable for
any damage, charge or expense thereunder. Sublessee further covenants and agrees
to indemnify Sublessor against and hold Sublessor harmless from any claim,
demand, action, proceeding, suit, liability, loss, judgment, expense (including
attorneys' fees) and damages of any kind or nature whatsoever arising out of, by
reason of, or resulting from, Sublessee's failure to perform or observe any of
the terms and conditions of the Prime Lease or this Sublease. Any other
provision in this Sublease to the contrary notwithstanding, in addition to the
Base Rental and Costs, Sublessee shall pay to Sublessor as Rental hereunder, any
and all sums which Sublessor may be required to pay the Prime Lessor arising out
of, by reason of, or resulting from Sublessee's use or occupancy of the
Subleased Premises, Sublessee's failure to perform or observe one or more of the
terms and conditions of the Prime Lease or this Sublease, or arising out of a
request by Sublessee for additional Building services from Prime Lessor
(including, without limitation, charges associated with over standard electrical
charges or extra janitorial services requested by Sublessee).
(b) Sublessee agrees that Sublessor shall not be required to
perform any of the covenants, agreements and/or obligations of Prime Lessor
under the Prime Lease and, insofar as any of the covenants, agreements and
obligations of Sublessor hereunder are required to be performed under the Prime
Lease by Prime Lessor thereunder, Sublessee acknowledges and agrees that
Sublessor shall be entitled to look to Prime Lessor for such performance.
Sublessor shall have no obligation to perform any work or services in the
Subleased Premises or to perform any other obligation of Prime Lessor under the
Prime Lease. In no event shall Sublessor be liable for the non-performance of
any obligation of the Prime Lessor tinder the Prime Lease, unless said non-
performance was caused by or resulted from the actions of Sublessor. Subject to
the other terms set forth below in this Section 6.4(b), Sublessor shall exercise
due diligence and take such action as may reasonably be indicated under the
circumstances, to secure such performance by Prime Lessor upon Sublessee's
written notice to Sublessor and request therefor (hereinafter referred as a
"Request for Prime Lessor's Performance") if Sublessor determines it is
reasonable and appropriate to do so. Sublessee agrees that it shall be the
responsibility of Prime Lessor to provide any such work and services and not
that of Sublessor. Sublessee shall not have the right to require or obtain
performance by Sublessor, and Sublessee shall have no claim against Sublessor by
reason of Prime Lessor's failure or refusal to comply with any of the terms of
the Prime Lease on its part to be performed. No such failure or refusal shall
constitute an eviction, actual or constructive, and Sublessee shall not be
entitled to cancel this Sublease or to any reduction or abatement of the rent
reserved herein. It is further agreed that Sublessor shall join with Sublessee
in any notice or demand that Prime Lessor perform and comply with its
obligations under the Prime Lease and that Sublessor shall, at Sublessee's
expense, cooperate generally with Sublessee in seeking such performance and
compliance on the part of Prime Lessor; provided, however, Sublessor shall not
be obligated to commence any legal action or proceeding against Prime Lessor
unless (i) no default of Sublessee remains outstanding and uncured under this
Sublease, (ii) Sublessee shall, in a written instrument acceptable to Sublessor,
indemnify, defend and hold Sublessor free and harmless of and from all claims,
demands, actions, proceedings, suits, liabilities, losses, judgments, expenses
(including reasonable attorneys' fees) and damages of any kind or nature
whatsoever which Sublessor may suffer or incur in connection with such legal
action or proceeding, and (iii) Sublessee shall provide
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<PAGE>
to Sublessor such security for said indemnity as Sublessor may in its sole and
absolute discretion deem appropriate.
(c) If Sublessee asks Sublessor in writing to request Prime
Lessor to give its approval or consent under the Prime Lease in any situation
where such approval or consent is required hereunder or under the Prime Lease,
Sublessor agrees to request such approval or consent from Prime Lessor. However,
such request by Sublessor shall not be deemed to constitute the approval or
consent of Sublessor in any situation where Sublessor's approval or consent is
required hereunder or to impair, affect, waive or diminish in any way the right
and ability of Sublessor or refuse to give its approval or consent, either prior
to or subsequent to making such request. In making any such request of Prime
Lessor, Sublessor shall be acting solely for Sublessee in order to satisfy any
requirement of the Prime Lease that Sublessor request such consent from Prime
Lessor. In all provisions of the Prime Lease (under the terms thereof and
without regard to modification thereof for purposes of incorporation into this
Sublease) requiring the approval or consent of Prime Lessor, Sublessee shall be
required to obtain the approval or consent of Sublessor and Prime Lessor, and
Sublessor shall not unreasonably withhold or delay its approval or consent;
provided that if Prime Lessor shall have withheld its approval or consent in
accordance with the Prime Lease, in any instance in which such approval or
consent is so required, Sublessor's refusal to give its approval or consent in
such instance shall not be deemed unreasonable.
(d) If Sublessor receives the benefit of an abatement of the
rental due under the Prime Lease with respect to the Subleased Premises under
the terms of:
(i) Section 10 of the Prime Lease and Section 29 of the
Addendum to the Prime Lease as a result of a destruction of all or part of the
Subleased Premises; or
(ii) Section 11 of the Prime Lease as a result of a
condemnation of all or part of the Subleased Premises;
then the Base Rental due under this Sublease shall abate for the same period of
time that the Prime Lessor abates Sublessor's Base Rental under the Prime Lease
with respect to the Subleased Premises. Sublessee shall not receive any
abatement pursuant to the terms of this Section 6.4(d) unless and until the
Prime Lessor provides Sublessor an uncontested abatement under one of the above-
referenced Sections with respect to the Subleased Premises. This Sublease shall
terminate upon the termination of the Prime Lease pursuant to Sections 10 or 11
of the Prime Lease and Section 29 of the Addendum to the Prime Lease. Sublessee
shall have no right to terminate this Sublease in the event of a destruction,
casualty or a condemnation, taking by eminent domain or deed in lieu thereof,
except upon termination of the Prime Lease with respect to the Subleased
Premises pursuant to Sections 10 and/or 11 of the Prime Lease and/or Section 29
of the Addendum to the Prime Lease. Sublessor agrees not to itself unilaterally
terminate the Prime Lease as it relates to the Subleased Premises, however, both
Sublessor and Sublessee are subject to the Prime Lessor's rights to terminate
the Prime Lease as provided in Sections 10 and 11 of the Prime Lease and Section
29 of the Addendum to the Prime Lease, or otherwise.
7. Prime Lease and Sublease Terms.
------------------------------
7.1 Prime Lease. Sublessor is the tenant of the Subleased Premises by
-----------
virtue of a certain Lease dated December 8, 1986, as modified by that Second
Addendum to Lease dated December 15, 1988, that Third Addendum dated October 5,
1993, that Extension Agreement dated February 21, 1995 and that Extension
Agreement dated January 19, 1996 (the foregoing lease and related documents
being herein collectively referred to as the "Prime Lease"), wherein SCI Limited
Partnership-I, a Delaware limited partnership (herein referred to as the "Prime
Lessor"), is the landlord by assignment. The Prime Lease is attached hereto as
Exhibit "B" and, except to the extent otherwise provided in Section 7.4 below,
- -----------
all terms, agreements, covenants and conditions thereof are incorporated herein
and made a part hereof as if fully set forth herein. Sublessee acknowledges that
Sublessee has reviewed and is familiar with all of the terms, agreements,
covenants and conditions of the Prime Lease attached hereto as Exhibit "B".
-----------
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7.2 Subordination to Prime Lease. This Sublease is and shall be at
----------------------------
all times subject to each and every one of the terms and conditions of the Prime
Lease and subordinate to the Prime Lease.
7.3 Terms and Conditions of Sublease. Subject to Section 6.4(b), the
--------------------------------
terms, conditions and respective obligations of Sublessor and Sublessee to each
other under this Sublease shall be the same as the terms and conditions of the
Prime Lease except for those provisions of the Prime Lease which are directly
contradicted by the express terms of this Sublease, in which event the terms of
the Sublease document shall control over the Prime Lease, all of which Prime
Lease provisions as modified herein are incorporated herein by reference and
shall have the same force and effect as though set forth at length. Therefore,
subject to Section 6.4(b) above, for the purposes of this Sublease, wherever in
the Prime Lease the word "Lease" is used it shall be deemed to mean the
Sublease, wherever in the Prime Lease the word "Premises" is used it shall be
deemed to mean the Subleased Premises, wherever in the Prime Lease the word
"Landlord" is used it shall be deemed to mean the Sublessor herein and wherever
in the Prime Lease the word "Tenant" is used it shall be deemed to mean the
Sublessee herein. All time periods for the Prime Lessor to respond under the
Prime Lease shall, as applicable to Sublessor, be extended by an additional
seven (7) days.
7.4 Inapplicable Provisions of Prime Lease. Notwithstanding the terms
--------------------------------------
of Section 7.3 above, the following provisions of the Prime Lease are hereby not
applicable in whole or in part, as indicated below, for the purpose of
incorporating the Prime Lease into the Sublease, and Sublessee shall have no
rights under the following parts, Sections and Exhibits of the Prime Lease: 5,
9.2, Sections 19, 20, 21, 22, 23, 24, 25, 28, 32, 33, 34 of the Addendum to the
Prime Lease, Sections 1, 2, 3, 5, 6 and 7 of the Second Addendum to Lease,
Sections 3 and 7 of the Third Addendum to Lease, and Sections 2 and 3 of the
January 19, 1996 Extension Agreement. Nothing contained herein shall be or be
deemed to have modified the Prime Lease to which this Sublease is subject and
subordinate.
7.5 Assumption of Obligations by Sublessee. During the Term of this
--------------------------------------
Sublease and for all periods subsequent thereto with respect to obligations
which have arisen prior to the expiration or termination of this Sublease,
Sublessee does hereby expressly assume and agree to perform and comply with, for
the benefit of Sublessor and Prime Lessor each and every obligation of Sublessor
under the Prime Lease with respect to the Subleased Premises, except for those
provisions of the Prime Lease which are directly contradicted by this Sublease,
in which event the terms of this Sublease document shall control over the Prime
Lease.
7.6 Definitions. The obligations that Sublessee has assumed under
-----------
Section 7.5 hereof are hereinafter referred to as the "Sublessee's Assumed
Obligations". The obligations that Sublessee has not assumed under Section 7.5
hereof are hereinafter referred to as the "Remaining Obligations".
7.7 Sublessee's Indemnity. Sublessee shall indemnify, defend and hold
---------------------
Sublessor free and harmless of and from all claims, demands, actions,
proceedings, suits, liabilities, losses, judgments, expenses (including
attorneys' fees) and damages of any kind or nature whatsoever arising out of
Sublessee's failure to comply with or perform Sublessee's Assumed Obligations.
7.8 Maintenance of Prime Lease. Sublessor agrees to maintain the
--------------------------
Prime Lease in existence, as it pertains to the Subleased Premises, during the
entire term of this Sublease, subject, however, to any earlier termination of
the Prime Lease without the fault or willful termination of the Sublessor, and,
upon written notice and request by Sublessee, to use its reasonable efforts as
specified in Section 6.4(b) above to cause Prime Lessor to comply with or
perform the Remaining Obligations. Notwithstanding the foregoing, Sublessor
shall not be required to institute any proceeding or action, at law or in
equity, against the Prime Lessor unless and until the requirements of Section
6.4(b) have been satisfied. Sublessee shall pay to Sublessor, as additional rent
hereunder, any cost or expense (including court costs, attorneys' fees and
expenses, and the fees and expenses of experts) where reasonably necessary to
cause Prime Lessor to perform its obligations under the Prime Lease following
any Request for Prime Lessor's Performance.
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<PAGE>
7.9 Submissions to Prime Lessor. In all provisions of the Prime Lease
---------------------------
requiring Sublessor, as tenant, to submit, exhibit to, supply or provide Prime
Lessor with evidence, certificates or any other matter or thing, Sublessee shall
be required to submit, exhibit to, supply or provide, as the case may be, the
same to Sublessor and Prime Lessor. In any such instance, the Sublessor shall
reasonably determine if such evidence, certificate or other matter or thing
shall be satisfactory, provided that if the Prime Lessor shall deem such
evidence, certificate or other matter or thing unsatisfactory, Sublessor's
refusal to accept such evidence, certificate or other matter or thing, as
satisfactory to Sublessor shall not be deemed unreasonable.
7.10 Sublessor's Representations. Sublessor represents to Sublessee,
---------------------------
based on the present actual knowledge of Sublessor and its employees, that as of
the date hereof:
(a) Sublessor has not executed any sublease and/or prior
assignment of any of its rights under the Prime Lease with respect to the
Subleased Premises, which would adversely affect this Sublease;
(b) No notices of default sent by Sublessor to Prime Lessor
remain outstanding and uncured with respect to any failure of the Prime Lessor
to perform the covenants and obligations on its parts to be performed and
observed under the Prime Lease;
(c) Sublessor has received no written notices of default from the
Prime Lessor which remain outstanding and uncured, and no circumstances exist
that with the giving of notice under the Prime Lease, the passage of time, or
both would constitute an Event of Default on the part of Sublessor under the
Prime Lease; and
(d) Sublessor has received no written notices of any violations
of law with respect to the Premises under the Prime Lease from any governmental
authority or any other person.
8. Taxes Payable By Sublessee. In addition to Base Rental, Costs and
--------------------------
other charges to be paid by Sublessee hereunder, Sublessee shall reimburse
Sublessor upon demand, as Rental, for any and all taxes payable by Sublessor
(other than Sublessor's federal, state and local net income taxes, franchise,
gift, transfer, capital stock, estate or inheritance taxes) whether or not now
customary or within the contemplation of the parties hereto: (a) upon, measured
by or reasonably attributable to the cost or value of Sublessee's equipment,
furniture, fixtures and other personal property located in the Subleased
Premises or by the cost or value of any improvements made in or to the Subleased
Premises by Sublessee, regardless of whether title to such improvements shall be
in Prime Lessor, Sublessee or Sublessor (b) upon, measured by and directly
related to the monthly rental payable hereunder, including, without limitation,
any gross receipts, gross income tax or excise tax levied by any local
governmental authority, the State of California, the federal government or any
other governmental body with respect to the receipt of such rental; (c) upon or
with respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Sublessee of the Subleased Premises or
any portion thereof; or (d) upon this transaction or any document to which
Sublessee is a party creating or transferring an interest in the Subleased
Premises. In the event that it shall not be lawful for Sublessee so to reimburse
Sublessor, the monthly Base Rental and Costs payable to Sublessor under this
Sublease shall be revised to net Sublessor the same net Base Rental and Costs
after imposition of any such tax upon Sublessor as would have been payable to
Sublessor prior to the imposition of any such tax.
9. Assignment or Subletting. Sublessee, for itself, its successors and
------------------------
assigns, expressly covenants and agrees that it shall not assign, mortgage,
encumber or otherwise transfer any right or interest in this Sublease, nor
sublet, nor suffer or permit the Subleased Premises or any part thereof to be
used by others, without the prior written consent of Sublessor and Prime Lessor
in each instance, which consent by Sublessor shall not be unreasonably withheld
or delayed, and any such attempted assignment, mortgage, encumbrance, other
transfer or subletting without such consent shall be null and void and ab
--
initio. The consent by Sublessor to an assignment or subletting shall not in any
- ------
way release or relieve Sublessee from any obligation or liability under this
Sublease, or in any way be construed to relieve Sublessee from obtaining the
express consent in writing of Sublessor and Prime Lessor to any further
assignment or subletting. Sublessee's right to further assign this Sublease or
to further sublet the Subleased Premises shall be subject to the provisions of
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<PAGE>
Section 13 of the Prime Lease. Sublessee agrees to pay Sublessor and Prime
Lessor all costs paid or incurred by them to review any sublease or assignment
proposed by Sublessee. If this Sublease is assigned, or if the Subleased
Premises or any part thereof is sublet or occupied by any person, firm or
corporation other than Sublessee, with the consent of Sublessor and Prime
Lessor, Sublessor may, upon any default by Sublessee, collect rent from the
assignee, subtenant or occupant and apply the net amount collected to the
Rental, but no such assignment, subletting, occupancy or collection shall be
deemed a waiver of this covenant or the acceptance of the assignee, subtenant or
occupant as a tenant, or a release of Sublessee from the future performance by
Sublessee of the covenants and agreements on the part of Sublessee herein
contained. Sublessee shall not be entitled to make, nor shall Sublessee make,
any claim, and Sublessee hereby waives any claims, for money damages (nor shall
Sublessee claim any money damages by way of set-off, counterclaim or defense)
based on any claim or assertion by Sublessee that Sublessor or Prime Lessor has
unreasonably withheld and/or delayed its consent or approval to a proposed
assignment or sub-subletting as provided for in this Section 9 or Section 13 of
the Prime Lease. Sublessee's sole and exclusive remedy shall be to enforce the
provisions of this Section 9 and Section 13 of the Prime Lease by an action for
specific performance, temporary restraining order, preliminary injunction, or
declaratory judgment.
10. Consent of Prime Lessor.
-----------------------
10.1 Consent to Sublease as Condition Precedent. Sublessor must
------------------------------------------
obtain the consent of Prime Lessor to any subletting of the Subleased Premises.
This Sublease shall not be effective unless, within fifteen (15) days of the
date hereof, Prime Lessor signs and delivers to Sublessor and Sublessee the
Consent to Sublease attached hereto as Exhibit "C" and incorporated herein by
-----------
reference, without modification, thereby giving Prime Lessor's consent to this
subletting.
10.2 Notices From Prime Lessor. Sublessor and Sublessee shall each
-------------------------
deliver to the other copies of all notices, requests or demands which relate to
the Subleased Premises or any portion thereof, promptly after receipt thereof
from Prime Lessor under the Prime Lease.
11. Brokers and Brokers Fees. Sublessor shall pay The Staubach
------------------------
Company ("Staubach") a real estate commission in the amount of Ten Thousand
Three Hundred Fifty Three and no/100 Dollars ($10,353.00), in full and complete
satisfaction for all brokerage services rendered by Staubach in connection with
this transaction, and Staubach hereby agrees that no other commissions, fees or
expenses are due Staubach. Sublessor shall pay CB Richard Ellis, Inc. ("Ellis";
Ellis and Staubach being collectively referred to as "Brokers") a real estate
commission in the amount often Thousand Three Hundred Fifty Three and no/100
Dollars ($10,353.00), in full and complete satisfaction for all brokerage
services rendered by Ellis in connection with this transaction, and Ellis hereby
agrees that no other commissions, fees or expenses are due Ellis. Brokers hereby
agree that the brokerage commissions set forth above shall not be earned, due or
payable until such time as (i) this Sublease is fully executed and delivered by
Sublessor and Sublessee, (ii) Sublessee has paid Sublessor the Base Rental due
November 1, 1999, and the Security Deposit due under Section 16, (iii) the Prime
Lessor within the fifteen (15) day period specified in Section 10.1 above, signs
and delivers to Sublessor and Sublessee the Exhibit "C" Consent to Sublease
form, without modification, (iv) the Purchase Price is paid for the furniture
sold under the terms of Section 18 below, and (v) Sublessee takes occupancy of
the Subleased Premises. If the Commencement Date is adjusted as per the terms of
this Sublease, the brokerage commissions paid hereunder shall be adjusted
accordingly. The commissions due under this Section 11 shall be paid by
Sublessor within thirty (30) days after the conditions to payment set forth in
this Section 11 are satisfied. Sublessee agrees to indemnify, defend and hold
Sublessor and Prime Lessor harmless from and against any and all claims of any
broker or agent, other than Brokers, claiming to have dealt with Sublessee in
connection with this transaction. Sublessor agrees to indemnify, defend and hold
Sublessee and Prime Lessor harmless from and against any and all claims of any
broker or agent claiming to have dealt with Sublessor in connection with this
transaction. Brokers acknowledge and agree that Sublessee has no responsibility
or obligation to pay Brokers any real estate commissions, fees or expenses, and
Sublessor shall be solely responsible to pay any amounts due to Brokers. Upon
payment of the commissions due under this Section I 1, Brokers shall execute and
deliver a written waiver of any rights that Brokers have, if any, to file a
Broker's lien against the Subleased Premises in connection with this Sublease.
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12. Sublessee's Work. Sublessor shall deliver, and Sublessee shall accept,
----------------
possession of the Subleased Premises "AS IS," "WHERE IS," and "WITH ALL FAULTS".
Except as specifically stated in the last grammatical sentence of Section 6.2(a)
above, Sublessor shall have no obligation to furnish, render or supply any work,
labor, services, materials, furniture, fixtures, equipment, decorations or other
items to make the Subleased Premises ready or suitable for Sublessee's
occupancy.
13. Parking. Sublessee shall have those parking rights described in
-------
Section 6.2 (as well as any other section discussing parking) of the Prime
Lease.
14. Notices. Any notice by either party to the other required, permitted
-------
or provided for herein Shall only be valid if(a) delivered personally, or (b)
sent by means of Federal Express, UPS Next Day Air or another reputable express
mail delivery service guaranteeing next day delivery, or (c) sent by United
States certified or registered mail, return receipt requested, postage pre-paid
addressed (i) if to Sublessor, at the following addresses:
Sterling Software (Western), Inc.
1800 Alexander Bell Drive
Reston, Virginia 20191
Attention: Randall K. Davis, President
Plus copies to:
The Staubach Company
6750 LBJ Freeway
Dallas, Texas 75240
Attention: Kelly Kackley
and
Steven K. Bender, Esq.
Long Aldridge & Norman
Suite 5300
303 Peachtree Street
Atlanta, Georgia 30308
and (ii) if to the Sublessee, at the following addresses:
@ROAD, INC.
-----------
47370 FREMONT BLVD.
-------------------
FREMONT, CA 94538
-----------------
Attention: ANDY SINGH
----------
Plus a copy to:
@ROAD, INC.
-----------
47370 FREMONT BLVD.
-------------------
FREMONT, CA 94538
-----------------
Attention: ALFRED CHAN
-----------
or at such other address for either party as that party may designate by notice
to the other. A notice given as set forth above shall be deemed effective, if
delivered personally, upon hand delivery thereof, if sent via express mail, upon
hand delivery, and if mailed by United States certified or registered mail, five
(5) days following such mailing in accordance with this Section.
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15. Default and Remedies.
--------------------
15.1 Events of Default. Sublessee shall be in default under this
-----------------
Sublease upon the occurrence of any one or more of the following events or
occurrences, each of which shall be deemed to be a material Event of Default:
(i) The failure by Sublessee to make any payment due Sublessor
under the terms of this Sublease with respect to Base Rental or Costs, within
three (3) days after Sublessee has been given written notice from Sublessor to
Sublessee specifying Sublessee's failure to make such payment. Sublessor shall
not be required to give written notice to Sublessee of any failure to make any
such payments more than two (2) times in any calendar year. After Sublessor has
given Sublessee the second written notice with respect to Sublessee's failing in
the payment of such amounts in any calendar year, thereafter the failure to pay
any such payment(s) during the remainder of the same calendar year shall mature
into a material Event of Default if such payment is not made by the date when
the same shall be due and payable; or
(ii) Sublessee fails to pay, when due, any other sum or amount
due and payable under this Sublease (other than Base Rental or Costs), or under
the Prime Lease provisions assumed by Sublessee pursuant to Paragraph 7.5
herein, and such failure continues for twenty-five (25) days after notice
thereof from Sublessor or Prime Lessor; or
(iii) Sublessee fails to fully and punctually observe or perform
any of the terms, conditions, agreements or covenants of this Sublease (other
than the obligation to pay the sums described in subparagraphs 15. l(i) and (ii)
above) and such failure continues for twenty-five (25) days after notice thereof
from Sublessor provided, however, that if such failure is an non-monetary
failure and cannot reasonably be cured within such twenty-five (25) day period,
no Event of Default shall exist hereunder if Sublessee begins to cure such
default within such twenty-five (25) day period and diligently, continuously and
in good faith pursues said cure to completion within one hundred and ten (110)
days after such notice; or
(iv) Sublessee fails to fully and punctually observe or perform
any of the terms or covenants of the Prime Lease assumed by Lessee pursuant to
Paragraph 7.5 above and such failure continues for twenty-five (25) days after
notice thereof from Sublessor or Prime Lessor, provided, however, that if such
failure is a non-monetary failure and cannot reasonably be cured within such
twenty-five (25) day period, no Event of Default shall exist hereunder if
Sublessee begins to cure such default within such twenty-five (25) day period
and diligently, continuously and in good faith pursues said cure to completion
within sixty (60) days after such notice; or
(v) Sublessee fails to eliminate any (a) odor, vibration,
noise, heat, cold or nuisance emanating from the Subleased Premises, which
disturbs Sublessor or other tenants of the Building, (b) waste, or (c) violation
of any legal requirement, caused by the act or omission of Sublessee, it agents,
employees, invitees, sublessees, assignees, contractors or subcontractors, and
such failure continues for five (5) days after notice thereof from Sublessor or
Prime Lessor; or
(vi) The filing or execution or occurrence of: (a) a petition
by or against Sublessee or any guarantor of this Sublease in bankruptcy or
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any provision of the present or any future
bankruptcy act or any other present or future federal, state or other bankruptcy
or insolvency statute or law, provided however that if an involuntary bankruptcy
petition is filed against Sublessee or any guarantor of this Sublease, no Event
of Default shall occur if said involuntary bankruptcy petition is dismissed
within sixty (60) days of the date such petition was initially filed, (b)
adjudication of Sublessee or any guarantor of this Sublease as a bankrupt or
insolvent, insolvency in the bankruptcy or equity sense, (c) an assignment by
Sublessee or any guarantor of this Sublease for the benefit of creditors, (d) a
petition or other proceeding by or against Sublessee or any guarantor of this
Sublease, or the appointment of a trustee, receiver, guardian, conservator or
liquidator with respect to any portion of Sublessee's property or property of
any guarantor of this Sublease, (e) any levy, execution or attachment against
Sublessee or any guarantor of this Sublease, or (f) any transfer or passage of
any interest of Sublessee under this Sublease by operation of law; or
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<PAGE>
(vii) Sublessee causes any lien to be placed on the Subleased
Premises or the Building.
15.2 Remedies upon Default.
---------------------
(i) If Sublessor elects pursuant to Section 15.1 to declare
an Event of Default, then Sublessor shall, during the continuation of said Event
of Default, have the right to declare a forfeiture of this Sublease as provided
in Section 1161 of the California Code of Civil Procedure, by giving Sublessee
an additional notice three (3) days prior to the effectiveness of said
forfeiture, and provided that such Sublessor's notice states such an election,
Sublessee's right to possession shall terminate and this Sublease shall
terminate, unless on or before the date specified in such notice, all arrears of
rent and all other sums specified in the initial notice of default and payable
by Sublessee under this Sublease shall have been paid by Sublessee and all
uncured breaches of this Sublease by Sublessee which were specified in the
initial notice of default shall have been fully remedied. Upon such termination,
Sublessor may, at its option and without any further notice or demand, in
addition to any other rights and remedies given hereunder or by law, exercise
its remedies relating hereto in accordance with the following provisions:
(a) In the event of any such termination of this Sublease, Sublessor
may then or at any time thereafter by judicial process, re-enter the Subleased
Premises and remove therefrom all persons and property and again repossess and
enjoy the Subleased Premises, without prejudice to any other remedies that
Sublessor may have by reason of such Event of Default and termination.
(b) In the event of any such termination of this Sublease, and in
addition to any other rights and remedies Sublessor may have, Sublessor shall
have all of the rights and remedies of a landlord provided by Section 1951.2 of
the California Civil Code. The amount of damages which Sublessor may recover in
the event of such termination shall include, without limitation, (1) the worth
at the time of award of the amount by which the unpaid rent for the balance of
the term after the time of award exceeds the amount of rental loss that
Sublessee proves could be reasonably avoided for the same period, (2) all
reasonable legal expenses and other reasonable related costs incurred by
Sublessor as a consequence of Sublessee's default, (3) all reasonable costs
incurred by Sublessor in restoring the Subleased Premises to good order and
condition, or in remodeling, renovating or otherwise preparing the Subleased
Premises for reletting, and (4) all reasonable costs (including, without
limitation, any commercially reasonable brokerage commissions) incurred by
Sublessor in reletting the Subleased Premises.
(c) After terminating this Sublease, Sublessor may remove any and
all personal property located in the Subleased Premises and place such property
in a public or private warehouse or elsewhere at the sole cost and expense of
Sublessee. In the event that Sublessee shall not immediately pay the cost of
storage of such property after the same has been stored for a period of thirty
(30) days or more, Sublessor may sell any or all thereof at a public or private
sale in such manner and at such times and places as Sublessor in its reasonable
discretion may deem proper, without any further notice to or demand upon
Sublessee. Sublessee waives all claims for damages -J that may be caused by
Sublessor's removing or storing or selling Sublessor's furniture, fixtures,
machinery and equipment as herein provided; or
(ii) In the event of the occurrence of any of the events
specified in Section 15.1(vi)(a), (b) or (c) of this Sublease, if Sublessor
shall not choose to exercise, or by law shall not be able to exercise, its
rights hereunder to terminate this Sublease, then, neither Sublessee, as debtor-
in-possession, nor any trustee or other person (collectively, the "Assuming
Sublessee") shall be entitled to assume this Sublease unless on or before the
date of such assumption, the Assuming Sublessee (a) cures, or provides adequate
assurance that the Assuming Sublessee will promptly cure, any existing default
under this Sublease, (b) compensates, or provides adequate assurance that the
Assuming Sublessee will promptly compensate Sublessor for any pecuniary loss
(including, Without limitation, attorneys fees and disbursements) resulting from
such default, and (c) provides adequate assurance of future performance under
this Sublease. For purposes of this Section 15.2(ii), "adequate assurance" of
such cure, compensation or future performance shall be effected by the
establishment of an escrow fund for the amount at issue or by bonding; or
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(iii) Continuation After Default. If an Event of Default
--------------------------
exists under this sublease and Sublessee has abandoned the Subleased Premises,
Sublessor shall also have the remedy described in California Civil Code Section
1951.4 (Sublessor may continue this Sublease in effect after Sublessee has
breached this Sublease and abandoned the Subleased Premises and recover rent as
it becomes due; provided, however that Sublessee has the right to sublet or
assign this Sublease, subject only to the limitations set forth in Section 9
hereof). Acts of maintenance or preservation or efforts to relet the Subleased
Premises or the appointment of a receiver upon initiative of Sublessor to
protect Sublessor's interest under this Sublease shall not constitute a
termination of Sublessee's right to possession; or
(iv) Without liability to Sublessee or any other party and
without constituting a constructive or actual eviction, suspend or discontinue
furnishing or rendering to Sublessee any property, material, labor, utilities or
other service, wherever Sublessor or Prime Lessor is obligated to furnish or
render the same so long as Sublessee is in default under this Sublease; or
(v) Allow the Subleased Premises to remain unoccupied and
collect rent from Sublessee as it comes due; or
(vi) The remedies provided for in this Sublease are
cumulative and are in addition to any other remedies available to Sublessor at
law or in equity by statute or otherwise.
15.3 No Election of Remedies. Sublessor's pursuit of any remedy or
-----------------------
remedies, including without limitation, any one or more of the remedies stated
in the foregoing Section 15.2 above, shall not (i) constitute an election of
remedies or preclude pursuit of any other remedy or remedies provided in this
Sublease or any other remedy or remedies provided by law or in equity,
separately or concurrently or in any combination, or (ii) serve as the basis for
any claim of constructive eviction, or allow Sublessee to withhold any payments
under this Sublease.
15.4 Application of Funds. If this Sublease shall terminate as a
--------------------
result of or while there exists a default hereunder, any funds of Sublessee held
by Sublessor may be applied by Sublessor to any damages payable by Sublessee
(whether provided for herein or by law) as a result of such termination or
default.
15.5 Subsequent Actions. Neither the commencement of any action or
------------------
proceeding, nor the settlement thereof, nor entry of judgment thereon shall bar
either party from bringing subsequent actions or proceedings from time to time,
nor shall the failure to include in any action or proceeding any sum or sums
then due be a bar to the maintenance of any subsequent actions or proceedings
for the recovery of such sum or sums so omitted.
15.6 Rent. All sums which Sublessee has anywhere in this Sublease
----
agreed to pay to or reimburse Sublessor, whether designated as Costs, additional
rent or otherwise, and whether for operating costs, telephone, utilities, taxes,
sewer rents or rates, water rents or rates, insurance premiums, cost of repairs
or otherwise, shall be deemed additional rent reserved in this Sublease, and
Sublessor shall have for the collection thereof all the remedies available for
the collection of unpaid rents.
15.7 Sublessor's Right of Entry. Sublessor and its agents, servants,
--------------------------
and employees may, but shall have no obligation to, upon the occurrence of an
(i) emergency or (ii) an Event of Default under Subsection 15.1 above, enter the
Premises without any further notice to Sublessee, without any charge, liability
or abatement of Rental, for purposes of taking any and all actions Sublessor
deems necessary to avoid damage or injury to persons or property and/or to
remedy any Event of Default under Subsection 15.1.
15.8 Additional Remedies Under Prime Lease. If any event described in
-------------------------------------
Section 14 of the Prime Lease shall occur in respect of Sublessee, the Subleased
Premises or Sublessee's property, or if Sublessee shall default in the payment
of any Rental or other amounts due hereunder or default in the performance or
observance of any of the terms, covenants and conditions of this Sublease or of
the Prime Lease on the part of Sublessee to be performed or observed, Sublessor
shall
-12-
<PAGE>
be entitled to exercise any or all of the rights and remedies reserved by Prime
Lessor in the Prime Lease, including, but not limited to, those rights and
remedies provided by Section 14 of the Prime Lease, which Section is
incorporated herein by reference, as if fully set forth herein, pursuant to the
terms of Section 7.3 above.
16. Security Deposit. Sublessee shall deposit with Sublessor upon
----------------
execution hereof TWENTY THOUSAND FOUR HUNDRED AND NO/100 DOLLARS ($20,400.00) as
------------------------------------------------------------
security for Sublessee's faithful performance of Sublessee's obligations under
this Sublease. If Sublessee fails to pay any Rental due hereunder, or otherwise
defaults with respect to any provisions of this Sublease, Sublessor may use,
apply or retain all or any portion of said deposit for the payment of any Rental
in default or for the payment of any other sum to which Sublessor may become
obligated by reason of Sublessee's default, or to compensate Sublessor for any
loss or damage which Sublessor may suffer thereby. If Sublessor so uses or
applies all or any portion of said deposit, Sublessee shall within ten (10) days
after written demand therefore deposit sufficient cash with Sublessor in the
amount needed to restore said deposit to the full amount deposited prior to the
application of said funds and Sublessee's failure to do so shall be a material
breach of this Sublease. Sublessor shall not be required to keep said deposit
separate from its general accounts and no interest or earnings shall be paid by
Sublessor with respect to such security deposit. If no default of Sublessee
under this Sublease or the Prime Lease remains outstanding and uncured on the
expiration date of this Sublease, then any remaining balance of the security
deposit shall be returned by Sublessor to Sublessee within thirty (30) days
after the later of the expiration date of this Sublease or the date Sublessee
has surrendered possession of the entire Subleased Premises to Sublessor in
accordance with the terms of this Sublease.
17. Holdover. If Sublessee retains possession of the Subleased Premises or
--------
any part thereof after the expiration or earlier termination of the Term, by
lapse of time or otherwise, then for such holdover period Sublessee shall be a
tenant-at-sufferance and during any holdover Sublessee shall be subject to and
shall perform all obligations in accordance with all of the terms and conditions
of this Sublease, except that Sublessee shall pay Base Rental and Costs equal to
one hundred and fifty (150%) percent of the Base Rental and Costs paid for the
last month of the Term and, in addition to the amounts specified above,
Sublessee shall pay all other amounts due from Sublessee under the terms of the
Sublease as if no holdover existed, plus all damages sustained by Sublessor by
reason of Sublessee's retention of possession. Additionally, Sublessee shall
remain liable to Sublessor and hereby agrees to indemnify, defend and hold
Sublessor harmless from and against any and all claims, demands, actions,
proceedings, suits, liabilities, losses, judgments, expenses (including
attorneys' fees) and damages of any kind or nature whatsoever Sublessor may
sustain as a result of any holdover by Sublessee, its assignees, sub-subtenants,
successors or other transferees. Sublessor shall retain all of its rights and
remedies against Sublessee during any holdover period. In no event shall there
be any renewal of this Sublease by operation of law if Sublessee remains in
possession of the Subleased Premises after the expiration of the Term.
18. Sale of Furniture. Sublesssor, upon execution of this Sublease, shall
-----------------
convey to Sublessee, by a Bill of Sale prepared by Sublessor, the phone system,
the furniture, the power distribution system currently located in the computer
room and raised computer flooring existing in the Subleased Premises for a total
sum of Fifty Thousand and no/100 Dollars ($50,000.00)(the "Purchase Price")
which shall be due and payable in full upon execution of this Sublease. At the
expiration or earlier termination of the term of this Sublease, Sublessee shall
be responsible for removing the raised computer flooring from the Subleased
Premises and restoring the Premises to the condition required as per the terms
of the Prime Lease.
19. Signage. Sublessee shall have the right at Sublessee's sole cost and
-------
expense to install signage in all locations utilized for signage by Sublessor at
the time of execution of this Sublease. All signage installed by Sublessee must
comply with any and all signage requirements of the Prime Lease, and Sublessee
shall be responsible for obtaining any consent of Prime Lessor to such signage
as required under the terms of the Prime Lease.
20. Miscellaneous. This Sublease shall be construed without regard to any
-------------
presumption or other rule requiring construction against the party causing the
Sublease to be drafted. Each covenant, agreement, obligation or other provision
of this Sublease on Sublessee's part to be
-13-
<PAGE>
performed shall be deemed and construed as a separate and independent covenant
of Sublessee, not dependent on any other provisions of this Sublease. Time is of
the essence with respect to the obligations of Sublessee and Sublessor under
this Sublease. Sublessee's and Sublessor's agents and employees have made no
representations or promises with respect to the Building or Subleased Premises.
21. Insurance and Waiver of Subrogation. Sublessee is responsible for
-----------------------------------
obtaining and maintaining coverage for all insurance Sublessor is required to
obtain and maintain under the terms of Section 12.1 of the Prime Lease, all of
which insurance shall contain a full waiver of subrogation for the benefit of
Sublessor and Prime Lessor.
22. No Recordation of Sublease. Recording of this Sublease or any
--------------------------
memorandum or short form thereof in any public records is prohibited.
23. Amendment of Prime Lease by Sublessor. Notwithstanding any other term
-------------------------------------
or provision of this Sublease, Sublessor shall have the right to amend the terms
and provisions of the Prime Lease, from time to time, provided that the terms of
any such amendment do not adversely affect the terms of this Sublease or
Sublessee's right to use or occupancy of the Subleased Premises pursuant to the
terms of this Sublease.
24. Force Majeure. Sublessor shall be excused for the period of any delay
-------------
and shall not be deemed in default with respect to the performance of any of the
terms, covenants, and conditions of this Sublease when prevented from so doing
by causes beyond its control, which shall include, but not be limited to, all
labor disputes, governmental regulations or controls, fire or other casualty,
inability to obtain any material or services, or acts of God (collectively
"Force Majeure"). If Sublessor claims the occurrence of a Force Majeure event
Sublessor must promptly give notice to Sublessee of the existence of such Force
Majeure, the nature and extent thereof, the obligation hereunder affected
thereby and the actions to be taken to abate or terminate such event.
Notwithstanding the existence of any Force Majeure, Sublessee, following the
Commencement Date, shall not be relieved of the obligation to pay Base Rental,
Costs or other Rental, which shall be due under the terms of this Sublease.
25. Delay in Commencement. In no event shall Sublessor be liable for any
---------------------
delay in the Commencement Date in the event that Sublessor is unable to vacate
the Subleased Premises prior to the Commencement Date. In the event that the
Commencement Date is delayed beyond September 30, 1999, then Sublessee shall
receive one (1) day of rent abatement for each one (1) day delay of the
Commencement Date beyond September 15, 1999. In no event shall Sublessee receive
more than thirty (30) days of rent abatement.
IN WITNESS WHEREOF, the parties hereto hereby execute this Sublease as of
the day and year first above written.
SUBLESSOR:
----------
STERLING SOFTWARE (WESTERN), INC., a Delaware
corporation
By: /s/ Lee McElrath
-----------------------------
Print Name: Lee McElrath
----------------------
Title: V.P. Finance & Admin.
--------------------------
[Signatures Continued on Next Page]
-14-
<PAGE>
SUBLESSEE:
----------
@ROAD, INC., a California corporation
By: /s/ Krish Panu
---------------------------
Print Name: Krish Panu
-------------------
Title: President / CEO
------------------------
The undersigned Brokers hereby acknowledge
and agree to the terms of Section 11 above.
BROKERS:
- --------
THE STAUBACH COMPANY
By: /s/ Bart Lammersen
-------------------------
Print Name: Bart Lammersen
------------------
Title: Associate
-----------------------
RICHARD ELLIS, INC.
By: /s/ Thor Wiles
--------------------------
Print Name: Thor Wiles
------------------
Title: Associate
-----------------------
-15-
<PAGE>
SPINNAKER ONE
SPINNAKER ONE: A FOUR-BUILDING 96,000 SQUARE FOOT COMPLEX DESIGNED FOR OFFICE,
RESEARCH AND DEVELOPMENT AND LIGHT INDUSTRIAL USES.
[SITE PLAN]
EXHIBIT A
<PAGE>
EXHIBIT B
STANDARD INDUSTRIAL LEASE-NET
-----------------------------
Lease Summary
-------------
The following information affects the terms of the Basic Lease.
I. LANDLORD: King & Lyons, a California Partnership
-----------------------------------------------------------------
II. TENANT: Interlink Computer Sciences, Inc., a California Corporation
-----------------------------------------------------------------
III. PREMISES: A 23,000 square foot portion of Building 2B of Spinnaker One
-----------------------------------------------------------------
specifically designated as 47366-82 Fremont Boulevard, Fremont, CA.
- --------------------------------------------------------------------------------
IV. TERM:
Lease Term: Sixty ( 60 ) months.
------------------------------------ ----
Lease Commencement [check one]:
X Subject to completion of improvements. Landlord's current estimate
--- of the substantial completion date is February 1, 1987.
---------- ----
Commencement Date: ___________________________________, 19____.
---
[Landlord initials:_________] [Tenant initials:_________]
V. CHARGES:
Base Monthly Rent: See Addendum ($___________).
----------------------------------
Security Deposit: Fifteen Thousand Five Hundred
Seventy Dollars ($15,570,00).
---------------------------------- ---------
Percentage Share of Expenses: Seventy-Six and Seven Tenths percent (76.7%).
---------------------------- -----
Estimated Monthly Expenses: Two Thousand Three Hundred Dollars ($2,300.00).
---------------------------------- --------
Rental Adjustment Period or Date(s): See Addendum
--------------------------------------
- -------------------------------------------------------------------------------.
VI. ATTACHMENTS: The following Exhibits are attached to and a part of this
Lease, for the purposes stated in the Basic Lease:
Addendum, Exhibits A, B and C
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
VII. EXECUTION: The undersigned Landlord and Tenant agree to the provisions of
this Lease, including the attached Basic Lease and the Exhibits identified
above.
LANDLORD TENANT
-------- ------
KING & LYONS INTERLINK COMPUTER SCIENCES, INC.
- ----------------------------- ----------------------------------
By: /s/ King & Lyons By: /s/ Lambert Onuma
- ----------------------------- ----------------------------------
King & Lyons Lambert Onuma
Its: Partner Its: President
- ----------------------------- ----------------------------------
Address: 46721 Fremont Blvd. Address:
-------------------- __________________________
Fremont, CA 94538
- ----------------------------- __________________________________
_____________________________ __________________________________
_____________________________ __________________________________
Dated As Of: Dec 8, 1986.
----- --
<PAGE>
Basic Lease
-----------
1. Parties. This Lease is entered into by and between the parties identified
-------
in the Lease summary as Landlord and Tenant.
2. Premises. Landlord leases to Tenant, and Tenant hires from Landlord, all
--------
or a portion (the "Premises") of a building (the "Building"), as identified in
the Lease Summary. The Premises encompass all space bounded by the inside
surface of the exterior walls and roof, the outside surface of all windows and
exterior doors, the centerline of any partition walls, and the upper surface of
the floor slab. A floor or plot plan depicting the building containing the
Premises may be attached hereto as an Exhibit, with the Premises outlined in
some suitable manner, solely for the purpose of designating the location of the
Premises.
3. Term. This Lease shall begin on the commencement date and continue for the
----
term stated in the Lease Summary, in accordance with the following:
3.1. Commencement. The commencement date shall be the Commencement Date
------------
stated in the Lease Summary or, if no Commencement Date is stated, the earlier
of (i) the date of substantial completion of the improvements to be constructed
by Landlord on the Premises, according to any description of Landlord work set
forth on an Exhibit or Addendum to this Lease, or.(ii) the date on which Tenant
first uses a portion of the Premises in its business. "Substantial completion"
shall have occurred on the first date on which (i) the governmental authority
having jurisdiction has authorized occupancy of the Premises, (ii) electric
power is available at the Premises, and (iii) the architect, engineer, or other
person supervising construction of the improvements certifies that they are
substantially complete and ready for occupancy, subject only to "punch-list"
defects that do not materially diminish the usefulness of the Premises. Landlord
shall advise Tenant, from time to time and in good faith, of the estimated
completion date. Upon ascertaining the commencement date, the parties shall
insert that date in the Lease Summary, as the "Commencement Date," and initial
the insertion. If the commencement date is other than the first day of a
calendar month, then the lease term shall extend for the number of months stated
in the Lease Summary, beginning with the first day of the month following the
commencement date.
3.2. Postponement. If, for any reason, Landlord is unable to deliver
------------
possession of the Premises to Tenant on a Commencement Date stated in the Lease
Summary, the commencement of the lease term will be postponed, without liability
to either party or affecting the validity of this Lease, and the term shall
begin on such date as Landlord is able to deliver possession. However, if
Landlord is unable to deliver possession within 180 days after execution of this
Lease, then this Lease shall thereupon terminate without liability to either
party.
4. Rental. As rental for the Premises, Tenant shall pay to Landlord, when due
------
and in lawful money of the United States, all sums required to be paid by Tenant
under this Lease, without deduction or offset, and shall promptly discharge all
other monetary obligations of the Tenant hereunder. Any payment not received by.
Landlord when due shall thereafter bear interest, at the rate stated in.
paragraph 17.1., until received, provided that Landlord will waive interest on
any monthly rental payment received not later than the fifth day of that month
(or the first business day following the fifth if the fifth falls on a weekend
or holiday). All such sums shall be paid to Landlord at Menlo Park, California,
or such other place in California as Landlord may designate.
4.1. Base Monthly Rent. The base monthly rent shall be the amount stated
-----------------
in the Lease Summary, payable in monthly installments in advance, on the first
day of each calendar month during the lease term. If the commencement date is a
day other than the first day of a calendar month, then the rent for that partial
month shall be a fraction of the base monthly rent, based on the number of days
in that partial month, including the commencement date, in proportion to the
total number of days in the month; such rent shall be payable on the first day
of the following month. Rent for the first calendar month of the term is payable
upon execution of this Lease.
5 Security. As security for the performance of its obligations under this
--------
Lease, Tenant gives Landlord the security described in this paragraph.
5.1. Deposit. Tenant shall deposit with Landlord, upon execution of this
-------
Lease, the sum stated in the Lease Summary as the security deposit. which
Landlord shall retain as a debtor and not as a trustee. Tenant acknowledges that
the use value of the security deposit has been considered in determining the
appropriate monthly rent for the Premises, and Tenant shall be entitled to no
credit or compensation, by way of interest or otherwise, for Landlord's
possession of the security deposit, which may be commingled with Landlord's own
funds. If Tenant defaults in the performance of any of its obligations
hereunder, Landlord may apply any portion of the deposit as necessary to cure
the default or to compensate Landlord for its damages from the default, and
Tenant shall, within ten days after
<PAGE>
Landlord's demand therefor, deposit with Landlord the sum that is necessary to
restore the deposit to the full original amount. Upon termination of this lease,
and after Tenant has vacated the Premises, the amount of such deposit remaining,
after curing Tenant's defaults and compensating Landlord for damages caused by
Tenant shall be returned to Tenant at its last address known to Landlord.
6. Use. Tenant shall have use of 76.7% of parking spaces immediately
---
surrounding and servicing the subject building.
6.1 Premises. The Premises shall be used only for general industrial,
--------
warehousing, and office purposes. Notwithstanding these permitted uses, Tenant
will engage in no activity on the Premises that would, in the judgment of any
insurer of the Premises, increase the premium on any of Landlord's insurance
over the amount otherwise charged therefor or cause such insurance to be
cancelled. In its use of the Premises, Tenant will comply with all applicable
laws, governmental regulations, and tract restrictions. Tenant will commit no
nuisance or waste on the Premises and will not cause any unreasonable odors,
noise, vibration, electronic emissions, or any other item to emanate from the
Premises so as to damage Landlord's property or interfere with any other person.
6.2. Exterior. No portion of the area outside of the Building is leased to
--------
Tenant. However, Tenant may utilize truck access and turning areas in a
reasonable manner, and Tenant may utilize designated parking areas, in common
with Landlord's other tenants, for daily parking of passenger vehicles. Tenant
shall have use of 76.7% of parking spaces immediately surrounding and servicing
the subject building. No rubbish containers or other materials may be stored
outside of the Premises unless screened and approved by Landlord. Tenant may not
erect or maintain any sign or other marking on, or visible from, the exterior of
the Premises without Landlord's prior written consent; such consent will not be
unreasonably withheld for any sign that conforms to sign standards described on
an Exhibit to this Lease. Tenant shall have no right of access to the Building
roof, and Tenant shall make no penetrations in the roof without Landlord's prior
written consent.
6.3. Waste Materials. Tenant shall not discharge commercial or industrial
---------------
wastes into the sewer system serving the Premises All such wastes shall be
disposed of only in sanitary containers that are regularly collected by a
properly licensed waste disposal firm. If Tenant causes any waste materials to
contaminate the Premises or any other property, Tenant shall indemnify Landlord
and hold it harmless from all claims, demands, liabilities, and expenses,
including attorneys' fees, arising out of such contamination.
7. Maintenance and Repair.
----------------------
7.1. Original Condition. If the Premises are complete and vacant when this
------------------
Lease is signed, Tenant acknowledges that the Premises are now in good condition
and are not in need of repair. If this Lease is executed while the Premises are
occupied by another tenant or before the Landlord has completed improvements the
Premises that are required by this Lease, then the Premises shall be deemed to
be in good condition and not in need of repair as of the commencement date of
the lease term, excepting only defects that could not be ascertained by
reasonable inspection, unless, within thirty days thereafter, Tenant delivers to
Landlord a written notice specifying the manner in which the Premises are not
then in good condition and repair.
7.2. Landlord's Obligations. Landlord shall maintain, at its expense, the
----------------------
structural soundness of the Building foundation, walls, floors, and roof except
for structural maintenance required and due to Tenant's negligent use of the
Premises. Subject to Tenant's obligation to pay a percentage share of the cost
in accordance with paragraph 8, Landlord shall maintain the exterior of the
Building and the landscaping, sidewalks, and parking areas (the "Common Area")
serving the Building.
7.3. Tenant's Obligations. Throughout the lease term, Tenant shall
--------------------
maintain the Premises, all improvements on the Premises, and all equipment and
systems that service the Premises in good condition and repair. The items to be
repaired by Tenant include, for example and not as a limitation: plumbing,
heating, air conditioning, ventilating, and electrical equipment; walls, floor
slab surface and coverings, ceilings, doors, and glass. Tenant will cause all
heating, ventilating, air conditioning, and electrical equipment to be
maintained in accordance with the manufacturers' recommendations and
specifications, and Tenant will place such equipment under service contract as
required for proper preventative maintenance. At the end of the lease term,
Tenant shall surrender the Premises to Landlord broom clean, in the same
condition as they existed at the commencement of this Lease, together with such
changes as are permitted to remain pursuant to this Lease, excepting only such
ordinary wear as could not have been avoided by routine maintenance. This
obligation shall not include unrepaired damage that Landlord may be obligated to
repair under Paragraph 10 of this Lease. If Tenant fails to perform proper
maintenance or repair, including preventative maintenance where appropriate,
Landlord may, after reasonable notice to Tenant (or without notice for emergency
repairs), cause the same to be performed and the cost thereof will promptly be
paid by Tenant upon receipt of a statement from Landlord setting forth the
amount due.
8. Costs. Tenant shall pay all utility and maintenance costs, property taxes,
-----
and insurance premiums associated with the Premises, as described below.
<PAGE>
to the Premises, including fire sprinkler monitoring; if utilities are not
separately metered to the Premises, Tenant shall pay for its percentage share.
Tenant shall pay its percentage share of all costs incurred by Landlord for
maintenance and repair of the building exterior and Common Area during the lease
term, including but not limited to painting, parking lot surfacing and roof
maintenance (excluding in the case of roof maintenance, expenditures for capital
items).
8.2. Property Taxes. Tenant shall pay its percentage share of all taxes,
--------------
general and special assessments, and other charges imposed by any taxing
authority and levied against the property containing the Premises or against
Landlord by virtue of its ownership thereof or collection of rental income
therefrom (excepting only estate taxes, inheritance taxes, and income taxes that
are payable on nonrental as well as rental income). "Taxing authority" includes
all entities having taxing or assessment authority by law or by virtue of any
recorded instrument binding on the owner of the Premises.
8.3. Insurance. Tenant shall pay its percentage share of all premiums for
---------
such insurance, as shall be carried by Landlord to its full replacement cost
value excluding the cost of excavations, foundations and footings, against all
perils included in the classifications of fire, extended coverage, vandalism,
malicious mischief, special extended perils, and all-risk sprinkler leakage;
against loss of Building rents, property taxes, and insurance costs for a period
of not more than six months; against personal injury and property damage
liability to the extent such insurance is not provided by Tenant under this
Lease; against such other hazards as are then normally insured against by owners
of commercial buildings of the sort containing the Premises.
8.4. Percentage Share. Tenant's percentage share of the costs described
----------------
above shall be the percentage stated in the Lease Summary, or, if no percentage
is there stated, shall be determined by the square footage of the Premises
divided by the square footage of the Building. However, if Tenant utilizes more
than its proportionate share of the Common Area, for parking or other purposes,
or more than a normal amount of any utility service, then Landlord may equitably
increase Tenant's percentage share of costs associated with those items to
account for such additional usage. Tenant's percentage share of property taxes
may also be equitably adjusted by Landlord to take account of any
disproportionate burden imposed by special improvements or valuations relating
to other portions of the building or to other buildings on the tax parcel, which
adjustment may raise or lower Tenant's percentage share; valuation data
contained on the tax assessor's worksheets, if available, shall conclusively
determine the manner in which any equitable adjustment is to be made. Tenant
shall have the right to review the tax assessor's worksheets as a method of
auditing Landlord's allocations of property taxes to be paid by Tenant.
8.5. Payment. At Landlord's election, Tenant shall pay its percentage
-------
share of such costs to Landlord either (i) when incurred, on the basis on
Landlord's periodic billings, or (ii) monthly in advance, on the first day of
each calendar month, and the monthly amount shall be determined by Landlord's
then-current estimate of the average monthly costs. If periodic billings are
utilized, Tenant's payment shall be due ten days after the billing date.
Landlord's initial estimate of the average monthly cost may be stated in the
Lease Summary. Periodically, but not less frequently than annually, Landlord
will provide Tenant with an accounting of all such costs for the preceding
period, and an appropriate sum will be credited or debited against Tenant's next
monthly rental payment so as to equalize Tenant's actual payments and Tenant's
actual share of costs for the period. Landlord may revise its monthly cost
estimate, and provide Tenant with an accounting for the previous period, at any
time during the lease term. If the lease term includes only a portion of a
taxing or insured period, then Tenant shall pay a pro rata portion of the total
property taxes or insurance premiums, based upon the number of days in the lease
term that are included in the taxing or insured period; however, Tenant shall
pay the entire amount of any property tax, for the tax year in which this Lease
terminates (or for the succeeding tax year if this Lease terminates after the
lien date for that tax year), levied on or attributable to improvements or
property that is to be removed from the Premises by Tenant prior to or at the
end of the lease term. If the Lease terminates before the property taxes for the
then-current fiscal year are known, the amount of the tax shall be reasonably
estimated on the basis of the best available information on current assessments
a and tax rates or, if no such information is available, shall be projected at
the same rate as was imposed for the last previous taxing period, plus 2%.
9. Alterations.
-----------
9.1. Tenant Work. Tenant shall make no alteration, addition, or utility
-----------
installation ("Changes") on or to the Premises without Landlord's prior written
consent. In making approved Changes, Tenant shall comply with all applicable
building code requirements. Unless Landlord has specifically waived this
provision in writing prior to the installation of Changes, such Changes (i)
shall be removed from the Premises, and all damage resulting from such removal
repaired by Tenant, prior to the end of the lease term, or (ii) shall remain on
the Premises at the end of the lease term and become the property of Landlord,
at Landlord's election. If Landlord does not notify Tenant, at least three
months prior to the end of the lease term, of its election to have Changes
remain on the Premises, then Landlord shall thereby have elected to require
Tenant to remove such Changes. In making all Changes, Tenant shall hold Landlord
harmless from mechanics' liens and all other liability resulting therefrom.
9.2. Landlord Work and Entry. Upon execution of this Lease, or at such
-----------------------
later time as is feasible and consistent with the terms hereof, Landlord shall
commence construction of any improvements depicted or described as Landlord work
on an Exhibit or Addendum to this Lease. Construction of such improvements shall
be pursued to completion with reasonable diligence, subject to delays for
reasons beyond Landlord's reasonable control ("Unexpected Events"). Unexpected
Events include, for example, labor difficulties, inclement
<PAGE>
weather, rationing or other governmental controls, and shortages of materials or
services.
All such improvements shall become part of the Premises and remain thereon at
the termination of the Lease. Landlord may enter the Premises at any time for
inspection purposes, and may enter during normal business hours to show the
Premises to prospective Tenants in the last 180 days of the lease term
accompanied by employers of Tenant.
10. Damage. If any structural portion of the Premises that Landlord is
------
obligated to maintain is damaged or destroyed by any cause, if such damage is
insured against, and if the insurance proceeds are available for rebuilding,
then this Lease will not terminate and Landlord will cause such damage to be
repaired with reasonable diligence, subject to delays in the disbursement of
insurance proceeds and Unexpected Events. Landlord's obligation in this regard
shall be enforceable by Tenant only if such damage interferes with Tenant's
reasonable occupancy of the Premises. Tenant's rent will abate to the extent
that the damage and repair period interfere with Tenant's use of the Premises.
See Paragraph 29.0 of Addendum. If Landlord elects to repair, rent will abate in
the manner described above; other than the obligation to repair stated above,
Landlord shall have no liability to Tenant on account of the damage.
11. Condemnation. If there is a taking by eminent domain or a transfer under
------------
threat thereof of (i) the entire Premises, or (ii) so much of the Premises, for
the balance of the lease term, as prevents the continued reasonable conduct of
Tenant's business thereon, then this Lease shall terminate as of the date that
possession of the condemned premises is delivered to the condemnor. No other
such taking or transfer shall terminate this Lease. All condemnation proceeds
shall be the property of Landlord, excepting only such portion thereof as is
designated by the condemnor as compensation for Tenant's moving expenses, of
Tenant's goodwill, or for Tenant's trade fixtures and improvements to the
Premises actually owned by Tenant.
12. Liability.
---------
12.1. Insurance. Tenant shall, at its expense, maintain in force during
---------
the lease term a combined single limit policy of bodily injury and property
damage insurance, having a liability limit of not less than One Million Dollars
($1,000,000), with contractual liability endorsement, insuring Landlord and
Tenant against all liability arising out of the owner ship, use, occupancy, or
maintenance of the Premises and appurtenant areas. Such insurance shall be
endorsed as primary and non-contributing, as to any policy carried by Landlord.
Tenant will deliver to Landlord a certificate evidencing such insurance and
providing that the insurance will not be cancelled except on at least 30 days
notice to Landlord.
12.2. Indemnity. Tenant shall indemnify Landlord and hold it harmless from
---------
all claims, demands, liabilities, and expenses, including attorney's fees,
arising out of Tenant's use of the Premises or from any acts permitted by Tenant
on the Premises, excluding claims or actions based upon Landlord's active
negligence or willful misconduct.
12.3. Waiver of Liability (No Subrogation). To the extent allowable by the
------------------------------------
applicable insurance without reduction of coverage, Landlord and Tenant hereby
waive all rights of recovery against the other for loss or damage that is
compensable by insurance then in force or required by this Agreement.
13. Transfer.
--------
13.1 Transfer by Tenant. Tenant shall not assign, sublet, or otherwise
------------------
transfer, or permit a transfer of, all or any portion of its interest in this
Lease, the Premises, or of a controlling interest in any Tenant entity, without
Landlord's prior written consent, which shall not be unreasonably withheld. No
such consent shall relieve Tenant of any liability under this Lease, nor shall
it constitute consent to any further transfer. As a condition of such consent,
the transferee must assume all of Tenant's liabilities hereunder.
13.2. Transfer by Landlord. The liability of Landlord hereunder shall
--------------------
exist only in respect to the period that Landlord is the owner of the Premises,
but all of Landlord's obligations shall run with the land and be binding upon
all subsequent owners thereof. Upon any transfer of Landlord's interest in the
Premises, and notification thereof to Tenant, Landlord shall be relieved of all
liability hereunder except such as may have accrued prior to the transfer
provided transferee agrees to assume Landlord's obligations under this Lease.
14. Default.
-------
14.1 Events. The occurrence of any of the following events shall
------
constitute a material breach of this Lease and default by Tenant:
14.1.1. Failure to pay rental within three days after Landlord's delivery
to Tenant, in the manner described in Section 1162 of the California Code of
Civil Procedure, of written notice of default;
14.1.2. Failure by Tenant to perform any nonmonetary obligation under
this Lease where such failure continues for more than thirty days or after
receipt of written notice from Landlord, the failure cannot reasonably be cured
within thirty days, for a period exceeding the time within which such failure
could be cured with reasonable diligence
14.1.3. A general assignment by Tenant for the benefit of creditors; the
filing of a petition by or against Tenant, seeking adjudication or
reorganization under the Bankruptcy Code; the appointment of a receiver to take
possession of, or a levy by way of attachment or execution upon, substantially
all of Tenant's assets at the Premises;
14.1.4. Tenant falsely stating its financial condition to Landlord,
either before or after the execution of this Lease.
14.2 Remedies. After any breach or default by Tenant, Landlord shall have
--------
all, rights and remedies afforded by law, including but not limited to the
following:
<PAGE>
14.2.1. If Tenant's right to possession is expressly terminated in
writing by Landlord because of such breach, Landlord may recover from Tenant
such damages as may be allowed under the laws of California, with interest at
the rate specified in paragraph 17.1, including the worth at the time of the
award of the amount by which the unpaid rent, for the balance of the term after
the time of the award, exceeds the amount of such rental loss that the Tenant
proves could have been reasonably avoided, as discounted to the then present
value at a rate equal to one percent (1%) over the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award.
14.2.2. Without terminating Tenant's right to possession, Landlord may
enforce all of its rights and remedies under this Lease, including the right to
recover rent as it becomes due. For purposes of this provision, any reletting of
the Premises for a term of less than the unexpired term of this Lease or any
reletting of a portion of the Premises shall, at Landlord's option, be deemed to
terminate the Tenant's right to possession only with respect to such portion of
the unexpired term or such portion of the Premises as is the subject of such
reletting.
14.2.3. Landlord may cause a receiver to be appointed to take possession
of the Premises and all of Tenant's property thereon to protect Landlord's
interest therein.
15. Subordination. At the option of the holder of any security interest
-------------
encumbering the Premises, this Lease shall be either prior to, or subordinate
to, the lien of such security interest, provided that subordination to a
security interest created after execution of this Lease shall occur only if the
security holder agrees in writing that Tenant's occupancy of the Premises will
not be disturbed by such security holder, or its successor in interest, so long
as Tenant is not in default in the performance of its obligations hereunder.
16. Tenant Statements.
-----------------
16.1 Offset. At the request of any prospective purchaser or encumbrancer
------
of the Premises, and for the benefit of such person, Tenant will, from time to
time as required, within ten days after notice from Landlord, execute a written
statement certifying that, to the best of Tenant's knowledge, (i) this Lease is
then unmodified and is in effect, (ii) no rent other than that for the current
month has been paid in advance, (iii) Landlord is not then in default in the
performance of any of its obligations, or specifying the manner in which any of
said matters is untrue. Tenant's failure to execute such written statement
within the time required shall constitute an admission by Tenant, which may be
relied upon by such person, that this Lease is then in effect without
modification, that no advance rent has been paid, and that Landlord is not then
in default.
16.2. Occupancy Certificate. Upon accepting occupancy of the Premises,
---------------------
Tenant will, if required by any mortgagee or prospective mortgagee of the
Premises, complete, execute, and deliver to Landlord a certificate reflecting
Tenant's acceptance of the Premises, in such reasonable form as may be required
by the mortgagee.
17. General Provisions.
------------------
17.1. Monetary Payments. Any monetary payment that is required by this
-----------------
Lease and is not made by Tenant When due shall thereafter bear interest at the
maximum rate as permitted by law. No acceptance by Landlord of any monetary
payment shall constitute a waiver by Landlord of any default by Tenant
hereunder.
17.2. Quiet Enjoyment. So long as Tenant is not in default hereunder,
---------------
Landlord warrants to Tenant the quiet possession of the Premises throughout the
lease term, commencing upon Tenant's actual possession of the Premises, against
all persons lawfully claiming possession thereof.
17.3. Construction. The rent payable under this Lease has been determined
------------
in light of all Other provisions hereof. Both parties have had equal opportunity
to review this Lease and eliminate any ambiguities contained herein, and this
Lease shall be fairly interpreted in accordance with its reasonable meaning,
neither for nor against either party, neither of which is to be considered as
having drafted this Lease. Captions are for convenience only and do not define
or limit the provisions of this Lease.
17.4. Notices. Any written notice required to be given to a party
-------
hereunder will be effective Upon the earlier of (i) the date that it is
delivered in the manner required by applicable law, or (ii) three days after
mailing, if mailed by first class, certified United States mail, posted in
California, and addressed to the party at its address stated in the Lease
Summary, or, if no address is there stated, to Tenant at the Premises and to
Landlord at its then-current address for payment of rent.
17.5. Entire Agreement. This Lease constitutes the entire agreement
----------------
between the parties concerning the subject matter; neither party has made any
representations or warranties to the other except as set forth herein.
17.6. Attorney's Fees. In any suit commenced by Landlord on Tenant, the
---------------
prevailing party shall be entitled to recover its attorneys' fees from the
other.
17.7. Time. Time is of the essence in the performance of all obligations
----
required by this Lease.
17.8. Addendum. If an Addendum containing additional provisions is
--------
attached to this Lease, the provisions of that Addendum override the provisions
of the Basic Lease to the extent they are inconsistent herewith.
17.9. Counsel. If a party was represented by counsel in connection with
-------
the negotiation and execution of this Lease, that fact is indicated by the
party's initials below.
Landlord's initials:__________ Tenant's initials:_______
<PAGE>
ADDENDUM
--------
LANDLORD: King & Lyons, a California Partnership
TENANT: Interlink Computer Sciences, Inc., a California Corporation
PREMISES: A 23,000 square foot portion of Building 2B of Spinnaker One
specifically designated as 47366-82 Fremont Boulevard, Fremont,
California.
18.0 Rental Schedule: The base monthly rental payable during the lease
---------------
term is as follows:
Months Rent
------ ----
1-5 $ 0
6-18 11,890
19-60 15,570
The rent for month six (6) of the lease term shall be payable upon occupancy of
the Premises by Tenant.
19.0 Security: In addition to the security required under Paragraph 5 of
--------
the Lease Agreement, Tenant shall deposit with Landlord as "additional security"
the amount of Forty Thousand Dollars ($40,000) in the form of cash or an
equivalent acceptable to Landlord. Said additional security shall be deposited
with Landlord on or before December 31, 1986. Should Tenant receive at least Two
Million Dollars ($2,000,000) of equity funding prior to December 31, 1986, then
this requirement for an additional security deposit shall be waived by Landlord.
If Tenant receives at least Two Million Dollars ($2,000,000) of equity funding
at any time during the lease term, the additional security will be released upon
written notice of said funding.
20.0 Landlord's Work: Landlord's work shall consist of the construction
---------------
of tenant improvements generally as depicted on the attached Exhibit B
constructed in accordance with Landlord's Tenant improvement standards. An
allowance of $18.50 per square foot ($425,500) shall be provided by Landlord
towards the cost of these tenant improvements. This allowance shall include the
cost of architectural fees, and permits required by the City of Fremont. This
allowance shall also include a $23,000 portion of the allowance for Landlord's
Additional Work which covers the costs of constructing the computer room as
depicted on Exhibit B and as further provided in paragraph 21.0 of this
Addendum. Tenant shall have the right to audit all costs of Landlord's Work.
Should the costs described above be greater than $18.50 per square foot
(the allowance), Landlord hereby agrees to increase the allowance to a maximum
of $20.00 per square foot provided that the base monthly rent payable during the
term shall increase at the rate of 1.0c per square foot per month during months
1 through 18 of the lease term for each $1.00 per square foot of cost in excess
of the allowance and 1.25c per square foot per month during months 19 through 60
of the lease term for each $1.00 per square foot of cost in excess of the
allowance. Tenant shall not be responsible for the payment of additional rent
for costs of Landlord's Work as described in this paragraph in excess of $20.00
per square foot. This maximum of $20.00 per square foot shall not apply to
Landlord's additional work as provided in Paragraph 21.0 of this Lease, except
for the $23,000 portion of this work allocated as Landlord's Work and subject to
the provisions of this Paragraph 20.0.
<PAGE>
Addendum
Page 2
Should the above-described costs be less than the allowance, the base
monthly rent shall decrease at the rate of .85c per square foot per month during
months 1 through 18 of the lease term for each $1.00 per square, foot of costs
less than the allowance and 1.12c per square foot per month during months 19
through 60 of the lease term for each $1,00 per square foot of cost less than
the allowance.
21.0 Landlord's Additional Work: The computer room as depicted on the
--------------------------
attached Exhibit B shall be constructed by Landlord as additional work. An
allowance of $4.50 per square foot ($103,500) shall be provided by Landlord
towards the cost of the computer room. A portion of this allowance equal to
$23,000 has been included in Landlord's Work under paragraph 20 of this Lease
Agreement. The remaining portion of the allowance equal to $3.50 per square foot
($80,500) in cost shall be reimbursed to Landlord subject to the provisions of
this paragraph 21. A $40,000 portion shall be reimbursed to Landlord in cash
payable on or before December 31, 1986. The remaining portion of the allowance
($40,500) shall be reimbursed to Landlord during months 6 through 60 of the
lease term at the rate of 2.43c per square foot per month for each $1.00 per
square foot of remaining cost. Should the actual cost of Landlord's additional
work as described in this paragraph be more or less than the allowance, the
monthly payment described above shall be adjusted up or down at the rate of
2.43c per square foot per month for each $1.00 per square foot that the actual
costs is more or less than the allowance.
22.0 Commencement: Tenant shall be allowed access to the Premises as soon
------------
as feasible prior to the commencement date of this Lease for the purposes of
installing personal property such as computers, temporary partitions, telephones
and other items. Said access shall be provided only if it does not interfere
with the construction of tenant improvements and in any way delays the
completion of the tenant improvements.
23.0 Postponement: If the Premises are not substantially complete and
------------
ready for Tenant's occupancy after ninety (90) days from the date Tenant
executes this Lease Agreement or approves the plans and specifications for
tenant improvements, whichever occurs later, Tenant shall receive one day of
occupancy rent free for each day beyond ninety days that occupancy is delayed.
The 90-day period for substantial completion shall not include days lost due to
delays in completion of construction that are caused by Tenant, either through
changes or additions that are requested by Tenant in the construction of tenant
improvements or delays in construction that are caused by Tenant's access to the
Premises prior to the commencement date.
24.0 Option to Renew: Tenant shall have the option to renew the initial
---------------
five (5) year term of the Lease for one (1) additional period of five (5) years
("Option Period") on the same terms and covenants and conditions provided
herein, except that upon such renewal the Monthly Rent due hereunder shall be
determined as provided below. Tenant shall exercise such option by giving
Landlord written notice ("Option Notice") at least one hundred eighty (180) days
prior to the expiration of the initial term of this Lease.
The initial monthly rent for the Option Period shall be determined as
follows:
(i) The parties shall have thirty (30) days after Landlord receives the
Option Notice within which to agree on the initial Monthly Rent for the Option
Period based upon the then fair market rental value of the Premises. If the
parties agree on the initial Monthly Rent for the Option Period within thirty
(30)
<PAGE>
Addendum
Page 3
days, they shall immediately execute an amendment to this Lease stating the
initial Monthly Rent for the Option Period.
(ii) The "then fair market rental value of the Premises" shall mean the
fair market monthly rental value of the Premises as of the commencement of the
Option Period; taking into consideration the uses permitted under this Lease,
the quality, size, design and location of the Premises, and comparable buildings
located in Fremont, California.
If Landlord and Tenant area are unable to agree on the "then fair market
rental value of the Premises" then this Lease shall expire at the end of the
Initial Term.
25.0 Waste Materials: Subject to the provisions of Paragraph 6.3 of the
---------------
Lease, to the best of Landlord's knowledge the land upon which the Premises are
constructed are free of hazardous waste and contaminants as of the commencement
date of this Lease.
26.0 Property Taxes: Tenant shall not be responsible for its percentage
--------------
share of tax increases as provided in Paragraph 8.2 of the Lease, if such
increases are caused by Landlord's voluntary transfer of the Premises or any
interest therein. This Paragraph shall apply only if the transfer occurs during
the last thirty months of the original lease term and shall apply only to tax
increase payments due from Tenant from the actual date of transfer during the
last thirty months of the term through expiration of the original lease term.
27.0 Insurance: Subject the provisions of Paragraph 8.3 of the Lease,
---------
Landlord shall have the option to insure the Premises at any time during the
lease term or extension thereof against the perils of earthquake.
28.0 Alterations:
-----------
28.1 Tenant Work: Landlord hereby gives Tenant permission to install
-----------
cables for computer terminals and phone lines along with other non-structural
interior improvements. Tenant shall, at Landlord's request, remove any such
improvements at Tenant's sole expense upon expiration of this Lease or any
extension thereof.
28.2 Landlord's Work: Landlord shall construct for Tenant's benefit a
---------------
computer room as depicted on the attached Exhibit B. The computer room shall
include a raised computer floor and a Halon system located beneath the raised
floor. It is anticipated that the $40,000 cash payment by Tenant for the
reimbursement of a portion of the cost of constructing the computer room in
accordance with Paragraph 21.0 of this Addendum, shall cover the cost of the
computer floor and Halon system. Therefore, Tenant shall retain ownership of the
computer floor and Halon system. Landlord shall require Tenant to remove these
items and repair any damage to the Premises caused by such removal at Tenant's
sole expense upon expiration of this Lease or extension thereof.
29.0 Damage: If the damage referred to in Paragraph 10 of the Lease is not
------
insured against, or the available insurance proceeds are insufficient for the
repair, or if the damage occurs within the last six months of the lease term and
the cost of repair is greater than 5% of the replacement cost of the building,
Landlord may, at its option, exercised by notice to Tenant within thirty days of
the date that Landlord acquires knowledge of the damage, elect either to
complete the repair at its expense or to terminate this Lease as of the date of
damage. Tenant shall also have the option to pay for the restoration or
<PAGE>
Addendum
Page 4
repairs and by so doing, the Landlord will not have the option to terminate this
Lease.
30.0 Indemnity: Commencing with Tenant's entry onto the Premises, and
---------
continuing throughout the term of this Lease, including all extension periods,
Tenant shall not be liable for, and Landlord shall indemnify and defend Tenant,
its officers, directors, employees, shareholders, agents and representatives, or
any of them, and the successors and assigns of such parties (collectively
"Tenant Indemnitiees"), from and against any and all claims damages,
liabilities, Judgments and expenses (including attorneys' fees and other costs),
for injury to persons, loss of life or damage to property occurring within,
around or adjacent to the Premises, and arising directly or indirectly out of
Landlord's construction of the Premises, Landlord's failure to perform any of
its obligations under this Lease, or any act of or failure to act by Landlord or
any agent or representative of Landlord while on the Premises; provided however,
Landlord shall have no liability for any injury, loss of life or damage to
property occurring in or about the Premises due to the sole negligence or
willful act or failure to act of Tenant, its partners, agents, contractors,
officers, directors, employees, shareholders or invitees. Landlord's liability
under this Paragraph shall be reduced by the net proceeds of any insurance
carried by Landlord to the extend such proceeds are applied toward payment of
such claims, damages, expenses, liabilities and judgments. Notwithstanding the
foregoing, any liability of Landlord to Tenant under this Paragraph shall be
satisfied only out of Landlord's estate hereunder or any insurance held by
Landlord, and Tenant may not obtain any personal or deficiency judgment against
Landlord or any of Landlord's partners, officers, employees or agents.
31.0 Waiver of Subrogation: Landlord and Tenant each shall, prior to or
---------------------
immediately after signing this Lease, procure from each of their respective
insurers under all policies of property, fire, theft, public liability, Worker's
Compensation and other insurance now or hereafter existing during the term
hereof and purchased by it insuring or covering the Premises or any person or
any contents thereof, or any operations therein, a waiver of all rights of
subrogation with each such insurer might otherwise, if at all, have to any
claims against the other to the extent required by this Lease Agreement and
Addendum.
32.0 Real Estate Commission: Landlord and Tenant mutually agree that the
----------------------
only broker of record in this transaction is Galaxy Realty Investment
Consultants represented by Mr. Sy Najjar. It shall be Landlord's sole
obligation, to pay the agreed upon commission to Galaxy Realty in connection
with negotiating this Lease.
33.0 Transfer by Tenant: Subject to the provisions of Paragraph 13 of the
------------------
Lease, Landlord shall consent to a transfer of this Lease to an entity Tenant
controls, is controlled by or is in common control with parent or any transfer
of stock of the Tenant including the transfer in connection with consolidation
or non-bankruptcy of Tenant or assignment in connection with transfer of
substantially all of the assets of the Tenant so long as such transfer or
assignment is to an entity whose financial condition is equal to or greater than
that of the Tenant and whose use of the Premises shall be consistent with that
of the Tenant.
<PAGE>
Addendum
Page 5
34.0 Landlord hereby agrees to notify Tenant of Landlord's intent to sell
the subject building in which Premises are located so that Tenant may have an
opportunity to offer to purchase the building.
END OF ADDENDUM
<PAGE>
EXHIBIT C
TENANT IMPROVEMENT STANDARDS
OFFICE AREA
- -----------
1) Carpet throughout the office area except for sheet vinyl in the restrooms
and lunch room area. Carpet shall consist of 20 ounce level loop direct
glue-down carpet by Design Weave without pad.
2) Suspended acoustical ceiling consisting of a 2' X 4' exposed grid.
3) Recessed fluorescent lighting fixtures.
4) Heating, ventilating and air conditioning.
5) Doors and partitions as shown with partitions to be textured and painted.
Doors are B-3 pre-finished birch, solid core with 20 minute label.
6) Bathroom and lunch room fixtures as shown.
7) Electrical service adequate to serve improvements as shown with standard
switching, electrical and telephone outlet distribution. Telephone outlets
include pull wire, cable provided by others.
WAREHOUSE
- ---------
1) Chain hung strip fluorescent lighting.
2) Sealed concrete floor.
FEES AND PERMITS
- ----------------
The tenant improvement allowance shall also include Landlord's
architectural fees and the cost of permits to be issued by the City of Fremont.
EXCLUSIONS
- ----------
The tenant improvement allowance does not include the following:
1) Window coverings.
2) Electrical data gathering lines or security equipment.
3) Telephonic or other communications systems.
4) Electrical and telephone outlets in the warehouse.
ALLOWANCE SHALL INCLUDE SIX (6) ELECTRICAL OUTLETS IN THE STOREROOM AND
ASSEMBLY-TEST AREA.
<PAGE>
SECOND ADDENDUM TO LEASE
------------------------
This SECOND ADDENDUM TO LEASE (Addendum) is dated for reference purposes as
12/5, 1988 and is made between King & Lyons, a California Partnership
("Landlord") and Interlink Computer Sciences Corporation, a California
Corporation (Tenant) to be a part of that certain Lease dated December 8, 1986
between Landlord and Tenant (herein the "Lease") concerning 23,000 square feet
of space located in a portion of Building 2B of Spinnaker I at 47366-82 Fremont
Boulevard, Fremont, California. Landlord and Tenant hereby agree that the Lease
is hereby modified and supplemented as follows:
1. Expansion Space: Tenant shall lease the expansion space consisting of,
---------------
7,000 square feet located adjacent to Tenant's existing premises at 47358
Fremont Boulevard, Fremont, California. The Lease for the expansion space shall
be upon terms and conditions described in the Lease as modified herein.
2. Expansion Space Improvements: Landlord shall construct tenant
----------------------------
improvements to the expansion space in accordance with plans and specifications
mutually agreeable to Landlord and Tenant.
3. Monthly Rent: Upon completion of the improvements to the expansion
------------
space, the base monthly rent for the expansion space shall be $5,075 per month
utilizing a $10 per square foot improvement allowance for the construction of
the subject improvements including the costs of plans and permits associated
with said construction. Should the improvement costs for the expansion space
exceed the allowance of $10 per square foot ($70,000), one half of the
additional cost shall be paid directly to Landlord by Tenant with the remaining
one half causing the rent to increase at the rate of 2.25c per month per $1.00
of additional costs. The improvement costs for the expansion space shall not
exceed $95,200.
4. Extended Term: The lease term for the entire premises (the original
-------------
and expansion space) shall be extended for a period of sixty months from the
date of completion of construction of the improvements to the expansion space
("Extended Term"). The total base monthly rent for the entire premises during
the Extended Term shall be $21,677 per month plus any adjustment for additional
improvement costs over and above the allowance of $70,000.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Extension Agreement
as of the day and year first above written.
SCI Limited Partnership-I, a Delaware Limited
---------------------------------------------
Partnership
-----------
By: /s/ Irving F. Lyons
--------------------------------------
Name: Irving F. Lyons, III
--------------------------------------
Title: Managing Director
--------------------------------------
LANDLORD
Interlink Computer Sciences Corporation, a
---------------------------------------------
California Corporation
---------------------------------------------
By: /s/ J Heffernan
---------------------------------------
Name: J Heffernan
---------------------------------------
Title: CFO
--------------------------------------
TENANT
<PAGE>
EXTENSION AGREEMENT
-------------------
THIS EXTENSION AGREEMENT is entered into as of the 19th day of January,
1996, by and between SCI Limited Partnership, a Delaware Limited Partnership
(formerly known as Bayside Spinnaker Partners I, a California Limited
Partnership) (the "Landlord") and Interlink Computer Sciences Corporation, a
California Corporation (the "Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant have entered into a Lease, dated as of the 8th
day of December, 1988, pursuant to which Landlord leased to Tenant certain
premises located at 47370 Fremont Boulevard, Fremont, CA 94538 (such lease, as
heretofore and hereafter modified, being herein referred to as the "Lease").
WHEREAS, Landlord and Tenant desire to extend the term of the Lease on the
terms and conditions set forth below.
NOW THEREFORE, in consideration of Ten Dollars ($ 10.00) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Landlord and Tenant agree as follows:
1. The term of the Lease is extended for sixty (60) months, such that the
Lease shall terminate on the 31st day of December, 2000. All of the terms and
conditions of the Lease shall remain in full force and effect during such
extension period except that the Monthly Base Rent during such extension shall
be as follows:
January 1, 1996 - June 30, 1998 $18,240
July 1, 1998 - December 31, 2000 $18,960
2. As part of this Extension Agreement, Landlord shall construct the
tenant improvements as Described below:
- repaint interior ( Paint to be White Opal for main areas and
Colonial Sand for accent walls)
- new carpet throughout the office area (not including computer
room) - carpet shall be DesignWeave New Barrymore, Montego.
Carpet for the three conference rooms shall be DesignWeave
Pinnacle, Forest.
- reseal warehouse floor
- remove fencing in warehouse area
- replace sinks and faucets in restrooms
- install wall and door to screen shower area in ladies restroom
- add additional lighting in shower areas
- new carpet and VCT in kitchen (Armstrong tile, Sand Rift White)
- mini blinds in kitchen area
- install three 36" wide overhead cabinets in kitchen area
- install three 110V duplex outlets in kitchen area
- provide $350 allowance for Aqua Group 25 gallon per day water
filtration system
- repair bubble in men's restroom counter top
- install icemaker line
- replace counter top in kitchen (Wilsonart, Opal Mix)
- provide overtime budget to accomplish re-painting and re-
carpeting of the support area only (approximately 6,000 square
feet
Landlord shall provide supplemental Tenant Improvement allowance, 50%
of the cost to retrofit the data center, not to exceed $12,500. This allowance
shall be expended by September 1996 to provide retrofit of the data center. This
shall by no means relieve Tenant of its responsibility of removing the data
center upon Lease Termination as detailed in Paragraph 28.2 of the original
Lease dated December 8, 1988. The removal amount expended by Landlord shall be
paid back to Landlord together with interest at 11% per annum in equal monthly
installments over the remaining lease term.
3. Upon execution of this Extension, Tenant shall pay Landlord $720 which
is the remaining rent due for January 1996.
4. Except as modified herein, the Lease, and all of the terms and
conditions thereof, shall remain in full force and effect.
5. Any obligation or liability whatsoever of Security Capital Industrial
Trust, a Maryland real estate investment trust, which may arise at any time
under the Lease or this Agreement or any obligation or liability which may be
incurred by it pursuant to any other instrument, transaction or undertaking
contemplated hereby, shall not be personally binding upon, nor shall resort for
the enforcement thereof be had to the property of, its trustees, directors,
shareholders, officers, employees, or agents regardless of whether such
obligation or liability is in the nature of contract, tort or otherwise.
<PAGE>
THIRD ADDENDUM
This Third Addendum to the Lease ("Addendum") is dated for reference purposes as
of 10/5, 1993 and is made between Bayside Spinnaker Partners I, a California
Limited Partnership ("Landlord") (formerly King & Lyons, a California
Partnership) and Interlink Computer Sciences Corporation, a California
Corporation ("Tenant") to be part of that certain Lease dated December 8, 1986
between Landlord and Tenant (herein the "Lease") concerning the premises located
in Spinnaker I, Building 2B at 47358-47382 Fremont Boulevard, Fremont,
California.
Landlord and Tenant hereby agree that the Lease and any previous Addendum's and
Exhibits, is hereby modified and supplemented as follows:
1. Premises: The premises shall be reduced in size from 30,000 square feet to
--------
24,000 square feet located in Spinnaker One, Building 2B. The attached Exhibit A
depicts the revised premises.
2. Lease Term: The lease term for the revised premises shall commence on
----------
October 1, 1993 and extend for a period of eighteen months. The termination date
will be March 31, 1995.
3. Sublease: Upon execution of this Lease by Landlord and Tenant, Landlord
--------
shall assume tenants obligations with respect to the sublessee currently
occupying the remaining 6,000 square foot portion of the building except for
paragraphs 17, 18, 19 and 20 of the Addendum to Sublease Agreement which shall
remain agreements and obligations of the tenant and subtenant for the remainder
of the sublease term. Tenant shall transfer the security deposit for the
sublease to the Landlord.
4. Base Rent: Commencing October 1, 1993 and throughout the lease term the base
---------
monthly rent shall equal $16,970.00 per month.
5. Tenant's Percentage Share of Expenses: Tenant's percentage share of Building
-------------------------------------
Operating Expenses shall be Eighty Percent (80%). Tenant's percentage share of
Outside Area and Real Property Tax Expenses shall be Twenty Five Percent (25%).
6. Estimate Monthly Expenses: Three Thousand Three Hundred Sixty Dollars
-------------------------
($3,360.00) per month.
7. First Right to Lease Adjacent Space: Tenant shall have the first right of
-----------------------------------
refusal to lease the adjacent 6,000 square feet of space located at 47358
Fremont Boulevard, Fremont, California. If at any time during the lease term
Landlord receives an acceptable offer from a third party on the subject adjacent
space, Tenant shall have the right within three days of the date of receipt of
the offer to agree to match the terms and conditions of the offer and lease the
subject space. If Tenant does not exercise this right as provided herein, then
Tenant's rights under this paragraph shall terminate and become null and void.
8. This Addendum will also Amend the Lease to correct the Landlord legal name.
The Landlord is Bayside Spinnaker Partners I, a California Limited Partnership
rather than King & Lyons, a California Partnership.
All other terms and conditions shall remain the same.
<TABLE>
LANDLORD: TENANT:
Bayside Spinnaker Partners I, Interlink Computer Sciences Corporation,
a California Limited Partnership a California Corporation
<S> <C>
By /s/ Bayside Spinnaker Partners I By /s/ Interlink Computer Sciences Corporation
------------------------------ ------------------------------
Its Partner Its Chief Financial Officer
---------------------------- ----------------------------
Dated 10/5 , 1993 Dated 10/5 , 1993
-------------------- --------------------
</TABLE>
<PAGE>
CONSENT BY LANDLORD TO SUBLEASE
-------------------------------
The undersigned, as Landlord under that certain Lease dated December 8, 1996
---------- ----
with Interlink Computer Sciences, Inc., a California Corporation, then acquired
by Sterling Software (Western), Inc., a Delaware Corporation ("Sublandlord") for
certain premises at 47366-72 Fremont Boulevard in Fremont, CA (the "Prime
Lease"), hereby consents to the entering into of the foregoing Sublease dated
August 24, 1999 ("Sublease") between Sublandlord, as sublessor, and @Road, Inc.,
a California Corporation, as subtenant ("Subtenant"), upon the express
understandings and conditions that:
a. Landlord neither approves nor disapproves the terms, conditions and
agreements contained in the Sublease (all of which shall be
subordinate and subject at all times to the terms, covenants and
conditions of the Prime Lease) and assumes no liability or obligation
of any kind whatsoever on account of anything contained in the
Sublease;
b. By executing this consent, Landlord shall not be deemed to have waived
any rights under the Prime Lease nor shall Landlord be deemed to have
waived Sublandlord's obligations to obtain any required consents under
the Prime Lease (other than consent to the Sublease itself);
c. Notwithstanding anything in the Sublease to the contrary, Sublandlord
shall be and continue to remain liable for the payment of rent and the
full and prompt performance of all of the obligations of Tenant under
and as set forth in the Prime Lease;
d. Nothing contained in the Sublease shall be taken or construed to in
any way modify, alter, waive or affect any of the terms, covenants or
conditions contained in the Prime Lease, or be deemed to grant
Subtenant any privity of contract with Landlord, or require Landlord
to accept any payments from Subtenant on behalf of Sublandlord;
e. The Sublease shall be deemed and agreed to be a sublease only and not
an assignment and there shall be no further subletting or assignment
of all or any portion of the premises demised under the Prime Lease
(including the premises demised by the foregoing Sublease) except in
accordance with the terms and conditions of the Prime Lease; and
f. If Landlord terminates the Prime Lease as a result of a default by
Sublandlord thereunder, the Sublease shall automatically terminate
concurrently therewith unless Landlord elects in writing to keep the
Sublease in full force and effect in which case the Sublease shall
become and be deemed to be a direct indenture of lease between
Landlord and Subtenant.
LANDLORD
--------
ProLogis Limited Partnership-I, a Delaware
Limited Partnership, formerly-known-as SCI
Limited Partnership-I
By: ProLogis Trust, a
Maryland Real Estate
Investment Trust, General Partner
By: /s/ Ned K. Anderson
---------------------------------
Ned K. Anderson
Title: Managing Director
Dated: 8/31/99
-------
<PAGE>
SPINNAKER ONE
[SITE PLAN]
EXHIBIT A
<PAGE>
EXTENSION AGREEMENT
THIS EXTENSION AGREEMENT is entered into as of the 21st day of February, 1995,
by and between SCI Limited Partnership-I (formerly known as Bayside Spinnaker
Partners I, a California Limited Partnership) (the "Landlord") and Interlink
Computer Sciences Corporation a California corporation (the "Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant have entered into a Lease, dated as of the 8th
day of December, 1986, pursuant to which Landlord leased to Tenant certain
premises located at 47370 Fremont Boulevard, Fremont, California (such lease, as
heretofore and hereafter modified, being herein referred to as the "Lease").
WHEREAS, Landlord and Tenant desire to extend the term of the Lease on the
terms and conditions set forth below.
NOW THEREFORE, in consideration of Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Landlord and Tenant agree as follows:
1. The term of this Lease is extended for nine (9) months, such that the
Lease shall terminate on the 31st day of December, 1995. All of the terms and
conditions of the Lease shall remain in full force and effect during such
extension period except that the Monthly Base Rent shall be $17,520.00 during
such extension.
2. Except as modified herein, the Lease, and all of the terms and
conditions thereof, shall remain in full force and effect.
3. Any obligation or liability whatsoever of SCI Limited Partnership-I, a
Delaware limited partnership, which may arise at any time under the Lease or
this Agreement or any obligation or liability which may be incurred by it
pursuant to any other instrument, transaction or undertaking contemplated
hereby, shall not be personally binding upon, nor shall resort for the
enforcement thereof be had to the property of, its trustees, directors,
shareholders, officers, employees, or agents regardless of whether such
obligation or liability is in the nature of contract, tort or otherwise.
IN WITNESS WHEREOF, the parties hereto have signed this Extension Agreement
as of the day and year first above written.
SCI LIMITED PARTNERSHIP-I
By: /s/ Irving F. Lyons, III
------------------------
Name: Irving F. Lyons, III
Title: Managing Director
Interlink Computer Sciences Corporation,
a California corporation
By: /s/ J. Heffernan
------------------------
Name: J Heffernan
-----------------------
Title: CFO
----------------------
<PAGE>
5. Security Deposit: The security deposit as described in the Lease shall
----------------
be increased to $21,677.
6. Expenses: Subject to the provisions of the lease, Tenant's percentage
--------
share of expenses shall increase to 100% and Tenant's estimated monthly expenses
shall increase to $3,000.
7. Option to Expand: At any time after the expiration of the 36th month of
----------------
the Extended Term, Tenant shall have the option to terminate the Lease in order
to expand to a new building located in the Bayside Business Park to be
constructed by Landlord. The new building shall be at least 45,000 square feet
in size and shall be constructed in a general purpose manner with interior
improvements to accommodate Tenant's use. A new lease shall be executed by
Landlord and Tenant for the new building for a minimum period of sixty (60)
months upon terms, covenants and conditions generally consistent with the Lease
except that the monthly rent payable for the new building shall be determined as
provided below:
(i) The parties shall have sixty (60) days after Landlord receives Tenant's
notice to expand within which to agree on the initial monthly rent for the new
building which shall be based upon the fair market rental value of the Premises
plus any rent due because of additional tenant improvement costs as described in
the Lease and this Second Addendum.
(ii) The then fair market rental value of the Premises shall mean the fair
market monthly rental value of the Premises as of the commencement of the new
lease; taking into consideration the uses permitted under the Lease, the
quality, size, design and location of the Premises and comparable buildings
located in the Bayside Business Park in Fremont, California.
LANDLORD: TENANT:
King & Lyons Interlink Computer
Sciences, Inc.
By: /s/ King & Lyons By: /s/ Interlink Computer Sciences, Inc.
---------------------- -------------------------------------
Date: 12/15/88 Date: December 06, 1988
--------------------- --------------------
<PAGE>
SPINNAKER ONE
[SITE PLAN]
EXHIBIT A
<PAGE>
[SITE PLAN]
EXHIBIT B
<PAGE>
EXHIBIT 10.9
File No. ______
INDUSTRIAL SPACE LEASE
(SINGLE TENANT NET)
THIS LEASE, dated January 13, 1995 for reference purposes only, is made by
and between Renco Equities IV, a California partnership ("Landlord"), and SEEQ
Technology Inc., a Delaware Corporation ("Tenant"), to be effective and binding
upon the parties as of the date the last of the designated signatories to this
Lease shall have executed this Lease (the "Effective Date of this Lease").
ARTICLE 1:
REFERENCES
1.1 REFERENCES: All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:
A. Tenant's Address for Notices: 47200 Bayside Parkway
--------------------------------
Fremont, California 94538
--------------------------------
Attn: Mr. Phillip J. Salsbury
--------------------------------
________________________________
B. Tenant's Representative: Mr. Ralph Harms
--------------------------------------
Phone Number: (510) 226-7400
-------------------------------------------
C. Landlord's Address for Notices: 1285 Oakmead Parkway
--------------------------------
Sunnyvale, California 94086
--------------------------------
________________________________
________________________________
D. Landlord's Representative: Mr. William N. Neidig
--------------------------------
Phone Number: (408) 730-5500 (730-2350 fax)
--------------------------------
E. Intended Commencement Date: February 1, 1995
--------------------------------
F. Intended Term: Ten (10) Years
--------------------------------
G. Lease Expiration Date: Ten (10) years from the Commencement
----------------------------------------
Date
----------------------------------------
H. Tenant's Punchlist Period: Five (5) Days
------------------------------------
I. First Month's Prepaid Rent: __________________________________
J. Last Month's Prepaid Rent: 0000000000
------------------------------------
K. Tenant's Security Deposit:____________________________________
L. Late Charge Amount: Five percent (5%) of the delinquent amount
------------------------------------------
M. Tenant's Required Liability Coverage: $3,000,000.00
-------------------------
N. Brokers: Dennis Stokes, The Galbreath Company
------------------------------------------------------
______________________________________________________
<PAGE>
O. Property or Project: That certain real property, situated in
the City of Fremont, County of Alameda, State of California, as presently
improved with one building, which real property is shown on the Site Plan
attached hereto as Exhibit "A" and is commonly known as or otherwise described
as follows:
47200 Bayside Parkway
Fremont, California 94538
P. Building: That certain Building within the Property in which
the Leased Premises are located, which Building is shown outlined in red on
Exhibit "A" hereto.
Q. Outside Areas: The "Outside Areas" shall mean all areas within
the Property which are located outside the buildings, such as pedestrian
walkways, parking areas, landscaped areas, open areas and enclosed trash
disposal areas.
R. Leased Premises: All the space which is the Building,
consisting of approximately 53,713 square feet of rentable area and, for
purposes of this Lease, agreed to contain said number of square feet. The Leased
Premises are commonly known as or otherwise described as follows:
47200 Bayside Parkway
Fremont, California 94538
S. Base Monthly Rent: The term "Base Monthly Rent" shall mean the
following:
Months 1 - 8
Months 9 - 12
Years two and three
Years four and five
Years six and seven
Years eight through ten
The above Base Monthly Rent is due for each month of the above
referenced period.
T. Permitted Use: The term "Permitted Use" shall the mean the
following:
Office, research & development, manufacturing & storage of
Tenant's products, and lawful uses permitted by the Bayside
Technology Park C C & R's in effect as of the date of this
Lease.
U. Exhibits: The term "Exhibits" shall mean the Exhibits to this
Lease which are described as follows:
Exhibit "A" - Site Plan showing the Property and delineating
the Building in which the Leased Premises are
located
Exhibit "B" - Floor Plan outlining the Leased Premise
Exhibit "D" - Acceptance Agreement
V. Addenda: The term "addenda" shall mean the Addendum (or
Addenda) to this Lease which is (or are) described as follows:
First Addendum To Lease
ARTICLE 2:
LEASED PREMISES, TERM AND POSSESSION
2.1 DEMISE OF LEASED PREMISES: Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord for the Lease Term and upon the terms and
subject to the conditions of this Lease, that certain interior space described
in the Property, the Building & the Outside Areas. Tenant's lease of the Leased
Premises, the Property, the Building & the Outside Areas, together with the
appurtenant right to use the Outside Areas as described in Article 2.2 below,
shall be conditioned upon and be subject to the continuing compliance by Tenant
with (i) all the terms and conditions of this Lease, the Leased Premises and the
Property, and (iv) all reasonable rules and regulations from time to time
established by Landlord.
2.2 RIGHT TO USE OUTSIDE AREAS: As an exclusive right to Tenant's right
to the use and occupancy of the Leased Premises, Tenant shall have the right to
use the Outside Areas in conjunction with its use of the Leased Premises solely
for the purposes for which they were designed and intended and for no other
purposes whatsoever. Tenant's right to so use the Outside Areas shall be subject
to the limitations on such use as set forth in Article 4 and shall terminate
concurrently with any termination of this Lease.
2.3 LEASE COMMENCEMENT DATE AND LEASE TERM: The term of this Lease
shall begin, and the Lease Commencement Date shall be deemed to have occurred,
on the Intended Commencement Date (as set forth in Article 1) unless either (i)
Landlord is unable to deliver possession of the Leased Premises to Tenant on the
Intended Commencement Date, in which case the Lease Commencement Date shall be
as determined pursuant to
(1) the Property, the Building & the Outside Areas
-2-
<PAGE>
Article 2.4 below or (ii) Tenant enters into possession of the Leased Premises
prior to the Intended Commencement Date, in which case the Lease Commencement
Date shall be as determined pursuant to Article 2.7 below (the "Lease
Commencement Date"). The term of the Lease shall end on the Lease Expiration
Date (as set forth in Article I), irrespective of whatever date the Lease
Commencement Date is determined to be pursuant to the foregoing sentence. The
Lease Term shall be that period of time commencing on the Lease Commencement
Date and ending on the Lease Expiration Date (the "Lease Term").
2.4 DELIVERY OF POSSESSION: Landlord shall deliver to Tenant possession
of the Leased Premises on or before the Intended Commencement Date (as set forth
in Article I) in their presently existing condition, broom clean. If Landlord is
unable to so deliver possession of the Leased Premises to Tenant in the agreed
condition on or before the Intended Commencement Date, for whatever reason,
Landlord shall not be in default under this Lease, nor shall this Lease be void,
voidable or cancelable to Tenant until the lapse of 60 days after the Intended
Commencement Date (the "delivery grace period"); however, the Lease Commencement
Date shall not be deemed to have occurred until such date as Landlord notifies
Tenant that the Leased Premises are in the agreed condition and are Ready for
Occupancy. If Landlord is unable to deliver possession of the Leased Premises in
the agreed condition to ten within the described delivery grace period
(including any extensions thereof by reason of Force Majeure or the actions of
Tenant), then Tenant's sole remedy shall be to cancel and terminate this Lease
(in which case Landlord shall return all amounts deposited by Tenant less
amounts paid to Tenant's broker), and in no event shall Landlord be liable in
damages to Tenant for such delay,. Tenant may not cancel this Lease at any time
after the date Landlord notifies Tenant that the Leased Premises have been put
into the agreed condition and are Ready for Occupancy.
2.5 ACCEPTANCE OF POSSESSION: Tenant acknowledges that it has inspected
the Leased Premises and is willing to accept them in their existing condition,
broom clean. Additionally, Landlord agrees to place in good working order all
existing plumbing, lighting, heating, ventilating and air conditioning systems
within the Leased Premises and all man doors and roll-up truck doors serving the
Leased Premises to the extent that such systems and/or items are not in good
operating condition as of the date Tenant accepts possession of the Leased
Premises; provided that, and only if, Tenant notifies Landlord in writing of
such failures or deficiencies within 15 days from the date Tenant so accepts
possession of the Leased Premises.
2.6 SURRENDER OF POSSESSION: Immediately prior to the expiration or
upon the sooner termination of this Lease, Tenant shall remove all of Tenant's
signs from the exterior of the Building and shall remove all of Tenant's
equipment, trade fixtures, furniture, supplies, wall decorations and other
personal property from the Leased Premises, and shall vacate and surrender the
Leased Premises to Landlord in the same condition, broom clean, as existed at
the Lease Commencement Date. (1) Tenant shall repair all damage to the Leased
Premises caused by Tenant's removal of Tenant's property and all damage to the
exterior of the Building caused by Tenant's removal of Tenant's signs. Tenant
shall patch and refinish, to Landlord's reasonable satisfaction, all
penetrations made by Tenant or its employees to the floor, walls or ceiling of
the Leased Premises, whether such penetrations were made with Landlord's
approval or not. Tenant shall clean, repair or replace all stained or damaged
ceiling tiles, wall coverings and clean or replace as may be required floor
coverings to the reasonable satisfaction of Landlord, reasonable wear and tear
excepted and except for those improvements or alterations installed by Tenant
which Tenant has a right to remove and those improvements which Landlord has
notified Tenant that it shall not be required to remove. Tenant shall replace
all burned out light bulbs and damaged light lenses, and repair and repaint all
damaged walls, reasonable wear and tear excepted and except for those
improvements or alterations installed by Tenant which Tenant has a right to
remove and those improvements which Landlord has notified Tenant that it shall
not be required to remove. Landlord shall retain a mechanical contractor at
Tenant's expense to service all heating, ventilating, and air-conditioning
equipment, and Tenant shall pay the reasonable cost for the service and the cost
to restore (or replace as required) said equipment to good working order,
reasonable wear and tear excepted and except for those improvements or
alterations installed by Tenant which Tenant has a right to remove and those
improvements which Landlord has notified Tenant that it shall not be required to
remove. Tenant shall pay the cost of restoring or replacing all trees, shrubs,
plants, lawn and ground cover, and repair (or replace as required) all paved
surfaces of the Property, and otherwise satisfy all requirements to repair any
damage or excessive wear to the Leased Premises, Building, Outside Areas, and/or
Property, reasonable wear and tear excepted and except for those improvements or
alterations installed by Tenant which Tenant has a right to remove and those
improvements which Landlord has notified Tenant that it shall not be required to
remove. Tenant shall repair all damage caused by Tenant to the exterior surface
of the Building and the paved surfaces of the outside areas adjoining the Leased
Premises and, where necessary, replace ore resurface same, reasonable wear and
tear excepted and except for those improvements or alterations installed by
Tenant which Tenant has a right to remove and those improvements which Landlord
has notified Tenant that it shall not be required to remove. Additionally,
Tenant shall, prior to the expiration or sooner termination of this Lease,
remove any improvements constructed or installed by Tenant which Landlord
requests be so removed by Tenant and repair all damage caused by such removal.
If the Leased Premises are not surrendered to Landlord in the condition required
by this Article at the expiration or sooner termination of this Lease, Landlord
may, at Tenant's expense, after giving notice and time to perXXX, so remove
Tenant's signs, property and/or improvements not so removed and make such
repairs and replacements not so made or hire, at Tenant's expense, independent
contractors to perform such work. Tenant shall be liable to Landlord for all
regular costs incurred by Landlord in returning the Leased Premises to the
required condition, plus interest on all costs incurred from the date paid by
Landlord at the then maximum rate of interest not prohibited by Law until paid,
payable by Tenant to Landlord within ten days after receipt of a statement
therefore from Landlord, and Tenant shall be deemed to have impermissibly held
over until such time as such required and material work is completed, and Tenant
shall pay Base Monthly Rent and Additional Rent in accordance with the terms of
Section 13.2 (Holding Over) until such work is completed.
-3-
<PAGE>
Tenant shall indemnify Landlord against loss or liability to the extent such
liability or loss results from delay by Tenant in so surrendering the Leased
Premises, including, without limitation, any claims made by any succeeding
tenant or any losses to Landlord due to lost opportunities to lease to
succeeding tenants.
2.7 EARLY OCCUPANCY: If Tenant enters into possession of the Leased
Premises prior to the Intended Commencement Date (or permits its contractors to
enter the Leased Premises prior to the Intended Commencement Date), unless
otherwise agreed in writing by Landlord, the Lease Commencement Date shall be
deemed to have occurred on such sooner date, and Tenant shall be obligated to
perform all its obligations under this Lease, including the obligation to pay
rent, from that sooner date.
ARTICLE 3:
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 BASE MONTHLY RENT: Commencing on the Lease Commencement Date (as
determined pursuant to Article 2.3 above) and continuing throughout the Lease
Term, Tenant shall pay to Landlord, without prior demand therefore, in advance
on the first day of each calendar month, as base monthly rent, the amount set
forth as "Base Monthly Rent" in Article 1 (the "Base Monthly Rent").
3.2 ADDITIONAL RENT: Commencing on the Lease Commencement Date (as
determined pursuant to Article 2.3 above) and continuing throughout the Lease
Term, in addition to the Base Monthly Rent, Tenant shall pay to Landlord as
additional rent (the "Additional Rent") the following amounts:
A. An amount equal to all Property Operating Expenses (as defined in
Article 13) incurred by Landlord. Payment shall be made by whichever of the
following methods (or combination of methods) is (are) from time to time
designated by Landlord:
(1) Landlord may bill to Tenant, on a periodic basis not more
frequently than monthly, the amount of such expenses (or group or expenses) as
paid or incurred by Landlord, and Tenant shall pay to Landlord the amount of
such expenses within ten days after receipt of a written bill therefore from
Landlord; and/or
(2) Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (such as Landlord's Insurance Costs or Real
Property Taxes), or group of identified expenses, which it reasonably
anticipates will be paid or incurred for the ensuing calendar or fiscal year, as
Landlord may determine, and Tenant shall pay to Landlord an amount equal to the
estimated amount of such expenses for such year in equal monthly, installments
during such year with the installments of Base Monthly Rent.
(3) Landlord reserves the right to change from time to time
the methods of billing Tenant for any given expense or group of expenses or the
periodic basis on which such expenses are billed.
B. Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7;
C. Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and
D. Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease other than late charges and interest on
defaulted rent.
3.3 YEAR-END ADJUSTMENTS: If Landlord shall have elected to bill Tenant
for the Property Operating Expenses (or any group of such expenses) on an
estimated basis in accordance with the provisions of Article 3.2A(2) above,
Landlord shall furnish to Tenant within three months following the end of the
applicable calendar or fiscal year, as the case may be, a statement setting
forth (i) the amount of such expenses paid or incurred during the just ended
calendar or fiscal year, as appropriate, and (ii) the amount that Tenant has
paid to Landlord for credit against such expenses for such period. If Tenant
shall have paid more than its obligation for such expenses for the stated
period, Landlord shall at Tenant's election, either (i) credit the amount of
such overpayment toward the next ensuing payment or payments of Additional Rent
that would otherwise by due or (ii) refund in cash to Tenant the amount of such
overpayment. If such year-end statement shall show that Tenant did not pay its
obligation for such expenses in full, then Tenant shall pay to Landlord the
amount of such underpayment within ten days from Landlord's billing of same to
Tenant. The provisions of this Article shall survive the expiration or sooner
termination of this Lease.
3.4 LATE CHARGE AND INTEREST ON RENT IN DEFAULT: Tenant acknowledges
that the late payment by Tenant of any monthly installment of Base Monthly Rent
will cause Landlord to incur certain costs and expense not contemplated under
this Lease, the exact amounts of which are extremely difficult or impractical to
fix. Such costs and expenses will include, without limitation, administration
and collection costs and processing and accounting expenses. Therefore, if any
installment of Base Monthly Rent is not received by Landlord from Tenant within
six calendar days after Tenant's receipt of written notice from Landlord that
the same becomes due, Tenant shall immediately pay to Landlord a late charge in
an amount equal to the amount set forth in Article 1 as the "Late Charge
Amount", and if any Additional Rent is not received by Landlord within 10
calendar days after Tenant's receipt of written notice from Landlord that same
becomes due, Tenant shall immediately pay to Landlord a late charge in an amount
equal to 5% percent of the Additional Rent not so paid. Landlord and Tenant
agree that this late charge represents a reasonable estimate of such costs and
expenses and is fair compensation to Landlord for the anticipated loss Landlord
would suffer by reason of Tenant's failure to make timely payment. In no event
shall this provision for a late charge be deemed to grant to Tenant a grace
period or extension of time within to pay any rental installment or prevent
Landlord from exercising any right or remedy available to Landlord upon Tenant's
failure to pay each rental installment due under this Lease when due, including
the right to terminate this Lease. If any rent remain delinquent for a period in
excess of 20 calendar days, then, in addition to such late charge, Tenant shall
pay to Landlord interest on any rent that is not so paid from said day at the
then maximum rate of interest not prohibited or made usurious by Law until paid.
-4-
<PAGE>
3.5 PAYMENT OF RENT: All rent shall be paid in lawful money of the
United States, without any abatement, reduction or offset for any reason
whatsoever, to Landlord at such address as Landlord may designate from time to
time. Tenant's obligation to pay Base Monthly Rent and all Additional Rent shall
be appropriately prorated at the commencement and expiration of the Lease Term.
The failure by Tenant to pay any Additional Rent as required pursuant to this
Lease when due shall be treated the same as a failure by Tenant to pay Base
Monthly Rent when due, and Landlord shall have the same rights and remedies
against Tenant as Landlord would have if Tenant failed to pay the Base Monthly
Rent when due.
3.6 PREPAID RENT: Concurrent with the execution of this Lease, Tenant
shall pay to Landlord the amount set forth in Article I as "First Month's
Prepaid Rent" as prepayment of rent for credit against the first installment(s)
of Base Monthly Rent due hereunder. Additionally, Tenant has paid to Landlord
the amount set forth in Article I as "Last Month's Prepaid Rent" as prepayment
of rent for credit against the last installment(s) of Base Monthly Rent due
hereunder, subject, however, to the provisions of Article 3.7 below.
3.7 SECURITY DEPOSIT: Concurrent with the execution of this Lease,
Tenant shall deposit with Landlord the amount set forth in Article 1 as the
"Security Deposit" as security for the performance by Tenant of the terms of
this Lease to be performed by Tenant, and not as prepayment of rent. Landlord
may apply such portion or portions of the Security Deposit as are reasonably
necessary for the following purposes: (i) to remedy any default by Tenant in the
payment of Base Monthly Rent or Additional Rent or a late charge or interest on
defaulted rent; (ii) to repair damage to the Leased Premises, the Building or
the Outside Areas caused by Tenant; (iii) surrendered in the condition required
pursuant to the provisions of Article 2; and (iv) to remedy any other default of
Tenant to the extent permitted by Law including, without limitation, paying in
full on Tenant's behalf any sums claimed by materialmen or contractors of Tenant
to be owing to them by Tenant for work done or improvements made at Tenant's
request to the Leased Premises. In this regard, Tenant hereby waives any
restriction on the uses to which the Security Deposit may be applied as
contained in Section 1950.7(c) of the California Civil Code and/or any successor
statute. In the event the Security Deposit or any portion thereof is so used,
Tenant shall pay to Landlord, promptly demanded within 10 days following
Tenant's receipt of written notice an amount in cash sufficient to restore the
Security Deposit to the full original sum. If Tenant fails to promptly restore
the Security Deposit and if Tenant shall have paid to Landlord any sums as "Last
Month's Prepaid Rent", Landlord may, in addition to any other remedy Landlord
may have under this Lease, reduce the amount of Tenant's Last Month's Prepaid
Rent by transferring all or portions of such Last Month's Prepaid Rent to
Tenant's Security Deposit until such Security Deposit is restored to the amount
set forth in Article 1. Landlord shall not be deemed a trustee of the Security
Deposit. Landlord may use the Security Deposit in Landlord's ordinary business
and shall not be required to segregate it from its general accounts. Tenant
shall not be entitled to any interest on the Security Deposit. If Landlord
transfer the Building or the Property during the Lease Term, Landlord may pay
the Security Deposit to any subsequent owner in conformity with the provisions
of Section 1950.7 of the California Civil Code and/or any successor statute, in
which event the transferring landlord shall be released from all liability for
the return of the Security Deposit provided that such Transferee assumes in
writing the obligation of Landlord under this Lease. Tenant specifically grants
to Landlord (and Tenant hereby waives the provisions of California Civil Code
Section 1950.7 to the contrary) a period of 30 days following a surrender of the
Leased Premises by Tenant to Landlord within which to return the Security
Deposit (less permitted deductions) to Tenant, it being agreed between Landlord
and Tenant that 30 days is a reasonable period of time within which to inspect
the Leased Premises, make required repairs, receive and verify workmen's
billings therefore, and prepare a final accounting with respect to such deposit.
In no event shall the Security Deposit, or any portion thereof, be considered
prepaid rent.
SEE ADDENDUM
ARTICLE 4:
USE OF LEASED PREMISES AND OUTSIDE AREA
4.1 PERMITTED USE: Tenant shall be entitled to use the Leased Premises
solely for the "Permitted Use" as set forth in Article 1 and for no other
purpose whatsoever. Tenant shall have the right to use the Outside Areas in
conjunction with its Permitted Use of the Leased Premises solely for the
purposes for which they were designed and intended and for no other purposes
whatsoever.
4.2 GENERAL LIMITATIONS ON USE: Tenant shall not do or permit anything
to be done in or about the Leased Premises, the Building, the Outside Areas or
the Property which does or could unreasonably jeopardize the structural
integrity of the Building or (ii) cause damage to any part of the Leased
Premises, the Building, the Outside Areas or the Property. Tenant shall not
operate any equipment within the Leased Premises which does or could
unreasonably injure, vibrate or shake the Leased Premises or the Building, (ii)
damage, overload, corrode, or impair the efficient operation of any electrical,
plumbing, sewer, heating, ventilating or air conditioning systems within or
servicing the Leased Premises or the Building or (iii) damage or impair the
efficient operation of the sprinkler system (if any) within or serving the
Leased Premises or the Building. Tenant shall not install any equipment or
antennas on or make any penetrations of the exterior walls or roof of the
Building. Tenant shall not affix any equipment to or make any penetrations or
cuts in the floor, roof, or exterior walls of the Leased Premises. Tenant shall
not place any loads upon the floors, walls, ceiling or roof systems which could
endanger the structural integrity of the Building or damage its floors,
foundations or supporting structural components. Tenant shall not place any
explosive, flammable or Hazardous Materials in the drainage systems of the
Leased Premises, the Building, the Outside Areas or the Property. Tenant shall
not drain or discharge any fluids in the landscaped areas or across the paved
areas of the Property. Tenant shall not use any of the Outside Areas for the
storage of its materials, supplies, inventory or equipment, and all such
materials, supplies, inventory or equipment shall at all times be stored within
the Leased Premises. Tenant shall not commit nor permit to be committed any
waste in or about the Leased Premises, the Building, the Outside Areas or the
Property.
SEE ADDENDUM
4.3 NOISE AND EMISSIONS: All noise generated by Tenant in its use of
the Leased Premises shall be confined or muffled so that it does not interfere
with the businesses of or annoy the occupants and/or users of adjacent
properties. All dust, fumes, odors and other emissions generated by Tenant's use
of the Leased Premises shall be
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sufficiently dissipated in accordance with sound environmental practices and
exhausted from the Leased Premises in such a manner so as not to interfere with
the businesses of or annoy the occupants and/or users of adjacent properties, or
cause any damage to the Leased Premises, the Building, the Outside Areas or the
Property or any component part thereof or the property of adjacent property
owners.
4.4 TRASH DISPOSAL: Tenant shall provide trash bins (or other adequate
garbage disposal facilities) within the trash enclosure areas provided or
permitted by Landlord outside the Leased Premises sufficient for the interim
disposal of all of its trash, garbage and waste. All such trash, garbage and
waste temporarily stored in such areas shall be stored in such a manner so that
it is not visible from outside of such areas, and Tenant shall cause such trash,
garbage and waste to be regularly removed from the Property at Tenant's sole
cost. Tenant shall at all times keep the Leased Premises, the Building, the
Outside Areas and the Property in a clean, safe and neat condition free and
clear of all trash, garbage, waste and/or boxes, pallets and containers
containing same at all times.
4.5 PARKING: Tenant shall not, at any time, park or permit to be
parked any recreational vehicles, inoperative vehicles or equipment in the
Outside Areas or on any portion of the Property. Tenant agrees to assume
responsibility for compliance by its employees and invitees with the parking
provisions contained herein.
4.6 SIGNS: Other than one business identification sign which is first
approved by Landlord in accordance with this Article, Tenant shall not place or
install on or within any portion of the Leased Premises, the exterior of the
Building, the Outside Areas or the Property any sign, advertisement, banner,
placard, or picture which is visible from the exterior of the Leased Premises.
Tenant shall not place or install on or within any portion of the Leased
Premises, the exterior of the Building, the Outside Areas or the Property any
business identification- identification sign which is visible from the exterior
of the Leased Premises until Landlord shall have first approved in writing the
location, size, content, design, method of attachment and material to be used in
the making of such sign. Any sign, once approved by Landlord, shall be installed
only in strict compliance with Landlord's approval, at Tenant's expense, using a
person first approved by Landlord to install same. Landlord shall not
unreasonably withhold its approval of Tenant's signs. Landlord may remove any
signs (which have not been first approved in writing by Landlord),
advertisements, banners, placards or pictures so placed by Tenant on or within
the Leased Premises, the exterior of the Building, the Outside Areas or the
Property and charge to Tenant the cost of such removal, together with any costs
incurred by Landlord to repair any damage caused thereby, including any cost
incurred to restore the surface upon which such sign was so affixed to its
original condition. Tenant shall remove all of Tenant's signs, repair any damage
caused thereby, and restore the surface upon which the sign was affixed to its
original condition, all to Landlord's reasonable satisfaction, upon the
termination of this Lease.
4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS: Tenant shall abide
by and shall promptly observe and comply with, at its sole cost and expense, all
Laws and Private Restrictions respecting the use and occupancy of the Leased
Premises, the Building, the Outside Areas or the Property including, with out
limitation, all Laws governing the use and/or disposal of hazardous materials,
and shall defend with competent counsel, indemnify and hold Landlord harmless
from any claims, damages or liability resulting from Tenant's failure to do so.
The indemnity provision of this Article shall survive the expiration or sooner
termination of this Lease, with respect to any activities of Tenant occurring on
or about the Property while Tenant was in possession of the Leased Premises.
4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS: With respect to any
insurance policies required or permitted to be carried by Landlord in accordance
with the provisions of this Lease, Tenant shall not conduct (or permit any other
person to conduct) any activities nor keep, store or use (or allow any other
person to keep, store or use) any item or thing within the Leased Premises, the
Building, the Outside Areas or the Property which (i) is prohibited under the
terms of such policies, (ii) could result in the termination of the coverage
afforded under any of such policies, (iii) could give to the insurance carrier
the right to cancel any of such policies, or (iv) could cause an increase in the
rates (over standard rates) charged for the coverage afforded under any of such
policies. Tenant shall comply with all requirements of any insurance company,
insurance underwriter, or Board of Fire Underwriters which are necessary to
maintain, at standard rates, the insurance coverages carried by either Landlord
or Tenant pursuant to this Lease.
4.9 LANDLORD'S RIGHT TO ENTER: Landlord and its agents shall have the
right to enter the Leased Premises during normal business hours after giving
Tenant 24 hour notice except in an emergency and subject to Tenant's reasonable
security measures for the purpose of (i) inspecting the same; (ii) showing the
Leased Premises to prospective purchasers, mortgagees; (iii) making necessary
alterations, additions or repairs; (iv) performing any of Tenant's obligations
when Tenant has failed to do so. After expiration of all notice & cure periods
Landlord shall have the right to enter the Leased Premises during normal
business hours (or as otherwise agreed), subject to Tenant's reasonable security
measures, for purposes of supplying any maintenance or services agreed to be
supplied by Landlord. Landlord shall have the right to enter the Outside Areas
during normal business hours for purposes of (i) inspecting the exterior of the
Building and the Outside Areas, (ii) posting notices of non-responsibility, or
"For Lease" signs and showing the space to prospective tenants in last 6 months
of lease, and (iii) supplying any services to be provided by Landlord. Any entry
into the Leased Premises or the Outside Areas obtained by Landlord in accordance
with this Article shall not under any circumstances be construed or deemed to be
a forcible or unlawful entry into, or a detainer of, the Leased Premises, or an
eviction, actual or constructive of Tenant from the Leased Premises or any
portion thereof.
4.10 USE OF OUTSIDE AREAS: Tenant, in its use of the Outside Areas,
shall at all times keep the Outside Areas in a safe condition free and clear of
all materials, equipment, debris, trash (except within existing enclosed trash
areas), inoperable vehicles, and other items which are not specifically
permitted by Landlord to be stored or located thereon by Tenant. If, in the
opinion of Landlord, unauthorized persons are using any of the Outside Areas by
reason of, or under claim of, the express or implied authority or consent of
Tenant, then Tenant, upon demand of Landlord, shall take reasonable action to
restrain such unauthorized use, and shall initiate such appropriate proceedings
as may be required to so restrain such use.
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<PAGE>
4.11 RULES AND REGULATIONS: Landlord shall have the right from time to
time to establish reasonable rules and regulations and/or amendments or
additions thereto resulting the use of the Leased Premises and the Outside Areas
for the care and orderly management of the Property. Upon delivery to Tenant of
a copy of such rules and regulations or any amendments or additions thereto,
Tenant shall comply with such rules and regulations. A violation by Tenant of
any of such rules and regulations shall constitute a default by Tenant under
this Lease. If there is a conflict between the rules and regulations and any of
the provisions of this Lease, the provisions of this Lease shall prevail.
Landlord shall not be responsible or liable to Tenant for the violation of such
rules and regulations by any other tenant of the Property.
4.13 OUTSIDE AREAS: No materials, pallets, supplies, tanks or
containers whether above or below ground level, equipment, finished products or
semifinished products, raw materials, inoperable vehicles or articles of any
nature shall be stored upon or permitted to remain outside of the Leased
Premises except in fully fenced and screened areas outside the Building which
have been designed for such purpose and have been approved in writing by
Landlord for such use by Tenant.
4.14 HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with
respect to the existence or use of Hazardous Materials on the Property:
A. Any handling, transportation, storage, treatment, disposal or use of
Hazardous Materials by Tenant, Tenant's Agents, or any other party after the
Effective Date of this Lease in or about the Property shall strictly comply with
all applicable Hazardous Materials Laws. Tenant shall indemnify, defend upon
demand with counsel reasonably acceptable to Landlord, and hold harmless
Landlord from and against any and all liabilities, losses, claims, damages, lost
profits, consequential damages, interest, penalties, fines, court costs,
remediation costs, investigation costs, and other expenses which result from or
arise in any manner whatsoever out of the use, storage, treatment,
transportation, release, or disposal of Hazardous Materials on or about the
Property by Tenant, Tenant's Agents, Permittees, or Invites after the Effective
Date.
B. If the presence of Hazardous Materials on the Property caused or
permitted by Tenant, Tenant's Agents, Permittees, or Invites after the Effective
Date of this Lease results in contamination or deterioration of water or soil or
any other part of the Property, then Tenant shall promptly take any and all
action necessary to investigate and remediate such contamination. Tenant shall
further be solely responsible for, and shall defend, indemnify and hold Landlord
and its agents harmless from and against, all claims, costs and liabilities,
including attorney's fees and costs, arising out of or in connection with any
investigation and remediation (including investigative analysis, removal,
cleanup, and/or restoration work) required hereunder to return the Leased
Premises, Building, Common Areas, Outside Areas, and/or Property and any other
property of whatever nature to their condition existing prior to the appearance
of such Hazardous Materials.
C. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Property, and (ii) any contamination of the Property by Hazardous Materials
which constitutes a violation of any Hazardous Materials Law. Tenant may use
small quantities of household chemicals such as adhesives, lubricants, and
cleaning fluids in order to conduct its business at the Premises and such other
Hazardous Materials as are necessary to the operation of Tenant's business of
which Landlord receives notice prior to such Hazardous Materials being brought
onto the Property (or any portion thereof) and which Landlord consents in
writing may be brought onto the Property. In granting Landlord's consent,
Landlord may specify the location and manner or use, storage, or handling of any
Hazardous Materials. Landlord's consent shall in no way relieve Tenant from any
of its obligations as contained herein. Tenant shall notify Landlord in writing
at least ten (10) days prior to the tenant bringing any Hazardous Material on
the Leased Premises, Building, Common Areas, Outside Areas, and/or Property.
Tenant shall provide Landlord with a list of all Hazardous Materials and the
quantities of each Hazardous Materials to be stored on any portion of the
Property, and upon Landlord's request Tenant shall provide Landlord with copies
of any and all Hazardous Materials Management Plans, Material Safety Data
Sheets, Hazardous Waste Manifests, and other documentation maintained or
received by Tenant pertaining to the Hazardous Materials used, stored, or
transported or to be used, stored, or transported on any portion of the
Property. At any time during the Lease Term, Tenant shall, within five days
after written request therefor received from Landlord, disclose in writing all
Hazardous Materials that are being used by Tenant on the Property (or have been
used on the Property), the nature of such use, and the manner of storage and
disposal.
D. Landlord may cause testing wells to be installed on the Property,
and may cause the ground water to be tested to detect the presence of Hazardous
Materials by the use of such tests as are then customarily used for such
purposes. If Tenant so requests, Landlord shall supply Tenant with copies of
such test results. The cost of such tests and of the installation, maintenance,
repair and replacement of such wells shall be paid by Tenant if such tests
disclose the existence of facts which give rise to liability of Tenant pursuant
to its indemnity given in A and or B above. Landlord may retain consultants to
inspect the Property, conduct periodic environmental audits, and review any
information provided by Tenant. Tenant shall pay the reasonable cost of fees
charged by Landlord and/or Landlord's consultants as a Property Management Cost.
SEE ADDENDUM
E. Upon the expiration or earlier termination of the Lease, Tenant, at
its sole cost, shall remove all Hazardous Materials from the Property deposited
by Tenant or Tenant's Agents, Contractors, Servants, Employees or Invitees
(Tenant's Parties). If Tenant fails to so surrender the Property, Tenant shall
indemnify and hold Landlord harmless from all damages resulting from Tenant's
failure to surrender the Property as required by this Subsection, including,
without limitation, any claims or damages in connection with the condition of
the Property caused by Tenant or Tenant's Parties including, without
limitation, damages occasioned by the inability to release the Property (or any
portion thereof) or a reduction in the fair market and/or rental value of the
Property, Building,
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<PAGE>
Common Areas, Outside Areas, and/or Property by reason of the existence of any
Hazardous Materials in or around the Leased Premises, Building, Common Areas,
Outside Areas, and/or Property cause. As a result of any release of Hazardous
Materials caused by Tenant or Tenant's Parties. If any action is required to be
taken by a governmental authority to test, monitor, and/or clean up Hazardous
Materials from the Leased Premises, Building, Common Areas, Outside Areas,
and/or Property and such action is not completed prior to the expiration or
earlier termination of the Lease, Landlord shall be entitled to all damages
directly or indirectly incurred as a result of any release of Hazardous
Materials caused by Tenant or Tenant's Parties including without limitation,
damages occasioned by the inability to release the Property or a reduction of
the fair market and/or rental value of the Leased Premises, Building, Common
Areas, Outside Areas, and/or Property.
F. As used herein, the term "Hazardous Material(s)" means any hazardous
or toxic substances, material or waste, which is or becomes regulated by any
federal, state, regional or local governmental authority because it is in any
way hazardous, toxic, carcinogenic, mutagenic or otherwise adversely affects any
part of the environment or creates risks of any such hazards or effects,
including, but not limited to, petroleum; asbestos, and polychorinated bipheyls
and any material, substance, or waste (a) defined as a "hazardous waste,"
"extremely hazardous waste" or "restricted hazardous waste" under Sections
25115, 25117 or 25122.7 or listed pursuant to Section 25140 of the California
Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law);
(b) defined as a "hazardous substance" under Section 25316 of the California
Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley Tanner
Hazardous Substance Account Act); (c) defined as a "hazardous material,"
"hazardous substance" or "hazardous waste" under Section 25501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release
Response Plans and Inventory); (d) defined as a "hazardous substance" under
Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7
(Underground Storage of Hazardous Substances); (e) defined as a "hazardous
waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act,,
42 United States Code Sections 6901 et seq. (42 U.S.C. 6903); or (g) defined as
a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 United States Code
Section 9601 et seq. (42 U.S.C. 9601) or (h) defined as a "hazardous substance"
pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C.
1251) or (i) listed pursuant to Section 307 of the Federal Water Pollution
Control Act (33 U.S.C. 1317) or (j) regulated under the Toxic Substances Control
Act (15 U.S.C. 2601 et seq.) or (k) defined as a "hazardous material" under
Section 66680 or 66084 of Title 22 of the California Code of Regulations
(Administrative Code), (l) listed in the United States Department of
Transportation Hazardous Materials Table (49 C.F.R. 172.101) or (m) listed by
the Environmental Protection Agency as "hazardous substances" (40 C.F.R. Part
302) and amendments thereto. The term "Hazardous Material Laws" shall mean (i)
all of the foregoing laws as amended from time to time and (ii) any other
federal, state, or local law, ordinance, regulation, or order regulating
Hazardous Materials.
G. Tenant's failure to comply with any of the requirements of this
Section regarding the storage, use, disposal, or transportation of Hazardous
Materials, or the appearance of any Hazardous Materials on the Leased Premises,
Building, Common Area, Outside Areas, and/or the Property without Landlord's
consent shall after the expiration of all notice and cure periods be an Event of
Default as defined in this Lease. The obligations of Landlord and Tenant under
this Section shall survive the expiration or earlier termination of the Lease
Term. The rights and obligations of Landlord and Tenant within respect to issues
relating to Hazardous Materials are exclusively established by this section. In
the event of any inconsistency between any other part of this Lease and this
Section, the terms of this Section shall control.
ARTICLE 5:
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE: Except in the case of damage to or
destruction of the Leased Premises, the Building, the Outside Areas or the
Property caused by an Act of God or other peril, in which case the provisions of
Article 10 shall control, the parties shall have the following obligations and
responsibilities with respect to the repair and maintenance of the Leased
Premises, the Building and the Outside Areas.
A. Tenant's Obligations: Tenant shall, at all times during the Lease
Term and at its sole cost and expense, regularly clean and continuously keep and
maintain in good order, condition and repair the Leased Premises and every
non-structural part thereof including, without limiting the generality of the
foregoing, (i) all interior walls, floors and ceilings, (ii) all windows, doors
and skylights, (iii) all electrical wiring, conduits, connectors and fixtures,
(iv) all plumbing, pipes, sinks, toilets, faucets and rains, (v) all lighting
fixtures, bulbs and lamps, (vi) all heating, ventilating and air conditioning
equipment, and (vii) all entranceways to the Leased Premises. Tenant, if
requested to do so by Landlord shall hire, at Tenant's sole cost and expense, a
licensed heating, ventilating and air conditioning contractor to regularly and
periodically (not less frequently than every three months) inspect and perform
required maintenance on the heating, ventilating and air conditioning equipment
and systems serving the Leased Premises, or alternatively, Landlord may, at its
election, contract in its own name for such regular and periodic inspections of
and maintenance on such heating, ventilating and air conditioning equipment and
systems and charge to Tenant, as Additional Rent, the reasonable cost thereof.
Tenant shall, at all times during the Lease Term, keep in a clean and orderly
condition the Outside Areas. Tenant shall regularly and periodically sweep and
clean the driveways and parking areas. Tenant shall, at its sole cost and
expense, repair all damage to the Leased Premises, the Building, the Outside
Areas or the Property caused by the activities of Tenant, its employees,
invitees or contractors promptly following written notice from Landlord to so
repair such damage (to the extent not covered by insurance required to be
maintained hereunder). If Tenant shall fail to perform the required maintenance
or fail to make repairs required of it pursuant to this Article within a
reasonable period of time following notice from Landlord to do so, then Landlord
may, ,at its election and without waiving any other remedy it may otherwise have
under this Lease or at Law, perform such maintenance or make such repairs and
charge to Tenant, as Additional Rent, the costs so incurred by, Landlord for
same. All glass within or a part of the Leased Premises, both interior and
exterior, is at the sole risk of Tenant and any broken glass shall promptly be
replaced by Tenant at Tenant's expense with glass of the same kind, size and
quality.
B. Landlord's Obligation: Landlord shall, at all times during the Lease
Term, maintain in good condition and repair: (i) the exterior and structural
parts of the Building (including the foundation, subflooring, load-
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bearing and exterior walls, and roof); and (ii) the landscaped areas located
outside the Building. The provisions of this Subarticle B shall in no way limit
the right of Landlord to charge to Tenant, as Additional Rent pursuant to
Article 3 (to the extent permitted pursuant to Article 3), the costs incurred by
Landlord in performing such maintenance and/or making such repairs.
5.2 UTILITIES: Tenant shall arrange, at its sole cost and expense and
in its own name, for the supply of gas and electricity to the Leased Premises.
Landlord shall maintain the water meter(s) in its own name; provided, however,
that if at any time during the Lease Term Landlord shall require Tenant to put
the water service in Tenant's name, Tenant shall do so at Tenant's sole cost.
Tenant shall be responsible for determining if the local supplier of water, gas
and electricity can supply the needs of Tenant and whether or not the existing
water, gas and electrical distribution systems within the Building and the
Leased Premises are adequate for Tenant's needs. Tenant shall be responsible for
determining if the existing sanitary and storm sewer systems now servicing the
Leased Premises and the Property are adequate for Tenant's needs. Tenant shall
pay all charges for water, gas, electricity, and storm and sanitary sewer
services as so supplied to the Leased Premises during the Lease Term Landlord
shall not interfere with delivery of utility service to the Property,
irrespective of whether or not the services are maintained in Landlord's or
Tenant's name.
5.3 SECURITY: Tenant acknowledges that Landlord has not undertaken any
duty whatsoever to provide security for the Leased Premises, the Building, the
Outside Areas or the Property and, accordingly, Landlord is not responsible for
the security of same or the protection of Tenant's property or Tenant's
employees, invitees or contractors. To the extent Tenant determines that such
security or protection services are advisable or necessary, Tenant shall arrange
for and pay the costs of providing same.
5.4 ENERGY AND RESOURCE CONSUMPTION: Landlord may cooperate in a
reasonable manner with the mandatory efforts of governmental agencies and/or
utility suppliers in reducing energy or other resource consumption within the
Property. Tenant shall not be entitled to terminate this Lease or to any
reduction in or abatement of rent by reason of such compliance or cooperation.
Tenant agrees at all times to cooperate fully with Landlord and to abide by all
reasonable rules established by Landlord (i) in order to maximize the efficient
operation of the electrical, heating, ventilating and air conditioning systems
and all other energy or other resource consumption systems within the Property
and/or (ii) in order to comply with the requirements and recommendations of
utility suppliers and governmental agencies regulating the consumption of energy
and/or other resources.
5.5 LIMITATION OF LANDLORD'S LIABILITY: Except for injury, damage, or
loss which arises from the negligence, willful misconduct, or breach of this
Lease by Landlord, Landlord's agents, employees or contractors, Landlord shall
not be liable to Tenant for injury to Tenant, its employees, agents, invitees or
contractors, damage to Tenant's property or loss of Tenant's business or
profits, nor shall Tenant be entitled to terminate this Lease or to any
reduction in or abatement of rent by reason of (i) Landlord's failure to provide
security services or systems within the Property for the protection of the
Leased Premises, the Building or the Outside Areas, or the protection of
Tenant's property or Tenant's employees, invitees, agents, or contractors, or
(ii) Landlord's failure to perform any maintenance or repairs to the Leased
Premises, the Building, the Outside Areas or the Property until Tenant shall
have first notified Landlord, in writing of the need for such maintenance or
repairs, and then only after Landlord shall have had a reasonable period of time
following its receipt of such notice within which to perform such maintenance or
repairs, or (iii) any failure, interruption, rationing, or other curtailment in
the supply of water, electric current, gas or other utility service to the
Leased Premises, the Building, the Outside Areas or the Property from whatever
cause (other than Landlord's sole active negligence or willful misconduct), or
(iv) the unauthorized intrusion or entry into the Leased Property by third
parties (other than Landlord).
ARTICLE 6:
ALTERATIONS AND IMPROVEMENTS
6.1 BY TENANT: Tenant shall not make any alterations to or
modifications of the Leased Premises or construct any improvements within the
Leased Premises until Landlord shall have first approved, in writing, the plans
and specifications therefore, which approval shall not be unreasonably withheld
or delayed. Landlord's consent shall not be required for non-structural interior
improvements costing less than $10,000 in any calendar year. Plans are required.
All such modifications, alterations or improvements, once so approved, shall be
made, constructed or installed by Tenant at Tenant's expense (including all
permit fees and governmental charges related thereto), using a licensed
contractor first approved by Landlord, in substantial compliance with the
Landlord approved plans and specifications therefore. All work undertaken by
Tenant shall be done in accordance with all Laws and in a good and workmanlike
manner using new materials of good quality. Tenant shall not commence the making
of any such modifications or alterations or the construction of any such
improvements until (i) all required governmental approvals and permits shall
have been obtained, (ii) all requirements regarding insurance imposed by this
Lease have been satisfied, (iii) Tenant shall have given Landlord at least five
business days prior written notice of its intention to commence such work so
that Landlord may post and file notices of non-responsibility, and (iv) if
requested by Landlord, Tenant shall have obtained contingent liability and broad
form builder's risk insurance in an amount reasonably satisfactory to Landlord
to cover any perils relating to the proposed work not covered by insurance
carried by Tenant pursuant to Article 9. In no event shall Tenant make any
modifications, alterations or improvements whatsoever to the Outside Areas or
the exterior or structural components of the Building including, without
limitation, any cuts or penetrations in the floor, roof or exterior walls of the
Leased Premises without Landlord's approval which shall not be unreasonably
withheld. As used in this Article, the term "modifications, alterations and/or
improvements" shall include, without limitation, the installation of additional
electrical outlets, overhead lighting fixtures, drains, sinks, partitions,
doorways, or the like.
6.2 OWNERSHIP OF IMPROVEMENTS: All modifications, alterations or
improvements made or added to the Leased Premises by Tenant (other than Tenant's
inventory, equipment, movable furniture, personal property, wall decorations and
trade fixtures) shall be deemed real property and a part of the Leased Premises,
but shall remain the property of Tenant during the Lease Term. Any such
modifications, alterations or improvements, once completed, shall not be altered
or removed from the Leased Premises during the Lease Term without Landlord's
written approval first obtained in accordance with the provisions of Article 6.1
above. At the expiration or sooner termination of this Lease, all such
modifications, alterations and improvements (other than Tenant's inventory,
equipment, moveable furniture, wall decorations and trade fixtures) shall
automatically become the property of Landlord and shall be surrendered to
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Landlord as a part of the Leased Premises as required pursuant to Article 2,
unless Landlord shall require Tenant to remove any of such modifications,
alterations or improvements in accordance with the provisions of Article 2, in
which case Tenant shall so remove same. Landlord shall have no obligation to
reimburse to Tenant all or any portion of the cost or value of any such
modifications, alterations or improvements so surrendered to Landlord. All
modifications, alterations or improvements which are installed or constructed on
or attached to the Leased Premises by Landlord at Landlord's expense shall be
deemed real property and a part of the Leased Premises and shall be the property
of Landlord. All lighting, plumbing, electrical, heating, ventilating and air
conditioning fixtures, partitioning, window coverings, wall coverings and floor
coverings installed by Tenant shall be deemed improvements to the Leased
Premises and not trade fixtures of Tenant.
6.3 ALTERATIONS: Tenant shall, at its sole cost make all modifications,
alterations and improvements to the Leased Premises that are required by an Law
because of (i) Tenant's use or occupancy of the Leased Premises, the Building,
the Outside Areas, or the Property, (ii) Tenant's application for any permit or
governmental approval, or (iii) Tenant's making of any modifications,
alterations or improvements to or within the Leased Premises. If Landlord shall,
at any time during the Lease Term, (i) be required by any governmental authority
to make any modifications, alterations or improvements to the Building or the
Project, the cost incurred by Landlord in making such modifications, alterations
or improvements, including an Landlord's interest rate per annum cost of money
factor shall be amortized by Landlord over the useful life of such
modifications, alterations or improvements, as determined in accordance with
generally accepted accounting standards, and the monthly amortized cost of such
modifications, alterations and improvements as so amortized shall be considered
a Property Maintenance Cost.
6.4 LIENS: Tenant shall keep the Property and every part thereof free
from any liens and shall pay when due all bills arising out of any work
performed, materials furnished, or obligations incurred by Tenant, its agents
employees or contractors relating to the Property. If any such claim of lien is
recorded against Tenant's interest in this Lease, the Property or any part
thereof, Tenant shall bond against, discharge or otherwise cause such lien to be
entirely released within 30 days after the same has been so recorded. Tenant's
failure to do so shall be conclusively deemed a material default under the terms
of this Lease.
ARTICLE 7:
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 BY TENANT: Tenant shall not sublet the Leased Premises (or any
portion thereof) or assign or encumber its interest in this Lease, whether
voluntarily or by operation of Law, without Landlord's prior written consent
which shall not be unreasonably withheld or delayed first obtained in accordance
with the provisions of this Article 7. Any attempted subletting, assignment or
encumbrance without Landlord's prior written consent, at Landlord's election,
shall constitute a default by Tenant under the terms of the Lease. The
acceptance of rent by Landlord from any person or entity other than Tenant, or
the acceptance of rent by Landlord from Tenant with knowledge of a violation of
the provisions of this Article, shall not be deemed to be a waiver by Landlord
of any provision of this Article or this Lease or to be a consent to any
subletting by Tenant or any assignment or encumbrance of Tenant's interest in
this Lease.
7.2 MERGER OR REORGANIZATION:
7.3 LANDLORD'S ELECTION: If Tenant shall desire to assign its interest
under this Lease or to sublet the Leased Premises, Tenant must first notify
Landlord, in writing, of its intent to so assign or sublet, at least 20 days in
advance of the date it intends to so assign its interest in this Lease or sublet
the Leased Premises but not sooner than one hundred eighty days in advance of
such date, specifying in detail the terms of such proposed assignment or
subletting, including the name of the proposed assignee or subleasee, the
proposed assignee's or subleasee's intended use of the Leased Premises, a
current financial statement of such proposed assignee or subleasee and the form
of documents to be used in effectuating such assignment or subletting. Landlord
shall have a period of 10 days following receipt of such notice within which to
do one of the following: (i) consent to such requested assignment or subletting
subject to Tenant's compliance with the conditions set forth in Article 7.4
below or (ii) refuse to so consent to such requested assignment or subletting,
provided that such consent shall not be unreasonably refused. It shall not be
unreasonable for Landlord to withhold its consent to any proposed assignment or
subletting if (i) the proposed assignee's or subtenant's anticipated use of the
Premises in-
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volves the storage, use or disposal of a Hazardous Material other than Hazardous
Materials used by Tenant; (ii) if the proposed assignee or subtenant has been
required by any prior landlord, lender or governmental authority to clean up
Hazardous Materials unlawfully discharged by the proposed assignee or subtenant;
or (iii) if the proposed assignee or subtenant is subject to investigation or
enforcement order or proceeding by any governmental authority in connection with
the unlawful use, disposal or storage of a Hazardous Material. During said 10
day period, Tenant covenants and agrees to supply to Landlord, upon request, all
necessary or relevant information which Landlord may reasonably request
respecting such proposed assignment or subletting and/or the proposed assignee
or subleasee.
7.4 CONDITIONS TO LANDLORD'S CONSENT: If Landlord elects to consent, or
shall have been ordered to so consent by a court of competent jurisdiction, to
such requested assignment, subletting or encumbrance, such consent shall be
expressly conditioned upon the occurrence of each of the conditions below set
forth, and any purported assignment, subletting or encumbrance made or ordered
prior to the full and complete satisfaction of each of the following conditions
shall be void and, at the election of Landlord, which election may be exercised
at any time following such a purported assignment, subletting or encumbrance but
prior to the satisfaction of each of the stated conditions, shall constitute a
material default by Tenant under this Lease until cured by satisfying in full
each such condition by the assignee, subleases or encumbrances. The conditions
are as follows:
A. Landlord having approved in form and substance the assignment or
sublease agreement (or the encumbrance agreement), which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.
B. Each such subleases or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant (or, in the case of encumbrance, each such encumbrancer
having similarly agreed to assume, be bound by and to perform Tenant's
obligations upon a foreclosure or transfer in lieu thereof).
C. Tenant having fully and completely performed all of its obligations
under the terms of this Lease as of the date of such assignment or subletting.
D. Tenant having reimbursed to Landlord all reasonable costs and
attorneys' fees incurred by Landlord in conjunction with the processing and
documentation of any such requested subletting, assignment or encumbrance.
E. Tenant having delivered to Landlord a complete and fully-executed
duplicate original of such sublease agreement, assignment agreement or
encumbrance (as applicable) and all related agreements.
F. Tenant having paid, or having agreed in writing to pay as to future
payments, to Landlord 50 percent of all assignment consideration or excess
rentals to be paid to Tenant or to any other on Tenant's behalf or for Tenant's
benefit for such assignment or subletting as follows:
(1) If Tenant assigns its interest under this Lease and if all
or a portion of the consideration for such assignment is to be paid by the
assignee at the time of the assignment, that Tenant shall have paid to Landlord
and Landlord shall have received an amount equal to 50 percent of the assignment
consideration so paid or to be paid (whichever is the greater) at the time of
the assignment by the assignee; or
(2) If Tenant assigns its interest under this Lease and if
Tenant is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant's assignee shall have entered
into a written agreement with and for the benefit of Landlord satisfactory to
Landlord and its counsel whereby Tenant and Tenant's assignee jointly agree to
pay to Landlord an amount equal to 50 percent of all such future assignment
consideration installments to be paid by such assignee as and when such
assignment consideration is so paid.
(3) If Tenant subleases the Leased Premises, that Tenant and
Tenant's subleasee shall have entered into a written agreement with and for the
benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant and
Tenant's subleasee jointly agree to pay to Landlord 50 percent of all excess
rentals to be paid by such subleases as and when such excess rentals are so
paid.
7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED: For purposes
of the Article, the term "assignment consideration" shall mean all consideration
to be paid by the assignee to Tenant or to any other on Tenant's behalf or for
Tenant's benefit as consideration for such assignment, less any commissions paid
by Tenant to a licensed real estate broker for arranging such assignment (not to
exceed then standard rates), and the term "excess rentals" shall mean all
consideration to be paid by the subleases to Tenant or to any other on Tenant's
behalf or for Tenant's benefit for the sublease of the Leased Premises in excess
of the rent due to Landlord under the terms of this Lease for the same period,
less any commissions paid by Tenant to a licensed real estate broker for
arranging such sublease (not to exceed then standard rates) and the cost of
improvements made to the subleased premises by Tenant at its expense for the
purpose of subleasing. Tenant agrees that the portion of any assignment
consideration and/or excess rentals arising from any assignment or subletting by
Tenant which is to be paid to Landlord pursuant to this Article now is and shall
then be the property of Landlord and not the property of Tenant.
7.6 PAYMENTS: All payments required by this Article to be made to
Landlord shall be made in cash in full as and when they become due. At the time
Tenant, Tenant's assignment or subleases makes each such payment to Landlord,
Tenant or Tenant's assignee or subleases, as the case may be, shall deliver to
Landlord an itemized statement in reasonable detail showing the method by which
the amount due Landlord was calculated and certified by the party making such
payment as true and correct.
7.7 GOOD FAITH: The rights granted to Tenant by this Article are
granted in consideration of Tenant's express covenant that all pertinent
allocations which are made by Tenant between the rental value of the Leased
Premises and the value of any of Tenant's personal property which may be
conveyed or leased generally concurrently with and which may reasonably be
considered a part of the same transaction as the permitted assignment or
subletting shall be made fairly, honestly and in good faith.
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7.8 EFFECT OF LANDLORD'S CONSENT: No subletting, assignment or
encumbrance, even with the consent of Landlord, shall relieve Tenant of its
personal and primary obligation to pay rent and to perform all of the
obligations to be performed by Tenant hereunder. Consent by Landlord to one or
more assignments or encumbrances of Tenant's interest in this Lease or to one or
more sublettings of the Leased Premises shall not be deemed to be a consent to
any subsequent assignment, encumbrance or subletting. If Landlord shall have
been ordered by a court of competent jurisdiction to consent to a requested
assignment or subletting, or such an assignment or subletting shall have been
ordered over the objection of Landlord, such assignment or subletting shall not
be binding between the assignee (or subleases) and Landlord until such time as
all conditions set forth in Article 7.4 above have been fully satisfied (to the
extent not then satisfied) by the assignee or sub subleases, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.
ARTICLE 8:
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE: Landlord shall not
be liable to Tenant for, and Tenant hereby releases Landlord and its partners,
principals, officers, agents and employees from, any and all liability, whether
in contract, tort or on any other basis, for any injury to or any damage
sustained by Tenant, Tenant's agents, employees, contractors or invitees; any
damage to Tenant's property; or any loss to Tenant's business, loss of Tenant's
profits or other financial loss of Tenant resulting from or attributable to the
condition of, the management of, the repair or maintenance of, the protection
of, the supply of services or utilities to, the damage to or destruction of the
Leased Premises, the Building, the Project or the Common Areas, including
without limitation (i) the failure, interruption, rationing or other curtailment
or cessation in the supply of electricity, water, gas or other utility service
to the Project, the Building or the Leased Premises; (ii) the vandalism or
forcible entry into the Building or the Leased Premises; (iii) the penetration
of water into or onto any portion of the Leased Premises through roof leaks or
otherwise; (iv) the failure to provide security and/or adequate lighting in or
about the Project, the Building or the Leased Premises; (v) the existence of any
design or construction defects within the Project, the Building or the Leased
Premises; (vi) the failure of any mechanical systems to function properly (such
as the HVAC systems); or (vii) the blockage of access to any portion of the
Project, the Building or the Leased Premises, except that Tenant does not so
release Landlord from such liability to the extent such damage was proximately
caused by Landlord's negligence, willful misconduct, or Landlord's failure to
perform an obligation expressly undertaken pursuant to this Lease after a
reasonable period of time shall have lapsed following receipt of written notice
from Tenant to so perform such obligation.
8.2 TENANT'S INDEMNIFICATION OF LANDLORD: Tenant shall defend with
competent counsel reasonably satisfactory to Landlord any claims made or legal
actions filed or threatened against Landlord with respect to the violation of
any law, or the death, bodily injury, personal injury, property damage, or
interference with contractual or property rights suffered by any third party
(including other tenants within the Project) occurring within the Leased
Premises or resulting from Tenant's use or occupancy of the Leased Premises, the
Building or the Outside Areas, or resulting from Tenant's activities in or about
the Leased Premises, the Building, the Outside Areas or the Property, and Tenant
shall indemnify and hold Landlord, Landlord's principals, employees, agents and
contractors harmless from any loss, liability, penalties, or expense whatsoever
(including any loss attributable to vacant space which otherwise would have been
leased, but for such activities) resulting therefrom, except to the extent
proximately caused by the negligence acts or omissions or willful misconduct of
Landlord or arising as a result of Landlord's breach of the terms of this Lease.
This indemnity agreement shall survive until the latter to occur of (i) the date
of the expiration, or sooner termination, of this Lease, or (ii) the date Tenant
actually vacates the Leased Premises.
ARTICLE 9:
INSURANCE
9.1 TENANT'S INSURANCE: Tenant shall maintain insurance complying with
all of the following:
A. Tenant shall procure, pay for and keep in full force and effect, at
all times during the Lease Term, the following:
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(1) Commercial General Liability Insurance insuring Tenant
against liability for bodily injury, death, property damage and personal injury
occurring at the Leased Premises, or resulting from Tenant's use or occupancy of
the Leased Premises or the Building, Outside Areas, Property, or Common Areas or
resulting from Tenant's activities in or about the Leased Premises. Such
insurance shall be on an occurrence basis with a combined single limit of
liability of not less than the amount of Tenant's Required Liability Coverage
(as set forth in Article 1). The policy or policies shall be endorsed to name
Landlord and such others as are designated by Landlord as additional insureds in
the form equivalent to CG20111185 or successor and shall contain the following
additional endorsement: "The insurance afforded to the additional insureds is
primary insurance. If the additional insureds have other insurance which is
applicable to the loss on a contributing, excess or contingent basis, the amount
of this insurance company's liability under this policy shall not be reduced by
the existence of such other insurance. Any insurance carried by the additional
insureds shall be excess and non contributing with the insurance provided by the
tenant." The policy shall not be canceled or reduced without at lest 30 days
written notice to additional insureds. If the policy insures more than one
location, it shall be endorsed to show that the limits and aggregate apply per
location using endorsement CG25041185 or successor. Tenant's policy shall also
contain the severability of interest and cross-liability endorsement or clauses.
(2) Fire and property damage insurance in so-called Special
Form Tenant against loss from physical damage to Tenant's personal property,
inventory, stock, trade fixtures and improvements within the Leased Premises
with coverage for the full actual replacement cost thereof;
(3) Plate-glass insurance, at actual replacement cost;
(4) Boiler and machinery insurance, if applicable;
(5) Including without limitation Liquor Liability insurance
for liability arising out of the distribution, sale, or consumption of food
and/or beverages including alcoholic beverages at the Leased Premises for not
less than the Tenant's Required Liability Coverage as set forth in Article 1;
(6) Workers' compensation insurance and any other employee
benefit insurance sufficient to comply with all Laws which policy shall be
endorsed to provide thirty (30) days written notice of cancellation to Landlord;
(7) With respect to making of alterations or the construction
of improvements or the like undertaken by Tenant, contingent liability and
builder's risk insurance, in an amount and with coverage satisfactory to
Landlord;
(8) Business Income Insurance at a minimum of 50% coinsurance
including coverage for loss of business income due to damage to equipment from
perils covered under the so called Special Form; and
(9) Comprehensive Auto Liability Insurance with a combined
single limit coverage of not less than the amount of Tenant's Required Liability
Coverage (as set forth in Article 1) for bodily injury and/or property damage
liability for: a) Owned autos b) Hired or borrowed autos c) Non-owned autos d)
Auto blanket contractual form CA0029. The policy shall be endorsed to provide 30
days written notice of cancellation to Landlord.
B. Each policy of liability insurance required to be carried by Tenant
pursuant to this Article or actually carried by Tenant with respect to the
Leased Premises or the Property (i) shall be in a form satisfactory to Landlord,
(ii) Shall be provided by carriers admitted to do business in the state of
California, with a Best rating of "A/V1" or better and/or acceptable to
Landlord. Property insurance shall contain a waiver and/or a permission to waive
by the insurer any right of subrogation against Landlord, its principal,
employees, agents and contractors which might arise by reason of any payment
under such policy or by reason of any act or omission of Landlord, its
principals, employees, agents or contractors.
C. Prior to the time Tenant or any of its contractors enters the Leased
Premises, Tenant shall deliver to the Landlord with respect to each policy of
insurance required to be carried by Tenant pursuant to this article, a
certificate of the insurer certifying, in a form satisfactory to the Landlord,
that the policy has been issued and premium paid providing the coverage required
by this Article and containing the provisions herein. Attached to such a
certificate shall be endorsements naming Landlord as additional insured, and
including the wording under primary insurance above. With respect to each
renewal or replacement of any such insurance, the requirements of this Article
must be complied with not less than 30 days prior to the expiration or
cancellation of the policy being renewed or replaced. Landlord may at any time
and from time-to-time inspect and/or copy any and all insurance policies
required to be carried by Tenant pursuant to this article. If Landlord's lender,
insurance broker or advisor or counsel reasonably determines at any time that
the form or amount of coverage set forth in Article 9.1(A) for any policy of
insurance Tenant is required to carry pursuant to this Article is not adequate,
then Tenant shall increase the amount of coverage for such insurance to such
greater amount or change the form as Landlord's lender, insurance broker or
advisor or counsel reasonably deems adequate (provided however such increase
level of coverage may not exceed the level of coverage for such insurance
commonly carried by comparable businesses similarly situated and operating under
similar circumstances).
D. The Commercial General Liability insurance carried by Tenant shall
specifically insure the performance by Tenant of the Indemnification provisions
set forth in Article 8.2 of this lease provided, however, nothing contained in
this Article 9 shall be construed to limit the liability of Tenant under
Indemnification provisions set forth in said Article 8.2.
9.2 LANDLORD'S INSURANCE: With respect to insurance maintained by Landlord:
A. Landlord shall maintain, as the minimum coverage required of it by
this Lease, property insurance in so-called "Special" form insuring Landlord
(and such others as Landlord may designate) against loss from physical damage to
the Building with coverage of not less than one hundred percent of the full
actual replacement cost thereof and against loss of rents for a period of not
less than twelve months. Such property damage insurance, at Landlord's election
but without any requirement on Landlord's behalf to do so, (i) may be written in
so-called Special Form, excluding only those perils commonly excluded from such
coverage by Landlord's then property damage insurer; (ii) may provide coverage
for physical damage to the improvements so insured for up to the entire full
actual replacement cost thereof; (iii) may be endorsed to include or separate
policies may be carried to cover loss or damage caused by any additional perils
against which Landlord may elect to insure, including earthquake and/or flood;
(iv) may provide coverage for loss of rents for a period of up to twelve months;
and/or (v) may contain "deductibles" per occurrence in an amount reasonably
acceptable to Landlord. Landlord shall not be required to cause such insurance
to cover any of Tenant's personal property, inventory and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises.
B. Landlord shall maintain Commercial General Liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occur-
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ring in, on or about, or resulting from the use or occupancy of the Property, or
any portion thereof, with combined single limit coverage of at least Two Million
Dollars. Landlord may carry such greater coverage as Landlord or Landlord's
Lender, insurance broker or advisor or counsel may from time to time determine
is reasonably necessary for the adequate protection of Landlord and the
Property.
9.3 MUTUAL WAIVER OF SUBROGATION: Landlord hereby releases Tenant, and
Tenant hereby releases Landlord and its respective principals, officers, agents,
employees and servants, from any and all liability for loss, damage or injury to
the property of the other in or about the Leased Premises or the Property which
is caused by or results from a peril or event or happening which would be
covered by insurance required to be carried by the party sustaining such loss
under the terms of this Lease, or is covered by insurance actually carried and
in force at the time of the loss, by the party sustaining such loss; provided,
however, that such waiver shall be effective only to the extent permitted by the
insurance covering such loss and to the extent such insurance is not prejudiced
thereby.
ARTICLE 10:
DAMAGE TO LEASED PREMISES
10.1 LANDLORD'S DUTY TO RESTORE: If the Leased Premises, the Building
or the Outside Areas are damaged by any peril after the Effective Date of this
Lease, Landlord shall restore the same, as and when required by this Article,
unless this Lease is terminated by Landlord pursuant to Article 10.3 or by
Tenant pursuant to Article 10.4. If this Lease is not so terminated, and the
issuance of all necessary governmental permits, Landlord shall promptly commence
and diligently prosecute to completion the restoration of the Leased Premises,
the Building or the Outside Areas, as the case may be, to the extent then
allowed by Law, to substantially the same condition in which it existed as of
the Lease Commencement Date. Landlord's obligation to restore shall be limited
to the improvements constructed by Landlord. Landlord shall have no obligation
to restore any improvements made by Tenant to the Leased Premises or any of the
Tenant's personal property, inventory or trade fixtures.
10.2 INSURANCE PROCEEDS: All insurance proceeds available from the fire
and property damage insurance carried by Landlord shall be paid to and become
the property of Landlord. If this Lease is terminated pursuant to either Article
10.3 or 10.4, all insurance proceeds available from insurance carried by Tenant
which cover loss of property that is Landlord's property or would become
Landlord's property on termination of this Lease shall be paid to and become the
property of Landlord, and the remainder of such proceeds shall be paid to and
become the property of Tenant. If this Lease is not terminated pursuant to
either Article 10.3 or 10.4, all insurance proceeds available from insurance
carried by Tenant which cover loss to property that is Landlord's property shall
be paid to and become the property of Landlord, and all proceeds available from
such insurance which cover loss to property which would only become the property
of Landlord upon the termination of this Lease shall be paid to and remain the
property of Tenant.
10.3 LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:
A. The Building is damaged by any peril which Landlord was required to
insure against at the time of such damage or destruction (an "insured peril") to
such an extent that the estimated cost to restore the Building exceeds seventy-
five percent of the then actual replacement cost thereof.
C. The Building is damaged by an uninsured peril, which peril Landlord
was not required to insure against pursuant to the provisions of Article 9 of
this Lease, to any extent.
D. The Building is damaged by any peril and, because of the Laws then
in force, the Building (i) can not be restored at reasonable cost or (ii) if
restored, can not be used for the same use being made thereof before such
damage.
10.4 TENANT'S RIGHT TO TERMINATE: If the Leased Premises, the Building
or the Outside Areas are damaged by any peril and Landlord does not elect to
terminate this Lease or is not entitled to terminate this Lease pursuant to this
Article, then as soon as reasonably practicable, Landlord shall furnish Tenant
with the written opinion of Landlord's architect or construction consultant as
to when the restoration work required of Landlord may be complete. Tenant shall
have the option to terminate this Lease in the event any of the following
occurs, which option may be exercised in the case of A or B below only by
delivery to Landlord of a written notice of election to terminate within seven
days after Tenant receives from Landlord the estimate of the time needed to
complete such restoration:
A. The Leased Premises are damaged by any peril and, in the reasonable
opinion of Landlord's architect or construction consultant, the restoration of
the Leased Premises cannot be substantially completed within nine months after
the date of such notice from Landlord; or
B. The Leased Premises are damaged by any peril within nine months of
the last day of the Lease Terminate and, in the reasonable opinion of Landlord's
architect or construction consultant, the restoration of the Leased Premises
cannot be substantially completed within ninety days after the date such
restoration is commenced.
C. SEE ADDENDUM
10.5 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of
Article 10.4 above, captioned "Tenant's Right to Terminate", are intended to
supersede and replace the provisions contained in California Civil Code, Section
1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly
Tenant hereby waives the provisions of said Civil Code Sections and the
provisions of any successor Code Sections or similar laws hereinafter enacted.
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10.6 ABATEMENT OF RENT: In the event of damage to the Leased Premises
which does not result in the termination of this Lease, the Base Monthly Rent
(and any Additional Rent) shall be temporarily abated during the period of
restoration in proportion to the degree to which Tenant's use of the Leased
Premises is impaired by such damage.
ARTICLE 11:
CONDEMNATION
11.1 TENANT'S RIGHT TO TERMINATE: Except as otherwise provided in
Article 11.4 below regarding temporary takings, Tenant shall have the option to
terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, (ii) 25 percent or more of the Leased Premises is taken and
the part of the Leased Premises that remains cannot, within a reasonable period
of time, be made reasonably suitable for the continue operation of Tenant's
business, or (iii) there is a taking of a portion of the Outside Areas and, as a
result of such taking, Landlord cannot provide parking spaces within the
Property (or within a reasonable distance therefrom) equal in number to at least
sixty-six and two-thirds percent of the number of parking spaces existing within
the Outside Areas immediately prior to such taking, whether by rearrangement of
the remaining parking areas in the Outside Areas (including, if Landlord elects,
construction of multi-deck parking structures or respiring for compact cars
where permitted Law). Tenant must exercise such option within a reasonable
period of time, to be effective on the later to occur of (i) the date that
possession of that portion of the Leased Premises or the Outside Areas that is
condemned is taken by the condemnor or (ii) the date Tenant vacated the Leased
Premises.
11.2 LANDLORD'S RIGHT TO TERMINATE: Except as otherwise provided in
Article 11.4 below regarding temporary takings, Landlord shall have the option
to terminate this Lease if, as a result of any taking, (i) all or a substantial
part of the Leased Premises is taken, (ii) more than thirty-three and one-third
percent of the Outside Areas is taken, or (iii) because of the Laws then in
force, the Leased Premises may not be used for the same use being made thereof
before such taking, whether or not restored as required by Article 11.3 below.
Any such option to terminate by Landlord must be exercisable within a reasonable
period of time, to be effective as of the date possession is taken by the
condemnor.
11.3 RESTORATION: If any part of the Leased Premises, the Building or
the Outside Areas is taken and this Lease is not terminate, then Landlord shall
repair any damage occasioned thereby to the remainder thereof to a condition
reasonably suitable for Tenant's continued operations and otherwise to the
extent practicable, in the manner and to the extent provided in Article 10.1.
11.4 TEMPORARY TAKING: If any portion of the Leased Premises is
temporarily taken for a period of 9 months or less and such period does not
extend beyond the Lease Expiration Date, this Lease shall remain in effect. If
any portion of the Leased Premises is temporarily taken for a period which
either exceeds 9 months or which extends beyond the Lease Expiration Date, then
Landlord and Tenant shall each independently have the option to terminate this
Lease, effective on the date possession is taken by the condemnor.
11.5 DIVISION OF CONDEMNATION AWARD: Any award made for any taking of
the Property, the Building, the Outside Areas or the Leased Premises, or any
portion thereof, shall belong to and be paid to Landlord, and Tenant hereby
assigns to Landlord all of its right, title and interest in any such award;
provided, however, that Tenant shall be entitled to receive any portion of the
award that is made specifically (i) for the taking of personal property,
inventory or trade fixtures belong to Tenant, (ii) for the interruption of
Tenant's business or its moving costs, (iii) for loss of Tenant's goodwill, or
(iv) for any temporary taking where this Lease is not terminated as a result of
such taking. The rights of Landlord and Tenant regarding any condemnation shall
be determined as provided in this Article, and each party hereby waives the
provisions of Section 1265.130 of the California Code of Civil Procedure, and
the provisions of any similar law hereinafter enacted, allowing either party to
petition the Superior Court to terminate this Lease and/or otherwise allocate
condemnation awards between Landlord and Tenant in the event of a taking of the
Leased Premises.
11.6 ABATEMENT OF RENT: In the event of a taking of the Leased Premises
which does not result in a terminate of this Lease, then, as of the date
possession is taken by the condemning authority, the Base Monthly Rent shall be
reduced in the same proportion that the area of that part of the Leased Premises
so taken (less any addition to the area of the Leased Premises by reason of any
reconstruction) bears to the area of the Leased Premises immediately prior to
such taking.
11.7 TAKING DEFINED: The terminate "taking" or "taken" as used in this
Article 11 shall mean any transfer or conveyance of all or any portion of the
Property to a public or quasi-public agency or other entity having the power of
eminent domain pursuant to or as a result of the exercise of such power by such
an agency, including any inverse condemnation and/or any sale or transfer by
Landlord of all or any portion of the Property to such an agency under threat of
condemnation or the exercise of such power.
ARTICLE 12:
DEFAULT AND REMEDIES
12.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its
obligations under this Lease if any of the following events occur:
A. Tenant shall have failed to pay within 10 days following receipt of
written notice Base Monthly Rent or any Additional Rent when due; or
B. Tenant shall have done or permitted to have been done any act, use
or thing in its use, occupancy or possession of the Leased Premises or the
Building or the Outside Areas which is prohibited by the terms of this Lease; or
C. Tenant shall have failed to perform any terminate, covenant or
condition of this Lease, except those requiring the payment of Base Monthly Rent
or Additional Rent, within 30 days after written notice from Landlord to Tenant
specifying the nature of such failure and requesting Tenant to perform same.
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D. Tenant shall have sublet the Leased Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of Law; or
E. Tenant shall have abandoned the Premises; or
F. Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantors) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or
G. Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or
H. Tenant or any Guarantor of this Lease shall have allowed (or sought)
to have entered against it a decree or order which: (i) grants or constitutes an
order for relief, appointment of a trustee, or confirmation or a reorganization
plan under the bankruptcy laws of the United States; (ii) approves as properly
filed a petition seeking liquidation or reorganization under said bankruptcy
laws or any other debtor's relief law or similar statute of the United States or
any state thereof; or (iii) otherwise directs the winding up or liquidation of
Tenant; provided, however, if any degree or order was entered without Tenant's
consent or over Tenant's objection. Landlord may not terminate this Lease
pursuant to this Subarticle if such decree or order is rescinded or reversed
within thirty days after its original entry.
I. Tenant or any Guarantor of this Lease shall have availed itself of
the protection of any debtor's relief law, moratorium law or other similar Law
which does not require the prior entry of a decree or order.
12.2 LANDLORD'S REMEDIES: In the event of any default by Tenant, and
without limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by Law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:
A. Landlord may, at Landlord's election, keep this Lease in effect and
enforce, by an action at law or in equity, all of its rights and remedies under
this Lease including, without limitation, (i) the right to recover the rent and
other sums as they become due by appropriate legal action, (ii) the right to
make payments required by Tenant, or perform Tenant's obligations and be
reimbursed by Tenant for the cost thereof with interest at the then maximum rate
of interest not prohibited by Law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.
B. Landlord may, at Landlord's election, terminate this Lease by giving
Tenant written notice of termination, in which event this Lease shall terminate
on the date set forth for termination in such notice. Any termination under this
Subarticle shall not relieve Tenant from its obligation to pay to Landlord all
Base Monthly Rent and Additional Rent then or thereafter due, or any other sums
due or thereafter accruing to Landlord, or from any claim against Tenant for
damages previously accrued or then or thereafter accruing. In no event shall any
one or more of the following actions by Landlord, in the absence of a written
election by Landlord to terminate the Lease, constitute a termination of the
Lease:
(1) Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;
(2) Consent to any subletting of the Leased Premises or
assignment of this Lease by Tenant, whether pursuant to the provisions hereof or
otherwise; or
(3) Any other action by Landlord or Landlord's agents intended
to mitigate the adverse effects of any breach of this Lease by Tenant,
including, without limitation, any action taken to maintain and preserve the
Leased Premises or any action taken to relet the Leased Premises, or any portion
thereof, for the account of Tenant and in the name of Tenant.
C. In the event Tenant breaches this Lease and abandons the Leased
Premises, Landlord may terminate this Lease, but this Lease shall not terminate
unless Landlord gives Tenant written notice of termination. If Landlord does not
terminate this Lease by giving written notice of termination, Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover rent as it becomes due under this Lease as provided in California Civil
Code Section 1951.4, as in effect on the Effective Date of this Lease.
D. In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to damages in an amount as set forth in
California Civil Code Section 1951.2, as in effect on the Effective Date of this
Lease. For purposes of computing damages pursuant to Section 1951.2, an interest
rate equal to the maximum rate of interest then not prohibited by Law shall be
used where permitted. Such damages shall include, without limitation:
(1) The worth at the time of award of the amount by which the
unpaid rent for the balance of the terminate after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco, at the time of award plus one percent; and
(2) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom, including without limitation, the following: (i) reasonable
expenses for cleaning, repairing or restoring the Leased Premises; (ii)
reasonable expenses for altering, remodeling or otherwise improving the Leased
Premises for the
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purpose of reletting, including removal of existing leasehold improvements
and/or installation of additional leasehold improvements (regardless of how the
same is funded, including reduction of rent, a direct payment or allowance to a
new tenant, or otherwise); (iii) reasonable broker's fees, advertising costs and
other expenses of reletting the Leased Premises; (iv) reasonable costs of
carrying and maintaining the Leased Premises which costs would have been billed
to Tenant as Additional Rent had Tenant not defaulted and which include but are
not limited to taxes, insurance premiums, utility charges, landscape maintenance
costs, costs of maintaining electrical, plumbing and HVAC equipment and costs
for providing security; (v) reasonable expenses incurred in removing, disposing
of and/or storing any of Tenant's personal property, inventory or trade fixtures
remaining therein; (vi) reasonable attorneys' fees, expert witness fees, court
costs and other reasonable expenses incurred by Landlord but not limited to
taxable costs) in retaking possession of the Leased Premises, establishing
damages hereunder, and re-leasing the Leased Premises; and (vii) any other
expenses, costs or damages otherwise incurred or suffered as a result of
Tenant's default.
12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES: In the event Landlord
fails to perform any of its obligations under this Lease, Landlord shall
nevertheless not be in default under the terms of this Lease until such time as
Tenant shall have first given Landlord written notice specifying the nature of
such failure to perform its obligations, and then only after Landlord shall have
had a reasonable period of time following its receipt of such notice within
which to perform such obligations. In the event of Landlord's default as above
set forth, then, and only then, Tenant shall have the following remedies only:
A. Tenant may then proceed in equity or at law to compel Landlord to
perform its obligations and/or to recover damages proximately caused by such
failure to perform (except as and to the extent Tenant has waived its right to
damages as provided in this Lease).
B. Tenant, at its option, may then cure any default of Landlord at
Landlord's cost. If, pursuant to this Subarticle, Tenant reasonably pays any sum
to any third party or does any act that requires the payment of any sum to any
third part at any time by reason of Landlord's default, the sum paid by, Tenant
shall be immediately due from Landlord to Tenant at the time Tenant supplies
Landlord with an invoice therefor (provided such invoice sets forth and is
accompanied by a written statement of Tenant setting forth in reasonable detail
the amount paid, the party to whom it was paid, the date it was paid, and the
reasons giving rise to such payment), together with interest at twelve percent
per annum from the date of such invoice until Tenant is reimbursed by Landlord.
Tenant may not offset such sums against any installment of rent due Landlord
under the terms of this Lease.
12.4 LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation,
trust, partnership, joint venture, unincorporated association, or other form of
business entity, Tenant agrees that (i) the obligations of Landlord under this
Lease shall not constitute personal obligations of the officers, directors,
trustees, partners, joint venturers, members, owners, stockholders, or other
principals of such business entity and (ii) Tenant shall have recourse only to
the assets of such business entity and proceeds from any disposition thereof for
the satisfaction of such obligations and not against the assets of such
officers, directors, trustees, partners, joint venturers, members, owners,
stockholders or principals (other than to the extent of their interest in the
assets owned by such business entity). Additionally, if Landlord is a
partnership, then Tenant covenants and agrees:
A. No partner of Landlord shall be sued or named as a party in any
suit or action brought by Tenant with result to any alleged breach of this Lease
(except to the extent necessary to secure jurisdiction over the partnership and
then only for that sole purpose);
B. No service of process shall be made against any partner of
Landlord except for the sole purpose of securing jurisdiction over the
partnership; or its assets or the proceeds from any disposition thereof and
C. No writ of execution will ever be levied against the assets of any
partner of Landlord other than to the extent of his interest in the assets of
the partnership. Tenant further agrees that each of the foregoing covenants and
agreements shall be enforceable by Landlord and by any partner of Landlord and
shall be applicable to any actual or alleged misrepresentation or nondisclosure
made respecting this Lease or the Leased Premises or any factual or alleged
failure, default or breach of any covenant or agreement either expressly or
implicitly contained in this Lease or imposed by statue or at common law.
12.5 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of
Article 12.3 above are intended to supersede and replace the provisions of
California Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant
hereby waives the provisions of California Civil Code Sections 1932(1), 1941 and
1942 and/or any similar or successor Law regarding Tenant's right to terminate
this Lease or to make repairs and deduct the expenses of such repairs from the
rent due under this Lease.
ARTICLE 13:
GENERAL PROVISIONS
13.1 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency
any and all taxes, assessments, license fees, use fees, permit fees and public
charges of whatever nature or description levied, assessed or imposed against
Tenant or Landlord by a governmental agency arising out of, caused by reason of
or based upon Tenant's estate in this Lease, Tenant's ownership of property,
improvements made by Tenant to the Leased Premises or the Outside Areas,
improvements made by Landlord for Tenant's use within the Leased Premises or the
Outside Areas, Tenant's use (or estimated use) of public facilities or services
or Tenant's consumption (or estimated consumption) of public utilities, energy,
water or other resources. 10 days following notice by Landlord, Tenant shall
furnish Landlord with satisfactory evidence of these payments. If any such
taxes, assessments, fees or public charges are levied against Landlord,
Landlord's property, the Building or the Property, or if the assessed value of
the Building or the Property is increased by the inclusion therein of a value
placed upon same, then Landlord, after giving written notice to Tenant, shall
have the right to pay such taxes, assessment, fee or public charge and bill
Tenant, as Additional Rent, the amount of such taxes, assessment, fee or public
charge so paid on Tenant's behalf. Tenant shall, within ten days from the date
it receives an invoice from Landlord setting forth the
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amount of such taxes, assessment, fee or public charge so levied, pay to
Landlord, as Additional Rent, the amount set forth in said invoice. Failure by
Tenant to pay the amount so invoiced within said ten day period shall be
conclusively deemed a default by Tenant under this Lease. Tenant shall have the
right, and the Landlord's full cooperation to bring suit in any court of
competent jurisdiction to recover from the taxing authority the amount of any
such taxes, assessment, fee or public charge so paid.
13.2 HOLDING OVER: This Lease shall terminate without further notice on
the Lease Effective Date (as set forth in Article 1). Any holding over by Tenant
after expiration of the Lease Terminate shall neither constitute a renewal nor
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Article. Any such holding over shall be
deemed an unlawful detainer of the Leased Premises unless Landlord has consented
to same. Any such holding over to which Landlord has consented shall be
construed to be a tenancy from month to month, on the same terms and conditions
herein specified insofar as applicable, except that the Base Monthly Rent shall
be increased to an amount equal to one hundred fifty percent of the Base Monthly
Rent payable during the last full month immediately preceding such holding over.
13.3 SUBORDINATION TO MORTGAGES: This Lease is subject to and
subordinate to all underlying ground leases, mortgages and deeds of trust which
affect the Building or the Property and which are of public record as of the
Effective Date of this Lease, and to all renewals, modifications,
consolidations, replacements and extensions thereof. However, if the lessor
under any such ground lease or any lender holding any such mortgage or deed of
trust shall advise Landlord that it desires or requires this Lease to be made
prior and superior thereto, then, upon written request of Landlord to Tenant,
Tenant shall promptly execute,, acknowledge and deliver any and all documents or
instruments which Landlord and such lessor or lender deem necessary or desirable
to make this Lease prior thereto. Tenant hereby consents to Landlord's ground
leasing the land underlying the Building or the Property and/or encumbering the
Building or the Property as security for future loans on such terms as Landlord
shall desire, all of which future ground leases, mortgages or deeds of trust
shall be subject to and subordinate to this Lease. However, if any lessor under
any such future ground lease or any lender holding such future mortgage or deed
of trust shall desire or require that this Lease be made subject to and
subordinate to such future ground lease, mortgage or deed of trust, then Tenant
agrees, within ten days after Landlord's written request therefor, to execute,
acknowledge and deliver to Landlord any and all documents or instruments
requested by Landlord or by such lessor or lender as may be necessary or proper
to assure the subordination of this Lease to such future ground lease, mortgage
or deed of trust, but only if such lessor or lender agrees to recognize Tenant's
rights under this Lease and agrees not to disturb Tenant's quiet possession of
the Leased Premises so long as Tenant is not in default under this Lease.
13.4 TENANT'S ATTORNMENT UPON FORECLOSURE: Tenant shall, upon request,
attorn (i) to any purchaser of the Building or the Property at any foreclosure
sale or private sale conducted pursuant to any security instrument encumbering
the Building or the Property, (ii) to any grantee or transferee designated in
any deed given in lieu of foreclosure of any security interest encumbering the
Building or the Property, or (iii) to the lessor under any underlying ground
lease of the land underlying the Building or the Property, should such ground
lease be terminated; provided that such purchaser, grantee or lessor recognizes
Tenant's rights under this Lease.
13.5 MORTGAGEE PROTECTION: In the event of any default on the part of
Landlord, Tenant will give notice by registered mail to any Lender or lessor
under any underlying ground lease who shall have requested, in writing, to
Tenant that it be provided with such notice, and Tenant shall offer such Lender
or lessor a reasonable opportunity to cure the default, including time to obtain
possession of the Leased Premises by power of sale or judicial foreclosure or
other appropriate legal proceedings if reasonably necessary to effect a cure.
13.6 ESTOPPEL CERTIFICATES: Tenant will, following any request by
Landlord, promptly execute and deliver to Landlord an estoppel certificate (i)
certifying that this Lease is unmodified and in full force and effect, or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect, (ii) stating the date to
which the rent and other charges are paid in advance, if any, (iii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults if any are claimed,
and (iv) certifying such other information about this Lease as may be reasonably
requested by Landlord, its Lender or prospective lenders, investor or purchaser
of the Building or the Property. Tenant's failure to execute and deliver such
estoppel certificate within ten days after Landlord's request therefor shall be
a material default by Tenant under this Lease, and Landlord shall have all of
the rights and remedies available to Landlord as Landlord would otherwise have
in the case of any other material default by Tenant, including the right to
terminate this Lease and sue for damages proximately caused thereby, it being
agreed and understood by Tenant that Tenant's failure to so deliver such
estoppel certificate in a timely manner could result in Landlord being unable to
perform committed obligations to other third parties which were made by Landlord
in reliance upon this covenant of Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this Article may be relied upon by any Lender or
purchaser or prospective Lender or purchaser of the Building, the Property, or
any interest herein.
13.7 TENANT'S FINANCIAL INFORMATION (PUBLIC): Tenant shall, within five
business days after Landlord's request therefor deliver to Landlord a copy of a
current (public) financial statement (if Tenant is a public company) including
an income statement for the most recent twelve month period and a balance sheet
and any such other information reasonably requested by Landlord regarding
Tenant's financial condition. Tenant acknowledges that Landlord is relying upon
the financial information provided to Landlord by Tenant prior to entering into
this lease and the information to be provided to Landlord by Tenant during the
terminate of this Lease. Landlord shall be entitled to disclose such financial
statements or other information to its Lender, to any present or prospective
principal of or investor in Landlord, or to any prospective Lender or purchaser
of the Building, the Property or any portion thereof or interest therein. Any
such financial statement or other information which is marked "confidential" or
company secrets" (or is otherwise similarly marked by Tenant) shall be
confidential and shall not be disclosed by Landlord to any third party except as
specifically provided in this Article, unless the same becomes a part of the
public domain without the fault of Landlord.
13.8 TRANSFER BY LANDLORD: Landlord and its successors in interest
shall have the right to transfer their interest in the Building, the Property,
or any portion thereof at any time and to any person or entity. In the event of
any such transfer, provided that the transferee recognizes all rights of Tenant
and assumes all obligations of Landlord under the Lease, the Landlord originally
named herein (and in the case of any subsequent transfer, the transferor), from
the date of such transfer, (i) shall be automatically relieved, without any
further act by any person or entity, of all liability for the performance of the
obligations of the Landlord hereunder which may accrue after the
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date of such transfer and (ii) shall be relieved of all liability for the
performance of the obligations of the Landlord hereunder which have accrued
before the date of transfer if its transferee agrees to assume and perform all
such prior obligations of the Landlord hereunder, Tenant shall attorn to any
such transferee. After the date of any such transfer, the terminate "Landlord"
as used herein shall mean the transferee of such interest in the Building or the
Property.
13.9 FORCE MAJEURE: The obligations of each of the parties under this
Lease (other than the obligations to pay money) shall be temporarily excused if
such party is prevented or delayed in performing such obligation by reason of
any strikes, lockouts or labor disputes; inability to obtain labor, materials,
fuels or reasonable substitutes therefor; governmental restrictions,
regulations, controls, action or inaction; civil commotion; inclement weather,
fire or other acts of God; or other causes (except financial inability) beyond
the reasonable control of the party obligated to perform (including acts or
omissions of the other party) for a period equal to the period of any such
prevention, delay or stoppage.
13.10 NOTICES: Any notice required or desired to be given by a party
regarding this Lease shall be in writing and shall be personally served, or in
lieu of personal service may be given by (i) delivery by Federal Express, United
Parcel Service or similar commercial carrier, (ii) electronic fax transmission,
or (iii) depositing such notice in the United States mail, postage prepaid,
addressed to the other party as follows:
A. If addressed to Landlord, to Landlord at its Address for Notices
(as set forth in Article 1).
B. If addressed to Tenant, to Tenant at its Address for Notices (as
set forth in Article 1). Any notice given by registered mail shall be deemed to
have been given on the third business day after its deposit in the United States
mail.
Any notice given by registered mail shall be deemed given on the date receipt
was acknowledged to the postal authorities. Any notice given by mail other than
registered or certified mail shall be deemed given only if received by the other
party, and then on the date of receipt. Any notice delivered by commercial
carrier or by fax shall be deemed given on the date of confirmation of delivery
by the carrier or by electronic confirmation. Each party may, by written notice
to the other in the manner aforesaid, change the address to which notices
addressed to its shall thereafter be mailed.
13.11 ATTORNEYS FEES: In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any terminate or covenant of this Lease or rights or
duties hereunder of either party, the prevailing party shall be entitled to
recover from the non-prevailing party as a part of such action or proceeding, or
in a separate action for that purpose brought within one year from the
determination of such proceeding, reasonable attorneys' fees, expert witness
fees, court costs and other reasonable expenses incurred by the prevailing
party.
13.12 DEFINITIONS: Any terminate that is given a special meaning by any
provision in this Lease shall unless otherwise specifically stated, have such
meaning whenever used in this Lease or in any Addenda or amendment hereto. In
addition to the terms defined in Article 1, the following terms shall have the
following meanings:
A. REAL PROPERTY TAXES: The terminate "Real Property Tax" or "Real
Property Taxes" shall each mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all installments of principal and interest required to pay
any general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or indirect
power or tax or levy assessments, which are levied or assessed for whatever
reason against the Project or any portion thereof, or Landlord's interest
herein, or the fixtures, equipment and other property of Landlord that is an
integral part of the Project and located thereon, or Landlord's business of
owning, leasing or managing the Project or the gross receipts, income or rentals
from the Project; (ii) all charges, levies or fees imposed by any governmental
authority against Landlord by reason of or based upon the use of or number of
parking spaces within the Project, the amount of public services or public
utilities used or consumed (e.g. water, gas, electricity, sewage or surface
water disposal) at the Project, the number of persons employed by the Project,
or the type of use or uses conducted within the Project; and (iii) all costs and
fees (including attorneys' fees) incurred by Landlord in contesting any Real
Property Tax and in negotiating with public authorities as to any Real Property
Tax but only to the extent of any such savings. If, at any time during the Lease
Terminate, the taxation or assessment of the Project prevailing as of the
Effective Date of this Lease shall be altered so that in lieu of or in addition
to any Real Property Tax described above there shall be levied, or imposed
(whether by reason of a change in the method of taxation or assessment, creation
of a new tax or charge, or any other cause) an alternate, substitute, or
additional tax or charge (i) on the value, size, use or occupancy of the Project
or Landlord's interest therein or (ii) on or measured by the gross receipts,
income or rentals from the Project, or on Landlord's business of owning, leasing
or managing the Project or (iii) computed in any manner with respect to the
operation of the Project, then any such tax or charge, however designated, shall
be included within the meaning of the terms "Real Property Tax" or "Real
Property Taxes" for purposes of this Lease. If any Real Property Tax is partly
based upon property or rents unrelated to the Project, then only that part of
such Real Property Tax that is fairly allocable to the Project shall be included
within the meaning of the terms "Real Property Tax" or "Real Property Taxes."
Notwithstanding the foregoing, the terms "Real Property Tax" or "Real Property
Taxes" shall not include estate, inheritance, transfer, gift or franchise taxes
of Landlord or the federal or state income tax imposed on Landlord's income from
all sources.
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<PAGE>
B. LANDLORD'S INSURANCE COSTS: The term "Landlord's Insurance Costs"
shall mean the costs to Landlord to carry and maintain the policies of fire and
property damage insurance including earth quake and flood for the Building and
the Property and general liability insurance required, or permitted, to be
carried by Landlord pursuant to Article 9, together with any deductible amounts
paid by Landlord upon the occurrence of any insured casualty or loss.
C. PROPERTY MAINTENANCE COSTS: The terminate "Property Maintenance
Costs" shall mean all costs and expenses (except Landlord's Insurance Costs and
Real Property Taxes) paid or incurred by Landlord in protecting, operating,
maintaining, repairing and preserving the Property and all parts thereof,
including without limitation, (i) professional management fees (equal to three
percent of the annualized Base Monthly Rent), (ii) the amortizing portion of any
costs incurred by Landlord in the making of any modifications, alterations or
improvements as set forth in Article 6, which are so amortized during the Lease
Terminate, (iii) costs of complying with governmental regulations governing it's
use of Hazardous Materials, and Landlord's costs of monitoring Tenant's use of
Hazardous Materials including fees charged by Landlord's consultants to
periodically inspect the Premises and the Property, subject to Section 4.14 and
(iv) such other costs as may be paid or incurred with respect to operating,
maintaining and preserving the Property, such as repairing, replacing, and
resurfacing the exterior surfaces of the buildings (including roofs), repairing,
replacing, and resurfacing paved areas, cleaning, maintaining, restoring and/or
replacing the interior of the Leased Premises both during the terminate of the
Lease and upon its termination, and maintaining, repairing or replacing, when
necessary electrical, plumbing, sewer, drainage, heating, ventilating and air
conditioning systems serving the buildings, providing utilities to the common
areas, maintenance, repair, replacement or installation of lighting fixtures,
directional or other signs and signals, irrigation or drainage systems, trees,
shrubs, materials, maintenance of all landscaped areas, and depreciation and
financing costs on maintenance and operating machinery and equipment (if owned)
and rental paid for such machinery and equipment (if leased).
D. READY FOR OCCUPANCY: The terminate "Ready for Occupancy" shall
mean the date upon which (i) the Leased Premises are available for Tenant's
occupancy in a broom clean condition and (ii) the improvements, if any, to be
made to the Leased Premises by Landlord as a condition to Tenant's obligation to
accept possession of the Leased Premises have been substantially completed and
the appropriate governmental building department (i.e., the City building
department, if the Property is located within a City, or otherwise the County
building department) shall have approved the construction of such improvements
as substantially complete or is willing to so approve the construction of the
improvements as substantially complete subject only to compliance with specified
conditions which are the responsibility of Tenant to satisfy or is willing to
allow Tenant to occupy subject to its receiving assurances that specified work
will be completed.
E. PROPERTY OPERATING EXPENSES: The terminate "Property Operating
Expenses" shall mean and include the all Real Property Taxes, plus all
Landlord's Insurance Costs.
F. LAW: The term "Law" shall mean any judicial decision and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirement of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Property, or any of them in
effect either at the Effective Date of this Lease or at any time during the
Lease Terminate, including, without limitation, any regulation, order, or policy
of any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).
G. LENDER: The terminate "Lender" shall mean the holder of any Note
or other evidence of indebtedness secured by the Property or any portion
thereof.
H. PRIVATE RESTRICTIONS: The terminate "Private Restrictions" shall
mean all recorded covenants, conditions and restrictions, private agreements,
easements, and any other recorded instruments affecting the use of the Property,
as they exist as of the date of this Lease.
I. RENT: The term "Rent" shall mean collectively Base Monthly Rent
and all Additional Rent.
13.13 GENERAL WAIVERS: One party's consent to or approval of any act by
the other party requiring the first party's consent or approval shall not be
deemed to waive or render unnecessary the first party's consent to or approval
of any subsequent similar act by the other party. No waiver of any provision
hereof or any breach of any provision hereof shall be effective unless in
writing and signed by the waiving party. The receipt by Landlord of any rent or
payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach. No waiver of any provision of
this Lease shall be deemed a continuing waiver unless such waiver specifically
states so in writing and is signed by both Landlord and Tenant. No delay or
omission in the exercise of any right or remedy accruing to either party upon
any breach by the other party under this Lease shall impair such right or remedy
or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by either party of any breach of any provision of this
Lease shall not be deemed to be a waiver of any subsequent breach of the same or
any other provisions herein contained.
13.14 MISCELLANEOUS: Should any provision of this Lease prove to be
invalid or illegal, such invalidity or illegality shall in no way affect, impair
of invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The terminate
"party" shall mean Landlord or Tenant as the context implies. If Tenant consists
of more than one person or entity, then all members of Tenant shall be jointly
and severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. The captions used in this Lease are for convenience only and
shall not be considered in the construction or interpretation of any provision
hereof. When the context of this Lease requires, the neuter gender in-
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<PAGE>
cludes the masculine, the feminine, a partnership or corporation or joint
venture, and the singular includes the plural. The terms "must", shall", will",
and "agree" are mandatory. The terminate "may" is permissive. When a party is
required to do something by this Lease, it shall do so at its sole cost and
expense without right of reimbursement from the other party unless specific
provision is made therefor. Where Tenant is obligated not to perform any act or
is not permitted to perform any act, Tenant is also obligated to restrain any
others reasonably within its control, including agents, invitees, contractors,
subcontractors and employees, from performing said act. Landlord shall not
become or be deemed a partner or a join venture with Tenant by reason of any of
the provisions of this Lease.
ARTICLE 14:
CORPORATE AUTHORITY,
BROKERS AND ENTIRE AGREEMENT
14.1 CORPORATE AUTHORITY: If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
Tenant is validly formed and duly authorized and existing, that Tenant is
qualified to do business in the State in which the Leased Premises are located,
that Tenant has the full right and legal authority to enter into this Lease,
that he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant in accordance with the bylaws and/or a board of directors' resolution of
Tenant, and that this Lease is binding upon Tenant in accordance with its terms.
Tenant shall, within thirty days after execution of this Lease, deliver to
Landlord a certified copy of the resolution of its board of directors
authorizing or ratifying the execution of this Lease, and if Tenant fails to do
so, Landlord at its sole election may elect to (i) extend the Intended
Commencement Date by such number of days that Tenant shall have delayed in so
delivering such corporate resolution to Landlord or (ii) terminate this Lease.
14.2 BROKERAGE COMMISSIONS: Tenant warrants that it has not had any
dealings with any real estate broker(s), leasing agent(s), finder(s) or
salesmen, other than the Brokers (as named in Article 1) with respect to the
lease by its of the Leased Premises pursuant to this Lease, and that it will
indemnify, ,defend with competent counsel, and hold Landlord harmless from any
liability for the payment of any real estate brokerage commissions, leasing
commissions or finders fees claimed by any other real estate broker(s), leasing
agent(s), finder(s), or salesmen to be earned or due and payable by reason of
Tenant's agreement or promise implied or otherwise) to pay (or to have Landlord
pay) such a commission or finder's fee by reason of its leasing the Leased
Premises pursuant to this Lease. The provisions of section 14.2 shall be mutual
between Landlord and Tenant.
14.3 ENTIRE AGREEMENT: This Lease, the Exhibits (as described in
Article 1) and the Addenda (as described in Article 1), which Exhibits and
Addenda are by this reference incorporated herein, constitute the entire
agreement between the parties, and there are no other agreements, understandings
or representations between the parties relating to the lease by Landlord of the
Leased Premises to Tenant, except as expressed herein. No subsequent changes,
modifications or additions to this Lease shall be binding upon the parties
unless in writing and signed by both Landlord and Tenant.
14.4 LANDLORD'S REPRESENTATIONS: Tenant acknowledges that neither
Landlord nor any of its agents made any representation or warranties respecting
the Project, the Building or the Leased Premises, upon which Tenant relied in
entering into this Lease, which are not expressly set forth in this Lease.
Tenant further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law, or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business, or (iii) the exact square footage of the
Leased Premises, and that Tenant relied solely upon its own investigations
respecting said matters. Tenant expressly waives any and all claims for damage
by reason of any state - management, representation, warranty, promise or other
agreement of Landlord or Landlord's agent(s), if any, not contained in this
Lease or in any Addenda hereto.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the respective dates below set forth with the intent to be legally bound thereby
as of the Effective Date of this Lease first above set forth.
AS LANDLORD: AS TENANT:
Renco Equities IV SEEQ Technology Inc.
- ------------------------------ ------------------------------------
a California partnership a Delaware corporation
- ------------------------------ ------------------------------------
By: /s/ Renco Equities IV By: /s/ P J Salsbury
-------------------------- ---------------------------------
Title: Title: Pres/CEO
----------------------- ------------------------------
By: By:
-------------------------- _________________________________
Title: Title:
----------------------- ------------------------------
Date: 1/13/95 PM Date: 1/13/95 AM
------------------------ -------------------------------
If Tenant is a CORPORATION, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. This Lease must
be executed by the chairman of the board, president or vice-president, and the
secretary, assistant secretary, the chief financial officer or assistant
treasurer, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event a certified copy, of the bylaws or a certified
copy of the resolution, as the case may be, must be attached to this Lease.
Single Tenant Lease
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<PAGE>
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("Amendment") dated for reference purposes as of
April 18, 1995, is made to that Industrial Space Lease dated as of January 13,
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1995, (the "Lease") by and between SEEQ Technology, Inc., a Delaware
- ----
corporation, as ("Tenant"), and Renco Equities IV, a California general
partnership as ("Landlord"), for the lease of space located at 47200 Bayside
Parkway, in Fremont, California (the "Leased Premises"). The parties hereto
agree that the Lease is amended, changed and modified by the following
provisions, which are hereby added to the Lease:
Unless otherwise expressly provided herein, all terms which are given a special
definition by the Lease that are used herein are intended to be used with the
definition given to them by the Lease. The provisions of the Lease shall remain
in full force and effect except as specifically amended hereby. In the event of
any inconsistency between the Lease and this Amendment, the terms of this
Amendment shall prevail.
15 Landlord hereby increases its allowance for the cost of construction of
interior improvements to a total of one hundred fifteen thousand three
hundred thirty six dollars ($115,336.00). In consideration for the
increase in the allowance and as provided for-in section 15 of the First
Addendum To Lease, the Base Monthly Rent shall be increased by the
product of one and thirty three one hundreds percent (1.33%) times the
amount of the total allowance in excess of fifty three thousand seven
hundred thirteen dollars ($53,713.00), which results in an increase in
the Base Monthly Rent of eight hundred nineteen dollars and fifty nine
cents ($819.59).
1.1 G. The Lease Expiration Date is January 31, 2005.
1.1 S The Base Monthly Rent is as follows:
February 1, 1995 thru February 28, 1995
March 1, 1995 thru September 30, 1995
October 1, 1995 thru January 31, 1996
February 1, 1996 thru January 31, 1998
February 1, 1998 thru January 31, 2000
February 1, 2000 thru January 31, 2002
February 1, 2002 thru January 31, 2005
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment To
Lease with the intent to be legally bound thereby, to be effective as of the
date the second party signs this First Amendment To Lease.
AS LANDLORD: AS TENANT:
Renco Equities IV SEEQ Technology, Inc.
A California general partnership a Delaware corporation
By: /s/ XXX By: /s/ XXX
---------------------- ---------------------------
Title: General Partner Title: VP CFO
------------------------
By: /s/ XXX By: /s/ XXX
---------------------- ---------------------------
Title: General Partner Title: Pres/CFO
------------------------
Dated: April XX,1995 Dated: April 13, 1995
-- --
Amendment
<PAGE>
FIRST ADDENDUM TO LEASE
THIS FIRST ADDENDUM TO LEASE ("Addendum") is made to that Industrial Space Lease
dated as of January 13, 1995,(the "Lease") by and between Renco Equities IV, a
-----------------
California general partnership (as "Landlord"), and SEEQ Technology Inc., a
Delaware corporation (as "Tenant"), for the lease of space located at 47200
Bayside Parkway in Fremont California (the "Leased Premises"). The parties
hereto agree that the Lease is amended, changed and modified by the following
provisions, which are hereby added to the Lease:
Unless otherwise expressly provided herein, all terms which are given a special
definition by the Lease that are used herein are intended to be used with the
definition given to them by the Lease. The provisions of the Lease shall remain
in full force and effect except as specifically amended hereby. In the event of
any inconsistency between the Lease and this Addendum, the terms of this
Addendum shall prevail.
Section 2.6
Sixty (60) days prior to the Lease expiration date Landlord and Tenant shall
inspect the Property and prepare a list of work which is readily discoverable to
be performed in connection with Tenant's obligations hereunder. Tenant may
either perform said work itself or require Landlord to perform said work. In the
event that Landlord performs the work Landlord shall do so in the shortest
reasonable time period and, Tenant shall pay the reasonable cost of said work.
Tenant shall not be required to repair or replace items or systems that are
properly functioning or otherwise in good working order as of the expiration
date of the Lease.
Upon Lease termination Tenant's obligation to repair or replace mechanical
systems snail be limited to repairing or replacing the individual components of
said systems rather than to replace an entire system unless the cost to replace
the entire system is less than the cost to replace the required components of
the system.
Section 3.7
Landlord may not pay on Tenant's behalf any liens which Tenant has provided a
bond for within fifteen (15) days following Landlord's notice to Tenant.
Section 4.2
Landlord shall not unreasonably withhold its approval of the manner in which
Tenant affixes its equipment to the Premises.
Section 4.7
Notwithstanding anything to the contrary contained herein, Tenant shall not be
required to make or pay for (through Property Operating Expenses or otherwise)
(i) structural alterations to the building or (ii) other changes which would
materially interfere with Tenant's use and enjoyment of the Leased Premises and
the conduct of Tenant's business in order to comply with any of the foregoing
Laws and Private Restrictions. Landlord represents and warrants to the best of
its knowledge that as of the Lease Commencement Date the Leased Premises, the
Building, the Outside Areas and the Property comply with all Private
Restrictions, laws, ordinances, orders, rules and regulations promulgated by any
state, federal, municipality or other agency or body having or claiming
jurisdiction thereof and Landlord shall pay for all costs (if any) required to
bring the Property into compliance with all Private Restrictions, laws,
ordinances, orders, rules and regulations promulgated by any state, federal, or
local authorities in effect as of the Commencement Date of this Lease. This
representation and warranty, and Landlord's obligations hereunder are limited to
improvements constructed by Landlord, its affiliates, or contractors.
<PAGE>
First Addendum To Lease
Page 2
Section 4.8
Landlord represents and warrants to the best of its knowledge, that as of the
Lease Commencement Date, the Leased Premises, Building and Property and all
existing tenant improvements therein comply with the regulations of Landlord's
insurance carrier. This representation and warranty is limited to the
improvements constructed by Landlord and its contractors. In the event that this
warranty is not correct, Landlord shall correct any defect at its sole cost.
Section 4.14
Landlord represents and warrants to Tenant that to the best of Landlord's
knowledge neither the Leased Premises nor any other portion of the Building or
Property is in violation of any Hazardous Materials Laws. Landlord further
represents and warrants that to the best of Landlord's knowledge there are no
Hazardous Materials on or seeping onto the Leased Premises or any other portion
of the Properly or in the soil or ground water beneath the Leased Premises or
any other portion of the Property. In addition, Landlord has not received any
notice (i) from any governmental agency or entity, including, without
limitation, the California Department of Health Services, the Regional Water
Quality Control Board, or the U.S. Environmental Protection Agency, proposing,
suggesting or threatening remedial action or alleging a violation of any law,
rule or regulation relating, directly or indirectly, to the physical or
environmental condition of the Building and/or Property or any portion thereof;
(ii) from any former owner, lien holder or former or present tenant or other
user of the Building and/or Property or any portion thereof seeking
indemnification for any cost associated with the presence of Hazardous Materials
on or beneath the Building and/or Property or any portion thereof or any
adjoining property. Landlord shall, at Landlord's sole cost and expense, perform
and be responsible for any remediation or cleanup of, or work related to,
Hazardous Materials present at, on or under the Property prior to the Lease
Commencement Date or caused by Landlord. In performing such work, Landlord shall
not unreasonably interfere with the use of the Property or the Leased Premises
by Tenant, and Landlord shall repair any damage to improvements at the Property
arising from such work.
Section 4.14 D.
Either Landlord or Tenant may cause testing wells to be installed on the
Property in locations that are approved by landlord and do not unreasonably
interfere with Tenant's business. The party conducting such tests shall provide
the results of such tests to the other party. In the event that the tests do not
disclose the presence of hazardous Materials, or disclose Hazardous materials
not deposited by the other party, then the costs of the tests shall be paid by
the party who conducted said tests.
Section 5.1
Landlord shall, at Landlord's cost during the term of this Lease, repair the
structural portions of the building which include the footings, concrete floor,
concrete walls, columns, and roof (other than routine maintenance and repair
costs and other than maintenance of the waterproof membrane which are Tenant's
responsibility pursuant to Section 13.12.C), (provided however that Tenant shall
pay the cost to repair any damage caused by Tenant, and normal maintenance
expenses such as painting). In addition, Landlord at its expense shall be
obligated to repair damage attributable to "Latent Defects". A "Latent Defect"
shall mean a defect in construction or operation that impairs the utility of the
defective system or portion of the Building, Leased Premises, Outside Area, or
Property for the purpose that it was constructed, provided however, that a
Latent Defect shall not include a defect which has not caused substantial and
material damage to the Building; Leased Premises, Outside Area, or Property
unless Tenant has notified Landlord in writing of said defect within two (2)
years from the Lease Commencement Date.
<PAGE>
First Addendum To Lease
Page 3
Notwithstanding anything to the contrary contained herein, Tenant's obligation
to repair (or pay the costs thereof) shall not extend to (1) damage and repairs
due to casualty which. Landlord is required to insure against provided that
Tenant shall pay any insurance deductible amounts as required pursuant to the
terms of this Lease, (2) damage caused in whole or in part by the negligence or
willful misconduct of Landlord or Landlord's agents, contractors, or employees
(but only to the extent of said negligence or misconduct), (3) repairs for which
Tenant has already paid as Property Maintenance Costs or repairs or costs
expressly excluded from Tenant's responsibility under Section 13.12.C; (4)
damage arising from Landlord's failure to comply with the provisions of this
Lease including, without limitation, Landlord's repair obligations pursuant to
this section; and repairs covered by valid warranties.
Section 6.1
Notwithstanding anything to the contrary in this Lease, Tenant shall be
permitted to construct improvements to the interior of the space without
obtaining Landlord's prior written consent provided however, that such
improvements shall: (i) not exceed a cost of ten thousand dollars ($10,000) in
any calendar year, (ii) shall be interior only, (iii) shall not affect the
structure of the Building, (iv) shall not involve demolition to work constructed
by Landlord, and (v) Tenant shall advise Landlord of the work to be constructed
and with each such improvement will provide to Landlord reproducible drawings
showing the improvements to be constructed by Landlord and existing adjacent
improvements.
Section 7.2
Notwithstanding anything to the contrary herein above, Tenant may assign this
Lease, or sublet any portion thereof to any of the following' (i) any
corporation or other entity which controls, is controlled by, or is under common
control with Tenant; (ii) any corporation or other entity resulting from the
merger or consolidation of Tenant; and (iii) any corporation, partnership, other
entity or person which acquires a controlling interest in the corporate stock of
Tenant or acquires substantially all of the assets of Tenant as a going concern
of the business that is being conducted on the Leased Premises, provided,
however, that no such assignment shall reduce or alter Tenant's liability under
the terms of this Lease.
Section 8.2
Landlord's Indemnification of Tenant. Subject to Tenant's obligations under the
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terms of this Lease, Landlord shall defend, indemnify, and hold Tenant harmless
from and against any and all losses, costs, expenses, liabilities, claims causes
of action and damages of all kinds that may result to Tenant, including
reasonable attorneys' fees and disbursements incurred by Tenant, arising from
(i) the disturbance of Tenant's quiet possession by Landlord, by persons
deriving title from Landlord, because of liens or encumbrances incurred or
suffered by Landlord; (ii) because of title paramount to Landlord's; (iii)
because of any defect in Landlord's power or authority to execute and undertake
Landlord's obligations under this Lease' or (iv) because of any failure by
Landlord to perform any of its obligations under this Lease. Landlord's duty to
indemnify Tenant under this Section 8.2 shall survive the expiration or earlier
termination of this Lease.
Landlord covenants with Tenant that, subject to Tenant's compliance with the
terms of this Lease; Tenant shall and may peaceably and quietly have, hold, and
enjoy the Leased Premises for the Term of this Lease, and any renewals, or
extensions thereof, and that neither Landlord, nor any party claiming under or
through Landlord, shall disturb the use or occupancy of the Leased Premises by
Tenant and Landlord shall defend Tenant's right to such use and occupancy.
<PAGE>
First Addendum To Lease
Page 4
Section 10.4 C.
Tenant may terminate this Lease in the event that the Leased Premises has not
been substantially restored within one (1) year following notice from Landlord
to Tenant as provided in this Section 10.4.
Section 11.5
(v) the unamortized value of Tenant's leasehold interest in the Leased Premises,
(vi) Tenant's improvements to the extent paid for by Tenant, (vii) any expense
of Tenant reasonably attributable to said Condemnation, and (viii) any
compensation payable to Tenant by reason of the payment by Tenant of rent in
excess of the rent payable by Tenant under this Lease in order to obtain
alternate space.
Section 12.1 C.
The following is added to Section 12.1 C. "... or in the event that such term,
covenant, or condition cannot reasonably be performed within thirty (30) days,
and Tenant shall have failed to commence to perform such term, covenant, or
condition within thirty (30) days, and fails to complete to cure the default in
the shortest reasonable time period."
Section 12.2
Throughout this section, Landlord shall charge Tenant the lesser of Landlord's
Interest Rate or the maximum rate of interest permitted by law.
Section 13.3
Tenant's obligation to subordinate to a loan or ground lease is subject to
Tenant receiving a non-disturbance agreement reasonably acceptable to Tenant.
Landlord represents that the only existing mortgage as of the date of this Lease
is a deed of trust in favor of Wells Fargo National Bank. Landlord will use
reasonable efforts to obtain a non-disturbance agreement reasonably acceptable
to Tenant.
Section 13.12A
Notwithstanding anything to the contrary contained herein, Tenant shall not be
obligated to pay (a) interest on Real Property Taxes or penalties resulting from
Landlord's failure to pay Real Property Taxes provided that Tenant shall have
paid said amount to Landlord prior to the delinquency date for said payments;
(b) any increases in Real Property Taxes attributable to additional improvements
to the Building and/or Property unless such improvements are constructed for
Tenant's sole benefit.
Section 13.12-C
All Property Maintenance Costs that Tenant is obligated to pay pursuant to the
terms of this Lease shall be reasonable and shall be directly related to
operation of the Building and/or the Property. Notwithstanding anything to the
contrary contained herein, Property Maintenance Costs shall not include the
following: (a) advertising costs, legal fees or brokerage commissions incurred
in connection with leasing except required to compensate Landlord following a
default by Tenant; (b) repairs, alterations, additions, improvements or
replacements made to rectify or correct any Latent Defect as defined in section
5.1 of this Lease or which are otherwise Landlord's responsibility pursuant to
Section 5.1 of this Lease; (c) damage and repairs attributable to condemnation,
fire or other casualty except for insurance deductibles which Tenant is
obligated to pay which shall be Property Maintenance Expenses; (d) damage and
repairs
<PAGE>
First Addendum To Lease
Page 5
covered under any insurance policy carried by Landlord in connection with the
Building and/or Property; (e) damage and repairs necessitated by the negligence
or willful misconduct of Landlord or Landlord's employees, contractors or
agents; (f) executive salaries or salaries of service personnel to the extent
that such service personnel perform services other than in connection with the
management, operation, repair or maintenance of the Property; (g) Landlord's
general overhead expenses not related to the Property; (h) payments of principal
or interest on any mortgage or other encumbrance; (i) depreciation; (j) legal
fees, accountants' fees and other expenses incurred in connection with disputes
with the enforcement of any defense of Landlord's title to or interest in the
Building or Property or any part thereof; (k) costs or fines arising from
Landlord's violation of any governmental rule or authority; (I) the cost of any
service provided to Tenant for which Landlord is entitled to be reimbursed from
a third party; (m) costs exceeding those Tenant proves are obtainable through
reasonably competitive bidding procedures consistent with the scope of work
performed; and (n) costs covered by warranty payments from subcontractors or
material suppliers or attributable to items warrantied by Landlord pursuant to
Section 5.1 of this Lease.
At Tenant's request, Landlord shall provide a statement of Property Maintenance
Costs which shall De itemized, signed and certified to be correct by Landlord.
Landlord shall keep at its office for a period of at least twelve (12) months
after the expiration of each calendar year, full and accurate books, records and
supposing documents in connection with Landlord's statement. Tenant or Tenant's
agent shall have the right at all reasonable times within said twelve (12) month
period to inspect such books, records and supporting documents, to challenge the
accuracy of any Property Maintenance Costs and to procure an audit. In the event
an audit of the records results in a determination that the Property Maintenance
Costs charged to Tenant were in excess of 5% more than the actual Property
Maintenance Costs, Landlord shall pay for the reasonable cost of such audit.
Section 14.5
Landlord's Interest Rate: Throughout the Lease where Tenant is obligated to pay
interest to Landlord, Tenant shall so pay interest at an annual interest rate
equal to the Wells Fargo National Bank Prime Lending Interest Rate, as
determined from time to time by Wells Fargo National Bank, plus three percent
(3%). In the event that such interest rate is not available, Landlord in its
reasonable opinion shall select another major regional national bank which
publishes a prime lending rate of interest to use as a reference rate to which
three percent (3%) shall be added.
Section 15
Additional Improvements: Landlord, or an affiliate of Landlord, shall install
interior improvements in accordance with a plan to be approved by Landlord and
Tenant. Landlord shall use its best efforts to complete construction of the
interior improvements prior to February 1, 1995. In the event that the
improvements are not complete by that date, Tenant shall accept the Premises on
February 1, 1995, on which date the Lease Term shall commence. Base Monthly Rent
for February shall be prorated based on the actual date of completion of
construction of interior improvements, provided, however, that Tenant shall pay
not less than:
for Base Monthly Rent for the month of February, and full base Monthly Rent
for March 1995, and succeeding months.
Landlord shall pay the cost of construction of interior improvements in an
amount equal to fifty three thousand seven hundred thirteen dollars
($53,713.00). In addition, Tenant may require Landlord to increase its
contribution for the cost of construction of interior improvements by an amount
up to an additional fifty three thousand seven hundred thirteen dollars
($53,713.00) in which case the Base Monthly Rent shall increase by an amount
equal to one the thirty three one hundreds percent (1.33%)
<PAGE>
First Addendum To Lease
Page 6
times the actual amount of the additional allowance provided by Landlord. Tenant
shall pay the cost of construction (if any) in excess of the amounts which
Landlord has agreed to provide.
Section 16
Option to Renew: Landlord hereby grants to Tenant the option to renew the Lease,
for an additional term of five (5) years (the "Renewal Term") with the option
commencing on the expiration of the Lease (the "First Renewal Commencement
Date") and ending five (5) years thereafter (the "First Renewal Expiration
Date").
1. The lease of the Leased Premises for either of the Renewal Terms shall be
on the same terms and conditions as set forth in the Lease, except:
A. That the rental for the Leased Premises during the Renewal Term shall
be as set forth below in Paragraph 3, and
B. That the Security Deposit shall be increased to the rental amount
determined in Paragraph 3 {the "increased Security Deposit Amount").
2. Tenant shall notify Landlord of Tenant's exercise of its right to renew the
Lease for the Renewal Term only by giving to Landlord written notice not sooner
than nine (9) months prior to the Renewal Commencement Date and not later than
six (6) months prior to the Renewal Commencement Date (time is expressly of the
essence to Landlord). Any attempted exercise of this Option made other than
within the time period stated or in the manner stated shall be void and of no
force or effect. In the event that Tenant does not or is not entitled to
exercise its option Tenant shall have no further rights hereunder.
3. If Tenant shall have properly and timely exercised its right to extend the
term of the Lease, the term of tl3e Lease shall be so extended for the Renewal
Term on the same terms and conditions contained in the Lease; provided, however,
the Base Monthly Rent for each month of the first thirty (30) months of the
Renewal Term shall be calculated as follows: The new Base Monthly Rent for the
Renewal Term shall be the greater of: (i) the Base Monthly Rent being paid by
Tenant to Landlord during the final full month of the final year of the initial
Lease Term, or (ii) the Then Market Rental Rate for the Lease Premises.
4. The term "Then Monthly Market Rental Rate" shall be determined by mutual
agreement between Landlord and Tenant or, in the event such agreement cannot be
made within ten (10) days from the date Tenant shall have exercised this option,
Landlord and Tenant shall each appoint a real estate appraiser with at least
five (5) years full-time commercial/industrial appraisal experience in Santa
Clara County to appraise and determine the fair market monthly rental rate the
Leased Premises, in their then existing condition for the use specified in the
Lease could be leased for, on the same terms and conditions set forth in the
Lease, to a qualified tenant ready, willing and able to lease the Leased
Premises for a term equal to the Renewal Term. If either party does not appoint
an appraiser within ten (10) days after the other party has given notice of the
name of its appraiser, the other party can then apply to the President of the
Santa Clara County Real Estate Board or the presiding Judge of the Superior
Court of that County for the selection of a second appraiser who meets the
qualifications stated above. The failing party shall bear the cost of appointing
the second appraiser and of paying the second appraiser's fee. The two
appraisers shall attempt to establish the Then Monthly Market Rental Rate for
the Leased Premises. If the two appraisers are unable to agree on the Then
Monthly Market Rental Rate for the Leased Premises within ten (10) days after
the second appraiser has been selected or appointed, then the two appraisers
shall attempt to select a third appraiser meeting the qualifications stated
above. If they fail to agree on a third appraiser, either party can follow the
above procedure for having an appraiser appointed by the Real Estate Board or a
judiciary. Each of the parties shall bear one-half (1/2) of the cost of
appointing the third appraiser and of paying the third appraiser's fee. Unless
the three appraisers are able to agree on the Then Monthly Market Rental Rate
for the Leased Premises within ten (10) days after the selection or appointment
of the third appraiser,
<PAGE>
First Addendum To Lease
Page 7
the two appraisal amounts being calculated most closely together, after having
discarded the appraisal amount which most greatly varies from the other two
appraisal amounts, shall be added together then divided by two (2). The
resulting rental amount shall be defined as the. Then Monthly Market Rental Rate
for the Leased Premises. In no event, however, shall the resulting Then Monthly
Market Rental Rate for the Renewal Term be less than the Base Monthly Rent paid
during the final full month of the initial Lease Term.
The Base Monthly Rent shall be adjusted at the end of the thirtieth (30th)
month of the Renewal Term by multiplying the Base Monthly Rent for the thirtieth
(30th) month times a fraction the numerator of which shall be the Consumer Price
Index published immediately prior to the period including the thirtieth (30th)
month of the Renewal Term and the denominator of which shall be the Consumer
Price Index published immediately prior to the first (1st) month of the Renewal
Term. In no event, however, shall the Base Monthly Rent for the last thirty (30)
months of either Renewal Term be less than the Base Monthly Rent for the first
thirty (30) months of the Renewal Term.
For purposes of this option, the term "Consumer Price Index" shall mean the
Consumer Price Index, All Urban Consumers, Subgroup "All Items", for the San
Francisco-Oakland-San Jose Area (1982-1984=100), now being published by the
United States Department of Labor, Bureau of Labor Statistics. If the Consumer
Price Index is changed so that the base year is altered from that used as of the
Lease Commencement Date, then the Consumer Price Index shall be converted in
accordance with the conversion factor published by the United States Department
of Labor, Bureau of Labor Statistics, to obtain the same result that would have
been obtained had the base year not been changed. If no conversion factor is
available, or if the Consumer Price Index is otherwise changed, revised or
discontinued for any reason, there shall be substituted in lieu thereof and the
term "Consumer Price Index" shall thereafter refer to the most nearly comparable
official price index of the United States Government reasonably designated by
Landlord in order to obtain substantially the same result for any adjustment
required by this Option as would have been obtained had the original Consumer
Price Index not been changed, revised or discontinued.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Addendum To
Lease with the intent to be legally bound thereby, to be effective as of the
date the second party signs this First Addendum To Lease.
AS LANDLORD: AS TENANT:
Renco Equities IV SEEQ Technology, Inc.
A California general partnership a Delaware corporation
By: /s/ XXX By: /s/ XXX
------------------------- ------------------------
Title: General Partner Title: VP CFO
--------------------
By: /s/ XXX By: /s/ XXX
------------------------ -----------------------
Title: General Partner Title: Pres/CFO
--------------------
By: /s/ XXX
-------------------------
Title: General Partner
Dated: 1/13/95 PM Dated: 1/13/95 AM
---------------------- ---------------------
<PAGE>
EXHIBIT "A"
<PAGE>
EXHIBIT "B"
<PAGE>
EXHIBIT "D"
ACCEPTANCE AGREEMENT
This Acceptance Agreement is made as of _________, 1994, by and between the
parties hereto with regard to that Lease dated __________, 1994, by and between
a California general partnership, as Landlord ("Landlord"), and ___________, and
corporation, as Tenant ("Tenant"), affecting those premises commonly known as
___________, located at ______________ in the City of ___________, State of
California (the "Premises"). The parties agree as follows:
1. All improvements required to be constructed by Landlord by the Lease
have been completed in accordance with the terms of the Lease and are hereby
accepted by Tenant, subject to the completion of punchlist items identified on
Exhibit "A" attached hereto.
2. Possession of the Premises has been delivered to Tenant and Tenant has
accepted and taken possession of the Premises.
3. The Lease Commencement Date is _____________, 1995.
4. The Lease Term shall expire on _______________, 19 _____, unless sooner
terminated according to the terms of the Lease or i3y mutual agreement.
5. The Base Monthly Rent due pursuant to the Lease is as follows:
_________________ thru _________________ ______________
_________________ thru _________________ ______________
_________________ thru _________________ ______________
6. Landlord has received a Security Deposit in the amount of ______________
Dollars ($ ).
7. Landlord has received Prepaid Rent in the amount of ___________________
Dollars ($ ), which shall be applied to the first installment(s) of Base
Monthly Rent.
8. The Lease is in full force and effect, neither party is in default of
its obligations under the Lease, and Tenant has no setoffs, claims, or defenses
to the enforcement of the Lease.
AS LANDLORD: AS TENANT:
____________________________________ _______________________
a California general partnership a ______________ corporation
By:_________________________________ By:____________________
Title: General Partner Title:_________________
By:_________________________________ By:____________________
Title: General Partner Title:_________________
By:_________________________________
Title: General Partner
Dated:______________________________ Dated:_________________
<PAGE>
EXHIBIT 10.10
SUBLEASE AGREEMENT
------------------
This sublease agreement ("Sublease") is entered into as of January 25, 2000 by
and between LSI Logic Corporation, a Delaware corporation located at 1551
McCarthy Blvd., Milpitas, CA 95035 ("Sublessor") and @Road Incorporated, a
California corporation ("Sublessee"), as a Sublease under that Industrial Space
Lease dated January 13, 1995, as amended by that certain First Addendum to Lease
dated as of January 13, 1995 and that certain First Amendment to Lease dated
April 18, 1995 (collectively, the "Lease") by and between Renco Equities IV, a
California partnership ("Landlord"), and SEEQ Technology, Inc., a Delaware
corporation ("SEEQ"), as tenant. A copy of the Lease is attached hereto as
Exhibit A. Sublessor represents and warrants that it is the successor by merger
to SEEQ and that it is now the tenant under the Lease.
1. SUBLEASE PREMISES
-----------------
1.1 Sublessor leases to Sublessee and Sublessee leases from Sublessor the
real property located at 47200 Bayside Parkway, Fremont, California consisting
of the entire freestanding building consisting of approximately 53,713 square
feet (the "Building") and more particularly described in Exhibit A to the Lease,
together with the grounds thereon, subject however, to any and all existing
encumbrances, easements, conditions, covenants, and restriction, rights-of-way,
any other matters of record, and such matters as may be disclosed by inspection
or survey (hereinafter referred to as "Premises").
1.2 Sublessee accepts the Premises as being in good and sanitary
order, condition and repair and accepts all other improvements included in the
Premises in their present condition, "AS IS," and without representation or
warranty by Sublessor as to the condition of the Premises or as to the use or
occupancy which may be made thereof. Notwithstanding the foregoing, Sublessor
shall deliver possession of the Premises to Sublessee as follows:
1
<PAGE>
(i) The Premises shall be in good working order and repair.
(ii) The Premises shall have been professionally cleaned.
(iii) Sublessor shall leave in place: the existing Rolm phone switch,
although Sublessee acknowledges that there are no handsets
available; and the existing CAT-5 and CAT-3 wiring uncut and in
place for Sublessee's use, including all network racks and patch
panels.
(iv) Sublessor represents and warrants to Sublessee that the power
that is distributed throughout the Building is at least 400
amps, 277/480 volts.
Sublessee will have a period of thirty (30) days from the Commencement Date to
report any inoperable Building systems to Sublessor and Sublessor will be
responsible for repairing such inoperable Building system at Sublessor's sole
cost and expense. Sublessor shall promptly commence to repair such inoperable
Building system and shall diligently pursue such repair to completion. If
however Sublessee, its agents, contractors, or guests cause any damage to any
Building systems or have caused any Building system to become inoperable,
Sublessor will have no responsibility or obligation to repair.
1.3 Upon the expiration or sooner termination of this Sublease,
Sublessee shall surrender the Premises, together with all Alterations (as
defined in the Lease), to Sublessor in the same condition as when received or
installed, ordinary wear and tear excepted, and clean and free of debris and
free of any liens created or suffered to be created by Sublessee. Sublessee
shall not, however, be required to remove any tenant improvements to the
Premises installed or constructed by, on behalf of or for the benefit of
Sublessor, nor shall Sublessor require Sublessee to remove any tenant
improvements to the Premises installed or constructed by Sublessee pursuant to
the Tenant Improvements Agreement except to the extent Landlord requires the
removal of any tenant improvements installed by Sublessee.
2
<PAGE>
1.4 Sublessee shall be entitled to use the Premises for general office
use, sales, R&D, assembly and any other use permitted under the Lease.
2. TERM
----
2.1 The term of this Sublease shall be for a period of approximately
sixty (60) months commencing on the later of the following: (i) February 1,
2000; or (ii) the date this Sublease has been consented to in writing by
Landlord as provided in Paragraph 9 of the Sublease (the "Commencement Date").
The term shall end on January 31, 2005, unless sooner terminated pursuant to any
provision hereof. Sublessor represents and warrants that the Premises is
currently vacant and that Sublessor will deliver exclusive possession of the
Premises to Sublessee on the Commencement Date.
2.2 Sublessor shall provide early access to the Premises to Sublessee
upon receipt of an executed copy of this Sublease by Sublessee. Such early
access will be for the purposes of preparing the space for occupancy and tenant
improvement work provided Sublessee has obtained the required insurance as
defined in the Lease.
3. RENT
----
3.1 Sublessee shall pay to Sublessor as base triple-net monthly rent for
the Premises the amounts set forth below, in advance, on the first day of each
month of the term hereof:
------------------------------------------------------------------------------
Total Monthly
-------------
Months NNN Rent
------ --------
------------------------------------------------------------------------------
February 2000 through May 2000 $ 0.00
------------------------------------------------------------------------------
June 2000 through January 2001 $30,307.26
------------------------------------------------------------------------------
February 2001 through January 2002 $57,472.91
------------------------------------------------------------------------------
February 2002 through January 2003 $60,158.56
==============================================================================
3
<PAGE>
==============================================================================
February 2003 through January 2004 $62,844.21
------------------------------------------------------------------------------
February 2004 through January 2005 $65,529.86
==============================================================================
Sublessee shall pay Sublessor upon the execution hereof the sum of Thirty
Thousand Three Hundred Seven and 26/100 Dollars ($30,307.26) as rent in advance
for the monthly triple-net rent due in June 2000. Rent for any period during the
term hereof which is for less than one month shall be prorated. Rent shall be
payable in advance on the first (1/st/) day of each month during the term,
without notice or demand without any deduction, offset, or abatement (except to
the extent expressly permitted by this Sublease) in lawful money of the United
States of America to Sublessor at the address stated herein or to such other
persons or at such other places as Sublessor may designate in writing.
3.2 In addition to the base net monthly rent specified in Paragraph 3.1,
Sublessee shall pay one hundred percent (100%) of the building operating
expenses as defined in the Lease, which payments shall be paid by Sublessee
directly to Sublessor. Sublessor shall provide Sublessee with a copy of all
billings, correspondence (including any notices alleging that a default has
occurred under the Lease) and other communications sent to Sublessor by Landlord
under or in connection with the Lease no later than four (4) business days after
the same has been received by Sublessor. Additionally, Sublessor shall provide
Sublessee with a copy of all billings, correspondence (including any notices
alleging that a default has occurred under the Lease) and other communications
sent by Sublessor to Landlord under or in connection with the Lease at the same
time such items are sent to Landlord. Additionally, Sublessee shall provide
Sublessor with a copy of all correspondence with Landlord (both sent and
received) for any and all items relating to the Premises, this Sublease or Lease
no later than four (4) business days from the time received from Landlord or at
the same time such items are sent to Landlord by Sublessee.
4
<PAGE>
3.3 Sublessee shall procure, obtain and pay liability insurance premiums
as required by Article 9 of the Lease upon delivery of the Premises.
------------
3.4 Sublessee hereby acknowledges that late payment by Sublessee to
Sublessor of rent and other sums due hereunder will cause Sublessor to incur
costs not contemplated by this Sublease, the exact amount of which will be
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges and late charges that may be imposed on Sublessor by the
terms of the Lease. Accordingly, if any installment of rent or other sums due
from Sublessee to Sublessor under this Sublease is not received by Sublessor
within five (5) business days after its due date, Sublessee shall pay to
Sublessor a late charge equal to five percent (5%) of such overdue amount. In
addition, this five percent (5%) late charge will be due for each subsequent
month (or part thereof) that Sublessee has not paid Sublessor the amount due.
The parties hereby agree that the late charges described in this paragraph
represent a fair and reasonable estimate of the costs Sublessor and/or Landlord
will incur by reason of late payment by Sublessee based upon the circumstances
existing as of the date of this Sublease. Acceptance of such late charge by
Sublessor and Landlord shall in no event constitute a waiver of Sublessee's
default with respect to such overdue amount, nor prevent Sublessor or Landlord
from exercising any of its other rights or remedies granted to it by law or this
Sublease.
Initials: /s/ D L (Sublessor) /s/ J R (Sublessee)
-------- --------
4. SECURITY DEPOSIT
----------------
4.1 Sublessee shall deposit with Sublessor upon the execution hereof the
sum of Two Hundred Forty Thousand and 00/100 Dollars ($240,000.00) as security
for Sublessee's faithful performance of Sublessee's obligations hereunder. If
Sublessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Sublease, Sublessor may
5
<PAGE>
use, apply or retain all or any portion of said deposit for the payment of any
rent or other charge in default or for the payment of any other sum to which
Sublessor may become obligated by reason of Sublessee's default, or to
compensate Sublessor for any loss or damage which Sublessor may suffer thereby,
if Sublessor so uses or applies all or any portion of said deposit, Sublessee
shall within ten (10) days after written demand therefor deposit cash with
Sublessor in an amount sufficient to restore said deposit to the full amount
herein above stated and Sublessee's failure to do so shall be a breach of this
Sublease, and Sublessor may at his option terminate this Sublease. Sublessor
shall not be required to keep said deposit separate from its general accounts.
Said deposit or so much thereof as had not theretofore been applied by Sublessor
shall be returned without payment of interest for its use, to Sublessee within
thirty (30) days after the expiration of the term hereof (or earlier termination
of the Sublease if Sublessee does not have any remaining contractual obligations
to Sublessor), or after Sublessee has vacated the Premises, whichever is later.
5. PROVISIONS CONSTITUTING SUBLEASE
--------------------------------
5.1 This Sublease is and at all times shall be subject and subordinate
to the Lease. Sublessee shall take no action that would cause Sublessor to be in
default of its obligations under the Lease. Sublessee shall perform all of its
obligations under this Sublease, and Sublessee shall indemnify and hold
Sublessor harmless from and against all liability, costs, damages, claims,
demands and expenses, including reasonable attorney's fees and costs, arising
out of Sublessee's failure to do so. Sublessor shall fully perform all of its
obligations under the Lease (except to the extent any of the same are the
obligation of Sublessee hereunder) and shall indemnify and hold Sublessee
harmless from and against all liability, costs, damages, claims, demands and
expenses, including reasonable attorneys' fees and costs, arising out of
Sublessor's failure to do so. Upon any termination of the Lease, this Sublease
shall terminate concurrently therewith except as otherwise provided in the
6
<PAGE>
Consent of Landlord to Sublease and without any liability of Sublessor to
Sublessee; provided, however, that a Lease termination due to Sublessor's
default of its obligations under the Lease or this Sublease, shall be subject to
the indemnification set forth above. Sublessor shall not enter into any
amendment or modification of the Lease without the consent of Sublessee, nor
shall Sublessor consent to a termination of the Lease or exercise any option to
terminate the Lease that it may have, or surrender the Lease, without the prior
written consent of Sublessee which will not unreasonably be withheld (and except
as may be specifically permitted by this Sublease).
5.2 All the terms, provisions, covenants, and conditions in the Master
Lease are hereby made a part of this Agreement (except as herein otherwise
expressly provided), and such rights and obligations as are contained herein
are, during the term of this subletting, hereby imposed upon the respective
parties hereto, the Sublessor herein being substituted for the Landlord in the
Master Lease, and the Sublessee herein being substituted for the Tenant in the
Master Lease; provided however, that the Sublessor shall not be liable to
Sublessee for any default by the Landlord under the Master Lease so long as
Sublessor exercises diligent and commercially reasonable efforts to enforce the
terms of the Lease against Landlord. Accordingly Sublessee recognizes that
Sublessor is not in a position to render any of the services or to perform any
of the obligations required of Landlord by the terms of this sublease.
6. TENANT IMPROVEMENTS
-------------------
6.1 Sublessor is not required to construct any tenant improvements for
Sublessee.
7. BROKERS
-------
7.1 Sublessee and Sublessor warrant and represent that each has had no
dealings with any real estate broker or agent in connection with the negotiation
7
<PAGE>
of this Sublease other than CB Richard Ellis and The Staubach Company, whose
commission shall be paid by Sublessor, and that each knows of no other real
estate broker or agent (other than the brokers described above) who is or might
be entitled to a commission in connection with this Sublease. Each party shall
indemnify, defend and hold the other harmless from and against any and all
liabilities or expenses, including reasonable attorneys' fees and costs, arising
from any claims made by any broker or individual (other than the brokers
described above) for commissions or fees who claims to have represented it in
connection with this Sublease. For example, if a broker (other than the brokers
described above) claims to have represented Sublessee in connection with this
Lease, then Sublessee shall indemnify Sublessor with respect to such claim.
8. CONSENTS AND APPROVALS
----------------------
8.1 Whenever the consent or approval of either party is required under
this Sublease, such consent or approval shall not be unreasonably withheld or
delayed. If Landlord gives its consent or approval to any request made by
Sublessee under this Sublease, then Sublessor shall also give its consent or
approval to such request so long as the implementation of such request does not
increase Sublessor's liability under the Lease.
9. LANDLORD'S CONSENT
------------------
9.1 Sublessor and Sublessee acknowledges that this Sublease is subject to
the consent of the Landlord under the Lease as to (i) the entering into of this
Sublease, and (ii) the proposed initial alterations that Sublessee seeks to make
to the Premises. Accordingly, this Sublease shall not be effective unless and
until Landlord's consent to these matters has been executed by Landlord and the
form of such consent is acceptable to Sublessor and Sublessee in their
reasonable business judgment. Sublessor shall use diligent efforts to obtain
such consent as soon as reasonably possible following execution of this Sublease
by Sublessor and Sublessee. Either party shall have the right to terminate this
8
<PAGE>
Sublease if Landlord's consent hereto, in form and content reasonably acceptable
to Sublessor and Sublessee, cannot be obtained within thirty (30) days after
this Sublease has been fully executed. Sublessor shall have no liability
whatsoever to Sublessee, however, if Sublessor is unable to obtain such consent
from Landlord.
10. PARKING
-------
10.1 Sublessee shall have for its use during the term of this Sublease the
right to one hundred percent (100%) of the parking allocated to Sublessor as
further defined in the Lease.
11. NOTICES
-------
11.1 All notices, unless otherwise provided herein, will be in writing and
deemed given on the date the notice is hand delivered, mailed, or electronically
transmitted (with a confirmation or acknowledgment of receipt) to the receiving
party at such party's address. Either party may change its address upon notice
to the other party as set forth herein.
For Sublessor: For Sublessee:
- ------------- -------------
LSI Logic Corporation @Road, Inc.
M/S D-106, 1551 McCarthy Blvd. 47200 Bayside Parkway
Milpitas, CA 95035 Fremont, CA 94538
Attn: General Counsel Attn: Andy Singh
Phone: (408) 433-8000 Phone:_______________________
Fax: (408) 433-6896 Fax:_________________________
12. CONFLICT
--------
12.1 If any terms of the Master Lease contradict the terms of this
Sublease, the terms of this Sublease shall control over the Master Lease as
between Sublessor and Sublessee.
9
<PAGE>
13. ASSIGNMENT OF WARRANTIES
------------------------
13.1 Sublessor hereby assigns to Sublessee all warranties given and
indemnities made by Landlord to Sublessor under the Lease subject to Landlord's
written consent to such assignment. Sublessor shall cooperate with Sublessee to
enforce all such warranties and indemnities at Sublessee's expense.
14. SIGN
14.1 Sublessor agrees that Sublessee shall be entitled, at its sole cost
and expense, to install its company signage on the monument sign for the
Premises in accordance with the requirements set forth in Bayside Technology
Park Exterior Signage Standards dated April 16, 1996 as amended or revised and
the City of Fremont's exterior signage standards. Notwithstanding the foregoing,
Sublessor shall not approve any signage that has not been previously approved by
Landlord. Sublessor shall exercise diligent and good faith efforts to cause
Landlord to approve such signage.
15. ADDITIONAL PROVISIONS
---------------------
15.1 As an inducement to Sublessee to enter this Sublease, to the best of
Sublessor's knowledge, Sublessor represents and warrants with respect to the
Premises that: (a) the Lease is in full force and effect, and there exists under
the Lease no default or event of default by either Landlord or Sublessor, nor
has there occurred any event which, with the giving of notice or passage of time
or both, could constitute such a default or event of default; (b) there are no
pending or threatened actions, suits or proceedings before any court or
administrative agency against Sublessor or Landlord or third parties which
could, in the aggregate, adversely affect the Premises or any part thereof or
the ability of either party to perform its obligations under the Lease, and
Sublessor is not aware of any facts which might result in such actions, suits or
proceedings; (c) there is no pending or threatened condemnation or similar
proceeding affecting the Premises or any portion thereof, and Sublessor has no
knowledge that any such action
10
<PAGE>
currently is contemplated; and (d) Sublessor has not received any notice from
any insurance company of any defects or inadequacies in the Premises or any part
thereof which could adversely affect the insurability of the Premises or the
premiums for the insurance thereof.
IN WITNESS WHEREOF, Sublessor and Sublessee have caused this Sublease to be duly
executed on the day and year first written below:
SUBLESSOR SUBLESSEE
- --------- ---------
LSI Logic Corporation, @Road Incorporated
a Delaware corporation a California Corporation
By: /s/ XXX By: /s/ XXX
---------------------------------- --------------------------------
It's: VP General Counsel and Secretary It's: Chairman and CEO
--------------------------------- ------------------------------
Date: January 31,2000 Date: 2/1/00
--------------------------------- ------------------------------
and and
By:___________________________________ By:________________________________
Its:__________________________________ Its:_______________________________
Date:_________________________________ Date:______________________________
11
<PAGE>
CONSENT TO SUBLEASE
This CONSENT TO SUBLEASE (Consent) is made to be effective on February 8, 2000,
(the "Effective Date") by and between LSI Logic Corporation, a Delaware
corporation (as "Tenant" and/or "Sublessor"), whose present address is 1551
McCarthy Boulevard, Milpitas, California 95035, @Road Incorporated, a California
corporation (as "Sublessee") whose current address is 47370 Fremont Boulevard,
Fremont, California 94538, and Renco Equities IV, a California general
partnership (as "Landlord") whose current address is 1285 Oakmead Parkway,
Sunnyvale, California 94086, who agree as follows:
THIS CONSENT IS MADE WITH REFERENCE TO THE FOLLOWING FACTS:
A. Landlord entered into a lease dated as of January 13, 1995, (the "Lease")
----------------
for the lease by Tenant's predecessor, SEEQ Technology, Inc, a Delaware
Corporation ("SEEQ") from Landlord of the following described space (the "Leased
Premises"):
47200 Bayside Parkway, Fremont, California 94538
B. Sublessee desires to sublease the Leased Premises from Tenant and to assume
all the obligations of Tenant under the existing Lease by and between Landlord
and SEEQ as of the Effective Date first above set forth.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES OF THE
PARTIES HEREIN CONTAINED, THE PARTIES HERETO AGREE AS FOLLOWS:
1. a. Assumption of obligations by Tenant: LSI Logic Corporation acknowledges
that it has acquired the assets of SEEQ and hereby assumes all the rights and
obligations of SEEQ under the terms of the Lease and agrees to be liable for and
to perform all obligations under the terms of the Lease for the benefit of
Landlord as if LSI Logic Corporation were the original tenant under the terms of
the Lease.
1.b. Landlord's Consent: Landlord hereby agrees to permit Tenant to sublease
the Leased Premises to Sublessee. Landlord's consent shall in no way void or
alter any of the terms of the Lease by and between Landlord and Tenant nor shall
this consent alter or diminish in any way Tenant's obligations to Landlord.
Sublessee's occupancy of the Leased Premises shall be subject to the Lease by
and between Landlord and Tenant. Landlord has not reviewed the terms of any
agreement between Tenant and Sublessee, and Landlord shall not be bound by any
agreement other than the terms of the Lease between Landlord and Tenant, and
this Consent. Landlord does not make any warranties or representations as to the
condition of the Leased Premises or the terms of the Lease between Landlord and
Tenant. Landlord's consent to the sublease shall in no
<PAGE>
Consent To Sublease
Page 2
way obligate Landlord to any further consents or agreements with Tenant and/or
Sublessee. Landlord does not waive enforcement of any terms of the Lease between
Landlord and Tenant including but not limited to the rights of Landlord
regarding construction of improvements in the Leased Premises and this Consent
does not grant Tenant or Sublessee any right to alter the Leased Premises.
2. Events on Termination: it is agreed by all parties hereto that, in the event
Landlord terminates the Lease pursuant to any right therein contained, said
Sublease shall automatically terminate simultaneously with the Lease.
Notwithstanding anything to the contrary set forth above, Landlord, at
Landlord's sole option and election, may choose to allow and to require
Sublessee to remain in possession of the Leased Premises leased under said
Sublease subject to all terms, covenants and conditions of said Lease by giving
Sublessee written notice prior to the effective date of termination of said
Lease, of Landlord's election to allow and to require Sublessee to remain in
possession of the Leased Premises in which event Sublessee shall be entitled and
obligated to remain in possession of the Leased Premises under the terms of said
Sublease, subject to all terms, covenants and conditions of the Lease. Provided,
however, that at Landlord's sole election, Sublessee shall pay as Base Monthly
Rent and Additional Rent the greater of: (i) the Base Monthly Rent and
Additional Rent as stated in the Lease, (ii) the Base Monthly Rent and
Additional Rent as stated in the Sublease, or (iii) the then market Base Monthly
Rent and Additional Rent as reasonably determined by Landlord. Such election by
Landlord to require Sublessee to remain in the Leased Premises shall not operate
as a waiver of any claims Landlord may have against Tenant. Following such
written notice by Landlord, Sublessee shall then, as of the effective date of
said termination of said Lease, be liable to and shall attorn in writing
directly to Landlord as though said Sublease were executed directly between
Landlord and Sublessee; provided, however, it is specifically agreed between the
parties hereto, that whether Landlord elects to allow and require Sublessee to
remain in possession of the Leased Premises under the terms of the Sublease,
subject to the Lease, or to allow said Sublease to automatically terminate
simultaneously with the Lease, Landlord shall not, in any event, nor under any
circumstances be responsible or liable to Sublessee for (i) the return of any
security deposit paid by Sublessee to Tenant, nor shall Sublessee be given
credit for any prepaid rental or other monetary consideration paid by Sublessee
to Tenant under said Sublease; (ii) any other claim or damage of any kind or
nature whatsoever by reason of or in connection with Landlord's termination of
said Lease and/or Sublease; and (iii) any default of Tenant under the Sublease.
Sublessee by entering into this Consent hereby accepts liability under the terms
of the Lease for all obligations of Tenant as if Sublessee had entered into the
Lease directly with Landlord and regardless of whether said obligations arose
from actions (or inaction) of Tenant prior to or following the Effective Date.
Upon the Termination of the Lease, whether Landlord has permitted Sublessee to
remain in the Leased Premises or if Landlord has not elected in writing prior to
the
<PAGE>
Consent To Sublease
Page 3
effective date of termination of said Lease to allow Sublessee to remain in the
Leased Premises as set forth above, said Sublease shall terminate co-terminously
with the effective termination of the Lease automatically, without notice, and
Sublessee and/or Tenant, jointly and severally, shall surrender the Leased
Premises to Landlord in good condition and repair and in the condition required
by the terms of the Lease as of the effective termination of the Lease, with
Landlord having no obligation or liability whatsoever to Sublessee by reason of
or in connection with any early termination of the Lease. In the event Sublessee
and/or Tenant fails to timely surrender the Leased Premises to Landlord in good
condition and repair and in the condition required by the terms of the Lease as
of the date the Lease terminates, Sublessee and/or Tenant, jointly and
severally, shall be liable to Landlord in such event for all damages sustained
by Landlord, including, but not limited to, loss of rental income, construction
and remodeling costs, attorney's fees and court costs resulting from or in
connection with Tenant's and/or Sublessee's failure to timely vacate the Leased
Premises and surrender the Leased Premises to Landlord in the required condition
as of the effective termination date of said Lease.
3. Assignment of Interests: In consideration of Landlord's consent to the
Sublease, Tenant irrevocably assigns to Landlord, as security for Tenant's
obligations under this Lease, all rent and income payable to Tenant under the
Sublease subject to the terms set forth hereon. Therefore Landlord may collect
all rent due under the Sublease and apply it towards Tenant's obligations under
the Lease. Landlord may also at any time following a default by Tenant require
lord that any security deposit paid by Sublessee to Tenant be paid by Tenant to
Landlord and Landlord shall hold such amount as an additional Security Deposit
under the terms of the Lease, Tenant and Sublessee agree to pay all rent and
income payable to Tenant under the Sublease to Landlord upon demand without
further consent of Tenant an Sublessee required; provided, however, that until
the occurrence of a default by Tenant under the Lease, Tenant shall have the
right to collect such rent. Tenant hereby irrevocably authorizes and directs
Sublessee, upon receipt of a written notice from Landlord, to pay to Landlord
the rents due and to become due under the Sublease upon the occurrence of tenant
default under the lease. Tenant agrees that Sublessee shall have the right to
rely on any such statement and request from Landlord, and that Sublessee shall
pay such rents to Landlord without any obligation or right to inquire as to
whether any default exists and notwithstanding any notice or claim from Tenant
to the contrary. Tenant shall have no right or claim against Sublessee or
Landlord for any such rents so paid by Sublessee to Landlord. It is further
agreed between the parties hereto that neither Tenant's assignment of such rent
and income, nor Landlord's acceptance of any payment of rental or other sum due
by Sublessee to Tenant under said Sublease, whether payable directly to Landlord
or endorsed to Landlord by Tenant, Shall in any way nor in any event be
construed as creating a direct contractual relationship between Landlord and
Sublessee, unless the parties expressly so agree in writing and such acceptance
shall be deemed to be an accommodation by Landlord to, and for the convenience
of Tenant and Sublessee. Any direct contractual agreement between Landlord and
Sublessee must be in writing.
<PAGE>
Consent To Sublease
Page 4
4. Delivery Required' This Consent to Sublease shall only be considered
effective, and Landlord's consent to the Sublease given, when this Consent is
executed by Landlord, Tenant, and Sublessee, and returned to Landlord.
5. Attorneys' Fees: If any party commences an action against any of the parties
arising out of or in connection with this Consent, the prevailing party or
parties shall be entitled to recover from the losing party or parties reasonable
attorneys' fees and costs of suit.
6. Excess Rentals: Section 7.4 of the Lease provides that Tenant shall pay
Landlord fifty percent (50%) of the excess rentals as defined in the Lease until
the expiration of the sublease. Commencing on March 1, 2000, and until such time
as the terms of the sublease may be amended or the sublease terminated, excess
rentals in the amount of four thousand three hundred fifteen dollars ($4,315.00)
shall be due and payable on or before the first of each month. Tenant and
Sublessee agree not to change the terms of the sublease to reduce any payment
due to landlord without landlord's consent.
7. Signage: Tenant will provide Landlord with detailed plans for any proposed
signage, which plans shall include a site plan indicating the location of the
proposed sign, dimensions and graphics.
IN WITNESS WHEREOF, Landlord, Tenant, and Sublessee have executed this Consent
on the respective dates below set forth to be effective as of the Effective Date
first above set forth.
AS LANDLORD: AS TENANT:
Renco Equities IV LSI Logic Corporation
a California partnership a Delaware corporation
By: /s/ XXX By: /s/ XXX
-------------------------- --------------------------
General Partner
Title:_______________________
By: /s/ XXX By:__________________________
--------------------------
General Partner Title:_______________________
Dated: February 17, 2000 Dated: February 17, 2000
-- --
AS SUBLESSEE:
@ Road Incorporated
a California corporation
By: /s/ XXX
--------------------------
<PAGE>
Consent To Sublease
Page 5
Title: CHAIRMAN/CEO
-----------------------
By:__________________________
Title:_______________________
Dated: February 17, 2000
--
<PAGE>
EXHIBIT 10.11
(Image)
AGREEMENT
This Agreement entered into at Chennai this 16th day of November 1999 between
M/s Elnet Technologies Ltd., a company incorporated under provisions of the
Companies Act, 1956, with sole and main object of letting out space with high-
tech infrastructural facilities for software developers, having its registered
office at TS 140, Block 2 & 9, Elnet Software City, CPT Road., Taramani, Chennai
- - 113 and hereinafter referred to as the First Party and M/s @Road India Pvt.
Ltd. a company incorporated under provisions of the Companies Act, 1956, having
its office at No.12, Raghavendra 1st Street, Sadashivanagar, Madipakkam, Chennai
- -600091 hereinafter referred to as the Second Party. The terms First Party and
Second Party, wherever the occur, shall mean and include its successors in
office and assign WITNESSETH AS FOLLOWS:
WHEREAS the First Party is the owner of ELNET SOFTWARE CITY at TS 140, Block 2 &
9, CPT Road, Taramani, Chennai- 113.
WHEREAS the Second Party approached the First Party and offered to take the
space with facilities relating to the IV-2 Module on IV Floor of software block
consisting of an area of 4100 sq.ft.
<PAGE>
WHEREAS the duration of the agreement has been agreed for 3 years starting from
18/th/ November 1999
WHEREAS the First Party has agreed to commence the service of the facilities by
providing the required space.
WHEREAS after due negotiations, the First Party and the Second Party have agreed
to the following terms and conditions:
1. The First party hereby agrees to grant permission to the Second party for
the use of the IV-2 module consisting of an area of 4100 sq.ft. on the IV
floor of Software Block situated at Elnet Software City at Taramani with
the following high-tech infrastructural facilities on consideration of
payment of compensation as per para 4 below by the second party:
a) Uninterrupted power supply (UPS)
b) Air conditioning
c) Adequate Diesel Generator backup
d) Water supply
e) Maintenance of common area
f) Security arrangements for the software city
2. The First party agrees to rectify any disruption of uninterrupted power
supply at the earliest with due consideration to disruption due to natural
calamities and force majeure conditions.
3. The Second Party is entitled to use the high-tech infrastructure to carry
on software development and any other connected activities.
4. The Second Party shall compensate the First Party during the first year of
this agreement with an amount of Rs.1,51,700/- per month at a rate of
Rs.37/- per sq.ft. for the module of 4100 sq.ft. and the said sum of
Rs.1,51,700/- shall be payable by the Second Party to the First Party
before 5th of every succeeding English Calendar month. Incase of default on
payment of compensation on due dates, an amount of 1.5% of the outstanding
arrears shall be compensated per month by Second Party till the date of
clearing the arrears in full.
5. Apart from the compensation payable, the electricity charges for the energy
received from State Electricity Board (TNEB) and generator set shall be
compensated by the Second Party for the actual consumption before 30th of
every month at a prescribed rate which is at present at Rs.5.15 per unit
and Rs.8.35 per unit respectively for TNEB supply and generated power
supply. These rates are revisable in accordance with the revision of rates
by TNEB and on account of change in generating cost.
<PAGE>
6. In addition to the compensation and electricity charges as shown in para 4
and 5 above, the Second Party shall also pay their share of common utility
charges (such as common area lighting, maintenance of elevators etc.) every
month on receipt of bills from the First party.
7. The deposit of Rs.7,58,500/- (5 months' compensation) is to be paid by the
Second Party to the First Party as interest free deposit. The deposit is
refundable on termination of this indenture, after adjusting arrears of
electricity charges, compensation and any other dues. The second party
shall not be allowed to adjust payment of compensation, electricity charges
and other dues from the deposit held with the first party.
8. The Second Party shall not be entitled to assign the benefit of the
facilities in the said premises either in whole or in part to any other
party.
9. The Second Party shall use the facilities for the purpose of its business
as aforesaid and shall not store in the area any combustible or inflammable
or dangerous materials and shall not carry on any business of illegal
nature in the premises.
10. The compensation is subject to an escalation of 10% from the beginning of
the second year i.e. from the beginning of 13th Month. The escalation will
be at the rate of 10% every year on the enhanced compensation rate till the
expiry of this agreement.
11. The Second Party shall bear the cost for breakage / damage other than those
relating to normal wear and tear during the period of lease.
12. Any amendment incorporating changes, if any, from time to time shall be
given effect to with mutual consent.
13. If the First Party finds that the second party has violated any of the
terms and conditions, the First Party will have the right to discontinue
the services being provided by them without any notice.
14. The Second Party has the liberty to terminate this agreement by giving 3
months' notice and on termination of the agreement, all facilities provided
by the first party shall be withdrawn. The First Party has the liberty to
terminate this agreement by giving 3 months' notice. However, in case of
continuous default in payment for a period of 3 months or more by the
second party, the first party reserves the right to terminate this
agreement by giving a shorter notice of one month.
<PAGE>
15. The First Party and Second Party hereby agree that all costs and expenses
incidental to the preparation, execution, registration of this deed shall
be payable by the Second Party. Other than the taxes and levies in
respective of Software City, all other taxes and levies in respect of the
business carried on by the Second Party will be borne wholly by the Second
Party.
16. The Second Party would arrange insurance cover and fire protection for the
equipment placed by them on their own.
17. The First Party hereby covenants to give the use of IV-2 module consisting
of an area of 4100 sq.ft. on the IV floor of Software Block at Elnet
Software City, Taramani, Chennai as stated in item no. 1 above
18. The First Party and Second Party agree that the agreement shall be further
renewable or otherwise at mutually agreed terms and conditions at the time
of expiry of this agreement.
19. All disputes will be subject to the Chennai Jurisdiction.
SCHEDULE
- --------
The IV-2 module consisting of an area of 4100 sq.ft. on the IV floor of Software
Block at Elnet Software City, Taramani, Chennai-113
IN WITNESS WHEREOF THE FIRST PARTY AND THE SECOND PARTY have set their hands and
signatures on the day, month and year first written above.
WITNESS
- -------
For ELNET TECHNOLOGIES LTD.
1. /s/ XXX
RAMESH CHANO MEENA, IAS
FIRST PARTY
/s/ XXX
2. SECOND PARTY
<PAGE>
Exhibit 10.12
@ROAD, INC.
1996 STOCK OPTION PLAN
(as amended September 28, 1999)
1. Establishment, Purpose and Term of Plan.
---------------------------------------
1.1 Establishment. The @Road, Inc. 1996 Stock Option Plan (the
"Plan") is hereby established effective as of September ____, 1996 (the
"Effective Date").
1.2 Purpose. The purpose of the Plan is to advance the interests of
the Participating Company Group and its shareholders by providing an incentive
to attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group.
1.3 Term of Plan. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Options
shall be granted, if at all, within ten (10) years from the earlier of the date
the Plan is adopted by the Board or the date the Plan is duly approved by the
shareholders of the Company.
2. Definitions and Construction.
----------------------------
2.1 Definitions. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).
(b) "Code" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.
(c) "Committee" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted
<PAGE>
herein, including, without limitation, the power to amend or terminate the Plan
at any time, subject to the terms of the Plan and any applicable limitations
imposed by law.
(d) "Company" means @Road, Inc., a California corporation, or any
successor corporation thereto.
(e) "Consultant" means any person, including an advisor, engaged
by a Participating Company to render services other than as an Employee or a
Director.
(f) "Director" means a member of the Board or of the board of
directors of any other Participating Company.
(g) "Employee" means any person treated as an employee (including
an officer or a Director who is also treated as an employee) in the records of a
Participating Company; provided, however, that neither service as a Director nor
payment of a director's fee shall be sufficient to constitute employment for
purposes of the Plan.
(h) "Fair Market Value" means, as of any date, the value of a
share of stock or other property as determined by the Board, in its sole
discretion, or by the Company, in its sole discretion, if such determination is
expressly allocated to the Company herein.
(i) "Incentive Stock Option" means an Option intended to be (as
set forth in the Option Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.
(j) "Nonstatutory Stock Option" means an Option not intended to
be (as set forth in the Option Agreement) or which does not qualify as an
Incentive Stock Option.
(k) "Option" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory
Stock Option.
(l) "Option Agreement" means a written agreement between the
Company and an Optionee setting forth the terms, conditions and restrictions of
the Option granted to the Optionee and any shares acquired upon the exercise
thereof.
(m) "Optionee" means a person who has been granted one or more
Options.
- 2 -
<PAGE>
(n) "Parent Corporation" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(o) "Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation.
(p) "Participating Company Group" means, at any point in time,
all corporations collectively which are then Participating Companies.
(q) "Stock" means the common stock, without par value, of the
Company, as adjusted from time to time in accordance with Section 4.2.
(r) "Subsidiary Corporation" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
(s) "Ten Percent Owner Optionee" means an Optionee who, at the
time an Option is granted to the Optionee, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code.
2.2 Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
the term "or" shall include the conjunctive as well as the disjunctive.
3. Administration.
--------------
3.1 Administration by the Board. The Plan shall be administered by
the Board, including any duly appointed Committee of the Board (the
"Administrator"). All questions of interpretation of the Plan or of any Option
shall be determined by the Board, and such determinations shall be final and
binding upon all persons having an interest in the Plan or such Option. Any
officer of a Participating Company shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company
herein, provided the officer has apparent authority with respect to such matter,
right, obligation, determination or election.
3.2 Powers of the Board. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its sole discretion:
- 3 -
<PAGE>
(a) to determine the persons to whom, and the time or times at
which, Options shall be granted and the number of shares of Stock to be subject
to each Option;
(b) to designate Options as Incentive Stock Options or
Nonstatutory Stock Options;
(c) to determine the Fair Market Value of shares of Stock or
other property;
(d) to determine the terms, conditions and restrictions
applicable to each Option (which need not be identical) and any shares acquired
upon the exercise thereof, including, without limitation, (i) the exercise price
of the Option, (ii) the method of payment for shares purchased upon the exercise
of the Option, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with the Option or such shares, including by
the withholding or delivery of shares of stock, (iv) the timing, terms and
conditions of the exercisability of the Option or the vesting of any shares
acquired upon the exercise thereof, (v) the time of the expiration of the
Option, (vi) the effect of the Optionee's termination of employment or service
with the Participating Company Group on any of the foregoing, and (vii) all
other terms, conditions and restrictions applicable to the Option or such shares
not inconsistent with the terms of the Plan;
(e) to approve one or more forms of Option Agreement;
(f) to amend, modify, extend, or renew, or grant a new Option in
substitution for, any Option or to waive any restrictions or conditions
applicable to any Option or any shares acquired upon the exercise thereof;
(g) to accelerate, continue, extend or defer the exercisability
of any Option or the vesting of any shares acquired upon the exercise thereof,
including with respect to the period following an Optionee's termination of
employment or service with the Participating Company Group;
(h) to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions of,
the Plan, including, without limitation, as the Board deems necessary or
desirable to comply with the laws of, or to accommodate the tax policy or custom
of, foreign jurisdictions whose citizens may be granted Options; and
(i) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all other
determinations
- 4 -
<PAGE>
and take such other actions with respect to the Plan or any Option as the Board
may deem advisable to the extent consistent with the Plan and applicable law.
4. Shares Subject to Plan.
----------------------
4.1 Maximum Number Shares Issuable. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be Seven Million Five Hundred Fifty Thousand
Seven Hundred Fifty (7,550,750) and shall consist of authorized but unissued or
reacquired shares of Stock or any combination thereof. If an outstanding Option
for any reason expires or is terminated or canceled or shares of Stock acquired,
subject to repurchase, upon the exercise of an Option are repurchased by the
Company, the shares of Stock allocable to the unexercised portion of such
Option, or such repurchased shares of Stock, shall again be available for
issuance under the Plan.
Notwithstanding the above, with respect to up to an aggregate of
6,550,000 shares of Stock (a) reserved and available for grant under the terms
of this Plan, (b) subject to Options granted under the Plan that become
available for resale under the Plan as a result of cancellations of such Options
and (c) sold under the Plan that are repurchased by the Company pursuant to any
repurchase right which the Company may have, such shares of Stock shall not be
available for resale under the Plan, but shall be treated as though transferred
to, and shall thereafter be available for sale under, the Company's 2000 Stock
Option Plan.
4.2 Adjustments for Changes in Capital Structure. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options and in the exercise price per
share of any outstanding Options. If a majority of the shares which are of the
same class as the shares that are subject to outstanding Options are exchanged
for, converted into, or otherwise become (whether or not pursuant to an
Ownership Change Event, as defined in Section 8.1) shares of another corporation
(the "New Shares"), the Board may unilaterally amend the outstanding Options to
provide that such Options are exercisable for New Shares. In the event of any
such amendment, the number of shares subject to, and the exercise price per
share of, the outstanding Options shall be adjusted in a fair and equitable
manner as determined by the Board, in its sole discretion. Notwithstanding the
foregoing, any fractional share resulting from an adjustment pursuant to this
Section 4.2 shall be rounded up or down to the nearest whole number, as
determined by the Board, and in no event may the exercise price of any Option be
decreased to an amount less than the par value, if any, of the stock
- 5 -
<PAGE>
subject to the Option. The adjustments determined by the Board pursuant to this
Section 4.2 shall be final, binding and conclusive.
5. Eligibility and Option Limitations.
----------------------------------
5.1 Persons Eligible for Options. Options may be granted only to
Employees, Consultants, and Directors. For purposes of the foregoing sentence,
"Employees" shall include prospective Employees to whom Options are granted in
connection with written offers of employment with the Participating Company
Group, and "Consultants" shall include prospective Consultants to whom Options
are granted in connection with written offers of engagement with the
Participating Company Group. Eligible persons may be granted more than one (1)
Option.
5.2 Option Grant Restrictions. Any person who is not an Employee on
the effective date of the grant of an Option to such person may be granted only
a Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee shall be deemed
granted effective on the date such person commences service with a Participating
Company, with an exercise price determined as of such date in accordance with
Section 6.1.
5.3 Fair Market Value Limitation. To the extent that the aggregate
Fair Market Value of stock with respect to which options designated as Incentive
Stock Options are exercisable by an Optionee for the first time during any
calendar year (under all stock option plans of the Participating Company Group,
including the Plan) exceeds One Hundred Thousand Dollars ($100,000), the portion
of such options which exceeds such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5.3, options designated as Incentive
Stock Options shall be taken into account in the order in which they were
granted, and the Fair Market Value of stock shall be determined as of the time
the option with respect to such stock is granted. If the Code is amended to
provide for a different limitation from that set forth in this Section 5.3, such
different limitation shall be deemed incorporated herein effective as of the
date and with respect to such Options as required or permitted by such amendment
to the Code. If an Option is treated as an Incentive Stock Option in part and
as a Nonstatutory Stock Option in part by reason of the limitation set forth in
this Section 5.3, the Optionee may designate which portion of such Option the
Optionee is exercising and may request that separate certificates representing
each such portion be issued upon the exercise of the Option. In the absence of
such designation, the Optionee shall be deemed to have exercised the Incentive
Stock Option portion of the Option first.
6. Terms and Conditions of Options. Options shall be evidenced by Option
-------------------------------
Agreements specifying the number of shares of Stock covered thereby, in such
form as
- 6 -
<PAGE>
the Board shall from time to time establish. Option Agreements may incorporate
all or any of the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:
6.1 Exercise Price. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option, (b) the exercise price per share for a Nonstatutory Stock Option shall
be not less than eighty-five percent (85%) of the Fair Market Value of a share
of Stock on the effective date of grant of the Option, and (c) no Option granted
to a Ten Percent Owner Optionee shall have an exercise price per share less than
one hundred ten percent (110%) of the Fair Market Value of a share of Stock on
the effective date of grant of the Option. Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Section 424(a) of
the Code.
6.2 Exercise Period. Options shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board and
set forth in the Option Agreement evidencing such Option; provided, however,
that (a) no Option shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such Option, (b) no Incentive Stock Option
granted to a Ten Percent Owner Optionee shall be exercisable after the
expiration of five (5) years after the effective date of grant of such Option,
and (c) no Option granted to a prospective Employee or prospective Consultant
may become exercisable prior to the date on which such person commences Service
with a Participating Company.
6.3 Payment of Exercise Price.
(a) Forms of Consideration Authorized. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value (as determined by the Company without regard
to any restrictions on transferability applicable to such stock by reason of
federal or state securities laws or agreements with an underwriter for the
Company) not less than the exercise price, (iii) by the assignment of the
proceeds of a sale or loan with respect to some or all of the shares being
acquired upon the exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T as promulgated from
time to time
- 7 -
<PAGE>
by the Board of Governors of the Federal Reserve System) (a "Cashless
Exercise"), (iv) by the Optionee's promissory note in a form approved by the
Company, (v) by such other consideration as may be approved by the Board from
time to time to the extent permitted by applicable law, or (vi) by any
combination thereof. The Board may at any time or from time to time, by adoption
of or by amendment to the standard forms of Option Agreement described in
Section 7, or by other means, grant Options which do not permit all of the
foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.
(b) Tender of Stock. Notwithstanding the foregoing, an Option
may not be exercised by tender to the Company of shares of Stock to the extent
such tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
Unless otherwise provided by the Board, an Option may not be exercised by tender
to the Company of shares of Stock unless such shares either have been owned by
the Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.
(c) Cashless Exercise. The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise.
(d) Payment by Promissory Note. No promissory note shall be
permitted if the exercise of an Option using a promissory note would be a
violation of any law. Any permitted promissory note shall be on such terms as
the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon the
exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Board, if the Company at any time is subject to
the regulations promulgated by the Board of Governors of the Federal Reserve
System or any other governmental entity affecting the extension of credit in
connection with the Company's securities, any promissory note shall comply with
such applicable regulations, and the Optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.
6.4 Tax Withholding.
(a) As a condition of the exercise of an Option granted under the
Plan, the Participant (or in the case of the Participant's death, the person
exercising the Option) shall make such arrangements as the Administrator may
require for the satisfaction of any applicable federal, state, local or foreign
withholding tax obligations that may arise in connection with the exercise of
the Option and the issuance of shares.
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<PAGE>
The Company shall not be required to issue any shares under the Plan until such
obligations are satisfied. If the Administrator allows the withholding or
surrender of shares to satisfy a Participant's tax withholding obligations under
this Section 6.4 (whether pursuant to Section 6.4(c), (d) or (e), or otherwise),
the Administrator shall not allow shares to be withheld in an amount that
exceeds the minimum statutory withholding rates for federal and state tax
purposes, including payroll taxes.
(b) In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Option.
(c) This Section 6.4(c) shall apply only after the date, if any,
upon which the Stock becomes a security of the Company that is listed or
approved for listing on a national securities exchange or designated or approved
for designation as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. (a "Listed
Security"). In the case of Participant other than an Employee (or in the case of
an Employee where the next payroll payment is not sufficient to satisfy such tax
obligations, with respect to any remaining tax obligations), in the absence of
any other arrangement and to the extent permitted under the applicable laws, the
Participant shall be deemed to have elected to have the Company withhold from
the shares to be issued upon exercise of the Option that number of shares having
a Fair Market Value determined as of the applicable Tax Date (as defined below)
equal to the amount required to be withheld. For purposes of this Section 6.4,
the Fair Market Value of the shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined under the
applicable laws (the "Tax Date").
(d) If permitted by the Administrator, in its discretion, a
Participant may satisfy his or her tax withholding obligations upon exercise of
an Option by surrendering to the Company shares that have a Fair Market Value
determined as of the applicable Tax Date equal to the amount required to be
withheld. In the case of shares previously acquired from the Company that are
surrendered under this Section 6.4(d), such shares must have been owned by the
Participant for more than six (6) months on the date of surrender (or such other
period of time as is required for the Company to avoid adverse accounting
charges).
(e) Any election or deemed election by a Participant to have
shares withheld to satisfy tax withholding obligations under Section 6.4(c) or
(d) above shall be irrevocable as to the particular shares as to which the
election is made and shall be subject to the consent or disapproval of the
Administrator. Any election by a
- 9 -
<PAGE>
Participant under Section 6.4(d) above must be made on or prior to the
applicable Tax Date.
(f) In the event an election to have shares withheld is made by a
Participant and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Participant shall receive
the full number of shares with respect to which the Option is exercised but such
Participant shall be unconditionally obligated to tender back to the Company the
proper number of shares on the Tax Date.
6.5 Repurchase Rights. Shares issued under the Plan may be subject
to a right of first refusal, one or more repurchase options, or other conditions
and restrictions as determined by the Board in its sole discretion at the time
the Option is granted. The Company shall have the right to assign at any time
any repurchase right it may have, whether or not such right is then exercisable,
to one or more persons as may be selected by the Company. Upon request by the
Company, each Optionee shall execute any agreement evidencing such transfer
restrictions prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates representing shares of
Stock acquired hereunder for the placement on such certificates of appropriate
legends evidencing any such transfer restrictions.
7. Standard Forms of Option Agreement.
----------------------------------
7.1 Incentive Stock Options. Unless otherwise provided by the Board
at the time the Option is granted, an Option designated as an "Incentive Stock
Option" shall comply with and be subject to the terms and conditions set forth
in the form of Immediately Exercisable Incentive Stock Option Agreement adopted
by the Board concurrently with its adoption of the Plan and as amended from time
to time.
7.2 Nonstatutory Stock Options. Unless otherwise provided by the
Board at the time the Option is granted, an Option designated as a "Nonstatutory
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of Immediately Exercisable Nonstatutory Stock Option Agreement
adopted by the Board concurrently with its adoption of the Plan and as amended
from time to time.
7.3 Standard Term of Options. Except as otherwise provided in
Section 6.2 or by the Board in the grant of an Option, any Option granted
hereunder shall have a term of ten (10) years from the effective date of grant
of the Option.
7.4 Authority to Vary Terms. The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an
- 10 -
<PAGE>
individual Option or in connection with the authorization of a new standard form
or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement shall be in
accordance with the terms of the Plan. Such authority shall include, but not by
way of limitation, the authority to grant Options which are not immediately
exercisable.
8. Transfer of Control.
-------------------
8.1 Merger or Sale of Assets. In the event of a proposed sale of all
or substantially all of the Company's assets or a merger of the Company with or
into another corporation where the successor corporation issues its securities
to the Company's shareholders, each outstanding Option shall be assumed or an
equivalent option or right shall be substituted by such successor corporation or
a parent or subsidiary of such successor corporation, unless the successor
corporation does not agree to assume the Option or to substitute an equivalent
option, in which case such Option shall terminate upon the consummation of the
merger or sale of assets. For purposes of this Section 8.1, an Option shall be
considered assumed, without limitation, if, at the time of issuance of the stock
or other consideration upon such merger or sale of assets, each holder of an
Option would be entitled to receive upon exercise of the Option the same number
and kind of shares of stock or the same amount of property, cash or securities
as such holder would have been entitled to receive upon the occurrence of such
transaction if the holder had been, immediately prior to such transaction, the
holder of the number of Shares of Common Stock covered by the Option at such
time (after giving effect to any adjustments in the number of Shares covered by
the Option as provided for in this Section 8.1).
9. Provision of Information. At least annually, copies of the Company's
------------------------
balance sheet and income statement for the just completed fiscal year shall be
made available to each Optionee and purchaser of shares of Stock upon the
exercise of an Option. The Company shall not be required to provide such
information to persons whose duties in connection with the Company assure them
access to equivalent information.
10. Nontransferability of Options. During the lifetime of the Optionee,
-----------------------------
an Option shall be exercisable only by the Optionee or the Optionee's guardian
or legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.
11. Transfer of Company's Rights. In the event any Participating Company
----------------------------
assigns, other than by operation of law, to a third person, other than another
Participating Company, any of the Participating Company's rights to repurchase
any shares of Stock acquired upon the exercise of an Option, the assignee shall
pay to the assigning
- 11 -
<PAGE>
Participating Company the value of such right as determined by the Company in
the Company's sole discretion. Such consideration shall be paid in cash. In the
event such repurchase right is exercisable at the time of such assignment, the
value of such right shall be not less than the Fair Market Value of the shares
of Stock which may be repurchased under such right (as determined by the
Company) minus the repurchase price of such shares. The requirements of this
Section 11 regarding the minimum consideration to be received by the assigning
Participating Company shall not inure to the benefit of the Optionee whose
shares of Stock are being repurchased. Failure of a Participating Company to
comply with the provisions of this Section 11 shall not constitute a defense or
otherwise prevent the exercise of the repurchase right by the assignee of such
right.
12. Indemnification. In addition to such other rights of indemnification
---------------
as they may have as members of the Board or officers or employees of the
Participating Company Group, members of the Board and any officers or employees
of the Participating Company Group to whom authority to act for the Board is
delegated shall be indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties; provided, however,
that within sixty (60) days after the institution of such action, suit or
proceeding, such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.
13. Termination or Amendment of Plan. The Board may terminate or amend
--------------------------------
the Plan at any time. However, subject to changes in the law or other legal
requirements that would permit otherwise, without the approval of the Company's
shareholders, there shall be (a) no increase in the maximum aggregate number of
shares of Stock that may be issued under the Plan (except by operation of the
provisions of Section 4.2), (b) no change in the class of persons eligible to
receive Incentive Stock Options, and (c) no expansion in the class of persons
eligible to receive Nonstatutory Stock Options. In any event, no termination or
amendment of the Plan may adversely affect any then outstanding Option or any
unexercised portion thereof, without the consent of the Optionee, unless such
termination or amendment is required to enable an Option designated as an
Incentive Stock Option to qualify as an Incentive Stock Option or is necessary
to comply with any applicable law or government regulation.
- 12 -
<PAGE>
14. Shareholder Approval. The Plan or any increase in the maximum number
--------------------
of shares of Stock issuable thereunder as provided in Section 4.1 (the "Maximum
Shares") shall be approved by the shareholders of the Company within twelve (12)
months of the date of adoption thereof by the Board. Options granted prior to
shareholder approval of the Plan or in excess of the Maximum Shares previously
approved by the shareholders shall become exercisable no earlier than the date
of shareholder approval of the Plan or such increase in the Maximum Shares, as
the case may be.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing @Road, Inc. 1996 Stock Option Plan was duly adopted by the Board
on September ___ 1996.
___________________________________
Secretary
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<PAGE>
Exhibit 10.13
@ROAD, INC.
2000 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this 2000 Stock Option Plan are
--------------------
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants and
to promote the success of the Company's business. Options granted under the Plan
may be Incentive Stock Options or Nonstatutory Stock Options, as determined by
the Administrator at the time of grant of an option and subject to the
applicable provisions of Section 422 of the Code and the regulations promulgated
thereunder.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Administrator" means the Board or its Committee appointed
-------------
pursuant to Section 4 of the Plan.
(b) "Affiliate" means an entity other than a Subsidiary (as defined
---------
below) which, together with the Company, is under common control of a third
person or entity.
(c) "Applicable Laws" means the legal requirements relating to the
---------------
administration of stock option and restricted stock purchase plans under
applicable U.S. state corporate laws, U.S. federal and applicable state
securities laws, the Code, any Stock Exchange rules or regulations and the
applicable laws of any other country or jurisdiction where Options are granted
under the Plan, as such laws, rules, regulations and requirements shall be in
place from time to time.
(d) "Board" means the Board of Directors of the Company.
-----
(e) "Change of Control" means a sale of all or substantially all of
-----------------
the Company's assets, or any merger or consolidation of the Company with or into
another corporation other than a merger or consolidation in which the holders of
more than 50% of the shares of capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, or such surviving entity,
outstanding immediately after such transaction.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
----
(g) "Committee" means one or more committees or subcommittees of the
---------
Board appointed by the Board to administer the Plan in accordance with Section 4
below.
(h) "Common Stock" means the Common Stock of the Company.
------------
(i) "Company" means @Road, Inc., a Delaware corporation.
-------
<PAGE>
(j) "Consultant" means any person, including an advisor, who is
----------
engaged by the Company or any Parent, Subsidiary or Affiliate to render services
and is compensated for such services, and any director of the Company whether
compensated for such services or not.
(k) "Continuous Service Status" means the absence of any interruption
-------------------------
or termination of service as an Employee or Consultant. Continuous Service
Status as an Employee or Consultant shall not be considered interrupted in the
case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence
approved by the Administrator, provided that such leave is for a period of not
more than ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) in the case of
transfers between locations of the Company or between the Company, its Parents,
Subsidiaries, Affiliates or their respective successors. A change in status
from an Employee to a Consultant or from a Consultant to an Employee will not
constitute an interruption of Continuous Service Status.
(l) "Corporate Transaction" means a sale of all or substantially all
---------------------
of the Company's assets, or a merger, consolidation or other capital
reorganization of the Company with or into another corporation and includes a
Change of Control.
(m) "Director" means a member of the Board.
--------
(n) "Employee" means any person employed by the Company or any
--------
Parent, Subsidiary or Affiliate, with the status of employment determined based
upon such factors as are deemed appropriate by the Administrator in its
discretion, subject to any requirements of the Code or the Applicable Laws. The
payment by the Company of a director's fee to a Director shall not be sufficient
to constitute "employment" of such Director by the Company.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(p) "Fair Market Value" means, as of any date, the fair market value
-----------------
of the Common Stock, as determined by the Administrator in good faith on such
basis as it deems appropriate and applied consistently with respect to
Participants. Whenever possible, the determination of Fair Market Value shall
be based upon the closing price for the Shares as reported in the Wall Street
-----------
Journal for the applicable date.
- -------
(q) "Incentive Stock Option" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable Option Agreement.
(r) "Listed Security" means any security of the Company that is
---------------
listed or approved for listing on a national securities exchange or designated
or approved for designation as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc.
(s) "Named Executive" means any individual who, on the last day of
---------------
the Company's fiscal year, is the chief executive officer of the Company (or is
acting in such
-2-
<PAGE>
capacity) or among the four most highly compensated officers of the Company
(other than the chief executive officer). Such officer status shall be
determined pursuant to the executive compensation disclosure rules under the
Exchange Act.
(t) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option, as designated in the applicable Option
Agreement.
(u) "Option" means a stock option granted pursuant to the Plan.
------
(v) "Option Agreement" means a written document, the form(s) of which
----------------
shall be approved from time to time by the Administrator, reflecting the terms
of an Option granted under the Plan and includes any documents attached to or
incorporated into such Option Agreement, including, but not limited to, a notice
of stock option grant and a form of exercise notice.
(w) "Option Exchange Program" means a program approved by the
-----------------------
Administrator whereby outstanding Options are exchanged for Options with a lower
exercise price or are amended to decrease the exercise price as a result of a
decline in the Fair Market Value of the Common Stock.
(x) "Optioned Stock" means the Common Stock subject to an Option.
--------------
(y) "Optionee" means an Employee or Consultant who receives an
--------
Option.
(z) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code, or any successor provision.
(aa) "Participant" means any holder of one or more Options, or the
-----------
Shares issuable or issued upon exercise of such Options, under the Plan.
(bb) "Plan" means this 2000 Stock Option Plan.
----
(cc) "Reporting Person" means an officer, Director, or greater than
----------------
ten percent stockholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.
(dd) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
----------
as amended from time to time, or any successor provision.
(ee) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 13 of the Plan.
(ff) "Stock Exchange" means any stock exchange or consolidated stock
--------------
price reporting system on which prices for the Common Stock are quoted at any
given time.
(gg) "Subsidiary" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.
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<PAGE>
(hh) "Ten Percent Holder" means a person who owns stock representing
------------------
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
-------------------------
the Plan, the maximum aggregate number of Shares that may be sold under the Plan
is 2,000,000 Shares of Common Stock, plus (i) up to an aggregate of 9,825,000
Shares that (a) are reserved and available for issuance under the Company's 1996
Stock Option Plan, (b) return to the 1996 Stock Option Plan upon cancellation of
outstanding options issued under that plan and (c) were Shares issued under the
1996 Stock Option Plan that the Company repurchases when the holder thereof
terminates his or her service relationship with the Company and (ii) an annual
increase on the first day of each of the Company's fiscal years beginning in
2001 and ending in 2010 equal to the lesser of (a) 2,500,000 Shares, (b) four
(4%) percent of the Shares outstanding on the last day of the immediately
preceding fiscal year, or (c) such lesser number of Shares as the Board shall
determine. Notwithstanding the above, the maximum aggregate number of Shares
that may be sold under the Plan during its term (as set forth in Section 6
below) is 50,250,000.
The Shares may be authorized, but unissued, or reacquired Common Stock. If
an award should expire or become unexercisable for any reason without having
been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares that were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant under the Plan.
In addition, any Shares of Common Stock which are retained by the Company upon
exercise of an award in order to satisfy the exercise or purchase price for such
award or any withholding taxes due with respect to such exercise or purchase
shall be treated as not issued and shall continue to be available under the
Plan. Shares issued under the Plan and later repurchased by the Company
pursuant to any repurchase right which the Company may have shall not be
available for future grant under the Plan.
4. Administration of the Plan.
--------------------------
(a) General. The Plan shall be administered by the Board or a
-------
Committee, or a combination thereof, as determined by the Board. The Plan may
be administered by different administrative bodies with respect to different
classes of Participants and, if permitted by the Applicable Laws, the Board may
authorize one or more officers to make awards under the Plan.
(b) Committee Composition. If a Committee has been appointed pursuant
---------------------
to this Section 4, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of any Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies (however caused) and remove all members of a Committee
and thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws and, in the case of a Committee administering the Plan in
accordance with the requirements of Rule 16b-3 or Section 162(m) of the Code, to
the extent permitted or required by such provisions.
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<PAGE>
(c) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(p) of the Plan, provided that such determination shall
be applied consistently with respect to Participants under the Plan;
(ii) to select the Employees and Consultants to whom Options
may from time to time be granted;
(iii) to determine whether and to what extent Options are
granted;
(iv) to determine the number of Shares of Common Stock to be
covered by each award granted;
(v) to approve the form(s) of agreement(s) used under the
Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder, which terms and
conditions include but are not limited to the exercise or purchase price, the
time or times when awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option, Optioned Stock or restricted
stock issued upon exercise of an Option, based in each case on such factors as
the Administrator, in its sole discretion, shall determine;
(vii) to determine whether and under what circumstances an
Option may be settled in cash under Section 10(c) instead of Common Stock;
(viii) to implement an Option Exchange Program on such terms and
conditions as the Administrator in its discretion deems appropriate, provided
that no amendment or adjustment to an Option that would materially and adversely
affect the rights of any Optionee shall be made without the prior written
consent of the Optionee;
(ix) to adjust the vesting of an Option held by an Employee or
Consultant as a result of a change in the terms or conditions under which such
person is providing services to the Company;
(x) to construe and interpret the terms of the Plan and awards
granted under the Plan, which constructions, interpretations and decisions shall
be final and binding on all Participants;
(xi) to make any adjustment or amendment to the Plan or to an
outstanding award with or without a Participant's consent if such adjustment or
amendment is necessary to avoid the Company's incurring adverse accounting
charges; and
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<PAGE>
(xii) in order to fulfill the purposes of the Plan and without
amending the Plan, to modify grants of Options to Participants who are foreign
nationals or employed outside of the United States in order to recognize
differences in local law, tax policies or customs.
5. Eligibility.
-----------
(a) Recipients of Grants. Nonstatutory Stock Options may be granted
--------------------
to Employees and Consultants. Incentive Stock Options may be granted only to
Employees, provided that Employees of Affiliates shall not be eligible to
receive Incentive Stock Options.
(b) Type of Option. Each Option shall be designated in the Option
--------------
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
(c) ISO $100,000 Limitation. Notwithstanding any designation under
-----------------------
Section 5(b), to the extent that the aggregate Fair Market Value of Shares with
respect to which Options designated as Incentive Stock Options are exercisable
for the first time by any Optionee during any calendar year (under all plans of
the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options
shall be treated as Nonstatutory Stock Options. For purposes of this Section
5(c), Incentive Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of the Shares subject to an
Incentive Stock Option shall be determined as of the date of the grant of such
Option.
(d) No Employment Rights. The Plan shall not confer upon any
--------------------
Participant any right with respect to continuation of an employment or
consulting relationship with the Company, nor shall it interfere in any way with
such Participant's right or the Company's right to terminate his or her
employment or consulting relationship at any time, with or without Cause.
6. Term of Plan. The Plan shall become effective upon its adoption by the
------------
Board of Directors. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 15 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in
--------------
the Option Agreement; provided that the term shall be no more than ten years
from the date of grant thereof or such shorter term as may be provided in the
Option Agreement and provided further that, in the case of an Incentive Stock
Option granted to a person who at the time of such grant is a Ten Percent
Holder, the term of the Option shall be five years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
8. Limitation on Grants to Employees. Subject to adjustment as provided
---------------------------------
in Section 13 below, the maximum number of Shares that may be subject to Options
granted to any one Employee under this Plan for any fiscal year of the Company
shall be 2,500,000, provided that this Section 8 shall apply only after such
time, if any, as the Common Stock becomes a Listed Security.
-6-
<PAGE>
9. Option Exercise Price and Consideration.
---------------------------------------
(a) Exercise Price. The per Share exercise price for the Shares to be
--------------
issued pursuant to exercise of an Option shall be such price as is determined by
the Administrator and set forth in the Option Agreement, but shall be subject to
the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who at the time of grant is a
Ten Percent Holder, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant; or
(B) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted prior to the date, if any, on which the Common
Stock becomes a Listed Security to a person who is at the time of grant is a Ten
Percent Holder, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant if required by the Applicable
Laws and, if not so required, shall be such price as is determined by the
Administrator;
(B) granted prior to the date, if any, on which the Common
Stock becomes a Listed Security to any other eligible person, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant if required by the Applicable Laws and, if not so required,
shall be such price as is determined by the Administrator.
(C) granted on or after the date, if any, on which the
Common Stock becomes a Listed Security to any eligible person, the per share
Exercise Price shall be such price as determined by the Administrator provided
that if such eligible person is, at the time of the grant of such Option, a
Named Executive of the Company, the per share Exercise Price shall be no less
than 100% of the Fair Market Value on the date of grant if such Option is
intended to qualify as performance-based compensation under Section 162(m) of
the Code.
(iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price other than as required above pursuant to a merger or
other corporate transaction.
(b) Permissible Consideration. The consideration to be paid for the
-------------------------
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist entirely of
(1) cash; (2) check; (3) delivery of Optionee's promissory note with such
recourse, interest, security and redemption provisions as the Administrator
determines to be appropriate (subject to the provisions of Section 153 of the
Delaware General Corporation Law); (4) cancellation of indebtedness; (5) other
Shares that have
-7-
<PAGE>
a Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares as to which the Option is exercised, provided that in the
case of Shares acquired, directly or indirectly, from the Company, such Shares
must have been owned by the Optionee for more than six months on the date of
surrender (or such other period as may be required to avoid the Company's
incurring an adverse accounting charge); (6) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
a securities broker approved by the Company shall require to effect exercise of
the Option and prompt delivery to the Company of the sale or loan proceeds
required to pay the exercise price and any applicable withholding taxes; (7) any
combination of the foregoing methods of payment; or (8) such other consideration
and method of payment for the issuance of Shares to the extent permitted under
the Applicable Laws. In making its determination as to the type of consideration
to accept, the Administrator shall consider if acceptance of such consideration
may be reasonably expected to benefit the Company and the Administrator may, in
its sole discretion, refuse to accept a particular form of consideration at the
time of any Option exercise.
10. Exercise of Option.
------------------
(a) General.
-------
(i) Exercisability. Any Option granted hereunder shall be
--------------
exercisable at such times and under such conditions as determined by the
Administrator, consistent with the term of the Plan and reflected in the Option
Agreement, including vesting requirements and/or performance criteria with
respect to the Company and/or the Optionee; provided however that, if required
by the Applicable Laws, any Option granted prior to the date, if any, upon which
the Common Stock becomes a Listed Security shall become exercisable at the rate
of at least 20% per year over five years from the date the Option is granted. In
the event that any of the Shares issued upon exercise of an Option (which
exercise occurs prior to the date, if any, upon which the Common Stock becomes a
Listed Security) should be subject to a right of repurchase in the Company's
favor, such repurchase right shall, if required by the Applicable Laws, lapse at
the rate of at least 20% per year over five years from the date the Option is
granted. Notwithstanding the above, in the case of an Option granted to an
officer, Director or Consultant of the Company or any Parent, Subsidiary or
Affiliate of the Company, the Option may become fully exercisable, or a
repurchase right, if any, in favor of the Company shall lapse, at any time or
during any period established by the Administrator.
(ii) Minimum Exercise Requirements. An Option may not be
-----------------------------
exercised for a fraction of a Share. The Administrator may require that an
Option be exercised as to a minimum number of Shares, provided that such
requirement shall not prevent an Optionee from exercising the full number of
Shares as to which the Option is then exercisable.
(iii) Procedures for and Results of Exercise. An Option shall be
--------------------------------------
deemed exercised when written notice of such exercise has been given to the
Company in accordance with the terms of the Option by the person entitled to
exercise the Option and the Company has received full payment for the Shares
with respect to which the Option is exercised. Full payment may, as authorized
by the Administrator, consist of any consideration and method
-8-
<PAGE>
of payment allowable under Section 9(b) of the Plan, provided that the
Administrator may, in its sole discretion, refuse to accept any form of
consideration at the time of any Option exercise.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares that thereafter may be available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is
exercised.
(iv) Rights as Stockholder. Until the issuance of the Shares (as
---------------------
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 13 of the Plan.
(b) Termination of Employment or Consulting Relationship. Except as
----------------------------------------------------
otherwise set forth in this Section 10(b), the Administrator shall establish and
set forth in the applicable Option Agreement the terms and conditions upon which
an Option shall remain exercisable, if at all, following termination of an
Optionee's Continuous Service Status, which provisions may be waived or modified
by the Administrator at any time. To the extent that the Optionee is not
entitled to exercise an Option at the date of his or her termination of
Continuous Service Status, or if the Optionee (or other person entitled to
exercise the Option) does not exercise the Option to the extent so entitled
within the time specified in the Option Agreement or below (as applicable), the
Option shall terminate and the Optioned Stock underlying the unexercised portion
of the Option shall revert to the Plan. In no event may any Option be exercised
after the expiration of the Option term as set forth in the Option Agreement
(and subject to Section 7).
The following provisions (1) shall apply to the extent an Option
Agreement does not specify the terms and conditions upon which an Option shall
terminate upon termination of an Optionee's Continuous Service Status, and (2)
establish the minimum post-termination exercise periods that may be set forth in
an Option Agreement:
(i) Termination other than Upon Disability or Death or for
------------------------------------------------------
Cause. In the event of termination of an Optionee's Continuous Service Status,
- -----
such Optionee may exercise an Option for 30 days following such termination to
the extent the Optionee was entitled to exercise it at the date of such
termination. No termination shall be deemed to occur and this Section 10(b)(i)
shall not apply if (i) the Optionee is a Consultant who becomes an Employee, or
(ii) the Optionee is an Employee who becomes a Consultant.
(ii) Disability of Optionee. In the event of termination of an
----------------------
Optionee's Continuous Service Status as a result of his or her disability
(including a disability within the meaning of Section 22(e)(3) of the Code),
such Optionee may exercise an Option at any time within six (6) months following
such termination to the extent the Optionee was entitled to exercise it at the
date of such termination.
-9-
<PAGE>
(iii) Death of Optionee. In the event of the death of an Optionee
-----------------
during the period of Continuous Service Status since the date of grant of the
Option, or within thirty (30) days following termination of Optionee's
Continuous Service Status, the Option may be exercised by Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance at any time within twelve months following the date of death, but
only to the extent of the right to exercise that had accrued at the date of
death or, if earlier, the date the Optionee's Continuous Service Status
terminated.
(c) Buyout Provisions. The Administrator may at any time offer to buy
-----------------
out for a payment in cash or Shares an Option previously granted under the Plan
based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
11. Taxes.
-----
(a) As a condition of the exercise of an Option granted under the
Plan, the Participant (or in the case of the Participant's death, the person
exercising the Option) shall make such arrangements as the Administrator may
require for the satisfaction of any applicable federal, state, local or foreign
withholding tax obligations that may arise in connection with the exercise of
the Option and the issuance of Shares. The Company shall not be required to
issue any Shares under the Plan until such obligations are satisfied. If the
Administrator allows the withholding or surrender of Shares to satisfy a
Participant's tax withholding obligations under this Section 11 (whether
pursuant to Section 11(c), (d) or (e), or otherwise), the Administrator shall
not allow Shares to be withheld in an amount that exceeds the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes.
(b) In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Option.
(c) This Section 11(c) shall apply only after the date, if any, upon
which the Common Stock becomes a Listed Security. In the case of Participant
other than an Employee (or in the case of an Employee where the next payroll
payment is not sufficient to satisfy such tax obligations, with respect to any
remaining tax obligations), in the absence of any other arrangement and to the
extent permitted under the Applicable Laws, the Participant shall be deemed to
have elected to have the Company withhold from the Shares to be issued upon
exercise of the Option that number of Shares having a Fair Market Value
determined as of the applicable Tax Date (as defined below) equal to the amount
required to be withheld. For purposes of this Section 11, the Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined under the Applicable Laws (the "Tax
---
Date").
- ----
(d) If permitted by the Administrator, in its discretion, a
Participant may satisfy his or her tax withholding obligations upon exercise of
an Option by surrendering to the Company Shares that have a Fair Market Value
determined as of the applicable Tax Date equal
-10-
<PAGE>
to the amount required to be withheld. In the case of shares previously acquired
from the Company that are surrendered under this Section 11(d), such Shares must
have been owned by the Participant for more than six (6) months on the date of
surrender (or such other period of time as is required for the Company to avoid
adverse accounting charges).
(e) Any election or deemed election by a Participant to have Shares
withheld to satisfy tax withholding obligations under Section 11(c) or (d) above
shall be irrevocable as to the particular Shares as to which the election is
made and shall be subject to the consent or disapproval of the Administrator.
Any election by a Participant under Section 11(d) above must be made on or prior
to the applicable Tax Date.
(f) In the event an election to have Shares withheld is made by a
Participant and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Participant shall receive
the full number of Shares with respect to which the Option is exercised but such
Participant shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.
12. Non-Transferability of Options.
------------------------------
(a) General. Except as set forth in this Section 12, Options may not
--------
be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent or distribution. The
designation of a beneficiary by an Optionee will not constitute a transfer. An
Option may be exercised, during the lifetime of the holder of an Option, only by
such holder or a transferee permitted by this Section 12.
(b) Limited Transferability Rights. Notwithstanding anything else in
------------------------------
this Section 12, prior to the date, if any, on which the Common Stock becomes a
Listed Security, the Administrator may in its discretion grant Nonstatutory
Stock Options that may be transferred by instrument to an inter vivos or
testamentary trust in which the Options are to be passed to beneficiaries upon
the death of the trustor (settlor) or by gift to "Immediate Family" (as defined
below), on such terms and conditions as the Administrator deems appropriate.
Following the date, if any, on which the Common Stock becomes a Listed Security,
the Administrator may in its discretion grant transferable Nonstatutory Stock
Options pursuant to Option Agreements specifying the manner in which such
Nonstatutory Stock Options are transferable. "Immediate Family" means any
----------------
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, and shall include adoptive relationships.
13. Adjustments Upon Changes in Capitalization, Merger or Certain Other
-------------------------------------------------------------------
Transactions.
- ------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
stockholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, the numbers of Shares set forth in Sections 3(a) and 8
above, and the number of Shares of Common Stock that have been authorized for
issuance under the Plan but as to which no Options have yet been granted or that
have been returned to the Plan upon cancellation
-11-
<PAGE>
or expiration of an Option, as well as the price per Share of Common Stock
covered by each such outstanding Option, shall be proportionately adjusted for
any increase or decrease in the number of issued Shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination,
recapitalization or reclassification of the Common Stock, or any other increase
or decrease in the number of issued Shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Administrator, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of Shares of Common Stock subject to an
Option.
(b) Dissolution or Liquidation. In the event of the dissolution or
--------------------------
liquidation of the Company, each Option will terminate immediately prior to the
consummation of such action, unless otherwise determined by the Administrator.
(c) Corporate Transaction. In the event of a Corporate Transaction,
---------------------
each outstanding Option shall be assumed or an equivalent option or right shall
be substituted by such successor corporation or a parent or subsidiary of such
successor corporation (the "Successor Corporation"), unless the Successor
---------------------
Corporation does not agree to assume the award or to substitute an equivalent
option or right, in which case such Option shall terminate upon the consummation
of the transaction.
For purposes of this Section 13(c), an Option shall be considered
assumed, without limitation, if, at the time of issuance of the stock or other
consideration upon a Corporate Transaction or a Change of Control, as the case
may be, each holder of an Option would be entitled to receive upon exercise of
the award the same number and kind of shares of stock or the same amount of
property, cash or securities as such holder would have been entitled to receive
upon the occurrence of the transaction if the holder had been, immediately prior
to such transaction, the holder of the number of Shares of Common Stock covered
by the award at such time (after giving effect to any adjustments in the number
of Shares covered by the Option as provided for in this Section 13); provided
that if such consideration received in the transaction is not solely common
stock of the Successor Corporation, the Administrator may, with the consent of
the Successor Corporation, provide for the consideration to be received upon
exercise of the award to be solely common stock of the Successor Corporation
equal to the Fair Market Value of the per Share consideration received by
holders of Common Stock in the transaction.
(d) Certain Distributions. In the event of any distribution to the
---------------------
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.
14. Time of Granting Options. The date of grant of an Option shall, for
------------------------
all purposes, be the date on which the Administrator makes the determination
granting such Option,
-12-
<PAGE>
or such other date as is determined by the Administrator, provided that in the
case of any Incentive Stock Option, the grant date shall be the later of the
date on which the Administrator makes the determination granting such Incentive
Stock Option or the date of commencement of the Optionee's employment
relationship with the Company. Notice of the determination shall be given to
each Employee or Consultant to whom an Option is so granted within a reasonable
time after the date of such grant.
15. Amendment and Termination of the Plan.
-------------------------------------
(a) Authority to Amend or Terminate. The Board may at any time amend,
-------------------------------
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation (other than an adjustment pursuant to Section 13 above) shall
be made that would materially and adversely affect the rights of any Optionee
under any outstanding grant, without his or her consent. In addition, to the
extent necessary and desirable to comply with the Applicable Laws, the Company
shall obtain stockholder approval of any Plan amendment in such a manner and to
such a degree as required.
(b) Effect of Amendment or Termination. No amendment or termination
----------------------------------
of the Plan shall materially and adversely affect Options already granted,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee or holder and the
Company.
(c) Accounting Issues. Notwithstanding anything else to the contrary
-----------------
in this Section 15, the Administrator may at any time amend or adjust the Plan
or an outstanding award issued under the Plan without the consent of the
affected Participant(s) if such amendment or adjustment is necessary to avoid
the Company's incurring adverse accounting charges.
16. Conditions Upon Issuance of Shares. Notwithstanding any other
----------------------------------
provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for
failure, to issue or deliver any Shares under the Plan unless such issuance or
delivery would comply with the Applicable Laws, with such compliance determined
by the Company in consultation with its legal counsel. As a condition to the
exercise of an Option, the Company may require the person exercising the award
to represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required by law.
17. Reservation of Shares. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. Agreements. Options shall be evidenced by Option Agreements in such
----------
form(s) as the Administrator shall from time to time approve.
19. Stockholder Approval. If required by the Applicable Laws, continuance
--------------------
of the Plan shall be subject to approval by the stockholders of the Company
within twelve (12) months
-13-
<PAGE>
before or after the date the Plan is adopted. Such stockholder approval shall be
obtained in the manner and to the degree required under the Applicable Laws.
20. Information and Documents to Optionees and Purchasers. Prior to the
-----------------------------------------------------
date, if any, upon which the Common Stock becomes a Listed Security and if
required by the Applicable Laws, the Company shall provide financial statements
at least annually to each Optionee and to each individual who acquired Shares
pursuant to the Plan, during the period such Optionee or purchaser has one or
more Options outstanding, and in the case of an individual who acquired Shares
pursuant to the Plan, during the period such individual owns such Shares. The
Company shall not be required to provide such information if the issuance of
Options under the Plan is limited to key employees whose duties in connection
with the Company assure their access to equivalent information.
-14-
<PAGE>
Exhibit 10.14
@ROAD, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------
The following constitute the provisions of the 2000 Employee Stock Purchase
Plan of @ROAD, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company. It is the intention of the Company to have the Plan
qualify as an "Employee Stock Purchase Plan" under Section 423 of the Code. The
provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
-----------
(a) "Board" means the Board of Directors of the Company.
-----
(b) "Code" means the Internal Revenue Code of 1986, as amended.
----
(c) "Common Stock" means the Common Stock of the Company.
------------
(d) "Company" means @ROAD, Inc., a Delaware corporation.
-------
(e) "Compensation" means total compensation, including commissions,
------------
payments for overtime, shift premium, incentive compensation, incentive
payments, bonuses and other compensation.
(f) "Continuous Status as an Employee" means the absence of any
--------------------------------
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of (i) sick leave; (ii)
military leave; (iii) any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company and its Designated Subsidiaries.
(g) "Contributions" means all amounts credited to the account of a
-------------
participant pursuant to the Plan.
(h) "Corporate Transaction" means a sale of all or substantially all
---------------------
of the Company's assets, or a merger, consolidation or other capital
reorganization of the Company with or into another corporation.
(i) "Designated Subsidiaries" means the Subsidiaries which have been
-----------------------
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan; provided however that the Board shall only have the
discretion to designate Subsidiaries if
-1-
<PAGE>
the issuance of options to such Subsidiary's Employees pursuant to the Plan
would not cause the Company to incur adverse accounting charges.
(j) "Employee" means any person, including an Officer, who is
--------
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(l) "Offering Date" means the first business day of each Offering
-------------
Period of the Plan.
(m) "Offering Period" means a period of twenty-four (24) months
---------------
commencing on February 1 and August 1 of each year, except for the first
Offering Period as set forth in Section 4(a).
(n) "Officer" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(o) "Plan" means this Employee Stock Purchase Plan.
----
(p) "Purchase Date" means the last day of each Purchase Period of the
-------------
Plan.
(q) "Purchase Period" means a period of six (6) months within an
---------------
Offering Period, except for the first Purchase Period as set forth in Section
4(b).
(r) "Purchase Price" means with respect to a Purchase Period an amount
--------------
equal to 85% of the Fair Market Value (as defined in Section 7(b) below) of a
Share of Common Stock on the Offering Date or on the Purchase Date, whichever is
lower; provided, however, that in the event (i) of any increase in the number of
Shares available for issuance under the Plan as a result of a stockholder-
approved amendment to the Plan, and (ii) all or a portion of such additional
Shares are to be issued with respect to one or more Offering Periods that are
underway at the time of such increase ("Additional Shares"), and (iii) the Fair
-----------------
Market Value of a Share of Common Stock on the date of such increase (the
"Approval Date Fair Market Value") is higher than the Fair Market Value on the
-------------------------------
Offering Date for any such Offering Period, then in such instance the Purchase
Price with respect to Additional Shares shall be 85% of the Approval Date Fair
Market Value or the Fair Market Value of a Share of Common Stock on the Purchase
Date, whichever is lower.
(s) "Share" means a share of Common Stock, as adjusted in accordance
-----
with Section 19 of the Plan.
(t) "Subsidiary" means a corporation, domestic or foreign, of which
----------
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.
-2-
<PAGE>
3. Eligibility.
-----------
(a) Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering Period under
the Plan, subject to the requirements of Section 5(a) and the limitations
imposed by Section 423(b) of the Code.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or of any subsidiary of the Company, or (ii) if such
option would permit his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company and its
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) of the Fair Market Value (as defined in Section 7(b) below) of such
stock (determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.
4. Offering Periods and Purchase Periods.
-------------------------------------
(a) Offering Periods. The Plan shall be implemented by a series of
----------------
Offering Periods of approximately twenty-four (24) months duration, with new
Offering Periods commencing on or about February 1 and August 1 of each year (or
at such other time or times as may be determined by the Board of Directors).
The first Offering Period shall commence on the beginning of the effective date
of the Registration Statement on Form S-1 for the initial public offering of the
Company's Common Stock (the "IPO Date") and continue until July 31, 2002. The
--------
Plan shall continue until terminated in accordance with Section 20 hereof. The
Board of Directors of the Company shall have the power to change the duration
and/or the frequency of Offering Periods with respect to future offerings
without stockholder approval if such change is announced at least five (5) days
prior to the scheduled beginning of the first Offering Period to be affected.
(b) Purchase Periods. Each Offering Period shall consist of four (4)
----------------
consecutive Purchase Periods of approximately six (6) months duration. The last
day of each Purchase Period shall be the "Purchase Date" for such Purchase
-------------
Period. A Purchase Period commencing on February 1 shall end on the next July
31. A Purchase Period commencing on August 1 shall end on the next January 31.
The first Purchase Period shall commence on the IPO Date and shall end on
January 31, 2001. The Board of Directors of the Company shall have the power to
change the duration and/or frequency of Purchase Periods with respect to future
purchases without stockholder approval if such change is announced at least five
(5) days prior to the scheduled beginning of the first Purchase Period to be
affected.
5. Participation.
-------------
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the Company and
filing it with the Company's
-3-
<PAGE>
payroll office prior to the applicable Offering Date, unless a later time for
filing the subscription agreement is set by the Board for all eligible Employees
with respect to a given Offering Period. The subscription agreement shall set
forth the percentage of the participant's Compensation (subject to Section 6(a)
below) to be paid as Contributions pursuant to the Plan.
(b) Payroll deductions shall commence on the first payroll paid
following the Offering Date and shall end on the last payroll paid on or prior
to the last Purchase Period of the Offering Period to which the subscription
agreement is applicable, unless sooner terminated by the participant as provided
in Section 10.
6. Method of Payment of Contributions.
----------------------------------
(a) A participant shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than one percent (1%)
and not more than twenty percent (20%) of such participant's Compensation on
each payday during the Offering Period. All payroll deductions made by a
participant shall be credited to his or her account under the Plan. A
participant may not make any additional payments into such account.
(b) A participant may discontinue his or her participation in the Plan
as provided in Section 10, or, on one occasion only during a Purchase Period may
increase and on one occasion only during a Purchase Period may decrease the rate
of his or her Contributions with respect to the Offering Period by completing
and filing with the Company a new subscription agreement authorizing a change in
the payroll deduction rate. The change in rate shall be effective as of the
beginning of the next calendar month following the date of filing of the new
subscription agreement, if the agreement is filed at least ten (10) business
days prior to such date and, if not, as of the beginning of the next succeeding
calendar month.
(c) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b), a participant's payroll
deductions may be decreased by the Company to 0% at any time during a Purchase
Period. Payroll deductions shall re-commence at the rate provided in such
participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10. In addition, a
participant's payroll deductions may be decreased by the Company to 0% at any
time during a Purchase Period in order to avoid unnecessary payroll
contributions as a result of application of the maximum share limit set forth in
Section 7(a), or as a result of the limitations set forth in Section 3(b), in
which case payroll deductions shall re-commence at the rate provided in such
participant's subscription agreement at the beginning of the next Purchase
Period, unless terminated by the participant as provided in Section 10.
7. Grant of Option.
---------------
(a) On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on each Purchase Date a number of Shares of the Company's Common Stock
determined by dividing such Employee's Contributions accumulated prior to such
Purchase Date and retained in the
-4-
<PAGE>
participant's account as of the Purchase Date by the applicable Purchase Price;
provided however that the maximum number of Shares an Employee may purchase
during each Purchase Period shall be 2,700 Shares (subject to any adjustment
pursuant to Section 19 below), and provided further that such purchase shall be
subject to the limitations set forth in Sections 3(b) and 13.
(b) The fair market value of the Company's Common Stock on a given
date (the "Fair Market Value") shall be determined by the Board in its
-----------------
discretion based on the closing sales price of the Common Stock for such date
(or, in the event that the Common Stock is not traded on such date, on the
immediately preceding trading date), as reported by the National Association of
Securities Dealers Automated Quotation (Nasdaq) National Market or, if such
price is not reported, the mean of the bid and asked prices per share of the
Common Stock as reported by Nasdaq or, in the event the Common Stock is listed
on a stock exchange, the Fair Market Value per share shall be the closing sales
price on such exchange on such date (or, in the event that the Common Stock is
not traded on such date, on the immediately preceding trading date), as reported
in The Wall Street Journal. For purposes of the Offering Date under the first
-----------------------
Offering Period under the Plan, the Fair Market Value of a share of the Common
Stock of the Company shall be the Price to Public as set forth in the final
prospectus filed with the Securities and Exchange Commission pursuant to Rule
424 under the Securities Act of 1933, as amended.
8. Exercise of Option. Unless a participant withdraws from the Plan as
------------------
provided in Section 10, his or her option for the purchase of Shares will be
exercised automatically on each Purchase Date of an Offering Period, and the
maximum number of full Shares subject to the option will be purchased at the
applicable Purchase Price with the accumulated Contributions in his or her
account. No fractional Shares shall be issued. The Shares purchased upon
exercise of an option hereunder shall be deemed to be transferred to the
participant on the Purchase Date. During his or her lifetime, a participant's
option to purchase Shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Purchase Date of each
--------
Offering Period, the Company shall arrange the delivery to each participant, as
appropriate, the Shares purchased upon exercise of his or her option. No
fractional Shares shall be purchased; any payroll deductions accumulated in a
participant's account which are not sufficient to purchase a full Share shall be
retained in the participant's account for the subsequent Purchase Period or
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 below. Any other amounts left over in a participant's account after
a Purchase Date shall be returned to the participant.
10. Voluntary Withdrawal; Termination of Employment.
-----------------------------------------------
(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
each Purchase Date by giving written notice to the Company. All of the
participant's Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and his or her
option for the current period will be automatically terminated, and no further
Contributions for the purchase of Shares will be made during the Offering
Period.
-5-
<PAGE>
(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Purchase Date of an Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 15, and his or her option will
be automatically terminated.
(c) In the event an Employee fails to remain in Continuous Status as
an Employee of the Company for at least twenty (20) hours per week during the
Offering Period in which the employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the Contributions credited to his
or her account will be returned to him or her and his or her option terminated.
(d) A participant's withdrawal from an offering will not have any
effect upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the Company.
11. Automatic Withdrawal. If the Fair Market Value of the Shares on any
--------------------
Purchase Date of an Offering Period is less than the Fair Market Value of the
Shares on the Offering Date for such Offering Period, then every participant
shall automatically (i) be withdrawn from such Offering Period at the close of
such Purchase Date and after the acquisition of Shares for such Purchase Period,
and (ii) be enrolled in the Offering Period commencing on the first business day
subsequent to such Purchase Period. Participants shall automatically be
withdrawn as of July 31, 2000 from the Offering Period beginning on the IPO Date
and re-enrolled in the Offering Period beginning on August 1, 2000 if the Fair
Market Value of the Shares on the IPO Date is greater than the Fair Market Value
of the Shares on July 31, 2000, unless a participant notifies the Administrator
prior to July 31, 2000 that he or she does not wish to be withdrawn and re-
enrolled.
12. Interest. No interest shall accrue on the Contributions of a
--------
participant in the Plan.
13. Stock.
-----
(a) Subject to adjustment as provided in Section 19, the maximum
number of Shares which shall be made available for sale under the Plan shall be
450,000 Shares, plus an annual increase on the first day of each of the
Company's fiscal years beginning in 2001 and ending in 2010 equal to the lesser
of (i) 900,000 Shares, (ii) two (2%) percent of the Shares outstanding on the
last day of the immediately preceding fiscal year, or (iii) such lesser number
of Shares as is determined by the Board. If the Board determines that, on a
given Purchase Date, the number of shares with respect to which options are to
be exercised may exceed (i) the number of shares of Common Stock that were
available for sale under the Plan on the Offering Date of the applicable
Offering Period, or (ii) the number of shares available for sale under the Plan
on such Purchase Date, the Board may in its sole discretion provide (x) that the
Company shall make a pro rata allocation of the Shares of Common Stock available
for purchase on such Offering Date or Purchase Date, as applicable, in as
uniform a manner as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising
-6-
<PAGE>
options to purchase Common Stock on such Purchase Date, and continue all
Offering Periods then in effect, or (y) that the Company shall make a pro rata
allocation of the shares available for purchase on such Offering Date or
Purchase Date, as applicable, in as uniform a manner as shall be practicable and
as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Purchase Date,
and terminate any or all Offering Periods then in effect pursuant to Section 20
below. The Company may make pro rata allocation of the Shares available on the
Offering Date of any applicable Offering Period pursuant to the preceding
sentence, notwithstanding any authorization of additional Shares for issuance
under the Plan by the Company's stockholders subsequent to such Offering Date.
(b) The participant shall have no interest or voting right in Shares
covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.
14. Administration. The Board, or a committee named by the Board, shall
--------------
supervise and administer the Plan and shall have full power to adopt, amend and
rescind any rules deemed desirable and appropriate for the administration of the
Plan and not inconsistent with the Plan, to construe and interpret the Plan, and
to make all other determinations necessary or advisable for the administration
of the Plan.
15. Designation of Beneficiary.
--------------------------
(a) A participant may file a written designation of a beneficiary who
is to receive any Shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of a
Purchase Period but prior to delivery to him or her of such Shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Purchase Date of an Offering Period.
If a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
(and his or her spouse, if any) at any time by written notice. In the event of
the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such Shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such Shares and/or cash to the spouse or to any
one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.
16. Transferability. Neither Contributions credited to a participant's
---------------
account nor any rights with regard to the exercise of an option or to receive
Shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws
-7-
<PAGE>
of descent and distribution, or as provided in Section 15) by the participant.
Any such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with Section 10.
17. Use of Funds. All Contributions received or held by the Company under
------------
the Plan may be used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such Contributions.
18. Reports. Individual accounts will be maintained for each participant
-------
in the Plan. Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of Contributions,
the per Share Purchase Price, the number of Shares purchased and the remaining
cash balance, if any.
19. Adjustments Upon Changes in Capitalization; Corporate Transactions.
------------------------------------------------------------------
(a) Adjustment. Subject to any required action by the stockholders of
----------
the Company, the number of Shares covered by each option under the Plan which
has not yet been exercised and the number of Shares which have been authorized
for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the maximum number of shares of
--------
Common Stock which may be purchased by a participant in a Purchase Period, the
number of shares of Common Stock set forth in Section 13(a) above, and the price
per Share of Common Stock covered by each option under the Plan which has not
yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common Stock
(including any such change in the number of Shares of Common Stock effected in
connection with a change in domicile of the Company), or any other increase or
decrease in the number of Shares effected without receipt of consideration by
the Company; provided however that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an option.
(b) Corporate Transactions. In the event of a dissolution or
----------------------
liquidation of the Company, any Purchase Period and Offering Period then in
progress will terminate immediately prior to the consummation of such action,
unless otherwise provided by the Board. In the event of a Corporate Transaction,
each option outstanding under the Plan shall be assumed or an equivalent option
shall be substituted by the successor corporation or a parent or Subsidiary of
such successor corporation. In the event that the successor corporation refuses
to assume or substitute for outstanding options, each Purchase Period and
Offering Period then in progress shall be shortened and a new Purchase Date
shall be set (the "New Purchase Date"), as of which date any Purchase Period and
-----------------
Offering Period then in progress will terminate. The New Purchase Date shall be
on or before the date of consummation of the transaction and the Board shall
notify each participant in writing, at least ten (10) days prior to the New
Purchase Date, that
-8-
<PAGE>
the Purchase Date for his or her option has been changed to the New Purchase
Date and that his or her option will be exercised automatically on the New
Purchase Date, unless prior to such date he or she has withdrawn from the
Offering Period as provided in Section 10.
For purposes of this Section 19, an option granted under the Plan shall be
deemed to be assumed, without limitation, if, at the time of issuance of the
stock or other consideration upon a Corporate Transaction, each holder of an
option under the Plan would be entitled to receive upon exercise of the option
the same number and kind of shares of stock or the same amount of property, cash
or securities as such holder would have been entitled to receive upon the
occurrence of the transaction if the holder had been, immediately prior to the
transaction, the holder of the number of Shares of Common Stock covered by the
option at such time (after giving effect to any adjustments in the number of
Shares covered by the option as provided for in this Section 19); provided
however that if the consideration received in the transaction is not solely
common stock of the successor corporation or its parent (as defined in Section
424(e) of the Code), the Board may, with the consent of the successor
corporation, provide for the consideration to be received upon exercise of the
option to be solely common stock of the successor corporation or its parent
equal in Fair Market Value to the per Share consideration received by holders of
Common Stock in the transaction.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per Share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of Shares of its outstanding Common Stock, and
in the event of the Company's being consolidated with or merged into any other
corporation.
20. Amendment or Termination.
------------------------
(a) The Board may at any time and for any reason terminate or amend
the Plan. Except as provided in Section 19, no such termination of the Plan may
affect options previously granted, provided that the Plan or an Offering Period
may be terminated by the Board on a Purchase Date or by the Board's setting a
new Purchase Date with respect to an Offering Period and Purchase Period then in
progress if the Board determines that termination of the Plan and/or the
Offering Period is in the best interests of the Company and the stockholders or
if continuation of the Plan and/or the Offering Period would cause the Company
to incur adverse accounting charges as a result of a change after the effective
date of the Plan in the generally accepted accounting rules applicable to the
Plan. Except as provided in Section 19 and in this Section 20, no amendment to
the Plan shall make any change in any option previously granted which adversely
affects the rights of any participant. In addition, to the extent necessary to
comply with Rule 16b-3 under the Exchange Act, or under Section 423 of the Code
(or any successor rule or provision or any applicable law or regulation), the
Company shall obtain stockholder approval in such a manner and to such a degree
as so required.
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be
-9-
<PAGE>
entitled to change the Offering Periods and Purchase Periods, limit the
frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
21. Notices. All notices or other communications by a participant to the
-------
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
----------------------------------
respect to an option unless the exercise of such option and the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, applicable state securities laws and the requirements of
any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
23. Term of Plan; Effective Date. The Plan shall become effective upon
----------------------------
the IPO Date. It shall continue in effect for a term of twenty (20) years
unless sooner terminated under Section 20.
-10-
<PAGE>
EXHIBIT 10.15
@ROAD, INC.
2000 DIRECTORS' STOCK OPTION PLAN
---------------------------------
1. Purposes of the Plan. The purposes of this Directors' Stock Option
--------------------
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.
All options granted hereunder shall be nonstatutory stock options.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Board" means the Board of Directors of the Company.
-----
(b) "Change of Control" means a sale of all or substantially all of
-----------------
the Company's assets, or any merger or consolidation of the Company with or into
another corporation other than a merger or consolidation in which the holders of
more than 50% of the shares of capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, or such surviving entity,
outstanding immediately after such transaction.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
----
(d) "Common Stock" means the Common Stock of the Company.
------------
(e) "Company" means @Road, Inc., a Delaware corporation.
-------
(f) "Continuous Status as a Director" means the absence of any
-------------------------------
interruption or termination of service as a Director.
(g) "Corporate Transaction" means a dissolution or liquidation of the
---------------------
Company, a sale of all or substantially all of the Company's assets, or a
merger, consolidation or other capital reorganization of the Company with or
into another corporation.
(h) "Director" means a member of the Board.
--------
(i) "Employee" means any person, including any officer or Director,
--------
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
<PAGE>
(k) "Fair Market Value" means the closing price of the Common Stock as
-----------------
reported on the Nasdaq National Market or a stock exchange on which the Shares
are listed (or, in the event that the Common Stock is not traded on such date,
on the immediately preceding trading date), as reported in The Wall Street
---------------
Journal, or if there is a public market for the Common Stock but the Common
- -------
Stock is not traded on the Nasdaq National Market or on a stock exchange, the
fair market value per Share shall be the mean of the bid and asked prices of the
Common Stock in the over-the-counter market on the date of grant, as reported in
The Wall Street Journal (or, if not so reported, as otherwise reported by a
- ------------------------
source deemed reliable by the Administrator).
(l) "Option" means a stock option granted pursuant to the Plan. All
------
options shall be nonstatutory stock options (i.e., options that are not intended
to qualify as incentive stock options under Section 422 of the Code).
(m) "Optioned Stock" means the Common Stock subject to an Option.
--------------
(n) "Optionee" means an Outside Director who receives an Option.
--------
(o) "Outside Director" means a Director who is not an Employee.
----------------
(p) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(q) "Plan" means this 2000 Directors' Stock Option Plan.
----
(r) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 11 of the Plan.
(s) "Subsidiary" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
-------------------------
the Plan, the number of Shares that are available to be sold under the Plan is
1,200,000 Shares of Common Stock. The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares that were subject thereto
shall, unless the Plan has been terminated, become available for future grant
under the Plan. In addition, any Shares of Common Stock that are retained by
the Company upon exercise of an Option in order to satisfy the exercise price
for such Option, or any withholding taxes due with respect to such exercise,
shall be treated as not issued and shall continue to be available under the
Plan. If Shares that were acquired upon exercise of an Option are subsequently
repurchased by the Company, such Shares shall not in any event be returned to
the Plan and shall not become available for future grant under the Plan.
-2-
<PAGE>
4. Administration of and Grants of Options under the Plan.
------------------------------------------------------
(a) Administrator. Except as otherwise required herein, the Plan
-------------
shall be administered by the Board.
(b) Procedure for Grants. All grants of Options hereunder shall be
--------------------
automatic and nondiscretionary and shall be made strictly in accordance with the
following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.
(ii) Each individual who becomes an Outside Director after the
effective date of this Plan, whether through election by the stockholders of the
Company or appointment by the Board of Directors to fill a vacancy, shall be
automatically granted an Option to purchase 40,000 Shares (the "First Option").
------------
(iii) Each Outside Director shall thereafter be automatically
granted an Option to purchase 10,000 Shares on the date of each Annual Meeting
of the Company's stockholders immediately following which such Outside Director
is serving on the Board, provided that, on such date, he or she shall have
served on the Board for at least six (6) months prior to the date of such Annual
Meeting (the "Annual Option").
-------------
(iv) Notwithstanding the provisions of subsections (ii) and
(iii) hereof, in the event that a grant would cause the number of Shares subject
to outstanding Options plus the number of Shares previously purchased upon
exercise of Options to exceed the Pool, then each such automatic grant shall be
for that number of Shares determined by dividing the total number of Shares
remaining available for grant by the number of Outside Directors receiving an
Option on the automatic grant date. Any further grants shall then be deferred
until such time, if any, as additional Shares become available for grant under
the Plan through action of the stockholders to increase the number of Shares
which may be issued under the Plan or through cancellation or expiration of
Options previously granted hereunder.
(v) Notwithstanding the provisions of subsections (ii) and
(iii) hereof, any grant of an Option made before the Company has obtained
stockholder approval of the Plan in accordance with Section 17 hereof shall be
conditioned upon obtaining such stockholder approval of the Plan in accordance
with Section 17 hereof.
(vi) The terms of each First Option granted hereunder shall be
as follows:
(1) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Section 9 below;
-3-
<PAGE>
(2) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the First Option, determined in
accordance with Section 8 hereof; and
(3) the First Option shall become vested and exercisable as
to 1/4th of the Shares subject to the Option on the 12 month anniversary of the
date of grant and as to 1/48th of the Shares subject to the Option on the first
of each month after the date of grant.
(vii) The terms of each Annual Option granted hereunder shall be
as follows:
(1) the Annual Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Section 9 below;
(2) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the Annual Option, determined in
accordance with Section 8 hereof; and
(3) the Annual Option shall become vested and exercisable
as to 1/12th of the Shares subject to the Option on the first of each month
after the date of grant.
(c) Powers of the Board. Subject to the provisions and restrictions
-------------------
of the Plan, the Board shall have the authority, in its discretion: (i) to
determine, upon review of relevant information and in accordance with Section
8(b) of the Plan, the fair market value of the Common Stock; (ii) to determine
the exercise price per Share of Options to be granted, which exercise price
shall be determined in accordance with Section 8 of the Plan; (iii) to interpret
the Plan; (iv) to prescribe, amend and rescind rules and regulations relating to
the Plan; (v) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted
hereunder; and (vi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(d) Effect of Board's Decision. All decisions, determinations and
--------------------------
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
(e) Suspension or Termination of Option. If the Chief Executive
-----------------------------------
Officer or his or her designee reasonably believes that an Optionee has
committed an act of misconduct, such officer may suspend the Optionee's right to
exercise any option pending a determination by the Board (excluding the Outside
Director accused of such misconduct). If the Board (excluding the Outside
Director accused of such misconduct) determines an Optionee has committed an act
of embezzlement, fraud, dishonesty, nonpayment of an obligation owed to the
Company, breach of fiduciary duty or deliberate disregard of the Company rules
resulting in loss, damage or injury to the Company, or if an Optionee makes an
unauthorized disclosure of any Company trade secret or confidential information,
engages in any conduct constituting unfair competition, induces any Company
customer to breach a contract with the Company or induces any principal for whom
the Company acts as agent to terminate such agency relationship, neither the
Optionee
-4-
<PAGE>
nor his or her estate shall be entitled to exercise any Option whatsoever. In
making such determination, the Board of Directors (excluding the Outside
Director accused of such misconduct) shall act fairly and shall give the
Optionee an opportunity to appear and present evidence on Optionee's behalf at a
hearing before the Board or a committee of the Board.
5. Eligibility. Options may be granted only to Outside Directors. All
-----------
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) above. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. Term of Plan; Effective Date. The Plan shall become effective on the
----------------------------
effectiveness of the registration statement under the Securities Act of 1933, as
amended, relating to the Company's initial public offering of securities. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 13 of the Plan.
7. Term of Options. The term of each Option shall be ten (10) years from
---------------
the date of grant thereof unless an Option terminates sooner pursuant to Section
9 below.
8. Exercise Price and Consideration.
--------------------------------
(a) Exercise Price. The per Share exercise price for the Shares to be
--------------
issued pursuant to exercise of an Option shall be 100% of the Fair Market Value
per Share on the date of grant of the Option.
(b) Form of Consideration. The consideration to be paid for the
---------------------
Shares to be issued upon exercise of an Option shall consist entirely of cash,
check, other Shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which the
Option shall be exercised (which, if acquired from the Company, shall have been
held more than six months), delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect exercise of the Option and prompt delivery
to the Company of the sale or loan proceeds required to pay the exercise price,
or any combination of such methods of payment and/or any other consideration or
method of payment as shall be permitted under applicable corporate law.
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable at such times as are set forth in Section
4(b) above; provided however that no Options shall be exercisable prior to
stockholder approval of the Plan in accordance with Section 17 below has been
obtained.
-5-
<PAGE>
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 8(b) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Continuous Status as a Director. If an Outside
----------------------------------------------
Director ceases to serve as a Director, he or she may, but only within ninety
(90) days after the date he or she ceases to be a Director of the Company,
exercise his or her Option to the extent that he or she was entitled to exercise
it at the date of such termination. Notwithstanding the foregoing, in no event
may the Option be exercised after its term set forth in Section 7 has expired.
To the extent that such Outside Director was not entitled to exercise an Option
at the date of such termination, or does not exercise such Option (to the extent
he or she was entitled to exercise) within the time specified above, the Option
shall terminate and the Shares underlying the unexercised portion of the Option
shall revert to the Plan.
(c) Disability of Optionee. Notwithstanding Section 9(b) above, in
----------------------
the event a Director is unable to continue his or her service as a Director with
the Company as a result of his or her total and permanent disability (as defined
in Section 22(e)(3) of the Code), he or she may, but only within twelve (12)
months from the date of such termination, exercise his or her Option to the
extent he or she was entitled to exercise it at the date of such termination.
Notwithstanding the foregoing, in no event may the Option be exercised after its
term set forth in Section 7 has expired. To the extent that he or she was not
entitled to exercise the Option at the date of termination, or if he or she does
not exercise such Option (to the extent he or she was entitled to exercise)
within the time specified above, the Option shall terminate and the Shares
underlying the unexercised portion of the Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an Optionee (i)
-----------------
during the term of the Option who is, at the time of his or her death, a
Director of the Company and who shall have been in Continuous Status as a
Director since the date of grant of the Option, or (ii) three (3) months after
the termination of Continuous Status as a Director, the Option may be exercised,
at any time within twelve (12) months following the date of death, by the
Optionee's
-6-
<PAGE>
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent of the right to exercise that had accrued
at the date of death or the date of termination, as applicable. Notwithstanding
the foregoing, in no event may the Option be exercised after its term set forth
in Section 7 has expired. To the extent that an Optionee was not entitled to
exercise the Option at the date of death or termination or if he or she does not
exercise such Option (to the extent he or she was entitled to exercise) within
the time specified above, the Option shall terminate and the Shares underlying
the unexercised portion of the Option shall revert to the Plan.
10. Nontransferability of Options. The Option may not be sold, pledged,
-----------------------------
assigned, hypothecated, transferred or disposed of in any manner other than (a)
by will or by the laws of descent or distribution; (b) pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder); (c)
by gift to the Optionee's Family; or (d) by gift or in exchange for an interest
in such entity to (i) a trust in which Optionee and/or Optionee's Family have
more than fifty percent of the beneficial interest, (ii) a foundation in which
Optionee and/or Optionee's Family control the management of assets, or (iii) any
other entity in which Optionee and/or Optionee's Family own more than fifty
percent of the voting interests. For purposes of this Section 10, Optionee's
"Family" shall include any child, stepchild, grandchild, parent, stepparent,
------
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law; daughter-in-law, brother-in-law or sister-in-law,
including adoptive relationships, and any person sharing the employee's
household (other than a tenant or employee). The designation of a beneficiary
by an Optionee does not constitute a transfer. An Option may be exercised
during the lifetime of an Optionee only by the Optionee or a transferee
permitted by this Section.
11. Adjustments Upon Changes in Capitalization; Corporate Transactions.
------------------------------------------------------------------
(a) Adjustment. Subject to any required action by the stockholders of
----------
the Company, the number of shares of Common Stock covered by each outstanding
Option, the number of Shares of Common Stock set forth in Sections 4(b)(ii) and
(iii) above, and the number of Shares of Common Stock which have been authorized
for issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock (including any such change in the number of Shares of Common
Stock effected in connection with a change in domicile of the Company) or any
other increase or decrease in the number of issued Shares of Common Stock
effected without receipt of consideration by the Company; provided however that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option.
-7-
<PAGE>
(b) Corporate Transactions. In the event of a Corporate Transaction,
----------------------
each outstanding Option shall be assumed or an equivalent option shall be
substituted by the successor corporation or a Parent or Subsidiary of such
successor corporation, unless the successor corporation does not agree to assume
the outstanding Options or to substitute equivalent options, in which case the
Options shall terminate upon the consummation of the transaction; provided
however that in the event of any transaction that qualifies as a Change of
Control and notwithstanding whether or not outstanding Options are assumed,
substituted for or terminated in connection with the transaction, the vesting of
each outstanding Option shall accelerate in full such that each Optionee shall
have the right to exercise his or her Option as to all of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable,
immediately prior to consummation of the transaction.
For purposes of this Section 11(b), an Option shall be considered
assumed, without limitation, if, at the time of issuance of the stock or other
consideration upon such Corporate Transaction, each Optionee would be entitled
to receive upon exercise of an Option the same number and kind of shares of
stock or the same amount of property, cash or securities as the Optionee would
have been entitled to receive upon the occurrence of such transaction if the
Optionee had been, immediately prior to such transaction, the holder of the
number of Shares of Common Stock covered by the Option at such time (after
giving effect to any adjustments in the number of Shares covered by the Option
as provided for in this Section 11); provided however that if such consideration
received in the transaction was not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon
exercise of the Option to be solely common stock of the successor corporation or
its Parent equal to the Fair Market Value of the per Share consideration
received by holders of Common Stock in the transaction.
(c) Certain Distributions. In the event of any distribution to the
---------------------
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.
12. Time of Granting Options. The date of grant of an Option shall, for
------------------------
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may amend or terminate the
-------------------------
Plan from time to time in such respects as the Board may deem advisable;
provided that, to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act (or any other applicable law or regulation), the Company
shall obtain approval of the stockholders of the Company to Plan amendments to
the extent and in the manner required by such law or regulation.
-8-
<PAGE>
(b) Effect of Amendment or Termination. Any such amendment or
----------------------------------
termination of the Plan that would impair the rights of any Optionee shall not
affect Options already granted to such Optionee and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.
14. Conditions Upon Issuance of Shares. Notwithstanding any other
----------------------------------
provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for
failure, to issue or deliver any Shares under the Plan unless such issuance or
delivery would comply with the legal requirements relating to the administration
of stock option plans under applicable U.S. state corporate laws, U.S. federal
and applicable state securities laws, the Code, any stock exchange or Nasdaq
rules or regulations to which the Company may be subject and the applicable laws
of any other country or jurisdiction where Options are granted under the Plan,
as such laws, rules, regulations and requirements shall be in place from time to
time (the "Applicable Laws"). Such compliance shall be determined by the
---------------
Company in consultation with its legal counsel.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by law.
15. Reservation of Shares. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
16. Option Agreement. Options shall be evidenced by written option
----------------
agreements in such form as the Board shall approve.
17. Stockholder Approval. If required by the Applicable Laws, continuance
--------------------
of the Plan shall be subject to approval by the stockholders of the Company.
Such stockholder approval shall be obtained in the manner and to the degree
required under the Applicable Laws.
-9-
<PAGE>
EXHIBIT 10.16
INDEMNIFICATION AGREEMENT
-------------------------
This Indemnification Agreement (the "Agreement") is made as of ___________,
---------
2000, by and between @Road, Inc., a California corporation (the "Company"), and
-------
_________________ (the "Indemnitee").
----------
RECITALS
--------
The Company and Indemnitee recognize the increasing difficulty in obtaining
liability insurance for directors, officers and key employees, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance. The Company and Indemnitee further recognize the
substantial increase in corporate litigation in general, subjecting directors,
officers and key employees to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited.
Indemnitee does not regard the current protection available as adequate under
the present circumstances, and Indemnitee and agents of the Company may not be
willing to continue to serve as agents of the Company without additional
protection. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, and to indemnify its directors,
officers and key employees so as to provide them with the maximum protection
permitted by law.
AGREEMENT
---------
In consideration of the mutual promises made in this Agreement, and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the Company and Indemnitee hereby agree as follows:
1. Indemnification.
---------------
(a) Third Party Proceedings. The Company shall indemnify Indemnitee
-----------------------
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while an
officer or director or by reason of the fact that Indemnitee is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) actually and reasonably incurred by
Indemnitee in connection with such action, suit or proceeding if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe Indemnitee's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that Indemnitee did
not act in good faith and in a manner which Indemnitee
<PAGE>
reasonably believed to be in or not opposed to the best interests of the
Company, or, with respect to any criminal action or proceeding, that Indemnitee
had reasonable cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings By or in the Right of the Company. The Company shall
---------------------------------------------
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or proceeding by or in
the right of the Company or any subsidiary of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or any subsidiary of the Company, by
reason of any action or inaction on the part of Indemnitee while an officer or
director or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) and, to the fullest extent permitted by
law, amounts paid in settlement (if such settlement is approved in advance by
the Company, which approval shall not be unreasonably withheld), in each case to
the extent actually and reasonably incurred by Indemnitee in connection with the
defense or settlement of such action or suit if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company and its shareholders, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudicated by court order or judgment
to be liable to the Company in the performance of Indemnitee's duty to the
Company and its shareholders unless and only to the extent that the court in
which such action or proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee has
-----------------------------
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 1(a) or Section 1(b) or the defense of any
claim, issue or matter therein, Indemnitee shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by Indemnitee in
connection therewith.
2. No Employment Rights. Nothing contained in this Agreement is intended
--------------------
to create in Indemnitee any right to continued employment.
3. Expenses; Indemnification Procedure.
-----------------------------------
(a) Advancement of Expenses. The Company shall advance all expenses
-----------------------
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referred to in
Section 1(a) or Section 1(b) of this Agreement (including amounts actually paid
in settlement of any such action, suit or proceeding). Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
by the Company as authorized hereby.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
--------------------------------
condition precedent to his or her right to be indemnified under this Agreement,
give the Company notice in
-2-
<PAGE>
writing as soon as practicable of any claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company and
shall be given in accordance with the provisions of Section 12(d) below. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
(c) Procedure. Any indemnification and advances provided for in
---------
Section 1 and this Section 3 shall be made no later than twenty (20) days after
receipt of the written request of Indemnitee. If a claim under this Agreement,
under any statute, or under any provision of the Company's Articles of
Incorporation or Bylaws providing for indemnification, is not paid in full by
the Company within twenty (20) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid amount
of the claim and, subject to Section 11 of this Agreement, Indemnitee shall also
be entitled to be paid for the expenses (including attorneys' fees) of bringing
such action. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action,
suit or proceeding in advance of its final disposition) that Indemnitee has not
met the standards of conduct which make it permissible under applicable law for
the Company to indemnify Indemnitee for the amount claimed, but the burden of
proving such defense shall be on the Company and Indemnitee shall be entitled to
receive interim payments of expenses pursuant to Section 3(a) unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists. It is the parties' intention that if the Company
contests Indemnitee's right to indemnification, the question of Indemnitee's
right to indemnification shall be for the court to decide, and neither the
failure of the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its
shareholders) to have made a determination that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct required by applicable law, nor an actual determination by the
Company (including its Board of Directors, any committee or subgroup of the
Board of Directors, independent legal counsel, or its shareholders) that
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that Indemnitee has or has not met the applicable standard of
conduct.
(d) Notice to Insurers. If, at the time of the receipt of a notice of
------------------
a claim pursuant to Section 3(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be obligated
--------------------
under Section 3(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such proceeding, with counsel approved by Indemnitee, upon the delivery to
Indemnitee of written notice of its election so to do. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of such counsel
by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees
-3-
<PAGE>
of counsel subsequently incurred by Indemnitee with respect to the same
proceeding, provided that (i) Indemnitee shall have the right to employ counsel
in any such proceeding at Indemnitee's expense; and (ii) if (A) the employment
of counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense
or (C) the Company shall not, in fact, have employed counsel to assume the
defense of such proceeding, then the fees and expenses of Indemnitee's counsel
shall be at the expense of the Company.
4. Additional Indemnification Rights; Nonexclusivity.
-------------------------------------------------
(a) Scope. Notwithstanding any other provision of this Agreement, the
-----
Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Articles of
Incorporation, the Company's Bylaws or by statute. In the event of any change,
after the date of this Agreement, in any applicable law, statute, or rule which
expands the right of a California corporation to indemnify a member of its board
of directors or an officer, such changes shall be deemed to be within the
purview of Indemnitee's rights and the Company's obligations under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a California corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement shall have
no effect on this Agreement or the parties' rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement
--------------
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Articles of Incorporation, its Bylaws, any agreement, any
vote of shareholders or disinterested members of the Company's Board of
Directors, the General Corporation Law of the State of California, or otherwise,
both as to action in Indemnitee's official capacity and as to action in another
capacity while holding such office. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though he or she may have ceased
to serve in any such capacity at the time of any action, suit or other covered
proceeding.
5. Partial Indemnification. If Indemnitee is entitled under any
-----------------------
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred in the investigation, defense, appeal or settlement of any civil or
criminal action, suit or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
---------------------
that in certain instances, Federal law or public policy may override applicable
state law and prohibit the Company from indemnifying its directors and officers
under this Agreement or otherwise. For example, the Company and Indemnitee
acknowledge that the Securities and Exchange Commission (the "SEC") has taken
---
the position that indemnification is not permissible for liabilities arising
under certain federal securities laws, and federal legislation prohibits
-4-
<PAGE>
indemnification for certain ERISA violations. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the SEC to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
7. Officer and Director Liability Insurance. The Company shall, from
----------------------------------------
time to time, make the good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
director and officer liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company's directors, if
Indemnitee is a director; or of the Company's officers, if Indemnitee is not a
director of the Company but is an officer; or of the Company's key employees, if
Indemnitee is not an officer or director but is a key employee. Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a parent
or subsidiary of the Company.
8. Severability. Nothing in this Agreement is intended to require or
------------
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
9. Exceptions. Any other provision herein to the contrary
----------
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses
------------------------------
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 317 of the California General Corporation Law, but such indemnification
or advancement of expenses may be provided by the Company in specific cases if
the Board of Directors finds it to be appropriate;
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses
------------------
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this
-5-
<PAGE>
Agreement, if a court of competent jurisdiction determines that each of the
material assertions made by Indemnitee in such proceeding was not made in good
faith or was frivolous;
(c) Insured Claims. To indemnify Indemnitee for expenses or
--------------
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the
extent such expenses or liabilities have been paid directly to Indemnitee by an
insurance carrier under a policy of officers' and directors' liability insurance
maintained by the Company; or
(d) Claims under Section 16(b). To indemnify Indemnitee for expenses
--------------------------
or the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
10. Construction of Certain Phrases.
-------------------------------
(a) For purposes of this Agreement, references to the "Company" shall
-------
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
if Indemnitee is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, Indemnitee shall stand in
the same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "other enterprises"
-----------------
shall include employee benefit plans; references to "fines" shall include any
-----
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
-------------------------------------
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not
---
opposed to the best interests of the Company" as referred to in this Agreement.
- --------------------------------------------
11. Attorneys' Fees. In the event that any action is instituted by
---------------
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to
-6-
<PAGE>
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action the court determines that each of Indemnitee's material
defenses to such action were made in bad faith or were frivolous.
12. Miscellaneous.
-------------
(a) Governing Law. This Agreement and all acts and transactions
-------------
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
(b) Entire Agreement; Enforcement of Rights. This Agreement sets
----------------------------------------
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.
(c) Construction. This Agreement is the result of negotiations
------------
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.
(d) Notices. Any notice, demand or request required or permitted to
-------
be given under this Agreement shall be in writing and shall be deemed sufficient
when delivered personally or sent by telegram or fax or forty-eight (48) hours
after being deposited in the U.S. mail, as certified or registered mail, with
postage prepaid, and addressed to the party to be notified at such party's
address as set forth below or as subsequently modified by written notice.
(e) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(f) Successors and Assigns. This Agreement shall be binding upon the
----------------------
Company and its successors and assigns, and inure to the benefit of Indemnitee
and Indemnitee's heirs, legal representatives and assigns.
(g) Subrogation. In the event of payment under this Agreement, the
-----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
to effectively bring suit to enforce such rights.
[Signature Page Follows]
<PAGE>
The parties hereto have executed this Agreement as of the day and year
set forth on the first page of this Agreement.
@Road, Inc.
By:________________________
Title:_____________________
Address: 47370 Fremont Boulevard
Fremont, CA 94538
AGREED TO AND ACCEPTED:
______________________
(Name)
Address: ___________________
___________________
<PAGE>
EXHIBIT 10.17
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
@ROAD, INC.
AND
DIFFERENTIAL CORRECTIONS, INC.
March 8, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions.......................................................... 1
1.1 Definitions.................................................... 1
2. Sale and Purchase.................................................... 3
2.1 Transfer of Assets............................................. 3
2.2 Excluded Assets................................................ 4
2.3 Transfer of Liabilities........................................ 5
2.4 Excluded Liabilities........................................... 5
2.5 Purchase Price................................................. 6
2.6 Adjustment to Purchase Price................................... 7
2.7 Deemed Assignment of Contracts................................. 7
2.8 Allocation of Purchase Price................................... 7
3. Closing.............................................................. 7
3.1 Closing........................................................ 7
3.2 Actions at the Closing......................................... 7
4. Representations and Warranties of Seller............................. 8
4.1 Organization, Standing and Power............................... 8
4.2 Capitalization................................................. 9
4.3 Authority...................................................... 9
4.4 Execution and Binding Effect................................... 10
4.5 Consents and Approvals of Governmental Entities................ 10
4.6 No Violation................................................... 10
4.7 Consents....................................................... 10
4.8 Financial Information.......................................... 10
4.9 No Undisclosed Liabilities..................................... 11
4.10 Absence of Certain Changes..................................... 11
4.11 Assets Generally............................................... 12
4.12 Intellectual Property.......................................... 13
4.13 Reserved....................................................... 14
4.14 Warranties and Indemnities..................................... 14
4.15 Real Property.................................................. 14
4.16 Reserved....................................................... 14
4.17 Reserved....................................................... 15
4.18 Licenses and Permits........................................... 15
4.19 Employees...................................................... 15
4.20 Taxes.......................................................... 16
4.21 Compliance with Laws........................................... 16
4.22 Environmental Matters.......................................... 16
4.23 Material Contracts............................................. 17
4.25 Product Liability.............................................. 18
</TABLE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.26 Litigation; Other Claims....................................... 18
4.27 Defaults....................................................... 19
4.28 Reserved....................................................... 19
4.29 Full Disclosure................................................ 19
4.30 Brokers and Finders............................................ 19
4.31 Fair Consideration; No Fraudulent Conveyance................... 19
5. Representations and Warranties of Buyer.............................. 19
5.1 Organization................................................... 20
5.2 Authority...................................................... 20
5.3 Execution and Binding Effect................................... 20
5.4 Consent and Approvals.......................................... 20
5.5 No Violation................................................... 20
5.6 Capitalization................................................. 21
5.7 Valid Issuance of Securities................................... 21
5.8 Title to Property and Assets................................... 22
5.9 Employee Benefit Plans......................................... 22
5.10 Tax Returns and Payments....................................... 22
5.11 Insurance...................................................... 22
5.12 Labor Agreements and Actions................................... 22
5.13 Permits........................................................ 22
5.14 Environmental and Safety Laws.................................. 23
4.26 Litigation; Other Claims....................................... 23
4.29 Full Disclosure................................................ 23
2.8 Patents and Trademarks......................................... 23
6. Covenants............................................................ 24
6.1 Access to Information.......................................... 24
6.2 Reserved....................................................... 24
6.3 Certain Notifications.......................................... 24
6.4 Best Efforts................................................... 24
6.5 Seller's Conduct of the Business Prior to Closing.............. 24
6.6 No Other Bids.................................................. 26
6.7 Tax Returns.................................................... 26
6.8 Post-Closing Access to Information............................. 27
6.9 Post-Closing Cooperation....................................... 27
6.10 No Post-Closing Retention of Copies............................ 27
6.11 Public Announcements........................................... 27
6.12 Post-Closing Actions........................................... 28
6.13 Future Agreements.............................................. 28
6.14 Permits........................................................ 28
6.15 Reserved....................................................... 28
6.16 Transfer Taxes................................................. 28
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
6.17 Risk of Loss................................................... 28
6.18 Reserved....................................................... 28
6.19 Non-Competition Agreement...................................... 28
6.20 Expenses....................................................... 30
6.21 Settlement with Communications and Measurement Technologies
Limited........................................................ 30
7. Employee Matters..................................................... 30
7.1 Transferred Employees.......................................... 30
7.3 Reserved....................................................... 31
7.4 No Right to Continued Employment or Benefits................... 31
7.5 No Solicitation or Hire by Seller.............................. 31
8. Conditions to Buyer's Obligations.................................... 32
8.1 Representations and Warranties True; Performance; Certificate.. 32
8.2 Seller Closing Documents....................................... 32
8.3 No Proceedings or Litigation................................... 33
8.4 Documents...................................................... 34
8.5 Governmental Filings........................................... 34
8.6 Title.......................................................... 34
8.7 No Material Adverse Change..................................... 34
8.9 Termination of Benefit Plans................................... 34
8.10 Legal Opinions................................................. 34
8.11 Shareholder Approval........................................... 34
8.12 Consulting Agreement........................................... 34
8.13 Non-Competition and Non-Solicitation Agreement................. 34
8.14 Bulk Sales..................................................... 34
8.15 Escrow Agreement............................................... 35
8.16 Restricted Stock Purchase Agreement............................ 35
8.17 Other Agreements............................................... 35
9. Conditions to Seller's Obligations................................... 35
9.1 Representations and Warranties True; Performance............... 35
9.2 No Proceeding or Litigation.................................... 35
9.3 Documents...................................................... 35
9.4 Governmental Filings........................................... 36
9.5 No Material Adverse Change..................................... 36
9.6 Legal Opinions................................................. 36
10. Indemnification...................................................... 36
10.1 Survival of Representations and Warranties..................... 36
10.2 Indemnification................................................ 36
10.3 Damages Threshold.............................................. 37
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
11. Termination.......................................................... 37
11.1 Termination of Agreement....................................... 37
11.2 Procedure and Effect of Termination............................ 37
12. Miscellaneous........................................................ 37
12.1 Amendments and Waivers......................................... 37
12.2 Successors and Assigns......................................... 38
12.3 Governing Law; Jurisdiction.................................... 38
12.4 Counterparts................................................... 38
12.5 Titles and Subtitles........................................... 39
12.6 Notices........................................................ 39
12.7 Severability................................................... 39
12.8 Entire Agreement............................................... 39
12.9 Advice of Legal Counsel........................................ 39
</TABLE>
EXHIBITS
- --------
Exhibit A Form of Press Release
Exhibit B Bill of Sale
Exhibit C Assignment and Assumption Agreement
Exhibit D Patent Assignment
Exhibit E Trademark Assignment
Exhibit F Copyright Assignment
Exhibit G Amendment and Consent to License Agreement
Exhibit H Consulting Agreement
Exhibit I Non-Competition Agreement
Exhibit J Escrow Agreement
Exhibit K Assignment Separate from Certificate
Exhibit L Stock Purchase Agreement
Exhibit M Seller's Counsel Legal Opinion
Exhibit N Buyer's Counsel Legal Opinion
SCHEDULES
- ---------
Schedule 1.1(g) Governmental Authorizations
Schedule 2.1(a) Personal Property
Schedule 2.1(c) Assumed Contracts
Schedule 2.1(d) Real Property Leases
Schedule 2.1(e) Accounts Receivable
Schedule 2.1(h) Intellectual Property
Schedule 2.1(j) Permits
Schedule 2.2(c) Excluded Contracts
-iv-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
----
Schedule 2.2(d) Other Excluded Assets
Schedule 2.3(a) Assumed Liabilities
Schedule 3.2(c) FM Station Outstanding Liabilities
Schedule 4.7 Required Consents
Schedule 4.8 Financial Statements
Schedule 4.12 Intellectual Property
Schedule 4.19 Employees
Schedule 4.23 Material Contracts
-v-
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
This Asset Purchase Agreement (the "Agreement") is entered into as of March
---------
8, 2000, by and between @Road, Inc., a California corporation ("Buyer"), and
-----
Differential Corrections, Inc., a California corporation ("Seller").
------
RECITALS
--------
Buyer is in the business of providing location-specific e-commerce
solutions to the mobile workforce and the communities they serve by offering to
business subscribers online productivity enhancement capabilities and related
business-to-business services. Seller conducts a business which provides
differential digital global positioning services and real-time traffic services
(the "Business"). Buyer desires to acquire from Seller, and Seller desires to
--------
sell to Buyer (the "Asset Sale"), substantially all of the assets of the
----------
Business on the terms and subject to the conditions set forth in this Agreement.
AGREEMENT
---------
In consideration of the mutual agreements, representations, warranties and
covenants set forth below, Buyer and Seller agree as follows:
1. Definitions.
-----------
1.1 Definitions. As used in this Agreement, the following terms shall
-----------
have the following meanings:
(a) "Affiliate" means with respect to any Person, a Person directly or
---------
indirectly controlling or controlled by or under common control with such
Person.
(b) "Closing" means the consummation of the transactions contemplated
-------
hereby.
(c) "Closing Date" means the date of the Closing.
------------
(d) "Code" means the Internal Revenue Code of 1986, as amended and the
----
regulations promulgated thereunder.
(e) "Contracts" means all rights under contracts, agreements, leases
---------
and other binding commitments or arrangements, written or oral (including any
amendments and other modifications thereto) to which Seller is a party or is
otherwise bound and which affect or relate to the Purchased Assets or the
Business.
(f) "GAAP" means generally accepted accounting principles of the
----
United States as set forth by the Financial Accounting Standards Board.
(g) "Governmental Authorizations" means the permits, authorizations,
---------------------------
consents or approvals of any Governmental Entity which are a condition to the
lawful
<PAGE>
consummation of the transactions contemplated hereby listed on Schedule 1.1(g)
---------------
to this Agreement.
(h) "Governmental Entity" means any court, or any federal, state,
-------------------
municipal or other governmental authority, department, commission, board, agency
or other instrumentality (domestic or foreign).
(i) "Liens" means any liens, pledges, claims, including, without
-----
limitation, claims of fraudulent transfer or recovery under applicable
bankruptcy law, insolvency law or any other law affecting creditor's rights,
security interests, restrictions, mortgages, deeds of trust, tenancies, and
other possessory interests, conditional sale or other title retention
agreements, assessments, easements, rights of way, covenants, restrictions,
rights of first refusal, defects in title, encroachments and other burdens,
options or encumbrances of any kind.
(j) "Material Adverse Effect" with respect to a Person means any
-----------------------
event, change or effect that is materially adverse to the condition (financial
or otherwise), properties, assets, liabilities, business, operations, results of
operations, or prospects of such Person and its Affiliates, taken as a whole.
(k) "Permitted Liens" means liens for property taxes not delinquent,
---------------
statutory liens and zoning restrictions, easements, rights-of-way or other
restrictions on the use of real property, including without limitation all liens
of record, provided, that such liens do not secure indebtedness for money and do
not, individually, or in the aggregate, materially interfere with Seller's
operation of the Business.
(l) "Person" means an individual, corporation, partnership,
------
association, trust, government or political subdivision or agent or
instrumentality thereof, or other entity or organization.
(m) "Personal Property" means all of the machinery, equipment,
-----------------
computer programs, computer software, installations, tools, motor vehicles,
fixtures, furniture, furnishings, leasehold improvements, office equipment,
inventories, supplies, plant, spare parts, and other tangible personal property
which are owned or leased by Seller and which are used or held for use in the
Business. The term Personal Property shall not include any of the Excluded
Assets.
(n) "Promissory Note" means that certain Secured Subordinated
---------------
Promissory Note dated December 20, 1999 issued by Seller in favor of Buyer in
the principal amount of $150,000 and that certain Secured Subordinated
Promissory Note dated January 28, 2000 issued by Seller in favor of Buyer in the
principal amount of $100,000.
(o) "Seller Balance Sheet" means the unaudited balance sheet of the
--------------------
Business, prepared by Seller in accordance with GAAP, consistently applied, and
delivered to Buyer upon the Closing Date, which includes the Seller's asset and
liability accounts as of the Closing Date.
-2-
<PAGE>
(p) "Taxes" means all taxes, however denominated, including any
-----
interest, penalties or other additions to tax that may become payable in respect
thereof, (i) imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such government, for
which Buyer could become liable as successor to or transferee of the Business or
the Purchased Assets or which could become a charge against or lien on any of
the Purchased Assets, which taxes shall include, without limiting the generality
of the foregoing, all income (including but not limited to any alternative
minimum taxes), sales and use taxes, ad valorem taxes, excise taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, real property gains taxes, transfer taxes, payroll and
employee withholding taxes, unemployment insurance contributions, social
security taxes, and other governmental charges, and other obligations of the
same or of a similar nature to any of the foregoing, which are required to be
paid, withheld or collected, or (ii) any liability for amounts referred to in
(i) as a result of any obligations to indemnify another person.
2. Sale and Purchase.
-----------------
2.1 Transfer of Assets. Subject to the terms and conditions of this
------------------
Agreement, Seller shall sell, assign, grant, transfer, and deliver (or cause to
be sold, assigned, granted, transferred and delivered) to Buyer, and Buyer shall
purchase and accept from Seller as of the Closing Date, free and clear of all
Liens, except for Permitted Liens, all of the Seller's rights, title and
interest in and to all of the assets, properties and business other than the
Excluded Assets owned, held or used in the conduct of the Business by Seller as
the same shall exist on the Closing Date (the "Purchased Assets"), including,
----------------
without limitation:
(a) All Personal Property (other than the Personal Property listed on
Schedule 2.2(d)), including, without limitation, the Personal Property listed on
- ---------------
Schedule 2.1(a);
- ---------------
(b) All raw materials, work-in-process, finished goods, supplies and
other inventories of the Business (the "Inventories");
-----------
(c) All Contracts (other than Contracts that are listed on Schedule
--------
2.2(c)), including, without limitation, those Contracts listed on Schedule
- ------ --------
2.1(c) (collectively the "Assumed Contracts");
- ------ -----------------
(d) All real property leasehold interests listed on Schedule 2.1(d)
---------------
(the "Real Property Leases");
--------------------
(e) All accounts receivable, notes receivable and other receivables
(as would be classified as receivables on the asset side of a balance sheet of
the Business prepared in accordance with GAAP) listed on Schedule 2.1(e);
---------------
(f) All prepaid expenses relating to the operation of the Business
including, but not limited to Taxes, leases and rentals;
(g) All of Seller's rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Purchased Assets,
including, without limitation, unliquidated rights under warranties;
-3-
<PAGE>
(h) All copyrights, copyright registrations, proprietary processes,
technology, methodologies, trade secrets, license rights, specifications,
technical manuals and data, drawings, inventions, designs, design information,
patents, patent applications, trade names, trademarks, service marks, product
information and data, know-how and development work-in-progress, customer lists,
software, business and marketing plans and other proprietary information and
intellectual or intangible property embodied in, relating to or pertaining to
the Business, whether pending, applied for or issued, whether filed in the
United States or in other countries, including without limitation the items
listed in Schedule 2.1(h), together with all associated goodwill (collectively,
---------------
"Intellectual Property");
---------------------
(i) All things authored, discovered, developed, made, perfected,
improved, designed, engineered, acquired, produced, conceived and first reduced
to practice by Seller or any of its employees or agents (in their capacity as
consultants or employees of Seller) that are embodied in, derived from or relate
to the Business, in any stage of development, including, without limitation,
modifications, enhancements, designs, techniques, methods, flow charts, coding
sheets, notes and all other information relating to the Business;
(j) All actual and pending licenses, permits, authorizations, consents
and approvals of any Governmental Entity affecting or relating in any way to the
Business, including without limitation, the items listed on Schedule 2.1(j) (the
---------------
"Permits");
-------
(k) All books, records files and papers, whether in hard copy or
electronic format, used in the Business, including without limitation,
engineering information, sales and promotional literature, manuals and data,
sales and purchase correspondence, lists of present, former and prospective
suppliers or customers, and any information relating to Taxes imposed on the
Business or Purchased Assets;
(l) All computer software programs, data and associated licenses used
in connection with the Business;
(a) All intangible personal property owned or leased by Seller and
which are used or held for the Business, and all intangible assets of Seller,
including goodwill, and all other assets, associated with or in any way related
to the Business or the Purchased Assets, other than the Excluded Assets,
together with the right to represent to third parties that Buyer is the
successor to the Business; and
(b) In the event that Seller enters into a settlement and release of
claims agreement pursuant to Section 6.21 hereof to the reasonable satisfaction
of Buyer, Buyer shall have the option to assume the Operating License Agreement
by and between Communications and Measurement Technologies Limited and Seller
dated April 10, 1996 (the "C&MT Agreement") in connection with the Closing, and
--------------
if so assumed, the C&MT Agreement shall be considered an Assumed Contract for
the purposes of this Agreement.
2.2 Excluded Assets. Buyer agrees that notwithstanding any provision of
---------------
Section 2.1 the following assets of Seller (the "Excluded Assets") shall be
---------------
excluded from the Purchased Assets.
-4-
<PAGE>
(a) All insurance contracts relating to the Business, including the
cash surrender value thereof, and all insurance proceeds or claims relating to
the operations of the Business prior to the Closing Date;
(b) All Employee Benefit Plans (as hereinafter defined) and all assets
or funds held in trust, or otherwise, associated with or used in connection with
the Employee Benefit Plans;
(c) Each Contract listed on Schedule 2.2(c) (the "Excluded
--------------- --------
Contracts"); and
- ---------
(d) The items described in Schedule 2.2(d) attached hereto.
---------------
2.3 Transfer of Liabilities. Subject to the terms and conditions of this
-----------------------
Agreement, Buyer agrees, effective as of the Closing Date, to assume the
following liabilities (the "Assumed Liabilities").
-------------------
(a) The liabilities set forth on Schedule 2.3(a) to the extent set
---------------
forth thereon; and
(b) The liabilities and obligations of Seller arising or incurred
after the Closing Date under the Assumed Contracts, other than the liabilities
attributable to any failure by Seller to comply with the terms thereof.
2.4 Excluded Liabilities. Except for those liabilities expressly assumed
--------------------
by Buyer pursuant to Section 2.3, Buyer shall not assume and shall not be liable
for, and Seller and its direct or indirect subsidiaries shall retain and remain
solely liable for and obligated to discharge, all of the debts, contracts,
agreements, commitments, obligations and other liabilities of any nature
whatsoever of Seller and its direct and indirect subsidiaries, whether known or
unknown, accrued or not accrued, fixed or contingent, including without
limitation, the following:
(a) Any liability for breaches by Seller or any of its respective
direct or indirect subsidiaries on or prior to the Closing Date of any Assumed
Contract or any liability for payments or amounts due under any Assumed Contract
or any other instrument, contract or purchase order on or prior to the Closing
Date;
(b) Obligations or liabilities under any Assumed Contract for which a
Required Consent has not been obtained as of the Closing;
(c) Any liability or obligation for or in respect of any of the
Excluded Assets, including, without limitation, any Contract not included in the
Assumed Contracts and any costs associated therewith;
(d) Subject to Section 6.16 hereof, any liability or obligation for
Taxes attributable to or imposed upon Seller or any of its direct or indirect
subsidiaries, or attributable to or imposed upon the Purchased Assets for any
period (or portion thereof) through the Closing Date, including, without
limitation, any Taxes attributable to or arising from the transactions
contemplated by this Agreement;
-5-
<PAGE>
(e) Any liability or obligation for or in respect of any loan, other
indebtedness for money borrowed, or account payable of Seller or any of its
direct or indirect subsidiaries, including, without limitation, the Promissory
Note and any liabilities owed to Affiliates of Seller;
(f) Any liability or obligation arising as a result of any legal or
equitable action or judicial or administrative proceeding initiated at any time,
to the extent relating to any action or omission on or prior to the Closing Date
by or on behalf of Seller or any of its direct or indirect subsidiaries,
including, without limitation, any liability for infringement of intellectual
property rights, breach of product warranty, injury or death caused by products,
or violations of federal or state securities or other laws;
(g) Any liability or obligation for making payments of any kind
(including as a result of the sale of Purchased Assets or as a result of the
termination of employment by Seller of employees, or other claims arising out of
the terms and conditions of employment with Seller, or for vacation or severance
pay or otherwise) to employees of Seller or in respect of payroll taxes for
employees of Seller;
(h) Any liability of Seller incurred in connection with the making or
performance of this Agreement and the transactions contemplated hereby;
(i) Any liability of Seller arising out of the violation of or failure
to comply with any Environmental Regulations (as hereinafter defined) by Seller
prior to the Closing Date applicable to any aspect of the Business; and
(j) Any costs or expenses of Seller incurred in connection with
shutting down, deinstalling and removing equipment not purchased by Buyer.
2.5 Purchase Price.
--------------
(a) Subject to the adjustments set forth in Section 10 and the Escrow
Agreement, the total purchase price for the Assets is $5,000,000 (the "Purchase
--------
Price") payable in cash (the "Cash Consideration") and shares of Series D
- ----- ------------------
Preferred Stock of Buyer (the "Shares").
------
(b) Subject to Section 10 and the Escrow Agreement, the Purchase Price
shall be paid by Buyer to Seller according to the following schedule: (i)
$2,000,000 in cash (less (i) any amounts outstanding pursuant to the Promissory
Note and (ii) an amount equal to $30,000 multiplied by the number of days in the
year 2000 before the Closing Date divided by 365) shall be due and payable on
the Closing Date (the "Immediate Consideration"), and shall be paid in
-----------------------
accordance with Section 3.2(c), (ii) $2,000,000 in cash shall be delivered to
Wells Fargo Bank (the "Escrow Agent") or an account or accounts designated by
------------
Escrow Agent (the "Second Payment"), and (iii) 76,923 Shares shall be issued in
--------------
the name of Seller and delivered to Escrow Agent or an account or accounts
designated by Escrow Agent (individually, the "Third Payment", and together,
-------------
with the Second Payment, the "Escrow Consideration"). The Escrow Consideration
--------------------
shall be subject to the provisions of the Escrow Agreement attached hereto as
Exhibit J. The Shares shall not bear interest and will not be registered under
- ---------
the Securities Act.
-6-
<PAGE>
2.6 Reserved.
--------
2.7 Deemed Assignment of Contracts. To the extent that the assignment
------------------------------
hereunder of any of the Assumed Contracts shall require the consent of any other
party (or in the event that any of the same shall be non-assignable), neither
this Agreement nor any actions taken hereunder shall constitute an assignment or
an agreement to assign if such assignment or attempted assignment would
constitute a breach thereof or result in a loss or diminution thereof; provided,
however, that, upon the request of the Buyer, Seller shall cooperate with Buyer
to establish a reasonable arrangement designed to provide Buyer with the
benefits and burdens of any such Assumed Contract, including appointing Buyer to
act as its agent to perform all of Seller's obligations under such Assumed
Contract and to collect and promptly remit to Buyer all compensation received by
Seller pursuant to such Assumed Contract and to enforce, for the account and
benefit of Buyer, any and all rights of Seller against any other person arising
out of the breach or cancellation of such Assumed Contract by such other person
or otherwise (any and all of which arrangements shall constitute, as between the
parties hereto, a deemed assignment or transfer); provided, that from and after
Closing, the Seller shall have no liability to the Buyer in the event that any
Assumed Contract requiring consent to assignment hereunder (or which by it terms
is non-assignable) is terminated.
2.8 Allocation of Purchase Price. On or before the Closing Date, Buyer
----------------------------
and Seller shall mutually agree to an allocation of the Purchase Price among the
Purchased Assets for purposes of complying with the requirements of Section 1060
and the regulations thereunder. Buyer and Seller agree to each prepare and file
on a timely basis with the Internal Revenue Service (and applicable state tax
authorities) substantially identical and supplemental Internal Revenue Service
Forms 8594 (and corresponding state tax forms) consistent with the allocation of
the Purchase Price agreed to pursuant to this Section 2.8. If any Tax authority
challenges such allocation, the party receiving notice of such challenge shall
give the other prompt written notice thereof and the parties shall cooperate in
order to preserve the effectiveness of such allocation.
3. Closing.
-------
3.1 Closing. Subject to the terms and conditions of this Agreement, the
-------
Closing shall take place on such date, as soon as practicable after all
conditions precedent in Sections 8 and 9 have been satisfied or waived, as the
parties may agree, but in any case, no later than March 31, 2000. (the "Closing
-------
Date").
- ----
3.2 Actions at the Closing. At the Closing, Seller shall deliver the
----------------------
Purchased Assets to Buyer, Buyer shall deliver the Immediate Consideration to
Seller and deliver the Escrow Consideration to the Escrow Agent, and Buyer and
Seller shall take such actions and execute and deliver such agreements, bills of
sale, and other instruments and documents as necessary or appropriate to effect
the transactions contemplated by this Agreement in accordance with its terms,
including without limitation the following:
(a) Seller Documents. At the Closing, Seller shall deliver to Buyer
----------------
any and all documents required to satisfy the conditions set forth in Section 8
of this Agreement and any other closing documents reasonably requested by Buyer.
-7-
<PAGE>
(b) Buyer Documents. At the Closing, Buyer shall deliver to Seller
---------------
any and all documents required to satisfy the conditions set forth in Section 9
of this Agreement and any other closing documents reasonably requested by
Seller.
(c) Purchase Price. At the Closing, Buyer shall deliver (these
--------------
amounts shall be current as of and inserted below on the Closing Date):
(i) $____________ of the Immediate Consideration to Seller;
(ii) $[146,000] of the Immediate Consideration to Cupertino
National Bank & Trust in full satisfaction of all amounts due and owing by
Seller under that certain Business Loan Agreement dated as of August 11, 1998 by
and between Seller and Cupertino National Bank & Trust;
(iii) $[400] of the Immediate Consideration to JLA Credit
Corporation in full satisfaction of all amounts due and owing by Seller under
that certain ______________ Agreement dated as of _____________ by and between
Seller and JLA Credit Corporation;
(iv) an aggregate of $_________ of the Immediate Consideration
to each of the entities and in the amounts listed on Schedule 3.2(c) hereto; and
---------------
(v) the Escrow Consideration to the Escrow Agent.
(d) Post-Closing Actions. Subsequent to the Closing Date, Seller
--------------------
shall, and shall cause any Affiliate of Seller to, from time to time execute and
deliver, upon the request of Buyer, all such other and further materials and
documents and instruments of conveyance, transfer or assignment as may
reasonably be requested by Buyer to effect, record or verify the transfer to and
vesting in Buyer of Seller's and any of Seller's Affiliates' right, title and
interest in and to the Purchased Assets, free and clear of all Liens in
accordance with the terms of this Agreement.
4. Representations and Warranties of Seller.
----------------------------------------
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Seller Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified
and is made and given with the intention of inducing the Buyer to enter into
this Agreement. Seller represents and warrants to Buyer as follows:
4.1 Organization, Standing and Power. Seller is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Seller has the requisite corporate power and
authority to own, lease and operate its properties and to carry on the Business
as now being conducted. Seller is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a Material Adverse Effect on the
-8-
<PAGE>
Business. The Business is conducted entirely by the Seller. The books,
accounts and records of the Business are maintained by the Seller.
4.2 Capitalization.
--------------
(a) The authorized capital stock of Seller will, upon the Closing
Date, consist of 7,000,000 shares of Common Stock and 3,000,000 shares of
Preferred Stock, 585,000 of which have been designated Series A Preferred Stock
585,000 of which are issued and outstanding immediately prior to Closing,
391,449 of which have been designated Series B Preferred Stock 380,540 of which
are issued and outstanding immediately prior to Closing, 1,000,000 of which have
been designated Series C Preferred Stock 194,896 of which are issued and
outstanding immediately prior to Closing, and 194,157 of which have been
designated Series D Preferred Stock, 166,667 of which are issued and outstanding
immediately prior to Closing. As of the Closing Date, the total number of
outstanding shares of Common Stock is 844,465. The designations, rights,
preferences and limitations in respect of each class of capital stock of Seller
are set forth in its Articles of Incorporation. All outstanding shares of
capital stock of Seller are duly authorized and validly issued, fully-paid and
nonassessable and were issued in compliance with applicable securities laws.
(b) Except as referenced above and for (i) conversion privileges of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock (iii) outstanding options to purchase 470,042
shares of Common Stock under Seller's 1994 Stock Option Plan, (iv) 29,958 shares
of Common Stock remaining available for future issuance to employees, directors
and consultants under Seller's 1994 Stock Option Plan, and (v) outstanding
warrants to purchase 14,585 shares of Series C Preferred Stock, there are no
outstanding options, warrants, rights (including conversion or preemptive
rights) or agreements, orally or in writing, for the purchase or acquisition
from Seller of any shares of its capital stock.
4.3 Authority.
---------
(a) The execution and delivery of this Agreement (and all other
agreements and instruments contemplated under this Agreement) by Seller, the
performance by Seller of its obligations hereunder and thereunder, and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors, and no
other act or proceeding on the part of or on behalf of Seller or its
shareholders is necessary to approve the execution and delivery of this
Agreement and such other agreements and instruments, the performance by Seller
of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby. The signatory officers of Seller
have the power and authority to execute and deliver this Agreement and all of
the other agreements and instruments to be executed and delivered by Seller
pursuant hereto, to consummate the transactions hereby and thereby contemplated
and to take all other actions required to be taken by Seller pursuant to the
provisions hereof and thereof.
(b) The affirmative vote of the holders of a majority of the shares of
each class of Seller capital stock outstanding on the record date set for the
meeting of Seller's shareholders or solicitation of the consent of Seller's
shareholders in writing in lieu of a meeting (the
-9-
<PAGE>
"Shareholder Meeting") is the only vote of the holders of any of Seller's
-------------------
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
4.4 Execution and Binding Effect. This Agreement has been duly and
----------------------------
validly executed and delivered by Seller and constitutes, and the other
agreements and instruments to be executed and delivered by Seller pursuant
hereto, upon their execution and delivery by Seller, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof by
Buyer), legal, valid and binding agreements of Seller, enforceable against
Seller in accordance with their respective terms except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general application relating to or affecting the enforcement of
creditor's rights, and by limitations applicable to equitable remedies.
4.5 Consents and Approvals of Governmental Entities. Other than the
-----------------------------------------------
Governmental Authorizations there is no requirement applicable to Seller to make
any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Seller of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Seller pursuant hereto or the consummation by Seller of the transactions
contemplated herein or therein.
4.6 No Violation. Neither the execution, delivery and performance of this
------------
Agreement or any of the other agreements and instruments to be executed and
delivered pursuant hereto, nor the consummation of the transactions contemplated
hereby or thereby, will, with or without the passage of time or the delivery of
notice or both, (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of Seller,
(b) violate, conflict with, or result in a violation or breach of, or constitute
a default (with or without due notice or lapse of time or both) under, or permit
the termination of, or result in the acceleration of, or entitle any party to
accelerate (whether as a result of a change of control of Seller or otherwise)
any material obligation, or result in the loss of any material benefit, or give
any person the right to require any security to be repurchased, or give rise to
the creation of any Lien, upon any of the Purchased Assets under any of the
terms, conditions, or provisions of any loan or credit agreement, note, bond,
mortgage, indenture, or deed of trust, or any license, lease, agreement, or
other instrument or obligation to which Seller is a party or by which or to
which it or any of the Purchased Assets may be bound or subject, or (c) violate
any statute, ordinance or law or any rule, regulation, order, writ, injunction
or decree of any Governmental Entity applicable to Seller or by which any of the
Purchased Assets may be bound.
4.7 Consents. Schedule 4.7 sets forth a true, complete and correct list
-------- ------------
of all consents and approvals of third parties that are required by Seller under
the terms of any Contract, Real Property Lease or consent, approval,
registration, certification, authorization, permit or license of any
Governmental Entity in connection with the Purchased Assets or the operation of
the Business (each a "Required Consent").
----------------
4.8 Financial Information. Seller has delivered to Buyer an unaudited
---------------------
balance sheet for the Business at December 31, 1999 (the "December 31, 1999
-----------------
Balance Sheet") and profit and loss statements for fiscal years ended December
- -------------
31, 1996, December 31, 1997, and
-10-
<PAGE>
December 31, 1998 (together with the December 31, 1999 Balance Sheet, the
"Financial Statements"), copies of which are set forth in the Seller Disclosure
--------------------
Schedule. The Financial Statements have been prepared consistently for all
periods presented and in accordance with GAAP, consistently applied. The
Financial Statements are in accordance with the books and records of Seller and
present fairly the financial condition, operating results and cash flows of the
Business as of the dates and during the periods indicated therein, subject to
normal year-end adjustments, which will not be material in amount or
significance. The reserves, if any, reflected in the Financial Statements are
adequate in light of the contingencies with respect to which they were made.
4.9 No Undisclosed Liabilities. Seller does not have any liability,
--------------------------
indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of
any type, whether accrued, absolute, contingent, matured, unmatured or other
(whether or not required by GAAP to be reflected in the Financial Statements)
except for those (i) that have been reflected in the December 31, 1999 Balance
Sheet, (ii) that have arisen in the ordinary course of the Business since
December 31, 1999 or (iii) obligations of the kinds not reflected on balance
sheets prepared in accordance with GAAP. None of the liabilities, indebtedness,
obligations, expenses, claims, deficiencies, guaranties or endorsements of any
type incurred after the December 31, 1999 Balance Sheet are material either
individually or in the aggregate to Seller or the Business.
4.10 Absence of Certain Changes. Since December 31, 1999, Seller has
--------------------------
conducted the Business in the ordinary course consistent with past practice and
Seller has not:
(a) created, incurred or assumed (i) any borrowings under capital
leases, or (ii) any obligation which in any material way affects the Business,
the Purchased Assets or Buyer's ability to conduct the Business in substantially
the same manner and condition as conducted by Seller on the date of this
Agreement;
(b) except as may be provided hereunder or otherwise in the ordinary
course of business, changed in any material way, the salary or other
compensation of any Employee or entered into any employment agreement with any
Employee (as hereinafter defined);
(c) cancelled any insurance coverage for the Business or the Purchased
Assets in effect prior to December 31, 1999;
(d) acquired or agreed to acquire by merging or consolidating with, or
by purchasing any assets or equity securities of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to the Business.
(e) sold, disposed of or encumbered any of the Purchased Assets or
licensed any Purchased Assets to any Person other than sales or licenses in the
ordinary course of business;
-11-
<PAGE>
(f) entered into any agreements or commitments relating to the
business conducted with the Purchased Assets, except on commercially reasonable
terms and in the ordinary course of business;
(g) entered into any agreement with any third party for the
distribution of any of the Purchased Assets;
(h) changed or announced any change to the products or services sold
by the Business;
(i) violated, amended or otherwise changed in any way the terms of any
Contracts;
(j) commenced a lawsuit related to or involving the Purchased Assets
other than for the routine collection of bills;
(k) assigned, sold or otherwise conveyed to any third party, any of
its accounts receivable prior to the Closing Date; or
(l) made any agreement to do any of the foregoing.
4.11 Assets Generally.
----------------
(a) The Purchased Assets include all of the assets (tangible and
intangible), properties, licenses, permits, Contracts and other agreements,
currently used by Seller in operating the Business and reasonably necessary for
the conduct of the Business after the Closing Date in a manner substantially
equivalent to the manner in which Seller has operated the Business prior to and
through the Closing Date. Other than the Required Consents and the Governmental
Approvals, no licenses or other consents from, or payments to, any other Person
are or will be necessary for Buyer to operate the Business and use the Purchased
Assets in substantially the manner in which Seller has operated the same.
(b) Seller holds good and marketable title, license to or leasehold
interest in all of the Purchased Assets and has the complete and unrestricted
power and the unqualified right to sell, assign and deliver the Purchased Assets
to Buyer. Upon consummation of the transactions contemplated by this Agreement,
Buyer will acquire good and marketable title, license or leasehold interest to
the Purchased Assets free and clear of any Liens except for Permitted Liens. No
Person other than Seller has any right or interest in the Purchased Assets,
including the right to grant interests in the Purchased Assets to third parties,
except for Purchased Assets licensed or leased from third parties which are set
forth in the Seller Disclosure Schedule.
(c) None of the Purchased Assets that constitute tangible personal
property is held under any lease, security agreement, conditional sales
contract, Lien, or other title retention or security arrangement. Schedule
--------
2.1(a) contains a true, complete and correct description of the items of
- ------
Personal Property which comprise all Personal Property used or held for use in
connection with the Business and which are material to the operation of the
Business as now
-12-
<PAGE>
conducted by Seller. All such Personal Property is located at the locations
listed on Schedule 2.1(a).
---------------
(d) All of the Inventories are items of a quality usable or saleable
in the ordinary course of business.
(e) All accounts receivable, notes receivable and other receivables
included in the Purchased Assets are valid and fully collectible in the
aggregate amount thereof, subject to normal and customary trade discounts less
any reserves for doubtful accounts recorded on the December 31, 1999 Balance
Sheet.
(f) All of the Purchased Assets are in good operating condition and
repair, except for ordinary wear and tear.
4.12 Intellectual Property.
---------------------
(a) To the best of Seller's knowledge, neither the development,
manufacture, marketing, license, sale or use of any product or intellectual
property currently licensed, used or sold by Seller violates any license or
agreement to which Seller is a party or infringes any copyright, patent,
trademark, service mark, trade secret or other intellectual property or other
proprietary right of any other party. All registered trademarks, service marks,
patents and copyrights held by Seller are valid and subsisting. There is no
pending or, to Seller's knowledge, threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any of the
Purchased Assets (including without limitation the Intellectual Property)
necessary or required for, or used in, the conduct of the business of Seller as
presently conducted nor, to Seller's knowledge, is there any basis for any such
claim, nor has Seller received any written notice asserting that any such
Purchased Asset (including without limitation the Intellectual Property) or the
proposed use, sale, license or disposition thereof conflicts with the rights of
any other party. Seller is not aware of any material unauthorized use,
infringement or misappropriation on the part of any third party of the Purchased
Assets (including without limitation the Intellectual Property).
(b) Seller has taken reasonable steps (including, without limitation,
entering into confidentiality and non-disclosure agreements ("Confidentiality
---------------
Agreements") with all officers, directors, shareholders, and employees of and
- ----------
consultants to Seller with access to or knowledge of the Purchased Assets
(including without limitation the Intellectual Property)) to maintain the
secrecy and confidentiality of, and its proprietary rights in, the Purchased
Assets (including without limitation the Intellectual Property).
(c) Schedule 4.12 contains a complete and accurate list of all
-------------
patents, patent applications, trademarks, trademark applications, service marks
and copyright or mask work registrations filed by or on behalf of Seller.
(d) All fees to maintain Seller's rights in the Intellectual Property,
including, without limitation, patent and trademark registration and prosecution
fees and all professional fees in connection therewith pertaining to the
Intellectual Property due and payable on or before
-13-
<PAGE>
the Closing Date, have been paid by Seller or will be paid by Seller within a
reasonable period after the Closing.
(e) All of the (i) Intellectual Property developed by Seller and (ii)
to Seller's knowledge, Intellectual Property developed other than by Seller,
used to operate the Business (including for purposes of products and
functionality currently under development) will record, store, process,
calculate and present calendar dates falling on and after (and if applicable,
spans of time including) January 1, 2000, and will calculate any information
dependent on or relating to such dates in the same manner, and with the same
functionality, data integrity and performance, as the products record, store,
process, calculate and present calendar dates on or before December 31, 1999, or
calculate any information dependent on or relating to such dates.
4.13 Reserved.
--------
4.14 Warranties and Indemnities. The Seller Disclosure Schedule sets forth
--------------------------
a true and correct summary of all written warranties and indemnities relating to
products sold or services rendered by Seller and any currently pending claims
thereunder.
4.15 Real Property.
-------------
(a) Seller does not own any real property. Schedule 2.1(d) sets forth
---------------
a list of all real property currently leased by Seller and for each lease, the
name of the lessor, the date of the lease and each amendment thereto and the
aggregate annual rental and/or other fees payable under any such lease. Seller
has delivered to Buyer a true, correct and complete copy of each Real Property
Lease identified on Schedule 2.1(d). Each Real Property Lease is in good
--------------
standing, valid and effective and grants the leasehold estates or rights or
occupancy or use that it purports to grant. Neither Seller nor, to Seller's
knowledge, any other party to any such Real Property Lease has given notice of
termination or taken any action inconsistent with the continuance of, is now in
violation or breach of, or in default in complying with any material provision
thereof. Each Real Property Lease is enforceable against Seller in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditor's rights, any
by limitations applicable to equitable remedies, and each such Real Property
Lease is to the knowledge of Seller enforceable against the other parties
thereto, subject to the above limitations and to the limitation that some
provisions in the contracts may be unenforceable, although such lack of
enforceability does not materially impair the enjoyment of the rights of Seller
under such Real Property Lease.
(b) To Seller's knowledge, no violation of any law, regulation or
ordinance, including without limitation, laws, regulations or ordinances
relating to zoning, environmental, city planning or similar matters) relating to
the Business or any Purchased Asset currently exists except for violations which
have not had and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Business or the Purchased
Assets.
4.16 Reserved.
--------
-14-
<PAGE>
4.17 Reserved.
--------
4.18 Licenses and Permits. Seller holds all consents, approvals,
--------------------
registrations, certifications, authorizations, permits and licenses of, and has
made all filings with, or notifications to, all Governmental Entities pursuant
to applicable requirements of all federal, state, local and foreign laws,
ordinances, governmental rules or regulations applicable to the Business, except
where the failure to obtain such consents, approvals, registrations,
certifications, authorizations, permits, licenses and filings with Governmental
Entities would not have a Material Adverse Effect.
4.19 Employees.
---------
(a) Schedule 4.19 sets forth the names, home addresses, compensation
-------------
levels, share option position, if any, and job titles of all of the Employees.
(b) It is currently not necessary for Seller to utilize in the
Business any inventions of any employee, officer, director, shareholder or
consultant made or owned prior to their employment by or affiliation with
Seller, nor is it or will it be necessary to utilize any other assets or rights
of any such persons or entities made or owned prior to their employment with or
engagement by Seller, in violation of any registered patents, trade names,
trademarks or copyrights or any other limitations or restrictions to which any
such persons or entity is a party or to which any of such assets or rights may
be subject.
(c) To Seller's knowledge, none of Seller's employees, consultants,
officers, directors or shareholders that has had knowledge of or access to
information relating to the Purchased Assets has taken, removed or made use of
any proprietary documentation, manuals, products, materials, or any other
tangible item from his or her previous employer relating to the Purchased Assets
by such previous employer which has resulted in Seller's access to or use of
such proprietary items included in the Purchased Assets, and Seller will not
gain access to or make use of any such proprietary items in the Business, except
to the extent that any such activities would not have a material adverse effect
on the Purchased Assets or the Business.
(d) Except for the Confidentiality Agreements, there are no written or
oral contracts of employment between Seller and any Employee.
(e) The Seller is not a party to a collective bargaining agreement
with any trade union, the Seller's employees are not members of a trade union
certified as a bargaining agent with the Seller and no proceedings to implement
any such collective bargaining agreement or certifications are pending.
(f) Seller does not have any Employee Benefit Plan as defined in the
Employment Retirement Income Security Act of 1974.
(g) There are no grievance or arbitration proceedings pending or, to
Seller's knowledge, threatened, with respect to Seller's employees, nor is
Seller aware of any basis for such proceedings or events.
-15-
<PAGE>
4.20 Taxes. All Taxes due and payable for all periods (or portions
-----
thereof) prior to and including the Closing Date have been paid by Seller.
Seller and any other person required to file returns or reports of Taxes have
duly and timely filed (or will file prior to the Closing Date) all returns and
reports of Taxes required to be filed prior to such date, and all such returns
and reports are true, correct, and complete. There are no liens for Taxes on
any of the Purchased Assets. Seller has complied with all record keeping and
tax reporting obligations relating to income and employment taxes due with
respect to compensation paid to employees or independent contractors providing
services to the Business. Seller is not a "foreign person" within the meaning
of Section 1445(f)(3) of the Code. There are no pending or, to Seller's
knowledge, threatened proceedings with respect to Taxes payable by Seller, and
there are no outstanding waivers or extensions of statutes of limitations with
respect to assessments of Taxes payable by Seller. No agreement or arrangement
regarding compensation of any employee providing services to the Business
provides for any payments which could result in a nondeductible expense to the
Buyer pursuant to Section 280G of the Code or an excise tax to the recipient of
such payment pursuant to Section 4999 of the Code.
4.21 Compliance with Laws. The operation of the Business has been
--------------------
conducted in all material respects in accordance with all applicable laws,
ordinances, governmental rules, regulations and other requirements of
Governmental Entities having jurisdiction over the Business. Seller has no
reason to believe that any consents, approvals, authorizations, registrations,
certifications, permits, filings or notifications that it has received or made
to operate the Business are invalid or have been or are being suspended,
canceled, revoked or questioned. To Seller's knowledge, there is no
investigation or inquiry to which Seller is a party or pending or threatened,
relating to the Business and its compliance with applicable foreign, state,
local or foreign laws, ordinances, governmental rules or regulations.
4.22 Environmental Matters. The Seller has not caused or allowed, or
---------------------
contracted with any party for, the generation, use, transportation, treatment,
storage or disposal of any Hazardous Substances (as defined below) in connection
with the operation of its Business or otherwise. To the best of its knowledge,
Seller, the operation of the Business, and any real property that Seller owns,
leases or otherwise occupies or uses (the "Premises") are in compliance with all
--------
applicable Environmental Laws (as defined below) or orders or directives of any
governmental authorities having jurisdiction under such Environmental Laws.
Seller has not received any citation, directive, letter or other communication,
written or oral, or any notice of any proceedings claim or lawsuit, from any
person arising out of the ownership or occupation of the Premises, or the
conduct of the Business, and Seller is not aware of any basis therefor. For
purposes of this Agreement, the term "Environmental Laws" shall mean any
------------------
federal, state or local law or ordinance or regulation pertaining to the
protection of public health or safety or damage to protection of the environment
in connection with the use, storage, disposal, transport or handling of
Hazardous Substances. For purposes of this Agreement, the term "Hazardous
---------
Substances" shall include any materials classified as hazardous or toxic under
- ----------
any Environmental Laws.
-16-
<PAGE>
4.23 Material Contracts.
------------------
(a) Schedule 4.23 contains a list of all Contracts which are material
-------------
to the Business ("Material Contracts"). "Material Contracts" shall include,
------------------ ------------------
without limitation, the following and shall be categorized in the Seller
Disclosure Schedule as follows:
(i) each Contract (other than routine purchase orders given
and pricing quotes received in the ordinary course of the Business and covering
a period of less than one year) for the purchase of inventory, spare parts,
other materials or personal property with any supplier or for the furnishing of
services to the Business under the terms of which Seller, on behalf of the
Business: (A) paid or otherwise gave consideration of more than $5,000 in the
aggregate during the fiscal year ended December 31, 1999, (B) is likely, in the
judgment of Seller, to pay or otherwise give consideration of more than $5,000
in the aggregate during the fiscal year ended December 31, 2000, (C) is likely,
in the judgment of Seller, to pay or otherwise give consideration of more than
$5,000 in the aggregate over the remaining term of such contract or (D) cannot
be canceled without penalty or further payment of less than $2,500;
(ii) each customer contract and agreement of the Business,
including names, addresses, contact names and telephone numbers (other than
routine purchase orders, pricing quotes with open acceptance and other tender
bids, in each case, entered into in the ordinary course of business and covering
a period of less than one year) which (A) involved consideration of more than
$5,000 in the aggregate during the fiscal year ended December 31, 1999, (B) is
likely, in the judgment of Seller, to involve consideration of more than $5,000
in the aggregate during the fiscal year ended December 31, 2000, (C) is likely,
in the judgment of Seller, to involve consideration of more than $5,000 in the
aggregate over the remaining term of the contract or (D) cannot be canceled
without penalty or further payment of less than $2,500;
(iii) (A) all Contracts relating to remote monitoring sites, and
(B) all Contracts between Seller and any FM radio stations;
(iv) (A) all distributor, manufacturer's representative,
broker, franchise, agency and dealer contracts and agreements of the Business
(specifying on a matrix, in the case of distributor agreements, the name of the
distributor, product, territory, termination date and exclusivity provisions)
and (B) all sales promotion, market research, marketing and advertising
contracts and agreements of the Business;
(v) all management contracts with independent contractors or
consultants (or similar arrangements) of the Business;
(vi) all Contracts and agreements (excluding routine checking
account overdraft agreements involving petty cash amounts) under which the
Business has created, incurred, assumed or guaranteed indebtedness or under
which the Business has imposed a security interest or Lien on any of its assets,
whether tangible or intangible, to secure indebtedness;
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(vii) all Contracts and agreements that limit the ability of any
Person related to the Business, or any of its affiliates, to compete in any line
of business or with any person or in any geographic area or during any period of
time, or to solicit any customer or client;
(ix) all Contracts pursuant to which Seller has agreed to
supply products to, perform services or otherwise engage in the conduct of the
Business for a customer at specified prices, whether directly or through a
specific distributor, manufacturer's representative or dealer; and
(x) all other Contracts (A) which are material to the Business
or (B) the absence of which would have a Material Adverse Effect on the
Business.
(b) Each license and each Material Contract is a legal, valid and
binding agreement, and none of the Material Contracts is in default by its terms
or has been canceled by the other party or by Seller; Seller is not in receipt
of any claim of default under any such agreement; and Seller does not anticipate
any termination or change to, or receipt of a proposal with respect to, any such
agreement as a result of the transactions contemplated hereby. Seller has
furnished Buyer with true and complete copies of all such agreements together
with all amendments, waivers or other changes thereto.
(c) There are no Contracts or other arrangements involving Seller in
which any member, manager, officer, director or Affiliate of Seller has a
financial interest in, including indebtedness to, Seller.
4.24 Products and Services. Each of the products and services produced,
---------------------
sold or provided by Seller in connection with the Business is, and at all times
has been, in compliance in all material respects with all applicable federal,
state, local and foreign laws and regulations and is, and at all relevant times
has been, fit for the ordinary purposes for which it is intended to be used and
conforms in all material respects to any promises or affirmations of fact made
in connection with the sale of such product or service. There is no design
defect with respect to any of such products, and each of such products contains
adequate warnings, presented in a reasonably prominent manner, in accordance
with applicable laws and current industry practice with respect to its contents
and use.
4.25 Product Liability. There are no claims, actions, suits, inquiries,
-----------------
proceedings or investigations pending by or against Seller, relating to any
products the Business and containing allegations that such products are
defective or were improperly designed or manufactured or improperly labeled or
otherwise improperly described for use.
4.26 Litigation; Other Claims. There are no claims, actions, suits,
------------------------
proceedings, or formal investigations against Seller, or any of its officers,
directors or shareholders, relating to the Business, the Purchased Assets or
Seller's employees which are currently pending or, to Seller's knowledge,
threatened, at law or in equity or before or by any Governmental Entity, or
which challenges or seeks to prevent, enjoin, alter or materially delay any of
the transactions contemplated hereby, nor is Seller aware of any basis for such
claims, actions, suits, inquiries,
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<PAGE>
proceedings, or investigations; and no Governmental Entity has at any time
challenged or questioned the legal right of Seller to offer or sell any of its
products or services.
4.27 Defaults. Seller is not in default under or with respect to any
--------
judgment, order, writ, injunction or decree of any court or any Governmental
Entity which could reasonably be expected to have a Material Adverse Effect on
the Business or any of the Purchased Assets.
4.28 Reserved.
--------
4.29 Full Disclosure. Seller is not aware of any facts pertaining to the
---------------
Purchased Assets or the Business which it has not disclosed to Buyer or Buyer's
legal counsel which would result in a Material Adverse Effect to the Business or
the Purchased Assets. There are no developments affecting any of the Purchased
Assets pending or, to the knowledge of Seller threatened, which might materially
detract from the value of such Purchase Assets, materially interfere with any
present or intended use of any such Purchased Assets or have a Material Adverse
Effect on the marketability of the Purchased Assets. Neither this Agreement nor
any other agreement, exhibit, schedule or officer's certificate being entered
into or delivered pursuant to this Agreement contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements contained in such document not misleading.
4.30 Brokers and Finders. Neither Seller nor any of its officers,
-------------------
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finder's fee in connection with
the transactions contemplated by this Agreement.
4.31 Fair Consideration; No Fraudulent Conveyance. The transactions
--------------------------------------------
contemplated in this Agreement or any agreements referenced in this Agreement
will not constitute a fraudulent conveyance under applicable state, local and
foreign statutes, ordinances, governmental rules and regulations, or otherwise
give rise to any right of any creditor of Seller to any of the Purchased Assets
after the Closing.
4.32 Insurance. The Seller Disclosure Schedule lists all insurance
---------
policies and fidelity bonds covering the Purchased Assets. There is no claim by
Seller pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies and bonds.
All premiums due and payable under all such policies and bonds have been paid
and Seller is otherwise in material compliance with the terms of such policies
and bonds. To Seller's knowledge, there is no threatened termination of, or
material premium increase with respect to, any of such policies.
5. Representations and Warranties of Buyer.
---------------------------------------
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Buyer Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified
and is made and given with the intention of inducing the Seller to enter into
this Agreement. Buyer represents and warrants to Seller as follows:
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<PAGE>
5.1 Organization. Buyer is a corporation duly formed and validly existing
------------
and in good standing under the laws of California, and has full corporate power
and authority and the legal right to execute and deliver this Agreement and all
of the other agreements and instruments to be executed and delivered by Buyer
pursuant hereto, and to consummate the transactions contemplated hereby and
thereby. Buyer is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for failures to be so
qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect on Buyer's business.
5.2 Authority. The execution and delivery of this Agreement (and all
---------
other agreements and instruments contemplated hereunder) by Buyer, the
performance by Buyer of its obligations hereunder and thereunder, and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors of Buyer,
and no other act or proceeding on the part of Buyer or its shareholders is
necessary to approve the execution and delivery of this Agreement and such other
agreements and instruments, the performance by Buyer of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. The signatory officers of Buyer have the power and
authority to execute and deliver this Agreement and all of the other agreements
and instruments to be executed and delivered by Buyer pursuant hereto, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by Buyer pursuant to the provisions hereof
and thereof.
5.3 Execution and Binding Effect. This Agreement has been duly and
----------------------------
validly executed and delivered by Buyer and constitutes, and the other
agreements and instruments to be executed and delivered by Buyer pursuant
hereto, upon their execution and delivery by Buyer, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof by
Seller), legal, valid and binding agreements of Buyer, enforceable against Buyer
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium, or other laws affecting the
enforcement of creditors' rights generally or provisions limiting competition,
and by equitable principles.
5.4 Consent and Approvals. There is no requirement applicable to Buyer to
---------------------
make any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Buyer of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Buyer pursuant hereto, except for filings (a) which are referred to in the
Seller Disclosure Schedule or (b) the failure of making which would not have a
Material Adverse Effect on the transactions contemplated hereby.
5.5 No Violation. Neither the execution, delivery and performance of this
------------
Agreement or any of the other agreements and instruments to be executed and
delivered pursuant hereto, nor the consummation of the transactions contemplated
hereby or thereby, will, with or without the passage of time or the delivery of
notice or both, (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of Buyer,
(b) violate, conflict with or result in a violation or breach of, or constitute
a default or require
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<PAGE>
consent of any Person (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any notice,
bond, mortgage, indenture, license, franchise, permit, agreement, lease or other
instrument or obligation to which Buyer is a party or by which Buyer or any of
its properties or assets may be bound, or (c) violate any statute, ordinance or
law or any rule, regulation, order, writ, injunction or decree of any
Governmental Entity applicable to Buyer or by which any of its properties or
assets may be bound.
5.6 Capitalization.
--------------
(a) The authorized capital stock of Buyer will, upon the Closing Date,
consist of 48,072,114 shares of Common Stock and 26,927,886 shares of Preferred
Stock, 3,750,000 of which have been designated Series A Preferred Stock all of
which are issued and outstanding immediately prior to Closing, 12,413,793 of
which have been designated Series B Preferred Stock all of which are issued and
outstanding immediately prior to Closing, 6,956,400 of which have been
designated Series C Preferred Stock all of which are issued and outstanding
immediately prior to Closing, and 3,807,693 of which have been designated Series
D Preferred Stock, 3,590,763 of which are issued and outstanding immediately
prior to Closing. As of the Closing Date, the total number of outstanding
shares of Common Stock is 8,899,940. The designations, rights, preferences and
limitations in respect of each class of capital stock of Buyer are set forth in
its Articles of Incorporation. All outstanding shares of capital stock of Buyer
are duly authorized and validly issued, fully-paid and nonassessable and were
issued in compliance with applicable securities laws. Buyer has reserved 76,923
shares of Series D Preferred Stock for issuance hereunder.
(b) Except as referenced above and for (i) conversion privileges of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock (ii) outstanding options to purchase 4,112,825
shares of Common Stock under the Buyer's 1996 Stock Option Plan, (iii) 1,139,051
shares of Common Stock remaining available for future issuance to employees,
directors and consultants under Buyer's 1996 Stock Option Plan, and (iv) the
rights set forth in the Amended and Restated Investors' Rights Agreement dated
December 17, 1999 among Buyer and certain holders of Buyer's capital stock,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights) or agreements, orally or in writing, for the purchase or
acquisition from Buyer of any shares of its capital stock.
5.7 Valid Issuance of Securities. The Shares being issued to Seller
----------------------------
hereunder, when issued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein, will be duly and validly issued, fully
paid and nonassessable and free of restrictions on transfer other than
restrictions on transfer under this Agreement and pursuant to applicable state
and federal securities laws. The Common Stock issuable upon conversion of the
shares has been duly and validly reserved for issuance, and upon issuance in
accordance with the terms of the Buyer's Amended and Restated Articles of
Incorporation, shall be duly and validly issued, fully paid and nonassessable
and free of restrictions on transfer other than restrictions on transfer under
this Agreement and pursuant to applicable federal and state securities laws.
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<PAGE>
5.8 Title to Property and Assets. Buyer owns its property and assets free
----------------------------
and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair Buyer's ownership or use of such property or assets. With
respect to the property and assets it leases, Buyer is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances.
5.9 Employee Benefit Plans. Buyer has complied with all applicable local,
----------------------
state and federal regulations with respect to each employment contract, deferred
compensation agreement, bonus plan, incentive plan, profit sharing plan,
retirement agreement and employee benefit plan subject to the Employee
Retirement Income Security Act of 1974.
5.10 Tax Returns and Payments. Buyer has filed all federal, state and
------------------------
local tax returns and reports as required by law. These returns and reports are
true and correct in all material respects. Buyer has paid all taxes and other
assessments due. Buyer has no knowledge of any liability of any tax to be
imposed upon its properties or assets as of the date of this Agreement that is
not adequately provided for.
5.11 Insurance. Buyer has in full force and effect fire and casualty
---------
insurance policies, with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any (including all) of its
properties that might be damaged or destroyed.
5.12 Labor Agreements and Actions. Buyer is not bound by or subject to
----------------------------
(and none of its assets or properties is bound by or subject to) any written or
oral, express or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or, to the knowledge of Buyer, has
sought to represent any of the employees, representatives or agents of Buyer.
There is no strike or other labor dispute involving Buyer pending, or to the
knowledge of the Buyer threatened, which could have a Material Adverse Effect on
the business of Buyer (as such business is presently conducted and as it is
proposed to be conducted), nor is Buyer aware of any labor organization activity
involving its employees. To its knowledge, Buyer has complied in all material
respects with all applicable state and federal equal employment opportunity laws
and with other laws related to employment. To Buyer's knowledge, no employee of
Buyer, nor any consultant with whom Buyer has contracted, is in violation of any
term of any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, Buyer because of the nature of the business to be conducted by
Buyer; and to Buyer's knowledge the continued employment by Buyer of its present
employees, and the performance of Buyer's contracts with its independent
contractors, will not result in any such violation. Buyer has not received any
notice alleging that any such violation has occurred.
5.13 Permits. To its knowledge, Buyer is not in violation of any
-------
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of Buyer. Buyer has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack
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of which could materially and adversely affect the business, properties,
prospects, or financial condition of Buyer and believes that it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted. Buyer is not in default in any material
respect under any of such franchises, permits, licenses or other similar
authority.
5.14 Environmental and Safety Laws. To the best of its knowledge, Buyer is
-----------------------------
not in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to the best of its knowledge,
no material expenditures are or will be required in order to comply with any
such existing statute, law or regulation.
5.15 Litigation; Other Claims. There are no claims, actions, suits,
------------------------
proceedings, or formal investigations against Buyer, or any of its officers,
directors or shareholders, relating to Buyer's business or Buyer's employees
which are currently pending or, to Buyer's knowledge, threatened, at law or in
equity or before or by any Governmental Entity, or which challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions contemplated
hereby, nor is Buyer aware of any basis for such claims, actions, suits,
inquiries, proceedings, or investigations; and no Governmental Entity has at any
time challenged or questioned the legal right of Buyer to offer or sell any of
its products or services.
5.16 Full Disclosure. Buyer has fully provided the Purchasers with all the
---------------
information which Seller has requested for deciding whether to enter into the
transactions contemplated by this Agreement and all information which Buyer
believes is reasonably necessary to enable Seller to make such a decision.
Neither this Agreement nor any other agreement, exhibit, schedule or officer's
certificate being entered into or delivered pursuant to this Agreement contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained in such document not
misleading. To the extent any business plans or financial or other projections
were disclosed to Seller, such information was prepared in good faith; however,
Buyer does not warrant that it will achieve such projections.
5.17 Intellectual Property. Buyer owns or possesses sufficient legal
---------------------
rights to all patents, trademarks, service marks, tradenames, copyrights, trade
secrets, licenses, information and proprietary rights and processes necessary
for its business as now conducted and as proposed to be conducted without any
conflict with, or infringement of, the rights of others. There are no
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is Buyer bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of "off the shelf" or standard
products. Buyer has not received any communications alleging that Buyer has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, tradenames, copyrights, trade secrets or
other proprietary rights or processes of any other person or entity. Buyer is
not aware that any of its employees is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with the use of such employee's best efforts to promote the
interest of Buyer or that would conflict with Buyer's business as proposed to be
conducted. The Company does not believe it is or will be necessary to use any
inventions of
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any of its employees (or persons it currently intends to hire) made prior to
their employment by the Company.
6. Covenants.
---------
6.1 Access to Information.
---------------------
(a) Prior and subsequent to the Closing and subject to the execution
of nondisclosure agreements reasonably satisfactory to Buyer and Seller, Seller
will permit Buyer to make a full and complete investigation of the Purchased
Assets and to receive from Seller all information of Seller relating to the
Purchased Assets or reasonably related to Seller's conduct of the Business.
Without limiting this right, Seller will give to Buyer and its accountants,
legal counsel, and other representatives full access, during normal business
hours, at a mutually agreeable location arranged in advance, to all of the
books, records, files, documents, properties, and contracts of Seller relating
to the Purchased Assets or reasonably related to Seller's conduct of the
Business and allow Buyer and any such representatives to make copies thereof,
all of which shall be made available in an organized fashion and so as to
facilitate an orderly review. This Section 6.1 shall not affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the transactions contemplated by this
Agreement. Seller shall maintain and make available the information and records
specified in this Section 6.1(a) in the ordinary course of Seller's business and
document retention policies, as if the transactions contemplated by this
Agreement had not occurred.
(b) At all times following the Closing, each party shall provide the
other party (at such other party's expense) with such reasonable assistance,
including the provision of available relevant records or other information and
reasonable access to and cooperation of any employees, as may be reasonably
requested by either of them in connection with the preparation of any financial
statement or tax return, any audit or examination by any taxing authority, or
any judicial or administrative proceeding relating to liability for Taxes.
6.2 Reserved.
--------
6.3 Certain Notifications. At all times prior to the Closing, Seller and
---------------------
Buyer shall promptly notify the other party in writing of the occurrence of any
event which will result, or has a reasonable prospect of resulting, in the
failure to satisfy any of the conditions specified in Section 8 or Section 9 of
this Agreement.
6.4 Best Efforts. The parties hereto shall use their best efforts (i) to
------------
cause to be fulfilled and satisfied all of the conditions to the Closing set
forth in Section 8 and 9 below, (ii) to cause to be performed all of the matters
required of such party at the Closing and (iii) to cause the Assumed Contracts
to be assigned to Buyer.
6.5 Seller's Conduct of the Business Prior to Closing. During the period
-------------------------------------------------
from the date of this Agreement to the Closing Date, Seller will conduct the
Business in its ordinary and usual course, consistent with past practice, and
will use all reasonable efforts to preserve intact all rights, privileges,
franchises and other authority of the Business, to retain the employees, and
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to maintain favorable relationships with licensors, licensees, suppliers,
contractors, distributors, customers, and others having relationships with the
Business. Seller shall promptly notify Buyer of any event or occurrence or
emergency not in the ordinary course of business, and any material event
involving the Business or the Purchased Assets. Without limiting the generality
of the foregoing, and except as approved in writing by Buyer in advance, prior
to the Closing, Seller:
(a) will not create, incur or assume (i) any borrowings under capital
leases, or (ii) any obligation which would in any material way affect the
Business, the Purchased Assets or Buyer's ability to conduct the Business in
substantially the same manner and condition as conducted by Seller on the date
of this Agreement;
(b) will not change in any manner the compensation of, or agree to
provide additional benefits to, or enter into any employment agreement with, any
employee;
(c) will not reduce or cancel its insurance coverage;
(d) will not acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
Business.
(e) will not sell, dispose of or encumber any of the Purchased Assets
or license any Purchased Assets to any Person except for the sale of Inventory
in the normal course of business consistent with past practice;
(f) will not engage in any special promotion which promotes the sale
of Inventory with highly discounted terms;
(g) will not enter into any Contracts relating to the Business, except
on commercially reasonable terms in the ordinary course of business of the
Business;
(h) will comply in all material respects with all laws and regulations
applicable to the Business;
(i) will not enter into any agreement with any third party for the
distribution of any of the Purchased Assets;
(j) will use reasonable efforts to assist Buyer in employing after the
Closing Date those employees to whom offers of employment are made by Buyer, and
will not (and will cause its Affiliates not to) solicit such employees to remain
in the employ of Seller or any of its Affiliates after the Closing Date;
(k) will not change or announce any change to the products or services
sold by the Business except with Buyer's written consent or at Buyer's request;
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<PAGE>
(l) will not expand the use of the Purchased Assets within the
organization of Seller;
(m) will not violate, amend or otherwise change in any way the terms
of any of the Assumed Contracts;
(n) will not commence a lawsuit related to or involving the Purchased
Assets other than (a) for the routine collection of bills; (b) for injunctive
relief on the grounds that Seller has suffered immediate and irreparable harm
not compensable in money damages, provided that Seller has obtained the prior
written consent of Buyer, such consent not to be unreasonably withheld; or (c)
for a breach of this Agreement;
(p) will not assign, sell or otherwise convey to any third party,
without obtaining Buyer's prior written consent, any of its accounts receivable
prior to the Closing Date.
6.6 No Other Bids.
-------------
(a) Until the earlier to occur of (i) the Closing or (ii) the
termination of this Agreement pursuant to its terms, Seller shall not, and
Seller shall not authorize any of its directors, officers, employees, agents or
advisors including, without limitation, attorneys, accountants, consultants,
bankers and financial advisors, to directly or indirectly, (x) initiate, solicit
or encourage submission of any inquiries, proposals or offers by any person,
entity or group (other than with Buyer and its affiliates, agents and
representatives) relating to any Transaction Proposal (as defined below), (y)
participate in any discussions or negotiations with, or disclose any non-public
information concerning Seller, the Business or the Purchased Assets to, or
otherwise assist, cooperate with, facilitate or encourage, or enter into any
agreement or understanding with, any person, entity or group (other than with
Buyer and its affiliates, agents and representatives) in connection with any
Transaction Proposal, or (z) execute and deliver any written letter of intent or
similar document with any third party relating to a Transaction Proposal. For
purposes of this Agreement, a "Transaction Proposal" shall mean any proposal
--------------------
relating to the possible acquisition of Seller, the Business or the Purchased
Assets or equity interests in Seller whether by way of merger, transfer of
capital stock of Seller, purchase of all or substantially all of the assets of
Seller, or otherwise.
(b) Seller will (i) notify Buyer immediately if any inquiry or
proposal is made or any information or access is requested (other than by Buyer)
in connection with a potential Transaction Proposal and (ii) immediately
communicate to Buyer the terms and conditions of any such Transaction Proposal
or potential Transaction Proposal or inquiry and the identity of the offeror or
potential offeror.
6.7 Tax Returns. Seller shall, to the extent that failure to do so could
-----------
adversely affect the Business or the Purchased Assets following Closing, (a)
continue to file in a timely manner all returns and reports relating to Taxes,
and such returns and reports shall be true, correct and complete and Seller
shall deliver to Buyer a copy of each such filed return and report within thirty
(30) days of such filing, and (b) be responsible for and pay when due any and
all Taxes.
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6.8 Post-Closing Access to Information. If, after the Closing Date, in
----------------------------------
order properly to operate the Business or prepare documents or reports required
to be filed with governmental authorities or Buyer's financial statements, it is
necessary that Buyer obtain additional information within Seller's possession
relating to the Purchased Assets or the Business, Seller will furnish or cause
its representatives to furnish such information to Buyer at Buyer's sole
expense. Such information shall include, without limitation, all agreements
between Seller and any Person relating to the Business. Seller shall maintain
and make available the information and records specified in this Section 6.8 for
a period of three (3) years after the Closing Date.
6.9 Post-Closing Cooperation.
------------------------
(a) Seller agrees that, if reasonably requested by Buyer, it will
cooperate with Buyer, at Buyer's expense, in enforcing the terms of any
agreements between Seller and any third party involving the Business, including
without limitation terms relating to confidentiality and the protection of
intellectual property rights. In the event that Buyer is unable to enforce its
intellectual property rights against a third party as a result of a rule or law
barring enforcement of such rights by a transferee of such rights, Seller agrees
to reasonably cooperate with Buyer by assigning to Buyer such rights as may be
required by Buyer to enforce its intellectual property rights in its own name.
If such assignment still does not permit Buyer to enforce its intellectual
property rights against the third party, Seller agrees to initiate proceedings
against such third party in Seller's name, provided that Buyer shall be entitled
to participate in such proceedings and provided further that Buyer shall be
responsible for the expenses of such proceedings and shall reimburse Seller for
such expenses as they are incurred by Seller.
(b) Subsequent to the Closing Date, Seller shall, from time to time,
execute and deliver, upon the request of Buyer, all such other and further
materials and documents and instruments of conveyance, transfer or assignment as
may reasonably be requested by Buyer to effect, record or verify the transfer
to, and vesting in Buyer, of Seller's right, title and interest in and to the
Purchased Assets, free and clear of all Liens, except for Permitted Liens, in
accordance with the terms of this Agreement.
(c) Seller will assist Buyer in obtaining any licenses, permits or
authorizations required for carrying on the Business but which are not
transferable.
6.10 No Post-Closing Retention of Copies. Immediately after the Closing,
-----------------------------------
Seller shall deliver to Buyer or destroy copies of Purchased Assets in Seller's
possession that are in addition to copies delivered to Buyer as part of the
Closing, whether such copies are in paper form, on computer media or stored in
another form; provided, however, that Seller may retain and use copies of
-------- --------
financial books and records relating to the Business as well as other documents
required by law to be kept by Seller for the sole purpose of preparing its
statutory accounts. The Seller shall not be permitted to use the financial
books and records of the Business for any other reason.
6.11 Public Announcements. The parties hereby agree that upon execution of
--------------------
this Agreement, Seller shall issue a press release substantially in the form
attached hereto as Exhibit A announcing the Asset Sale. Buyer and Seller shall
---------
advise and confer with each other prior to
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<PAGE>
the issuance of any other reports, statements or releases concerning this
Agreement (including the exhibits and schedules hereto) and the transactions
contemplated herein. Neither Buyer nor Seller will make any public disclosure
with respect to the transactions contemplated herein unless both parties agree
on the text and timing of such public disclosure; provided, however, that
-------- -------
nothing contained herein shall prevent either party at any time from furnishing
any information to any Governmental Entity.
6.12 Post-Closing Actions. Subsequent to the Closing Date, Seller shall
--------------------
use its best efforts to satisfy Seller's liabilities and the liabilities of the
Business not expressly assumed by Buyer pursuant to Section 2.3 hereof and to
obtain written releases from claims from such creditors. On or before the three
(3) month anniversary of the Closing Date, Seller shall provide Buyer with
materials and documents substantiating the satisfaction of this Section 6.12.
Seller shall maintain and make available to Buyer the information and records
specified in this Section 6.12 for a period of two (2) years after the Closing
Date.
6.13 Future Agreements. In the event Seller enters into any agreement
-----------------
between the date of this Agreement and the Closing that relates primarily to the
Business, at the request of Buyer, Seller agrees to include any such agreement
within the Assumed Contracts.
6.14 Reserved.
--------
6.15 Reserved.
--------
6.16 Transfer Taxes. Buyer shall be responsible for paying and shall
--------------
promptly discharge when due, any sales or use, transfer, real property gains,
excise or stamp taxes arising from the transfer of the Purchased Assets pursuant
to this Agreement. Notwithstanding the foregoing, in no event shall Buyer be
liable for any other Taxes of Seller, including without limitation any income or
alternative minimum taxes.
6.17 Risk of Loss. The risk of any loss, damage, impairment, confiscation,
------------
or condemnation of any of the Purchased Assets from any cause whatsoever shall
be borne by Seller at all times prior to the Closing. In the event of any such
loss, damage, impairment, confiscation, or condemnation, whether or not covered
by insurance, Seller shall promptly notify Buyer of such loss, damage,
impairment, confiscation, or condemnation, which notice shall provide an
estimate of the costs to repair, restore or replace such Purchased Assets and
shall state whether Seller intends to repair, restore or replace such assets.
6.18 Reserved.
--------
6.19 Non-Competition Agreement.
-------------------------
(a) In consideration of the Buyer entering into this Agreement, Seller
(on its own behalf and not on behalf of its officers, directors or shareholders
in their individual capacities) undertakes that for one (1) year after the
Closing Date and within the counties, cities and states of the United States of
America and each political subdivision and/or nation throughout the world (the
"Territory") it will not:
---------
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<PAGE>
(i) participate, assist or otherwise be directly or indirectly
involved or concerned, financially or otherwise, as a member, shareholder, unit
holder, director, consultant, adviser, contractor, principal, agent, manager,
beneficiary, partner, associate, trustee, financier or otherwise in any business
or activity which is the same as or substantially similar to the Business or any
material part of it (a "Restricted Business");
-------------------
(ii) solicit, canvass, induce or encourage directly or
indirectly any employee of Buyer to leave the employment of Buyer;
(iii) solicit, canvass, approach or accept any offer from any
person or entity who was at any time during the 24 months immediately preceding
the Closing Date a customer or supplier of the Business with a view to
establishing a relationship with or obtaining the patronage of that person or
entity in a Restricted Business;
(iv) interfere or seek to interfere, directly or indirectly,
with any relationship between Buyer and any client, customer, employee or
supplier of the Business.
(b) If any of the separate and independent covenants and restraints
referred to in clause (a) of this Section 6.19 are or become invalid or
unenforceable for any reason then that invalidity or unenforceability will not
affect the validity or enforceability of any other separate and independent
covenants and restraints.
(c) If any prohibition or restriction contained in clause (a) of this
Section 6.19 is judged to go beyond what is reasonable in the circumstances, but
would be judged reasonable if that activity was deleted or that period or area
was reduced, then the prohibitions or restrictions apply with that activity
deleted or period or area reduced by the minimum amount necessary.
(d) Seller acknowledges that:
(i) the prohibitions and restrictions contained in clause (a)
of this Section 6.19 are reasonable and necessary; and
(ii) Seller has received valuable consideration for agreeing to
the covenants in clause (a) of this Section 6.19.
(e) Seller and Buyer acknowledge and agree that it will be difficult
to compute the amount of damage or loss to Buyer if Seller violated any of their
agreements under this Section 6.19, that Buyer will be without an adequate legal
remedy if Seller violated the provisions of this Section 6.19, and that any such
violation may cause substantial irreparable injury and damage to Buyer not fully
compensable by monetary damages. Therefore, Seller and Buyer agree that in the
event of any violation by Seller of this Section 6.19, Buyer shall be entitled
(i) to recover from Seller monetary damages, (ii) to obtain specific
performance, injunctive or other equitable relief, of either a preliminary or
permanent type, and (iii) to seek any other available rights or remedies at law
or in equity which may be exercised concurrently with the rights granted
hereunder.
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<PAGE>
6.20 Expenses. Seller and Buyer shall each pay all costs and expenses
--------
incurred by it or on its behalf in connection with this Agreement and the
transactions contemplated hereby, including fees and expenses of its own
financial consultants, accountants and counsel. Seller shall be solely
responsible for all costs and expenses necessary or incident to the transfer of
any of the Purchased Assets to Buyer, excluding those Taxes described in Section
6.16 hereof and the fees set forth in Section 7 of the Amendment and Consent to
License Agreement.
6.21 Settlement with Communications and Measurement Technologies Limited.
-------------------------------------------------------------------
Seller shall use its best efforts to enter into a full and final settlement of
all claims of whatever nature arising from (i) an Operating License Agreement by
and between Communications and Measurement Technologies Limited and Seller dated
April 10, 1996, (ii) the transactions contemplated thereby and (iii)
correspondence between the parties and their counsel, prior to the Closing Date.
7. Employee Matters.
----------------
7.1 Transferred Employees.
---------------------
(a) Offer of Employment. Subject to and in accordance with the
-------------------
provisions of this Section 7, Buyer may offer employment to any or all of the
employees who are employed by Seller in the Business as of the date of this
Agreement (the "Employees"). Seller agrees that it will cooperate with Buyer to
---------
identify those employees of Seller who are necessary for the conduct the
Business. Prior to the Closing, Buyer, after notice to Seller as to the timing
and method of contact, shall have the right to contact any or all of the
Employees for the purposes of making offers of employment with Buyer (or any
Affiliate designated by Buyer) after the Closing Date and receiving written
acceptances of such employment (in each case contingent on consummation of the
transactions contemplated by this Agreement). Upon Closing, Buyer (or any
Affiliates designated by Buyer) shall hire those Employees to whom it has made
an offer in accordance with this Section 7.1 and who accept such offer in the
manner and within the time frame reasonably established by Buyer. Each such
Employee who is employed by Seller on the Closing Date and who actually
transfers to employment with Buyer (or any Affiliate designated by Buyer) at or
after the Closing Date as a result of an offer of employment made by Buyer is
hereafter referred to as a "Transferred Employee." Transferred Employees shall
--------------------
not include any person on a disability leave of more than twenty-six (26) weeks.
Buyer shall not be obligated to hire any employee unless an offer of employment
is subsequently made to, and accepted by, such employee; in addition, Buyer
shall have no obligation to hire any employees of Seller after the Closing Date.
(b) Transition. The employment by Seller of the Transferred Employees
----------
shall end at the close of business on the Closing Date and the employment of the
Transferred Employees by Buyer shall commence at 12:01 a.m. on the day after the
Closing Date. The terms of employment with Buyer (or Buyer's Affiliates) shall
be as mutually agreed to between each Transferred Employee and Buyer (or Buyer's
Affiliate, as the case may be), subject to the provisions of this Section 7.1.
Between the date of this Agreement and the Closing Date, Seller will provide
each Transferred Employee with the same level of compensation as that currently
provided by Seller. Buyer shall have no obligation with respect to payments of
salary,
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<PAGE>
compensation, wages, health or similar benefits, commissions, bonuses (deferred
or otherwise), severance, stock or stock options or any other sums due to any
Transferred Employee that accrued before the Closing Date. Seller will be fully
responsible for all amounts payable to any employee, including (without
limitation) all termination payments, redundancy compensation, severance pay,
accrued vacation pay and other amounts payable in respect of the termination of
employment of any employee in connection with the sale of the Purchased Assets
to the Buyer. In addition, Seller will be fully responsible for all amounts
owing to Transferred Employees prior to Closing.
(c) Retention of Employees Prior to Closing. Seller agrees to use
---------------------------------------
reasonable efforts to retain the Employees as employees of the Business until
the Closing Date, and to assist Buyer in securing the employment after the
Closing Date of those Employees to whom Buyer (or designated by Buyer) makes or
intends to make offers of employment under subsection (a) above. Seller shall
not transfer any Employee to employment with Seller outside of the Business
prior to the Closing or without the consent of Buyer. Seller shall notify Buyer
promptly if, notwithstanding the foregoing, any Employee terminates employment
with Seller after the date of this Agreement but prior to the Closing. Buyer
may request Seller to hire additional employees for the Business, in which case
Seller will use commercially reasonable efforts to identify and hire such
employees.
7.2 Compensation and Benefits of Transferred Employees. Buyer shall be
--------------------------------------------------
free to establish its own employee benefit plans; Buyer shall have no obligation
to offer benefit plans of the same type or with terms similar to or better than
the terms of Seller's current employee benefit plans. Buyer may, at its option,
give each Transferred Employee credit for such Transferred Employee's years of
most recent continuous service with Seller for purposes of determining
participation and benefit levels under all of Buyer's vacation policies and
benefit plans and programs.
7.3 Reserved.
--------
7.4 No Right to Continued Employment or Benefits. No provision in this
--------------------------------------------
Agreement shall create any third party beneficiary or other right in any Person
(including any beneficiary or dependent thereof) for any reason, including,
without limitation, in respect of continued, resumed or new employment with
Seller or Buyer (or any Affiliate of Seller or Buyer) or in respect of any
benefits that may be provided, directly or indirectly, under any plan or
arrangement maintained by Seller, Buyer or any Affiliate of Seller or Buyer.
Except as otherwise expressly provided in this Agreement, Buyer is under no
obligation to hire any employee of Seller, provide any employee with any
particular benefits, or make any payments or provide any benefits to those
employees of Seller whom Buyer chooses not to employ.
7.5 No Solicitation or Hire by Seller. For a period of one year after the
---------------------------------
Closing, Seller will not solicit any Transferred Employee for employment. For
purposes of this Section 7.5, the term "solicit" shall not include the following
activities by Seller: (i) advertising for employment in any bulletin board
(including electronic bulletin boards), newspaper, trade journal or other
publication available for general distribution to the public without specific
reference to any particular employees; (ii) participation in any hiring fair or
similar event open to
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<PAGE>
the public not targeted at Buyer's employees; and (iii) use of recruiting or
employee search firms that have been instructed by Seller not to target any
Transferred Employee.
8. Conditions to Buyer's Obligations.
---------------------------------
The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived by Buyer in writing, except as
otherwise provided by law:
8.1 Representations and Warranties True; Performance; Certificate.
-------------------------------------------------------------
(a) The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made or given again at and as of the Closing Date;
(b) Seller shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date;
(c) The conditions set forth in this Section 8 have been fulfilled or
satisfied, unless otherwise waived in writing by Buyer; and
(d) Buyer shall have received a certificate, dated as of the Closing
Date, signed and verified by an officer of Seller on behalf of Seller certifying
to the matters set forth in Sections 8.1(a) and 8.1(b) above.
(e) Buyer shall have received a certificate, dated as of the Closing
Date, executed by the Secretary of Seller certifying: (i) resolutions duly
adopted by the Board of Directors and the shareholders of Seller authorizing the
execution of this Agreement and the execution, performance and delivery of all
agreements, documents and transactions contemplated hereby; (ii) Articles of
Incorporation of Seller; (iii) Bylaws of Seller; and (iv) that none of the above
have been altered, amended, modified or rescinded and all of which remain in
full force and effect as of the Closing Date.
8.2 Seller Closing Documents.
------------------------
(a) Seller shall have delivered to Buyer:
(i) the Bill of Sale substantially in the form attached as
Exhibit B, duly executed by Seller;
- ---------
(ii) the Assignment and Assumption Agreement in substantially
the form attached hereto as Exhibit C, duly executed by Seller;
---------
(iii) the Patent Assignment in substantially the form attached
hereto as Exhibit D, duly executed by Seller;
---------
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<PAGE>
(iv) the Trademark Assignment in substantially the form
attached hereto as Exhibit E, duly executed by Seller;
---------
(v) the Copyright Assignment in substantially the form
attached hereto as Exhibit F, duly executed by Seller;
---------
(vi) the Amendment and Consent to License Agreement (the
"Stanford Assignment") in substantially the form attached hereto as Exhibit G,
-------- ---------- ---------
duly executed by Seller and The Board of Trustees of the Leland Stanford Junior
University;
(vii) all consents to assignment required to transfer the
Assumed Contracts to Buyer (the "Required Consents"), duly executed by parties
-----------------
having the authority to so assign or consent to assign, in form and substance
acceptable to Buyer, as well as a written confirmation from such third parties
that the Contracts are in good standing, provided that any outstanding
liabilities or cure amounts under such Assumed Contracts are the sole obligation
of Seller and provided further that Buyer shall have the right to decline
assignments of any of the Assumed Contracts if the outstanding liabilities or
cure amounts under such Assumed Contracts are not discharged by Seller;
(viii) all Governmental Authorizations and Required Waivers
("Required Waiver" shall mean (i) a waiver of notice of and consent to the Asset
---------------
Sale and (ii) an acknowledgement that such warrants will continue in full force
and effect as warrants to purchase the capital stock of Seller pursuant to their
terms without any amendment thereto);
(ix) the Seller Balance Sheet;
(x) UCC-3 Termination Statements duly executed by each of the
Cupertino National Bank and JLA Credit Corporation;
(b) Seller shall have delivered to Escrow Agent or an account or
accounts designated by the Escrow Agent an Assignment Separate from Certificate
in connection with the issuance of the Shares and in the form attached hereto as
Exhibit K.
- ---------
8.3 No Proceedings or Litigation.
----------------------------
(a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement.
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent the transactions contemplated by this Agreement,
including, without limitation, the sale of the Purchased Assets or asserting
that the sale of the Purchased Assets would be illegal or create liability for
damages or which may have a Material Adverse Effect on the Business or the
Purchased Assets.
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<PAGE>
8.4 Documents. This Agreement, the exhibits and schedules attached
---------
hereto, and any other instruments of conveyance and transfer and all other
documents to be delivered by Seller at the Closing and all actions of Seller
required by this Agreement and the exhibit agreements, or incidental thereto,
and all related matters, shall be in form and substance reasonably satisfactory
to Buyer and Buyer's counsel and shall be in full force and effect.
8.5 Governmental Filings. The parties shall have made any required filing
--------------------
with Governmental Entities in connection with this Agreement and the exhibit
agreements, and any approvals related thereto shall have been obtained or any
applicable waiting periods shall have expired. If a proceeding or review
process by a Governmental Entity is pending in which a decision is expected,
Buyer shall not be required to consummate the transactions contemplated by this
Agreement until such decision is reached or rendered, notwithstanding Buyer's
legal ability to consummate the transactions contemplated by this Agreement
prior to such decision being reached or rendered.
8.6 Reserved.
--------
8.7 No Material Adverse Change. There shall have been no material adverse
--------------------------
change in the financial condition or results of operations of the Business on
the Closing Date as compared with the date of this Agreement.
8.8 Reserved.
--------
8.9 Reserved.
--------
8.10 Legal Opinion. Buyer shall have received a legal opinion from Manatt,
-------------
Phelps & Phillips LLP, legal counsel to Seller, dated the Closing Date, in a
form satisfactory to Buyer and attached hereto as Exhibit M.
---------
8.11 Shareholder Approval. This Agreement and the transactions it
--------------------
contemplates shall have been approved and adopted by such vote of the holders of
the outstanding shares of Seller's capital stock entitled to vote thereon as is
required to approve such transactions, and shall have otherwise been approved as
required by law and the charter documents of Seller.
8.12 Consulting Agreement. Buyer and Ronald P. Haley shall have entered
--------------------
into a consulting agreement in the form attached hereto as Exhibit H (the
---------
"Consulting Agreement").
--------------------
8.13 Non-Competition and Non-Solicitation Agreement. Buyer and Ronald P.
----------------------------------------------
Haley shall have entered into a non-competition agreement in substantially the
form attached hereto as Exhibit I (the "Non-Competition Agreement").
--------- -------------------------
8.14 Bulk Sales. The notices and filings required by the California
----------
Uniform Commercial Code, including without limitation Article 6 thereof, shall
have been prepared and published in accordance with the terms thereof, and any
waiting periods or hearings shall have terminated with respect thereto. No
other waiting periods or notices shall be required in order for Seller to be in
compliance with such Section.
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8.15 Escrow Agreement. Buyer and Seller shall have entered into an Escrow
----------------
Agreement in substantially the form attached hereto as Exhibit J, and such
---------
agreement shall remain in full force and effect.
8.16 Stock Purchase Agreement. Buyer and Seller shall have entered into a
------------------------
Stock Purchase Agreement in substantially the form attached hereto as Exhibit L.
---------
8.17 Other Agreements. Buyer shall have entered into agreements with
----------------
Sprint regarding frame relay services and Microspace Communications Corporation
regarding satellite uplink services in such forms as are reasonably acceptable
to Buyer.
9. Conditions to Seller's Obligations.
----------------------------------
The obligations of Seller under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived in writing by Seller, except as
otherwise provided by law:
9.1 Representations and Warranties True; Performance.
------------------------------------------------
(a) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made or given again at and as of the Closing Date;
(b) Buyer shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date; and
(c) Seller shall have received a certificate, dated as of the Closing
Date, signed and verified by an officer of Buyer on behalf of Buyer certifying
to the matters set forth in Sections 9.1(a) and 9.1(b) above.
9.2 No Proceeding or Litigation.
---------------------------
(a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement.
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent the sale of the Purchased Assets or asserting that
the sale of the Assets would be illegal or create liability for damages.
9.3 Documents. This Agreement and the exhibits and schedules attached
---------
hereto, and any other instruments of conveyance and transfer and all other
documents to be delivered by
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<PAGE>
Buyer to Seller at the Closing and all actions of Buyer required by this
Agreement and the exhibit agreements, or incidental thereto, and all related
matters, shall be in form and substance reasonably satisfactory to Seller and
Seller's counsel and shall be in full force and effect.
9.4 Governmental Filings. The parties shall have made any filing required
--------------------
with Governmental Entities, and any approvals shall have been obtained or any
applicable waiting periods shall have expired. If a proceeding or review
process by a Governmental Entity is pending in which a decision is expected,
Seller shall not be required to consummate the transactions contemplated by this
Agreement until such decision is reached or rendered, notwithstanding Seller's
legal ability to consummate the transactions contemplated by this Agreement
prior to such decision being reached or rendered.
9.5 No Material Adverse Change. There shall have been no material adverse
--------------------------
change in the financial condition or results of operations of Buyer's business
on the Closing Date as compared with the date of this Agreement.
9.6 Legal Opinion. Seller shall have received a legal opinion from
-------------
Venture Law Group, A Professional Corporation, legal counsel to Buyer, dated the
Closing Date, in a form satisfactory to Seller and attached hereto as Exhibit N.
---------
10. Indemnification.
---------------
10.1 Survival of Representations and Warranties. All covenants (to be
------------------------------------------
performed prior to the Closing Date) and all representations and warranties in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the consummation of the transactions contemplated hereby and continue
until the first anniversary of the Closing (the "Indemnification Termination
---------------------------
Date"); provided that if any claims for indemnification have been asserted with
- ---- --------
respect to any such representations, warranties and covenants prior to the
Indemnification Termination Date, the representations, warranties and covenants
on which any such claims are based shall continue in effect until final
resolution of any claims, and provided, further, that representations,
-------- -------
warranties and covenants relating to Taxes shall survive until 30 days after
expiration of all applicable statutes of limitations relating to such Taxes.
All covenants to be performed after the Closing Date shall continue
indefinitely.
10.2 Indemnification. Subject to the limitations set forth in this Section
---------------
10, from and after the Effective Time, Seller shall protect, defend, indemnify
and hold harmless Buyer and Buyer's Affiliates, officers, directors, employees,
representatives and agents (each of the foregoing Persons is hereinafter
referred to individually as an "Indemnified Party" and collectively as
-----------------
"Indemnified Parties") from and against any and all losses, costs, damages,
-------------------
liabilities, fees (including without limitation attorneys' fees) and expenses
(collectively, the "Damages"), that any of the Indemnified Parties incurs or
-------
reasonably anticipates incurring by reason of or in connection with any claim,
demand, action or cause of action relating to (a) any misrepresentation, breach
of, or default in connection with, any of the representations, warranties,
covenants or agreements of the Seller contained in this Agreement, including any
exhibits or schedules attached hereto, (b) any and all obligations of Seller not
expressly assumed by Buyer pursuant to the terms hereof, (c) any failure of
Seller to comply with Article 6 of the
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<PAGE>
California Uniform Commercial Code, or the bulk sales laws of any other
jurisdiction applicable to Seller, (d) any claims brought by employees or
consultants of Seller who were terminated prior to or as of the Closing, and (e)
the Purchase Price Adjustment. Damages in each case shall be net of the amount
of any insurance proceeds and indemnity and contribution actually recovered by
Buyer.
10.3 Damages Threshold. Notwithstanding the foregoing, Buyer may not
-----------------
receive any amount of the Escrow Consideration from the Escrow Fund unless and
until an Officer's Certificate (as such term is defined in the Escrow Agreement)
identifying Damages in the aggregate amount in excess of $25,000.00 has been
delivered to the Escrow Agent and such amount is determined pursuant to this
Section 10 and the Escrow Agreement to be payable, in which case Buyer shall
receive Escrow Consideration pursuant to the terms of this Agreement and the
Escrow Agreement equal in value to the full amount of such Damages without
deduction.
11. Termination.
-----------
11.1 Termination of Agreement. This Agreement may be terminated at any
------------------------
time prior to the Closing:
(a) By mutual written consent of Buyer and Seller;
(b) By either party, if the other party goes into liquidation, has an
application or order made for its winding up or dissolution, has a resolution
passed or steps taken to pass a resolution for its winding up or dissolution, or
has a receiver, receiver and manager, administrator, liquidator, provisional
liquidator, official manager or administrator appointed to it or any of its
assets; or
(c) By Buyer or Seller if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; or
(d) By either party if the Closing does not occur by March 31, 2000.
11.2 Procedure and Effect of Termination. In the event of termination of
-----------------------------------
this Agreement by any or all of the parties pursuant to Section 11.1, written
notice shall be given to each other party specifying the provision of Section
11.1, pursuant to which such termination is made and shall become void and there
shall be no liability on the part of Buyer or Seller (or their respective
officers, directors, partners or Affiliates), except as a result of any breach
of this Agreement by such party or to the extent such a party is entitled to
indemnification under Section 10 of this Agreement.
12. Miscellaneous.
-------------
12.1 Amendments and Waivers. Any term of this Agreement may be amended or
----------------------
waived with the written consent of the parties or their respective successors
and assigns. Any amendment or waiver effected in accordance with this Section
12.1 shall be binding upon the parties and their respective successors and
assigns.
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<PAGE>
12.2 Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
12.3 Governing Law; Jurisdiction. This Agreement and all acts and
---------------------------
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the exclusive
jurisdiction and venue of the courts of the state and federal courts of Alameda
County, California.
12.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
12.5 Titles and Subtitles. The titles and subtitles used in this Agreement
--------------------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
12.6 Notices. Any notice required or permitted by this Agreement shall be
-------
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice, and
(a) if to Buyer, to
@Road, Inc.
47370 Fremont Boulevard
Fremont, CA 94538
Attention: Krish Panu, President
Facsimile: (510) 353-6028
with a copy to:
Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Attention: Tae Hea Nahm
Facsimile: (650) 233-8386
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<PAGE>
(b) if to Seller, to
Differential Corrections, Inc.
469 El Camino Real, #110
Santa Clara, CA 95050
Attention: Ronald P. Haley
Facsimile:
with a copy to:
Manatt, Phelps & Phillips, LLP
3030 Hansen Way, Suite 100
Palo Alto, CA 94304
Attention: Jerold F. Petruzzelli
Facsimile: (650) 213-0260
12.7 Severability. If one or more provisions of this Agreement are held to
------------
be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
12.8 Entire Agreement. This Agreement and the documents referred to herein
----------------
are the product of both of the parties hereto, and constitute the entire
agreement between such parties pertaining to the subject matter hereof and
thereof, and merge all prior negotiations and drafts of the parties with regard
to the transactions contemplated herein and therein. Except as specifically set
forth herein, any and all other written or oral agreements existing between the
parties hereto regarding such transactions are expressly canceled.
Notwithstanding the foregoing, each of the (i) Mutual Nondisclosure Agreement;
No-Shop; Services Agreement dated as of December 20, 1999 by and between Buyer
and Seller, (ii) Promissory Note, and (iii) Security Agreement dated as of
December 20, 1999 by and between Buyer and Seller, shall survive the execution
of this Agreement and shall continue with full force and effect until expressly
terminated by mutual written consent of the parties hereto or otherwise
terminated pursuant to the terms thereof.
12.9 Advice of Legal Counsel. Each party acknowledges and represents that,
-----------------------
in executing this Agreement, it has had the opportunity to seek advice as to its
legal rights from legal counsel and that the person signing on its behalf has
read and understood all of the terms and provisions of this Agreement. This
Agreement shall not be construed against any party by reason of the drafting or
preparation thereof.
[Signature Page Follows]
-39-
<PAGE>
This Agreement has been duly executed and delivered by the duly authorized
officers of Seller and Buyer as of the date first above written.
@ROAD, INC.
By: _________________________________
Krish Panu, President
DIFFERENTIAL CORRECTIONS, INC.
By: _________________________________
Ronald P. Haley, CEO
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EXHIBIT A
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EXHIBIT B
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EXHIBIT C
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EXHIBIT D
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EXHIBIT E
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EXHIBIT F
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EXHIBIT G
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EXHIBIT H
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EXHIBIT I
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EXHIBIT J
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EXHIBIT K
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EXHIBIT L
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EXHIBIT M
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EXHIBIT N
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EXHIBIT 10.18
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of March
---------
23, 2000 by and between @Road, Inc., a California corporation ("Buyer"), and
-----
Hynet Technologies, a California corporation ("Seller").
------
RECITALS
A. Buyer is an Internet-based productivity enhancement service for companies
with a mobile workforce leveraging GPS, wireless data networks and the Internet.
Seller conducts a business that (i) provides leading financial institutions,
high-tech companies and semiconductor manufacturers with a solution for creating
dynamic, reusable information units that can then be leveraged to rapidly create
and deploy dynamic customer content for use on the web and in printed materials
and (ii) includes a mobile portal technology, myWebtoGo.com, that is designed to
deliver Internet content to wireless and mobile appliances (the "Business").
--------
B. Buyer desires to acquire from Seller, and Seller desires to sell to Buyer,
substantially all of the assets of the Business on the terms and subject to the
conditions set forth in this Agreement.
AGREEMENT
In consideration of the mutual agreements, representations, warranties and
covenants set forth below, Buyer and Seller agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
-----------
following meanings:
"Affiliate" means with respect to any Person, a Person directly or
---------
indirectly controlling or controlled by or under common control with such
Person.
"Closing" means the consummation of the transactions contemplated hereby.
-------
"Closing Date" means the date of the Closing as set forth in Section 3.1
------------
herein.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"GAAP" means generally accepted accounting principles of the United States
----
as set forth by the Financial Accounting Standards Board.
"Governmental Authorizations" means the permits, authorizations, consents
---------------------------
or approvals of any Governmental Entity that are a condition to the lawful
consummation of the transactions contemplated hereby as listed on Schedule
--------
1.1(i) to this Agreement.
- ------
"Governmental Entity" means any court, or any federal, state, municipal or
-------------------
other governmental authority, department, commission, board, agency or other
instrumentality (domestic or foreign).
<PAGE>
"Lien" means any mortgage, pledge, lien, security interest, option,
-----
covenant, condition, restriction, encumbrance, charge or other third-party claim
of any kind.
"Material Adverse Effect" with respect to a Person means any event, change
-----------------------
or effect that is materially adverse to the condition (financial or otherwise),
properties, assets, liabilities, business, operations, results of operations or
prospects of such Person and its Affiliates, taken as a whole.
"Person" means an individual, corporation, partnership, association, trust,
------
government or political subdivision or agent or instrumentality thereof, or
other entity or organization.
"Seller Balance Sheet" means the unaudited balance sheet of the Business,
--------------------
prepared by Seller in accordance with GAAP, consistently applied, and delivered
to Buyer upon the Closing Date, which includes the Seller's asset and liability
accounts as of the Closing Date.
"Taxes" means all taxes, however denominated, including any interest,
-----
penalties or other additions to tax that may become payable in respect thereof,
(i) imposed by any federal, territorial, state, local or foreign government or
any agency or political subdivision of any such government, for which Buyer
could become liable as successor to or transferee of the Business or the
Purchased Assets or that could become a charge against or lien on any of the
Purchased Assets, which taxes shall include, without limiting the generality of
the foregoing, all sales and use taxes, ad valorem taxes, excise taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, real property gains taxes, transfer taxes, payroll and
employee withholding taxes, unemployment insurance contributions, social
security taxes, and other governmental charges, and other obligations of the
same or of a similar nature to any of the foregoing, which are required to be
paid, withheld or collected, or (ii) any liability for amounts referred to in
(i) as a result of any obligations to indemnify another person.
2. Sale and Purchase
-----------------
2.1 Transfer of Assets. Subject to the terms and conditions of this
------------------
Agreement, Seller shall sell, assign, grant, transfer, and deliver (or cause to
be sold, assigned, granted, transferred and delivered) to Buyer, or to any
Affiliate of Buyer designated by Buyer, and Buyer shall purchase and accept from
Seller, as of the Closing Date, free and clear of all Liens, all of the Seller's
rights, title and interest in and to all of the assets, properties and business,
other than the Excluded Assets, owned, held or used in the conduct of the
Business by Seller as the same shall exist on the Closing Date (the "Purchased
---------
Assets"), including, without limitation:
- ------
(a) all tangible personal property and leases of and other interests
in tangible personal property used in connection with the Business, including,
without limitation, the items listed on Schedule 2.1(a);
---------------
(b) all raw materials, work-in-process, finished goods, supplies and
other inventories of the Business (the "Inventories");
-----------
2
<PAGE>
(c) all rights under contracts, agreements, leases and other interests
in real and personal property, licenses, commitments, sales and purchase orders
and other instruments, including without limitation the items listed on Schedule
--------
2.1(c) (collectively the "Contracts");
- ------ ---------
(d) all accounts receivable, notes receivable and other receivables;
(e) all prepaid expenses relating to the operation of the Business
including, but not limited to, Taxes, leases and rentals;
(f) all of Seller's rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Purchased Assets,
including, without limitation, unliquidated rights under warranties;
(g) all copyrights, copyright registrations, proprietary processes,
trade secrets, license rights, specifications, technical manuals and data,
drawings, inventions, designs, patents, patent applications, trade names,
trademarks, service marks, product information and data, know-how and
development work-in-progress, customer lists, software modules and engines,
business and marketing plans and other intellectual or intangible property
embodied in or pertaining to the Business, whether pending, applied for or
issued, whether filed in the United States or in other countries, including
without limitation the items listed in Schedule 2.1(g), together with all
---------------
associated goodwill;
(h) all things authored, discovered, developed, made, perfected,
improved, designed, engineered, acquired, produced, conceived or first reduced
to practice by Seller or any of its employees or agents that are embodied in,
derived from or relate to the Business, in any stage of development, including,
without limitation, modifications, enhancements, designs, concepts, techniques,
methods, ideas, flow charts, coding sheets, notes and all other information
relating to the Business;
(i) any and all design and code documentation, methodologies,
processes, trade secrets, copyrights, design information, product information,
technology, formulae, routines, engineering specifications, technical manuals
and data, drawings, inventions, know-how, techniques, engineering work papers,
and notes, development work-in-process, and other proprietary information and
materials of any kind relating to, used in, or derived from the Purchased Assets
(collectively with subsections (g) and (h), the "Intellectual Property");
---------------------
(j) all permits, authorizations, consents and approvals of any
Governmental Entity affecting or relating in any way to the Business, including
without limitation, the items listed on Schedule 2.1(j) (the "Permits");
--------------- -------
(k) all books, records files and papers, whether in hard copy or
electronic format, used in the Business, including without limitation,
engineering information, sales and promotional literature, manuals and data,
sales and purchase correspondence, lists of present, former and prospective
suppliers or customers, personnel and employment records, and any information
relating to Taxes imposed on the Business or Purchased Assets;
(l) all computer software programs, data and associated licenses used
in connection with the Business; and
3
<PAGE>
(m) all goodwill associated with the Business or the Purchased Assets,
together with the right to represent to third parties that Buyer is the
successor to the Business.
2.2 Excluded Assets. Buyer agrees that the following assets of Seller
---------------
(the "Excluded Assets" shall be excluded from the Purchased Assets:
---------------
(a) $12,500 for the purpose of satisfying the claims of all creditors
of Seller;
(b) Network Access Services Agreement and Metered Access Services
Agreement with Epoch Internet, each dated 11/30/98;
(c) Business Product Purchase Agreement with Lucent Technologies dated
5/5/98;
(d) Business Services Agreement and Subscription Agreement with AT&T
each dated 3/9/98 and Lease Agreement with AT&T dated 5/5/98;
(e) Lease Agreement with Xerox dated 1/8/97;
(f) Corporate travel plan with Avis;
(g) Software License and Service Agreement with 3Com dated 10/3/99;
(h) Software License and Service Agreement with Common Wealth Magazine
dated 2/28/98;
(i) Software License and Service Agreement with Prentice-Hall dated
10/7/97;
(j) All agreements with Charles Schwab & Co;
(k) All Seller nondisclosure agreement and all Seller consulting
agreements;
(l) Distributor Agreement with Cyberbiz E-World dated 9/14/99;
(m) Lease Agreement with The Landmark dated October 16, 1997;
(n) Sublease Agreement with TeVeo, Inc. dated February 8, 2000;
(o) Sublease Agreement with Cohesive Networks dated May 1, 1998;
(p) Note and Warrant Purchase Agreement, Promissory Note and Warrant
with Maui Investment Holding Co. dated November 1, 1999;
(q) All agreements with employment and consultant recruiting firms
and consultants, including without limitation those with Emerson Brooks, Cross
Creek, Connexion and Solutions;
(r) Agreement with CAP Ventures dated 5/26/98;
4
<PAGE>
(n) All employee benefit plans and all assets or funds held in trust,
or otherwise, associated with or used in connection with the employee benefit
plans, including those with TriNet Employer Group; and
(o) All insurance contracts relating to the Business, including the
cash surrender value thereof, and all insurance proceeds or claims relating to
the operations of the Business prior to the Closing Date.
2.3 Transfer of Liabilities. Subject to the terms and conditions of this
-----------------------
Agreement, Buyer or an Affiliate of Buyer designated by Buyer agrees, effective
as of the Closing Date, to assume the liabilities and obligations of Seller
arising under the Contracts, other than the liabilities attributable to any
failure by Seller to comply with the terms thereof (the "Assumed Liabilities").
-------------------
2.4 Excluded Liabilities. Except for those liabilities expressly assumed
--------------------
by Buyer or any Affiliate designated by Buyer pursuant to Section 2.3, Buyer
shall not assume and shall not be liable for, and Seller and its direct or
indirect subsidiaries shall retain and remain solely liable for and obligated to
discharge, all of the debts, contracts, agreements, commitments, obligations and
other liabilities of any nature whatsoever of Seller and its direct and indirect
subsidiaries, whether known or unknown, accrued or not accrued, fixed or
contingent, including without limitation the following:
(a) Any liability for breaches by Seller or any of its respective
direct or indirect subsidiaries on or prior to the Closing Date of any contract
or any other instrument, contract or purchase order or any liability for
payments or amounts due under any Contract or any other instrument, contract or
purchase order on or prior to the Closing Date;
(b) Any liability or obligation for Taxes attributable to or imposed
upon Seller or any of its direct or indirect subsidiaries, or attributable to or
imposed upon the Purchased Assets for any period (or portion thereof) through
the Closing Date, including, without limitation, any Taxes attributable to or
arising from the transactions contemplated by this Agreement;
(c) Any liability or obligation for or in respect of any loan, other
indebtedness for money borrowed, or account payable of Seller or any of its
direct or indirect subsidiaries, including without limitation debts to Maui
Investment Holding Co. which Maui Investment Holding Co. by its signature hereto
agrees shall be canceled as of the Closing Date and any such liabilities owed to
Affiliates of Seller;
(d) Any liability or obligation arising as a result of any legal or
equitable action or judicial or administrative proceeding initiated at any time,
to the extent relating to any action or omission on or prior to the Closing Date
by or on behalf of Seller or any of its direct or indirect subsidiaries,
including, without limitation, any liability for fraudulent conveyance,
infringement of intellectual property rights, breach of product warranty, injury
or death caused by products, or violations of federal or state securities or
other laws;
5
<PAGE>
(e) Any liability or obligation arising on or prior to the Closing
Date out of any "employee benefit plan," as such term is defined by the Employee
Retirement Income Security Act of 1974 ("ERISA") or other employee benefit
-----
plans;
(f) Any liability or obligation for making payments of any kind
(including as a result of the sale of Purchased Assets or as a result of the
termination of employment by Seller of employees, or other claims arising out of
the terms and conditions of employment with Seller, or for vacation or severance
pay or otherwise) to employees of Seller or in respect of payroll taxes for
employees of Seller;
(g) Any liability of Seller incurred in connection with the making or
performance of this Agreement and the transactions contemplated hereby and any
liability or obligation for or in respect of any of the Excluded Assets;
(h) Any liability of Seller arising out of the violation of or failure
to comply with any Environmental Regulations (as hereinafter defined) applicable
to any aspect of the Business;
(i) Any costs or expenses of Seller incurred in connection with
shutting down, deinstalling and removing equipment not purchased by Buyer, and
the costs associated with all contracts and agreements not assumed by Buyer; and
(j) Obligations or liabilities under any assumed Contract for which a
Required Consent has not been obtained as of the Closing.
2.5 Purchase Price.
--------------
(a) Subject to the performance by Seller of all of its obligations
under this Agreement (including delivering all documents required to be
delivered) at the Closing and Section 10 hereof, in consideration of the
acquisition of the Purchased Assets under Section 2.1, Buyer agrees (a) to
deliver to Seller 50,000 shares of duly issued, fully-paid Buyer common stock,
par value $0.0001 per share (the "Purchase Price" or the "Shares") and (b) to
-------------- ------
assume the Assumed Liabilities. The Shares will not be registered under the
Securities Act of 1933, as amended.
2.6 Allocation of Purchase Price. The Purchase Price shall be allocated
----------------------------
among the Purchased Assets as provided in an exhibit to be prepared by Buyer for
purposes of complying with the requirements of Code Section 1060 and the
regulations thereunder. Buyer and Seller agree to each prepare and file on a
timely basis with the Internal Revenue Service (and applicable state tax
authorities) substantially identical and supplemental Internal Revenue Service
Forms 8594 (and corresponding state tax forms) consistent with Buyer's
allocation of the Purchase Price. If any Tax authority challenges such
allocation, the party receiving notice of such challenge shall give the other
prompt written notice thereof and the parties shall cooperate in order to
preserve the effectiveness of such allocation.
3. Closing
-------
6
<PAGE>
3.1 Closing. Subject to the terms and conditions of this Agreement, the
-------
Closing shall take place on such date, as soon as practicable after all
conditions precedent in Sections 8 and 9 have been satisfied or waived, as the
parties may agree, but in any case, no later than April 25, 2000 (the "Closing
-------
Date").
- ----
3.2 Actions at the Closing. At the Closing, Seller shall deliver the
----------------------
Purchased Assets to Buyer, Buyer shall deliver the Purchase Price to Seller, and
Buyer and Seller shall take such actions and execute and deliver such
agreements, bills of sale, and other instruments and documents as necessary or
appropriate to effect the transactions contemplated by this Agreement in
accordance with its terms, including without limitation the following:
(a) Bill of Sale; Assignment and Assumption Agreement. Buyer shall
-------------------------------------------------
deliver to Seller for Seller's execution thereof a general Bill of Sale
substantially in the form attached as Exhibit A and with respect to each
-------
Contract, or item of Intellectual Property, an Assignment and Assumption
Agreement substantially in the form attached as Exhibit B, a Patent Assignment
-------
substantially in the form attached as Exhibit C, a Trademark Assignment
-------
substantially in the form attached as Exhibit D and a Copyright Assignment
-------
substantially in the form attached as Exhibit E (the "Transfer Documents") in
------- ------------------
each case duly executed by Seller, and in the aggregate assigning to Buyer all
of Seller's right, title and interest in and to the Purchased Assets. Buyer may
designate one or more of its Affiliates as the recipient of certain of the
Purchased Assets, and as the party to assume certain of the Assumed Liabilities,
in which case Seller shall transfer such Purchased Assets and Assumed
Liabilities to Buyer or the Affiliate(s) designated by Buyer pursuant to such
Transfer Documents.
(b) Purchase Price. Buyer shall deliver the Shares to Seller issued
--------------
in the name of Seller.
(c) Title. Seller shall provide reasonable evidence of valid title to
-----
such of the Purchased Assets as Buyer may reasonably request in writing prior to
the Closing, in form and substance reasonably satisfactory to Buyer.
(d) Third Party Consents and Assignments. Buyer shall prepare for
------------------------------------
Seller's delivery to Buyer any assignments, and any required consents to
assignment, that Seller has obtained in respect of the Contracts, duly executed
by parties having the authority to so assign or consent to assign, in form and
substance as Buyer shall reasonably request, as well as a written confirmation
from such third parties that the Contracts are in good standing.
(e) Seller Documents. At the Closing, Seller shall deliver to Buyer
----------------
any and all documents required to satisfy the conditions set forth in Section 9
of this Agreement and any other closing documents reasonably requested by Buyer.
(f) Buyer Documents. At the Closing, Buyer shall deliver to Seller
---------------
any and all documents required to satisfy the conditions set forth in Section 8
of this Agreement.
(g) Post-Closing Actions. Subsequent to the Closing Date, Seller
--------------------
shall, and shall cause any Affiliate of Seller to, from time to time execute and
deliver, upon the request of Buyer, all such other and further materials and
documents and instruments of conveyance, transfer or assignment as may
reasonably be requested by Buyer to effect, record or verify the
7
<PAGE>
transfer to and vesting in Buyer of Seller's and any of Seller's Affiliates'
right, title and interest in and to the Purchased Assets, free and clear of all
Liens in accordance with the terms of this Agreement.
8
<PAGE>
4. Representations and Warranties of Seller
----------------------------------------
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Seller Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified.
Seller represents and warrants to Buyer as follows:
4.1 Organization, Standing and Power. Seller is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Seller has the requisite corporate power and
authority and all permits, authorizations, consents, and approvals of all
Governmental Entities to own, lease and operate its properties and to carry on
the Business as now being conducted and as proposed to be conducted, except
where the failure to have such power, authority and governmental approvals would
not, individually or in the aggregate, have a Material Adverse Effect on the
Business. Seller is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for failures to be so
qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect on the Business.
4.2 Authority. As of the Closing, the execution and delivery of this
---------
Agreement (and all other agreements and instruments contemplated under this
Agreement) by Seller, the performance by Seller of its obligations hereunder and
thereunder, and the consummation by Seller of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action by the
Board of Directors and shareholders of Seller, and no other act or proceeding on
the part of or on behalf of Seller or its shareholders is necessary to approve
the execution and delivery of this Agreement and such other agreements and
instruments, the performance by Seller of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby. The signatory officers of Seller have the power and authority to
execute and deliver this Agreement and all of the other agreements and
instruments to be executed and delivered by Seller pursuant hereto, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by Seller pursuant to the provisions hereof
and thereof.
4.3 Execution and Binding Effect. This Agreement has been duly and
----------------------------
validly executed and delivered by Seller and constitutes, and the other
agreements and instruments to be executed and delivered by Seller pursuant
hereto, upon their execution and delivery by Seller, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof by
Buyer), legal, valid and binding agreements of Seller, enforceable against
Seller in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, (b) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies, and (c) to the extent the indemnification
provisions contained in this Agreement may be limited by applicable federal or
state securities laws.
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<PAGE>
4.4 Consents and Approvals of Governmental Entities. Other than the
-----------------------------------------------
Governmental Authorizations there is no requirement applicable to Seller to make
any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Seller of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Seller pursuant hereto or the consummation by Seller of the transactions
contemplated herein or therein.
4.5 No Violation. Neither the execution, delivery and performance of this
------------
Agreement and all of the other agreements and instruments to be executed and
delivered pursuant hereto, nor the consummation of the transactions contemplated
hereby or thereby, will, with or without the passage of time or the delivery of
notice or both, (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of Seller,
(b) conflict with or result in a violation or breach of, or constitute a default
or require consent of any Person (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any contract, notice, bond, mortgage, indenture, license, franchise, permit,
agreement, lease or other instrument or obligation to which Seller is a party or
by which Seller or any of the Purchased Assets may be bound, (c) violate any
material statute, ordinance or law or any rule, regulation, order, writ,
injunction or decree of any Governmental Entity applicable to Seller or by which
any properties or assets of Seller may be bound, or (d) result in any
cancellation of, or obligation to repay, any grant, loan or other financial
assistance received by Seller from any Governmental Entity.
4.6 Consents. Schedule 4.6 sets forth each agreement, contract or other
-------- ------------
instrument binding upon Seller requiring a consent as a result of the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, except such consents as would not,
individually or in the aggregate, have a Material Adverse Effect if not received
by the Closing Date (each a "Required Consent").
----------------
4.7 Financial Information. Seller has delivered to Buyer an unaudited
---------------------
balance sheet for the Business at September 30, 1999 (the " September 30,
1999 Balance Sheet"), unaudited statements of income and balance sheet for the
--------------
Business for the three-month period ended December 31, 1999 and audited
statements of income and balance sheet for the Business for the fiscal year
September 30, 1998 (together with the September 30, 1999 Balance Sheet, the
"Financial Statements"), copies of which are set forth in the Seller Disclosure
--------------------
Schedule. The Financial Statements have been prepared consistently for all
periods presented, and revenues presented on the Financial Statements have been
recognized in accordance with GAAP, consistently applied. The Financial
Statements present fairly the financial condition, operating results and cash
flows of the Business as of the dates and during the periods indicated therein,
subject to normal year-end adjustments, which will not be material in amount or
significance.
4.8 No Undisclosed Liabilities. Seller does not have any liability,
--------------------------
indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of
any type, in excess of $5,000 individually or in the aggregate, whether accrued,
absolute, contingent, matured, unmatured or other (whether or not required by
GAAP to be reflected in the Financial Statements that (i) has not been reflected
in the September 30, 1999 Balance Sheet, or (ii) has not arisen in the ordinary
course of the Seller's business since September 30, 1999.
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<PAGE>
4.9 Absence of Certain Changes. Since September 30, 1999, Seller has
--------------------------
conducted the Business in the ordinary course consistent with past practice and
Seller:
(a) has not created, incurred or assumed (i) any borrowings under
capital leases, or (ii) any obligation which in any material way affect the
Business, the Purchased Assets or Buyer's ability to conduct the Business in
substantially the same manner and condition as conducted by Seller on the date
of this Agreement;
(b) has not changed in any manner the compensation of, or agreed to
provide additional benefits to, or enter into any employment agreement with, any
Employee (as hereinafter defined);
(c) has maintained insurance coverage in amounts adequate to cover
the reasonably anticipated risks of the business conducted with the Purchased
Assets;
(d) has not acquired or agreed to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
Business.
(e) has not sold, disposed of or encumbered any of the Purchased
Assets or licensed any Purchased Assets to any Person except for the sale of
Inventory in the normal course of business consistent with past practice;
(f) has not engaged in any special promotion which promotes the sale
of Inventory with highly discounted terms;
(g) has not entered into any agreements or commitments relating to
the business conducted with the Purchased Assets, except on commercially
reasonable terms in the ordinary course of business;
(h) has complied in all material respects with all laws and
regulations applicable to the Business;
(i) has not entered into any agreement with any third party for the
distribution of any of the Purchased Assets;
(j) has not changed or announced any change to the products or
services sold by the Business except with Buyer's written consent or at Buyer's
request;
(k) has not expanded the use of the Purchased Assets within the
organization of Seller;
(l) has not violated, amended or otherwise change in any way the
terms of any of the Contracts;
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(m) has not commenced a lawsuit related to or involving the Purchased
Assets other than (i) for the routine collection of bills or (ii) for a breach
of this Agreement;
(p) has not assigned, sold or otherwise conveyed to any third party,
any of its accounts receivable prior to the Closing Date; or
(q) made any agreement to do any of the foregoing.
4.10 Assets Generally.
----------------
(a) The Purchased Assets include all properties, tangible and
intangible, and only such properties, currently used by Seller in operating the
Business and necessary for Buyer to operate the Business after the Closing Date
in a manner substantially equivalent to the manner in which Seller has operated
the Business prior to and through the Closing Date. Other than the Required
Consents and the Governmental Approvals, no licenses or other consents from, or
payments to, any other Person are or will be necessary for Buyer to operate the
Business and use the Purchased Assets in the manner in which Seller has operated
the same.
(b) Seller holds good and marketable title, license to or leasehold
interest in all of the Purchased Assets and has the complete and unrestricted
power and the unqualified right to sell, assign and deliver the Purchased Assets
to Buyer. Upon consummation of the transactions contemplated by this Agreement,
Buyer will acquire good and marketable title, license or leasehold interest to
the Purchased Assets free and clear of any Liens and there exists no restriction
on the use or transfer of the Purchased Assets, except as may be assumed
hereunder by Buyer as an Assumed Liability and except for liens arising in the
ordinary course of business and not yet known.. No Person other than Seller has
any right or interest in the Purchased Assets, including the right to grant
interests in the Purchased Assets to third parties, except for Purchased Assets
licensed or leased from third parties which are set forth in the Seller
Disclosure Schedule and identified as such.
(c) None of the Purchased Assets that constitute tangible personal
property is held under any lease, security agreement, conditional sales
contract, lien, or other title retention or security arrangement.
(d) Except as provided in this Agreement, no restrictions will exist
on Buyer's right to sell, resell, license or sublicense any of the Purchased
Assets or engage in the Business, nor will any such restrictions be imposed on
Buyer as a consequence of the transactions contemplated by this Agreement or by
any agreement referenced in this Agreement.
(e) All of the Purchased Assets are in good operating condition and
repair, as required for their use in the Business as presently conducted, and
conform to all applicable laws, and no notice of any violation of any law
relating to any of the Purchased Assets or Assumed Liabilities has been received
by Seller.
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4.11 Intellectual Property.
---------------------
(a) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (including without
limitation the continued conduct by Buyer after the Closing Date of the Business
as presently conducted by Seller and the incorporation of any Intellectual
Property in any product of Buyer or an affiliate of Buyer) will not breach,
violate or conflict with any instrument or agreement governing any intellectual
property necessary or required for, or used in, the conduct of the Business as
presently conducted and will not cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any such Intellectual Property
or in any material way impair the right of Buyer or any of its affiliates to
use, sell, license or dispose of, or to bring any action for the infringement
of, any such intellectual property or portion thereof;
(b) Neither the development, manufacture, marketing, license, sale or
use of any product or intellectual property currently licensed, used or sold by
Seller or currently under development violates or will violate any license or
agreement to which Seller is a party or to the best of Seller's knowledge
infringes or will infringe any copyright, patent, trademark, service mark, trade
secret or other intellectual property or other proprietary right of any other
party. All registered trademarks, service marks, patents and copyrights held by
Seller are valid and subsisting. There is no pending or threatened claim or
litigation contesting the validity, ownership or right to use, sell, license or
dispose of any of the Purchased Assets (including without limitation the
Intellectual Property) necessary or required for, or used in, the conduct of the
business of Seller as presently conducted nor is there any basis for any such
claim, nor has Seller received any notice asserting that any such Purchased
Asset (including without limitation the Intellectual Property) or the proposed
use, sale, license or disposition thereof conflicts or will conflict with the
rights of any other party, nor is there any basis for any such assertion. There
is no material unauthorized use, infringement or misappropriation on the part of
any third party of the Purchased Assets (including without limitation the
Intellectual Property); and
(c) Seller has taken reasonable steps (including, without limitation,
entering into confidentiality and non-disclosure agreements with all officers
and employees of and consultants to Seller with access to or knowledge of the
Purchased Assets (including without limitation the Intellectual Property) to
maintain the secrecy and confidentiality of, and its proprietary rights in, the
Purchased Assets (including without limitation the Intellectual Property)
necessary or required for, or used in, the conduct of the business of Seller as
presently conducted. The Seller Disclosure Schedule contains a complete and
accurate list of all applications, filings and other formal actions made or
taken pursuant to federal, state, local and foreign laws by Seller to perfect or
protect its interest in the Purchased Assets, including, without limitation, all
patents, patent applications, trademarks, trademark applications, service marks
and copyright or mask work registrations.
(d) All fees to maintain Seller's rights in the Intellectual Property,
including, without limitation, patent and trademark registration and prosecution
fees and all professional fees in connection therewith pertaining to the
Intellectual Property due and payable on or before the Closing Date, have been
paid by Seller or will be paid by Seller within a reasonable period after the
Closing.
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4.12 Supply Agreements.
-----------------
(a) The Seller Disclosure Schedule contains a list (including names,
addresses, contact names and telephone numbers), which is complete in all
material respects, of all agreements or other arrangements pursuant to which
Seller is obligated to supply products, perform services or otherwise engage in
the conduct of the Business (such agreements, as supplemented below, are
referred to collectively as the "Supply Agreements"). Seller has provided a
-----------------
true and complete copy of all Supply Agreements to Buyer. All such Supply
Agreements are in full force and effect and are valid and effective in
accordance with their respective terms against Seller, as the case may be, and
against the other party thereto. Seller holds right, title and interest under
the terms of each Supply Agreement free of all Liens. Seller is not in default
under any such Supply Agreements (or has caused an event which with notice or
lapse of time, or both, would constitute a default), nor is the other party
thereto in default (or has caused an event which with notice or lapse of time,
or both, would constitute a default) under any such Supply Agreements.
(b) Seller has not entered into any agreement under which Seller is
restricted from selling, licensing or otherwise distributing any products or
services to any class of customers, in any geographic area, during any period of
time or in any segment of the market.
(c) After the Closing, Buyer will not be prevented by any act of
Seller from changing prices charged to existing or future customers of any
products or services.
(d) Seller has not granted any third party the right to supply any
products or services of the Business to any other third party. No agreement for
supply of the products or services by Seller obligates Seller, and no agreement
would obligate Buyer after the Closing Date, to provide any change in
specification of such products or services or to provide new products or
services. No agreement pursuant to which Seller has licensed the use of any
products to any third party obligates Seller to provide any change in
specification in the performance of such products or to provide new products or
services.
4.13 Warranties and Indemnities. The Seller Disclosure Schedule sets
--------------------------
forth a summary of all warranties and indemnities, express or implied, relating
to products sold or services rendered by Seller, and no warranty or indemnity
has been given by Seller which is not listed on the Seller Disclosure Schedule
or which differs therefrom in any respect. Seller is in compliance with all
warranties described in the Seller Disclosure Schedule. The Seller Disclosure
Schedule also indicates all warranty and indemnity claims currently pending
against Seller.
4.14 Real Property.
-------------
(a) Schedule 2.1(a) sets forth a list of all real property currently
owned or leased by Seller and which relates to the Business, are in full force
and effect. To the best of Seller's knowledge, all such current leases are
valid and effective in accordance with their respective terms against Seller and
the other party thereto. Seller has delivered to Buyer a true, correct and
complete copy of each lease identified on Schedule 2.1(a). The premises or
property described in said leases are presently occupied or used by Seller as
lessee or sublessor under the
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terms of said leases. Seller is the legal and equitable owner and holder of the
leasehold interest in each such lease. Seller has all right, title and interest
of the lessee under the terms of said leases, free of all Liens. Seller is not
in default under any such leases (and has not caused an event which with notice
or lapse of time, or both, would constitute a default), and to the Seller's
knowledge, the other parties thereto are not in default (and have not caused an
event which with notice or lapse of time, or both, would constitute a default)
under any such leases.
(b) No violation of any law, regulation or ordinance, including
without limitation, laws, regulations or ordinances relating to zoning,
environmental, city planning or similar matters) relating to the Business or any
Purchased Asset currently exists or has existed at any time except for
violations which have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Business or
the Purchased Assets. There are no developments affecting any of the Purchased
Assets pending or, to the knowledge of Seller threatened, which might materially
detract from the value of such Purchase Assets, materially interfere with any
present or intended use of any such Purchased Assets or have a Material Adverse
Effect on the marketability of the Purchased Assets.
4.15 Inventories. To the best of Seller's knowledge, all of the
-----------
Inventories are and will be items of a quality usable or salable in the ordinary
and usual course of business. The value at which the Inventories are carried on
the September 30, 1999 Balance Sheet reflects an inventory valuation policy of
Seller which is consistent with industry practice and which is in accordance
with GAAP, consistently applied.
4.16 Accounts Receivable. All accounts receivable, notes receivable and
-------------------
other receivables included in the Purchased Assets are valid, genuine and fully
collectible in the aggregate amount thereof, subject to normal and customary
trade discounts less any reserves for doubtful accounts recorded on the
September 30, 1999 Balance Sheet. All accounts, notes receivable, and other
receivables arising out of or relating to the Business on September 30, 1999
have been included in the September 30, 1999 Balance Sheet.
4.17 Licenses and Permits. Seller holds all consents, approvals,
--------------------
registrations, certifications, authorizations, permits and licenses of, and has
made all filings with, or notifications to, all Governmental Entities pursuant
to applicable requirements of all federal, state, local and foreign laws,
ordinances, governmental rules or regulations applicable to the business,
including, but not limited to, all such laws, ordinances, governmental rules or
regulations relating to registration of the products of the Business (at their
current level of development and use) and certification of the facilities of the
Business. The Business is in compliance with all federal, state, local and
foreign laws, ordinances, governmental rules and regulations relating to the
products manufactured by the Business or otherwise related to the Business and
Seller has no reason to believe that any consents, approvals, authorizations,
registrations, certifications, permits, filings or notifications that it has
received or made to operate the Business are invalid or have been or are being
suspended, canceled, revoked or questioned. There is no investigation or
inquiry to which Seller is a party or, to Seller's knowledge, pending or
threatened, relating to the Business and its compliance with applicable foreign,
state, local or foreign laws, ordinances, governmental rules or regulations.
Each such consent, approval, registration, certification, authorization, permit
or license is transferable and shall be transferred to Buyer in accordance with
the terms of this Agreement.
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4.18 Employees.
---------
(a) Schedule 4.18 sets forth the names, home addresses, compensation
-------------
levels, share option position, if any, and job titles of all of the Employees.
All employees, consultants, officers, directors and shareholders of Seller or
any Seller Subsidiary that have had access to the Purchased Assets are parties
to a written agreement (a "Confidentiality Agreement"), under which each such
-------------------------
person or entity (i) is obligated to disclose and transfer to Seller, without
the receipt by such person of any additional value therefor (other than normal
salary or fees for consulting services), all inventions, developments and
discoveries which, during the period of employment with or performance of
services for Seller, he or she makes or conceives of either solely or jointly
with others, that relate to any subject matter with which his or her work for
Seller may be concerned, or relate to or are connected with the Business,
products or projects of Seller, or involve the use of the time, material or
facilities of Seller, and (ii) is obligated to maintain the confidentiality of
proprietary information of Seller. None of Seller's employees, consultants,
officers or directors is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
conflict with their obligation to promote the interests of Seller with regard to
the Business or the Purchased Assets or that would conflict with the Business or
the Purchased Assets. Neither the execution nor the delivery of this Agreement,
nor the carrying on of the Business by its employees and consultants, will
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any of such persons or entities are now obligated. It is currently not
necessary nor will it be necessary for Seller to utilize in the Business any
inventions of any of such persons or entities (or people it currently intends to
hire) made or owned prior to their employment by or affiliation with Seller, nor
is it or will it be necessary to utilize any other assets or rights of any such
persons or entities (or people it currently intends to hire) made or owned prior
to their employment with or engagement by Seller, in violation of any registered
patents, trade names, trademarks or copyrights or any other limitations or
restrictions to which any such persons or entity is a party or to which any of
such assets or rights may be subject. To the Seller's knowledge, none of
Seller's employees, consultants, officers, directors or shareholders that has
had knowledge or access to information relating to the Purchased Assets has
taken, removed or made use of any proprietary documentation, manuals, products,
materials, or any other tangible item from his or her previous employer relating
to the Purchased Assets by such previous employer which has resulted in Seller's
access to or use of such proprietary items included in the Purchased Assets, and
Seller will not gain access to or make use of any such proprietary items in the
Business, except to the extent that any such activities would not have a
material adverse effect on the Purchased Assets or the Business.
(b) Except for the Confidentiality Agreements, there are no written
or oral contracts of employment between Seller and any Employee.
(c) The Seller is not a party to a collective bargaining agreement
with any trade union, the Seller's employees are not members of a trade union
certified as a bargaining agent with the Seller and no proceedings to implement
any such collective bargaining agreement or certifications are pending.
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4.19 Employee Benefit and Compensation Plans. Buyer will incur no
---------------------------------------
liability with respect to, or on account of, and Seller will retain any
liability for, and on account of, any employee benefit plan of Seller, any of
its Affiliates or any predecessor employer of any employee, including, but not
limited to, liabilities Seller may have to such employees under all employee
benefit schemes, incentive compensation plans, bonus plans, pension and
retirement plans, vacation, profit-sharing plans (including any profit-sharing
plan with a cash-or-deferred arrangement) share purchase and option plans,
savings and similar plans, medical, dental, travel, accident, life, disability
and other insurance and other plans or arrangements, whether written or oral and
whether "qualified" or "non-qualified," or to any employee as a result of
termination of employment by Seller as contemplated by this Agreement. Seller
has not, with respect to any employee, maintained or contributed to, or been
obligated or required to contribute to, any retirement or pension plan or any
employee benefit plan. The Seller has complied with all of its obligations
(including obligations to make contributions) in respect of the pension funds of
which its employees are members, there is no outstanding liability of the Seller
or any of its Affiliates to any such funds and all such funds are fully funded
to meet all potential claims for benefits by any and all such employees and any
former employee.
4.20 Taxes. To the best of the Seller's knowledge, all Taxes have been or
-----
will be paid by Seller for all periods (or portions thereof) prior to and
including the Closing Date except for those Taxes not yet due. Seller and any
other person required to file returns or reports of Taxes have duly and timely
filed (or will file prior to the Closing Date) all returns and reports of Taxes
required to be filed prior to such date, and all such returns and reports are
true, correct, and complete. There are no liens for Taxes on any of the
Purchased Assets. Seller has complied with all record keeping and tax reporting
obligations relating to income and employment taxes due with respect to
compensation paid to employees or independent contractors providing services to
the Business. There are no pending or, to Seller's knowledge, threatened
proceedings with respect to Taxes, and there are no outstanding waivers or
extensions of statutes of limitations with respect to assessments of Taxes.
4.21 Compliance with Law. The operation of the Business has been
-------------------
conducted in all material respects in accordance with all applicable and
material laws, regulations and other requirements of Governmental Entities
having jurisdiction over the same.
4.22 Environmental Matters. Seller has not caused or allowed, or
---------------------
contracted with any party for, the generation, use, transportation, treatment,
storage or disposal of any Hazardous Substances (as defined below) in connection
with the operation of its Business or otherwise. To the best of Seller's
knowledge, Seller, the operation of the Business, and any real property that
Seller owns, leases or otherwise occupies or uses (the "Premises") are in
compliance with all applicable Environmental Laws (as defined below) or orders
or directives of any governmental authorities having jurisdiction under such
Environmental Laws. Seller has not received any citation, directive, letter or
other communication, written or oral, or any notice of any proceedings claim or
lawsuit, from any person arising out of the ownership or occupation of the
Premises, or the conduct of the Business, and Seller is not aware of any basis
therefor. For purposes of this Agreement, the term "Environmental Laws" shall
mean any federal, state or local law or ordinance or regulation pertaining to
the protection of public health or safety or damage to protection of the
environment in connection with the use, storage, disposal, transport or handling
of Hazardous Substances. For purposes of this Agreement, the term "Hazardous
17
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Substances" shall include any materials classified as hazardous or toxic under
any Environmental Laws.
4.23 Material Contracts.
------------------
(a) Schedule 4.23 contains a list of all Contracts which are material
-------------
to the Business ("Material Contracts"). "Material Contracts" shall include,
------------------ ------------------
without limitation, the following and shall be categorized in the Seller
Disclosure Schedule as follows:
(i) each Contract (other than routine purchase orders given and
pricing quotes received in the ordinary course of the Business and covering a
period of less than one year) for the purchase of inventory, spare parts, other
materials or personal property with any supplier or for the furnishing of
services to the Business under the terms of which Seller, on behalf of the
Business: (A) paid or otherwise gave consideration of more than $5,000 in the
aggregate during the fiscal year ended September 30, 1999, (B) is likely to pay
or otherwise give consideration of more than $5,000 in the aggregate during the
fiscal year ended September 30, 2000, (C) is likely to pay or otherwise give
consideration of more than $5,000 in the aggregate over the remaining term of
such contract or (D) cannot be canceled without penalty or further payment of
less than $5,000;
(ii) each customer contract and agreement of the Business (other
than routine purchase orders, pricing quotes with open acceptance and other
tender bids, in each case, entered into in the ordinary course of business and
covering a period of less than one year) which (A) involved consideration of
more than $5,000 in the aggregate during the fiscal year ended September 30,
1999, (B) is likely to involve consideration of more than $5,000 in the
aggregate during the fiscal year ended September 30, 2000, (C) is likely to
involve consideration of more than $5,000 in the aggregate over the remaining
term of the contract or (D) cannot be canceled without penalty or further
payment of less than $5,000;
(iii) (A) all distributor, manufacturer's representative, broker,
franchise, agency and dealer contracts and agreements of the Business
(specifying on a matrix, in the case of distributor agreements, the name of the
distributor, product, territory, termination date and exclusivity provisions)
and (B) all sales promotion, market research, marketing and advertising
contracts and agreements of the Business which: (1) involved consideration of
more than $5,000 in the aggregate during the fiscal year ended September 30,
1999 or (2) are likely to involve consideration of more than $5,000 in the
aggregate during the fiscal year ended September 30, 2000 or (3) are likely to
involve consideration of more than $5,000 in the aggregate over the remaining
term of the contract;
(iv) all management contracts with independent contractors or
consultants (or similar arrangements) of the Business and which (A) involved
consideration or more than $5,000 in the aggregate during the fiscal year ended
September 30, 1999, (B) are likely to involve consideration of more than $5,000
in the aggregate during the fiscal year ended September 30, 2000, or (C) are
likely to involve consideration of more than $5,000 in the aggregate over the
remaining term of the contract;
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(v) all contracts and agreements (excluding routine checking
account overdraft agreements involving petty cash amounts) under which the
Business has created, incurred, assumed or guaranteed (or may create, incur,
assume or guarantee) indebtedness or under which the Business has imposed (or
may impose) a security interest or lien on any of its assets, whether tangible
or intangible, to secure indebtedness;
(vi) all contracts and agreements that limit the ability of any
Person related to the Business, or any of its affiliates, to compete in any line
of business or with any person or in any geographic area or during any period of
time, or to solicit any customer or client;
(viii) all Contracts pursuant to which the Business has agreed to
supply products to a customer at specified prices, whether directly or through a
specific distributor, manufacturer's representative or dealer; and
(ix) all other Contracts (A) which are material to the
Business or (B) the absence of which would have a Material Adverse Effect on the
Business, or (C) which are believed by Seller to be of unique value even though
not material to the Business.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Business, each license, each Material Contract,
is a legal, valid and binding agreement, and none of the Material Contracts is
in default by its terms or has been canceled by the other party; Seller is not
in receipt of any claim of default under any such agreement; and Seller does not
anticipate any termination or change to, or receipt of a proposal with respect
to, any such agreement as a result of the transactions contemplated hereby.
Seller has furnished Buyer with true and complete copies of all such agreements
together with all amendments, waivers or other changes thereto.
4.24 Products. Each of the products and services produced, sold or
--------
provided by Seller in connection with the Business is, and at all times has
been, in compliance in all material respects with all applicable federal, state,
local and foreign laws and regulations and is, and at all relevant times has
been, fit for the ordinary purposes for which it is intended to be used and
conforms in all material respects to any promises or affirmations of fact made
in connection with the sale of such product or service. There is no design
defect with respect to any of such products, and each of such products contains
adequate warnings, presented in a reasonably prominent manner, in accordance
with applicable laws and current industry practice with respect to its contents
and use.
4.25 Product Liability. There are no claims, actions, suits, inquiries,
-----------------
proceedings or investigations pending by or against Seller, relating to any
products the Business and containing allegations that such products are
defective or were improperly designed or manufactured or improperly labeled or
otherwise improperly described for use.
4.26 Litigation; Other Claims.
------------------------
(a) There are no claims, actions, suits, inquiries, proceedings, or
investigations against Seller, or any of its officers, directors or
shareholders, relating to the Business, the Purchased Assets or Seller's
employees which are currently pending or threatened,
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at law or in equity or before or by any Governmental Entity, or which challenges
or seeks to prevent, enjoin, alter or materially delay any of the transactions
contemplated hereby, nor is Seller aware of any basis for such claims, actions,
suits, inquiries, proceedings, or investigations; and no Governmental Entity has
at any time challenged or questioned the legal right of Seller to manufacture,
offer or sell any of its products or services in the present manner or style
thereof.
(b) There are no grievance or arbitration proceedings pending or
threatened, and there are no actual or threatened strikes or work stoppages with
respect to the Business, the Purchased Assets or Seller's employees, nor is
Seller aware of any basis for such proceedings or events.
4.27 Defaults. Seller is not in default under or with respect to any
--------
judgment, order, writ, injunction or decree of any court or any Governmental
Entity which could reasonably be expected to have a Material Adverse Effect on
the Business or any of the Purchased Assets. There does not exist any default
by Seller or by any other Person, or event that, with notice or lapse of time,
or both, would constitute a default under any agreement entered into by Seller
as part of the operations of the Business which could reasonably be expected to
have a Material and Adverse Effect on the Business or the Purchased Assets, and
no notices of breach thereof have been received by Seller.
4.28 Schedules. The schedules describing the Purchased Assets are
---------
complete and accurate and describe the material assets in the possession of, or
used by Seller in connection with the Business. The property listed in such
Schedules constitutes all of the material tangible and intangible property
necessary for the conduct by Seller of the Business.
4.29 Full Disclosure. Seller is not aware of any facts pertaining to the
---------------
Purchased Assets which affect the Business or the Purchased Assets in a
materially adverse manner or which will in the future affect the Business or the
Purchased Assets in a materially adverse manner. Neither this Agreement nor any
other agreement, exhibit, schedule or officer's certificate being entered into
or delivered pursuant to this Agreement contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements contained in such document not misleading.
4.30 Brokers and Finders. Neither Seller nor any of its officers,
-------------------
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finder's fee in connection with
the transactions contemplated by this Agreement.
4.31 Fair Consideration; No Fraudulent Conveyance. The sale of the
--------------------------------------------
Purchased Assets pursuant to this Agreement is made in exchange for fair and
equivalent consideration. Seller is not now insolvent and will not be rendered
insolvent by the sale, transfer and assignment of the Purchased Assets pursuant
to the terms of this Agreement. Seller is not entering into this Agreement or
any of the other agreements referenced in this Agreement with the intent to
defraud, delay or hinder its creditors and the consummation of the transactions
contemplated by this Agreement, and the other agreements referenced in this
Agreement, will not have any such effect. The transactions contemplated in this
Agreement or any agreements referenced in this Agreement will not constitute a
fraudulent conveyance, or otherwise give rise to any right of any creditor of
Seller to any of the Purchased Assets after the Closing.
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4.32 Insurance. The Seller Disclosure Schedule lists all insurance
---------
policies and fidelity bonds covering the Purchased Assets. There is no claim by
Seller pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies and bonds.
All premiums due and payable under all such policies and bonds have been paid
and Seller is otherwise in material compliance with the terms of such policies
and bonds (or other policies and bonds providing substantially similar insurance
coverage). There is no threatened termination of, or material premium increase
with respect to, any of such policies.
4.33 Capitalization.
--------------
(a) The authorized capital stock of Seller will, upon the Closing
Date, consist of 20,000,000 shares of common stock and 8,008,530 shares of
preferred stock, 558,560 of which have been designated Series A Preferred Stock,
all of which are issued and outstanding immediately prior to Closing, 949,970 of
which have been designated Series B Preferred Stock, all of which are issued and
outstanding immediately prior to Closing, and 6,500,000 of which have been
designated Series C Preferred Stock, 6,243,247 of which are issued and
----------
outstanding immediately prior to Closing. As of the Closing Date, the total
number of outstanding shares of common stock is 2,962,960. The designations,
---------
rights, preferences and limitations in respect of each class of capital stock of
Seller are set forth in its Articles of Incorporation. All outstanding shares
of capital stock of Seller are duly authorized and validly issued, fully-paid
and nonassessable and were issued in compliance with applicable securities laws.
(b) Except as referenced above and for (i) conversion privileges of
the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock (ii) outstanding options to purchase 498,500 shares of common stock under
-------
Seller's 1998 Equity Incentive Plan, (iii) 2,486,540 shares of Common Stock
---------
remaining available for future issuance to employees, directors and consultants
under Seller's 1998 Equity Incentive Plan, (v) outstanding warrants to purchase
425,676 shares of Series C Preferred Stock, and (vi) the rights set forth in the
- ------- --------------------
Amended and Restated Investors' Rights Agreement dated June 19, 1998 among
-------------
Seller and certain holders of Seller's capital stock, there are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements, orally or in writing, for the purchase or acquisition from Seller of
any shares of its capital stock.
5. Representations and Warranties of Buyer
---------------------------------------
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Buyer Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified.
Buyer represents and warrants to Seller as follows:
5.1 Organization. Buyer is a corporation duly formed and validly existing
------------
and in good standing under the laws of California, and has full corporate power
and authority and the legal right to execute and deliver this Agreement and all
of the other agreements and instruments to be executed and delivered by Buyer
pursuant hereto, and to consummate the transactions contemplated hereby and
thereby. Buyer is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties
21
<PAGE>
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for failures to be so qualified or
licensed and in good standing that would not, individually or in the aggregate,
have a Material Adverse Effect on Buyer's business.
5.2 Authority. The execution and delivery of this Agreement (and all
---------
other agreements and instruments contemplated hereunder) by Buyer, the
performance by Buyer of its obligations hereunder and thereunder, and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors of Buyer,
and no other act or proceeding on the part of Buyer or its shareholders is
necessary to approve the execution and delivery of this Agreement and such other
agreements and instruments, the performance by Buyer of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. The signatory officers of Buyer have the power and
authority to execute and deliver this Agreement and all of the other agreements
and instruments to be executed and delivered by Buyer pursuant hereto, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by Buyer pursuant to the provisions hereof
and thereof.
5.3 Execution and Binding Effect. This Agreement has been duly and
----------------------------
validly executed and delivered by Buyer and constitutes, and the other
agreements and instruments to be executed and delivered by Buyer pursuant
hereto, upon their execution and delivery by Buyer, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof by
Seller), legal, valid and binding agreements of Buyer, enforceable against Buyer
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium, or other laws affecting the
enforcement of creditors' rights generally or provisions limiting competition,
and by equitable principles.
5.4 Consent and Approvals. There is no requirement applicable to Buyer to
---------------------
make any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Buyer of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Buyer pursuant hereto, except for filings (a) which are referred to in the
Seller Disclosure Schedule or (b) the failure of making which would not have a
Material Adverse Effect on the transactions contemplated hereby.
5.5 No Violation. Neither the execution, delivery and performance of this
------------
Agreement and of all the other agreements and instruments to be executed and
delivered pursuant hereto, nor the consummation of the transactions contemplated
hereby or thereby, will, with or without the passage of time or the delivery of
notice or both, (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of Buyer,
(b) conflict with or result in a violation or breach of, or constitute a default
or require consent of any Person (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any notice, bond, mortgage, indenture, license, franchise, permit, agreement,
lease or other instrument or obligation to which Buyer is a party or by which
Buyer or any of its properties or assets may be bound, or (c) violate any
statute, ordinance or law or any rule, regulation, order, writ, injunction or
decree of any Governmental Entity applicable to Buyer or by which any of its
properties or assets may be bound.
22
<PAGE>
5.6 Capitalization.
--------------
(a) The authorized capital stock of Buyer will, upon the Closing Date,
consist of 48,072,114 shares of common stock and 26,927,886 shares of preferred
stock, 3,750,000 of which have been designated Series A Preferred Stock, all of
which are issued and outstanding immediately prior to Closing, 12,413,793 of
which have been designated Series B Preferred Stock, all of which are issued and
outstanding immediately prior to Closing, 6,956,400 of which have been
designated Series C Preferred Stock, all of which are issued and outstanding
immediately prior to Closing, and 3,807,693 of which have been designated Series
D Preferred Stock, 3,590,763 of which are issued and outstanding immediately
prior to Closing. As of the Closing Date, the total number of outstanding
shares of Common Stock is 9,087,440. The designations, rights, preferences and
limitations in respect of each class of capital stock of Buyer are set forth in
its Articles of Incorporation. All outstanding shares of capital stock of Buyer
are duly authorized and validly issued, fully-paid and nonassessable and were
issued in compliance with applicable securities laws. Buyer has reserved 50,000
shares of common stock for issuance hereunder.
(b) Except as referenced above and for (i) conversion privileges of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock (ii) outstanding options to purchase 3,976,075
shares of common stock under the Buyer's 1996 Stock Option Plan, (iii) 1,014,801
shares of common stock remaining available for future issuance to employees,
directors and consultants under Buyer's 1996 Stock Option Plan, and (iv) the
rights set forth in the Amended and Restated Investors' Rights Agreement dated
December 17, 1999 among Buyer and certain holders of Buyer's capital stock,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights) or agreements, orally or in writing, for the purchase or
acquisition from Buyer of any shares of its capital stock.
5.7 Valid Issuance of Securities. The Shares being issued to Seller
----------------------------
hereunder, when issued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein, will be duly and validly issued, fully
paid and nonassessable and free of restrictions on transfer other than
restrictions on transfer under this Agreement and pursuant to applicable state
and federal securities laws.
5.8 Title to Property and Assets. Buyer owns its property and assets
----------------------------
free and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair Buyer's ownership or use of such property or assets. With
respect to the property and assets it leases, Buyer is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances.
5.9 Tax Returns and Payments. Buyer has filed all federal, state and
------------------------
local tax returns and reports as required by law. These returns and reports are
true and correct in all material respects. Buyer has paid all taxes and other
assessments due. Buyer has no knowledge of any liability of any tax to be
imposed upon its properties or assets as of the date of this Agreement that is
not adequately provided for.
6. Covenants.
---------
23
<PAGE>
6.1 Access to Information.
---------------------
(a) Prior and subsequent to the Closing, Seller will permit Buyer to
make a full and complete investigation of the Purchased Assets and to receive
from Seller all information of Seller relating to the Purchased Assets or
reasonably related to Seller's conduct of the Business. Without limiting this
right, Seller will give to Buyer and its accountants, legal counsel, and other
representatives full access, during normal business hours, at a mutually
agreeable location arranged in advance, to all of the books, records, files,
documents, properties, and contracts of Seller relating to the Purchased Assets
or reasonably related to Seller's conduct of the Business and allow Buyer and
any such representatives to make copies thereof, all of which shall be made
available in an organized fashion and so as to facilitate an orderly review.
This Section 6.1 shall not affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the transactions contemplated by this Agreement. Seller shall
maintain and make available the information and records specified in this
Section 6.1(a) in the ordinary course of Seller's business and document
retention policies, as if the transactions contemplated by this Agreement had
not occurred.
(b) At all times following the Closing, each party shall provide the
other party (at such other party's expense) with such reasonable assistance,
including the provision of available relevant records or other information and
reasonable access to and cooperation of any employees, as may be reasonably
requested by either of them in connection with the preparation of any financial
statement or tax return, any audit or examination by any taxing authority, or
any judicial or administrative proceeding relating to liability for Taxes.
6.2 Third Party Consents. Seller and Buyer shall use commercially
--------------------
reasonable efforts to obtain, within the applicable time periods required, all
Required Consents, waivers, permits, consents and approvals and to effect all
registrations, filings and notices with or to third parties or Governmental
Entities which are necessary to consummate the transactions contemplated by this
Agreement so as to preserve all rights of, and benefits to, the Buyer in the
Purchased Assets.
6.3 Certain Notifications. At all times prior to the Closing, Seller and
---------------------
Buyer shall promptly notify the other party in writing of the occurrence of any
event which will result, or has a reasonable prospect of resulting, in the
failure to satisfy any of the conditions specified in Section 8 or Section 9 of
this Agreement.
6.4 Best Efforts. The Seller shall use its best efforts (i) to cause to
------------
be fulfilled and satisfied all of the conditions to the Closing set forth in
Section 8 below, (ii) to cause to be performed all of the matters required of it
at the Closing and (iii) to cause the Contracts to be assigned to Buyer.
6.5 Seller's Conduct of the Business Prior to Closing. During the period
-------------------------------------------------
from the date of this Agreement to the Closing Date, Seller will conduct the
Business in its ordinary and usual course, consistent with past practice, and
will use all reasonable efforts to preserve intact all rights, privileges,
franchises and other authority of the Business, to retain the employees, and to
maintain favorable relationships with licensors, licensees, suppliers,
contractors, distributors, customers, and others having relationships with the
Business. Seller shall promptly notify Buyer
24
<PAGE>
of any event or occurrence or emergency not in the ordinary course of business,
and any material event involving the Business or the Purchased Assets. Without
limiting the generality of the foregoing, and except as approved in writing by
Buyer in advance, prior to the Closing, Seller:
(a) except for funds borrowed by Seller from certain of its
shareholders after the date first set forth above, will not create, incur or
assume (i) any borrowings under capital leases, or (ii) any obligation which
would in any material way affect the Business, the Purchased Assets or Buyer's
ability to conduct the Business in substantially the same manner and condition
as conducted by Seller on the date of this Agreement;
(b) will not change in any manner the compensation of, or agree to
provide additional benefits to, or enter into any employment agreement with, any
employee;
(c) will maintain insurance coverage in amounts adequate to cover the
reasonably anticipated risks of the business conducted with the Purchased
Assets;
(d) will not acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
Business.
(e) will not sell, dispose of or encumber any of the Purchased Assets
or license any Purchased Assets to any Person except for the sale of Inventory
in the normal course of business consistent with past practice;
(f) will not engage in any special promotion which promotes the sale
of Inventory with highly discounted terms;
(g) will not enter into any agreements or commitments relating to the
Business, except on commercially reasonable terms in the ordinary course of
business of the Business;
(h) will comply in all material respects with all laws and
regulations applicable to the Business;
(i) will not enter into any agreement with any third party for the
distribution of any of the Purchased Assets;
(j) will use reasonable efforts to assist Buyer in employing after the
Closing Date those employees to whom offers of employment are made by Buyer, and
will not (and will cause its Affiliates not to) solicit such employees to remain
in the employ of Seller or any of its Affiliates after the Closing Date;
(k) will not change or announce any change to the products or
services sold by the Business except with Buyer's written consent or at Buyer's
request;
(l) will not expand the use of the Purchased Assets within the
organization of Seller;
25
<PAGE>
(m) will not violate, amend or otherwise change in any way the terms
of any of the Contracts;
(n) will not commence a lawsuit related to or involving the Purchased
Assets other than (a) for the routine collection of bills; (b) for injunctive
relief on the grounds that Seller has suffered immediate and irreparable harm
not compensable in money damages, provided that Seller has obtained the prior
written consent of Buyer, such consent not to be unreasonably withheld; or (c)
for a breach of this Agreement;
(p) will not assign, sell or otherwise convey to any third party,
without obtaining Buyer's prior written consent, any of its accounts receivable
prior to the Closing Date.
6.6 No Other Bids. Until the earlier to occur of (a) the Closing or (b)
-------------
the termination of this Agreement pursuant to its terms, Seller shall not, and
Seller shall not authorize any of its officers, directors, employees or other
representatives to, directly or indirectly, (i) initiate, solicit or encourage
(including by way of furnishing information regarding the Business or the
Purchased Assets) any inquiries, or make any statements to third parties which
may reasonably be expected to lead to any proposal concerning the sale of
Seller, the Business or the Purchased Assets (whether by way of merger, purchase
of capital shares, purchase of assets or otherwise) (a "Transaction Proposal"),
--------------------
(ii) negotiate, engage in any substantive discussions, or enter into any
agreement, with any Person concerning a Transaction Proposal or (iii) execute
and deliver any written letter of intent or similar document with any third
party relating to a Transaction Proposal. Seller will (x) notify Buyer
immediately if any inquiry or proposal is made or any information or access is
requested (other than by Buyer) in connection with a potential Transaction
Proposal and (y) immediately communicate to Buyer the terms and conditions of
any such Transaction Proposal or potential Transaction Proposal or inquiry and
the identity of the offeror or potential offeror.
6.7 Tax Returns. Seller shall, to the extent that failure to do so could
-----------
adversely affect the Business or the Purchased Assets following Closing, (a)
continue to file in a timely manner all returns and reports relating to Taxes,
and such returns and reports shall be true, correct and complete and shall be
subject to the review and consent of Buyer which consent shall not be
unreasonably withheld, and (b) be responsible for and pay when due any and all
Taxes.
6.8 Post-Closing Access to Information. If, after the Closing Date, in
----------------------------------
order properly to operate the Business or prepare documents or reports required
to be filed with governmental authorities or Buyer's financial statements, it is
necessary that Buyer obtain additional information within Seller's possession
relating to the Purchased Assets or the Business, Seller will furnish or cause
its representatives to furnish such information to Buyer. Such information
shall include, without limitation, all agreements between Seller and any Person
relating to the Business. Seller shall maintain and make available the
information and records specified in this Section 6.8 for a period of seven (7)
years after the Closing Date.
6.9 Post-Closing Cooperation. Seller agrees that, if reasonably requested
------------------------
by Buyer, it will cooperate with Buyer, at Buyer's expense, in enforcing the
terms of any agreements between Seller and any third party involving the
Business, including without limitation terms relating to confidentiality and the
protection of intellectual property rights. In the event that
26
<PAGE>
Buyer is unable to enforce its intellectual property rights against a third
party as a result of a rule or law barring enforcement of such rights by a
transferee of such rights, Seller agrees to reasonably cooperate with Buyer by
assigning to Buyer such rights as may be required by Buyer to enforce its
intellectual property rights in its own name. If such assignment still does not
permit Buyer to enforce its intellectual property rights against the third
party, Seller agrees to initiate proceedings against such third party in
Seller's name, provided that Buyer shall be entitled to participate in such
proceedings and provided further that Buyer shall be responsible for the
expenses of such proceedings.
6.10 No Post-Closing Retention of Copies. Immediately after the Closing,
-----------------------------------
Seller shall deliver to Buyer or destroy copies of Purchased Assets in Seller's
possession that are in addition to copies delivered to Buyer as part of the
Closing, whether such copies are in paper form, on computer media or stored in
another form; provided, however, that Seller may retain and use copies of
------------------
financial books and records relating to the Business as well as other documents
required by law to be kept by Seller for the sole purpose of preparing its
statutory accounts. The Seller shall not be permitted to use the financial
books and records of the Business for any other reason.
6.11 Public Announcements. The parties hereby agree that upon execution
--------------------
of this Agreement, Buyer may issue a press release in the form reasonably
acceptable to the Seller and Buyer.. On and prior to the Closing Date, Buyer and
Seller shall advise and confer with each other prior to the issuance of any
reports, statements or releases concerning this Agreement (including the
exhibits and schedules hereto) and the transactions contemplated herein.
Neither Buyer nor Seller will make any public disclosure prior to the Closing or
with respect to the Closing unless both parties agree on the text and timing of
such public disclosure; provided, however, that nothing contained herein shall
-----------------
prevent either party at any time from furnishing any information to any
Governmental Entity. Immediately after this Agreement is signed, both parties
will make public announcements to their respective share exchanges; the text of
such public announcements will be reviewed by the parties prior to release.
6.12 Post-Closing Actions. Subsequent to the Closing Date, Seller shall,
--------------------
from time to time, execute and deliver, upon the request of Buyer, all such
other and further materials and documents and instruments of conveyance,
transfer or assignment as may reasonably be requested by Buyer to effect, record
or verify the transfer to, and vesting in Buyer, of Seller's right, title and
interest in and to the Purchased Assets, free and clear of all Liens, in
accordance with the terms of this Agreement.
6.13 Future Agreements. In the event Seller enters into any material
-----------------
agreement between the date of this Agreement and the Closing that relates
primarily to the Business, at the request of Buyer, Seller agrees to include any
such agreement within the Contracts.
6.14 Non-Competition Agreement.
-------------------------
(a) In consideration of the Buyer entering into this Agreement, Seller
undertakes that for three (3) years after the Closing Date and within the
counties, cities and states of the United States of America and each political
subdivision and/or nation throughout the
27
<PAGE>
world (the "Territory") neither it nor any Affiliate (on its own behalf and not
---------
on behalf of its holders of preferred stock in their individual capacities) of
it will:
(i) participate, assist or otherwise be directly or indirectly
involved or concerned, financially or otherwise, as a member, shareholder,
unitholder, director, consultant, adviser, contractor, principal, agent,
manager, beneficiary, partner, associate, trustee, financier or otherwise in any
business or activity which is the same as or substantially similar to the
Business or any material part of it (a "Restricted Business");
--------------------
(ii) solicit, canvass, induce or encourage directly or indirectly
any employee of Buyer to leave the employment of Buyer;
(iii) solicit, canvass, approach or accept any offer from any
person or entity who was at any time during the 24 months immediately preceding
the Closing Date a customer or supplier of the Business with a view to
establishing a relationship with or obtaining the patronage of that person or
entity in a Restricted Business;
(iv) interfere or seek to interfere, directly or indirectly, with
any relationship between Buyer and any client, customer, employee or supplier of
the Business.
(b) If any of the separate and independent covenants and restraints
referred to in clause (a) of this Section 6.14 are or become invalid or
unenforceable for any reason then that invalidity or unenforceability will not
affect the validity or enforceability of any other separate and independent
covenants and restraints.
(c) If any prohibition or restriction contained in clause (a) of this
Section 6.14 is judged to go beyond what is reasonable in the circumstances, but
would be judged reasonable if that activity was deleted or that period or area
was reduced, then the prohibitions or restrictions apply with that activity
deleted or period or area reduced by the minimum amount necessary.
(d) Seller acknowledges that:
(i) the prohibitions and restrictions contained in clause (a)
of this Section 6.14 are reasonable and necessary; and
(ii) Seller has received valuable consideration for agreeing to
the covenants in clause (a) of this Section 6.14.
(e) Seller and Buyer acknowledge and agree that it will be difficult
to compute the amount of damage or loss to Buyer if Seller violated any of their
agreements under this Section 6.14, that Buyer will be without an adequate legal
remedy if Seller violated the provisions of this Section 6.14, and that any such
violation may cause substantial irreparable injury and damage to Buyer not fully
compensable by monetary damages. Therefore, Seller and Buyer agree that in the
event of any violation by Seller of this Section 6.14, Buyer shall be entitled
(i) to recover from Seller monetary damages, (ii) to obtain specific
performance, injunctive or other equitable relief, of either a preliminary or
permanent type, and (iii) to seek any other available rights or remedies at law
or in equity which may be exercised concurrently with the rights granted
hereunder.
28
<PAGE>
6.15 Permits. Seller will assist Buyer in obtaining any licenses, permits
-------
or authorizations required for carrying on the Business but which are not
transferable.
6.16 Bulk Sales Law. Buyer shall assist Seller in making all such filings
--------------
as are required in connection with the Bulk Sales laws of California, including,
without limitation, the filings and public notice requirements of the California
Uniform Commercial Code.
6.17 Taxes. Seller shall be responsible for paying, shall promptly
-----
discharge when due, and shall reimburse, indemnify and hold harmless Buyer from,
any sales or use, transfer, real property gains, excise, stamp, income,
alternative minimum income or other similar Taxes arising from, imposed on or
attributable to the transactions contemplated by this Agreement.
6.18 Indebtedness. On or prior to the Closing Date, Seller shall have
------------
fully discharged, satisfied or cancelled all loans, other indebtedness for money
borrowed, accounts payable and equipment leases of Seller and any of its direct
or indirect subsidiaries, including without limitation (i) all debts to Maui
Investment Holding Co., (ii) all debts to the shareholders of Seller
("Shareholder Discharge"), and (iii) all such liabilities owed to Affiliates of
- -----------------------
Seller, and all security interests or other rights related thereto shall have
terminated, and Seller shall provide Buyer with evidence of all such discharges,
satisfactions or cancellations in the forms reasonably acceptable to Buyer (each
a "Discharge"). Maui Investment Holding Co. shall have delivered a release of
---------
all claims in connection with the Discharge of all indebtedness between Seller
and Maui Investment Holding Co. in the form reasonably satisfactory to Buyer and
Buyer's counsel, as the same shall have been delivered to Seller by Buyer at the
Closing ("Maui Discharge").
---------------
6.19 Expenses. Seller and Buyer shall each pay all costs and expenses
--------
incurred by it or on its behalf in connection with this Agreement and the
transactions contemplated hereby, including fees and expenses of its own
financial consultants, accountants and counsel. Seller shall be solely
responsible for all costs and expenses necessary or incident to the transfer of
any of the Purchased Assets to Buyer.
6.20 Settlement with Commerce One. Prior to the Closing, Seller shall
----------------------------
fully and finally settle all claims with and against Commerce One, including
without limitation the dismissal with prejudice of all actions between the
parties and execution and performance of the Mutual Release and Settlement
Agreement in substantially the form attached hereto as Exhibit F (the "Commerce
- --------
One Agreement").
- -------------
6.21 Termination of 1998 Equity Incentive Plan and Stock Options. Seller
-----------------------------------------------------------
hereby acknowledges and agrees that Buyer will not assume Seller's 1998 Equity
Incentive Plan or any other stock plan of Seller and any stock options granted
or issuable thereunder and that Seller shall take all such actions as are
necessary to terminate the 1998 Equity Incentive Plan and all stock options
granted or issuable thereunder as of the Closing Date and the 1998 Equity
Incentive Plan and all stock options granted or issuable thereunder shall be
terminated on or before the Closing Date (the "Termination of Plans and
------------------------
Options").
6.22 Termination of Director of Professional Services. If the employment
------------------------------------------------
or consulting relationship between Seller and Sivesh Pradhaan, Director of
Professional Services, is terminated on or prior to the Closing, Seller shall
make best efforts to execute a Release
29
<PAGE>
of Claims between Seller and Sivesh Pradhaan in connection with such termination
on or before the Closing Date (the "Termination of Director").
-----------------------
6.23 Termination of Agreements. Prior to the Closing, Seller shall use its
-------------------------
best efforts to fully and finally settle all claims in connection with Sections
2.2(b), (c), (d) and (e).
7. Employee Matters
----------------
7.1 Transferred Employees.
---------------------
(a) Offer of Employment. Subject to and in accordance with the
-------------------
provisions of this Section 7, Buyer may offer employment to any or all of the
employees who are employed by Seller in the Business as of the date of this
Agreement (the "Employees"). Seller agrees that it will cooperate with Buyer to
---------
identify those employees of Seller who are necessary for the conduct the
Business. Prior to the Closing, Buyer, shall have the right to contact any or
all of the Employees for the purposes of making offers of employment with Buyer
(or any Affiliate designated by Buyer) after the Closing Date and receiving
written acceptances of such employment (in each case contingent on consummation
of the transactions contemplated by this Agreement). Each Key Employee (as
defined in Section 8.14 hereof) or other Employee who is employed by Seller on
the Closing Date and who actually transfers to employment with Buyer (or any
Affiliate designated by Buyer) at or after the Closing Date as a result of an
offer of employment made by Buyer is hereafter referred to as a "Transferred
-----------
Employee." Transferred Employees shall not include any person on a disability
- --------
leave of more than twenty-six (26) weeks. Buyer shall not be obligated to hire
any employee unless an offer of employment is subsequently made to, and accepted
by, such employee; in addition, Buyer shall have no obligation to hire any
employees of Seller after the Closing Date. The employment of any Transferred
Employee shall be subject to Buyer's established policies generally applicable
to new employees, including the execution of Buyer's standard form of
confidentiality and invention assignment agreement.
(b) Transition. The employment by Seller of the Transferred Employees
----------
shall end at the close of business on the Closing Date and the employment of the
Transferred Employees by Buyer shall commence at 12:01 a.m. on the day after the
Closing Date. The terms of employment with Buyer (or Buyer's Affiliates) shall
be as mutually agreed to between each Transferred Employee and Buyer (or Buyer's
Affiliate, as the case may be), subject to the provisions of this Section 7.1.
Between the date of this Agreement and the Closing Date, Seller will provide
each Transferred Employee with the same level of compensation as that currently
provided by Seller. Buyer shall have no obligation with respect to payments of
salary, compensation, wages, health or similar benefits, commissions, bonuses
(deferred or otherwise), severance, stock or stock options or any other sums due
to any Transferred Employee that accrued before the Closing Date. Seller will
be fully responsible for all amounts payable to any employee, including (without
limitation) all termination payments, redundancy compensation, severance pay,
accrued vacation pay and other amounts payable in respect of the termination of
employment of any employee in connection with the sale of the Purchased Assets
to the Buyer. In addition, Seller will be fully responsible for all amounts
owing to Transferred Employees prior to Closing.
30
<PAGE>
(c) Retention of Employees Prior to Closing. Seller agrees to use
---------------------------------------
reasonable efforts to retain the Employees as employees of the Business until
the Closing Date, and to assist Buyer in securing the employment after the
Closing Date of those Employees to whom Buyer (or designated by Buyer) makes or
intends to make offers of employment under subsection (a) above. Seller shall
not transfer any Employee to employment with Seller outside of the Business
prior to the Closing or without the consent of Buyer. Seller shall notify Buyer
promptly if, notwithstanding the foregoing, any Employee terminates employment
with Seller after the date of this Agreement but prior to the Closing. Buyer
may request Seller to hire additional employees for the Business, in which case
Seller will use commercial reasonable efforts to identify and hire such
employees.
(d) Bonus. Buyer will pay to the Key Employees, including Daniel
-----
Chang, an aggregate of the lesser of $150,000 or 50% of revenue net of expenses
received by Buyer as of the one year anniversary of the Closing Date that are a
direct result of Seller's Hynet Directive product (the "One Year Bonus"), so
--------------
long as such Key Employee and Mr. Chang remain employed by Buyer one year after
the Closing Date. The One Year Bonus will be distributed among the Key
Employees as determined by Mr. Chang, subject to the reasonable consent of
Buyer.
7.2 Compensation and Benefits of Transferred Employees. Coverage for
--------------------------------------------------
Transferred Employees under Buyer's compensation and benefit plans and other
programs shall commence as of 12:01 a.m. on the day after the Closing Date.
Buyer shall be free to establish its own employee benefit plans; Buyer shall
have no obligation to offer benefit plans of the same type or with terms similar
to or better than the terms of Seller's current employee benefit plans. Buyer
may, at its option, give each Transferred Employee credit for such Transferred
Employee's years of most recent continuous service with Seller for purposes of
determining participation and benefit levels under all of Buyer's vacation
policies and benefit plans and programs.
7.3 Other Employees of the Business. With respect to each employee of the
-------------------------------
Business as of the Closing Date who is not a Transferred Employee (each a "Non-
---
Transferred Employee"), Seller agrees to either terminate such Non-Transferred
- --------------------
Employee's employment with Seller, effective prior to the Closing or offer such
Non-Transferred Employee continued employment with Seller other than in the
Business. Seller further acknowledges that the Non-Transferred Employees shall
not be employees of Buyer after the Closing.
7.4 No Right to Continued Employment or Benefits. No provision in this
--------------------------------------------
Agreement shall create any third party beneficiary or other right in any Person
(including any beneficiary or dependent thereof) for any reason, including,
without limitation, in respect of continued, resumed or new employment with
Seller or Buyer (or any Affiliate of Seller or Buyer) or in respect of any
benefits that may be provided, directly or indirectly, under any plan or
arrangement maintained by Seller, Buyer or any Affiliate of Seller or Buyer.
Except as otherwise expressly provided in this Agreement, Buyer is under no
obligation to hire any employee of Seller, provide any employee with any
particular benefits, or make any payments or provide any benefits to those
employees of Seller whom Buyer chooses not to employ.
31
<PAGE>
7.5 No Solicitation or Hire by Seller. For a period of one year after
---------------------------------
the Closing, Seller will not solicit any Transferred Employee for employment.
For purposes of this Section 7.5, the term "solicit" shall not include the
following activities by Seller: (i) advertising for employment in any bulletin
board (including electronic bulletin boards), newspaper, trade journal or other
publication available for general distribution to the public without specific
reference to any particular employees; (ii) participation in any hiring fair or
similar event open to the public not targeted at Buyer's employees; and (iii)
use of recruiting or employee search firms that have been instructed by Seller
not to target any Transferred Employee.
8. Conditions to Buyer's Obligations
---------------------------------
The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived by Buyer in writing, except as
otherwise provided by law:
8.1 Representations and Warranties True; Performance; Certificate.
-------------------------------------------------------------
(a) The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made or given again at and as of the Closing Date;
(b) Seller shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date;
(c) The conditions set forth in this Section 8 have been fulfilled or
satisfied, unless otherwise waived in writing by Buyer; and
(d) Buyer shall have received a certificate, dated as of the Closing
Date, signed and verified by an officer of Seller on behalf of Seller certifying
to the matters set forth in Sections 8.1(a) and 8.1(b) above.
8.2 Deliverables and Consents. At the Closing, Seller shall deliver (i)
--------
all Governmental Authorizations, Discharges, Required Consents and consents
required to transfer the Contracts to Buyer on the terms and conditions provided
to Seller, without change as a result of the transfer to Buyer, (ii) the Maui
Discharge, Commerce One Agreement, Termination of Plans and Options and
Termination of Director, and (iii) the Settlement Agreement between Seller and
the shareholders of Seller owned, beneficially owned, controlled, under common
control, managed or affiliated with Katherine Jen.
8.3 No Proceedings or Litigation.
----------------------------
(a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement.
32
<PAGE>
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent transactions contemplated by this Agreement,
including, without limitation, the sale of the Purchased Assets or asserting
that the sale of the Purchased Assets would be illegal or create liability for
damages or which may have a Material Adverse Effect on the Business or the
Purchased Assets.
8.4 Documents. This Agreement, the exhibits and schedules attached
---------
hereto, and any other instruments of conveyance and transfer and all other
documents to be delivered by Seller at the Closing and all actions of Seller
required by this Agreement and the exhibit agreements, or incidental thereto,
and all related matters, shall be in form and substance reasonably satisfactory
to Buyer and Buyer's counsel and shall be in full force and effect.
8.5 Governmental Filings. The parties shall have made any required filing
--------------------
with Governmental Entities in connection with this Agreement and the exhibit
agreements, and any approvals related thereto shall have been obtained or any
applicable waiting periods shall have expired. If a proceeding or review
process by a Governmental Entity is pending in which a decision is expected,
Buyer shall not be required to consummate the transactions contemplated by this
Agreement until such decision is reached or rendered, notwithstanding Buyer's
legal ability to consummate the transactions contemplated by this Agreement
prior to such decision being reached or rendered.
8.6 No Material Adverse Change. There shall have been no material adverse
--------------------------
change in the financial condition or results of operations of the Business on
the Closing Date as compared with the date of this Agreement.
8.7 Termination of Benefit Plans. Seller shall have provided Buyer with
----------------------------
evidence, reasonably satisfactory to Buyer as to the termination of all benefit
plans and payments owing by Seller relating to all Employees and the termination
of all Non-Transferred Employees' benefit plans.
8.8 Legal Opinions. Buyer shall have received a legal opinion from legal
--------------
counsel to Seller, dated the Closing Date, in a form satisfactory to Buyer.
8.9 Shareholder Approval. This Agreement and the transactions it
--------------------
contemplates shall have been approved and adopted by such vote of the holders of
the outstanding shares of Seller's capital stock entitled to vote thereon as is
required to approve such transactions, including the unanimous consent of the
holders of Seller's common stock, and shall have otherwise been approved as
required by law and the charter documents of Seller.
8.10 Bulk Sales. The notice required by the California Uniform Commercial
----------
Code shall have been prepared and published in accordance with the terms
thereof, and any waiting periods or hearings shall have terminated with respect
thereto. No other waiting periods or notices shall be required in order for
Seller to be in compliance with such Section.
8.11 Other Conditions. Buyer and Christine Chang shall have entered to a
----------------
consulting agreement in the form attached hereto as Exhibit G, and Buyer and
Nai-Yu Pai shall have entered to a consulting agreement in the form attached
hereto as Exhibit H.
33
<PAGE>
8.12 Non-Competition Agreements. Each of the persons listed on Schedule
--------------------------
8.12 shall have entered into a non-competition agreement, in the form attached
hereto as Exhibit I, which provides that such persons will not engage in any
activity which competes in any aspect of the business conducted by Buyer or
Seller for two (2) years following the Closing.
8.13 Key Employees. On or before the Closing, each of the Employees
-------------
listed on Schedule 8.13 (the "Key Employees") shall have accepted employment
-------------
with Buyer pursuant to Buyer's standard form of offer letter and Proprietary
Rights and Confidentiality Agreement.
8.14 Investor Representation Letter. In connection with the issuance of
------------------------------
the Shares, Seller shall have entered into an Investor Representation Letter in
the form reasonably acceptable to Buyer and Buyer's counsel.
9. Conditions to Seller's Obligations
----------------------------------
The obligations of Seller under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived in writing by Seller, except as
otherwise provided by law:
9.1 Representations and Warranties True; Performance.
------------------------------------------------
(a) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made or given again at and as of the Closing Date;
(b) Buyer shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date;
(c) Seller shall have received a certificate, dated as of the Closing
Date, signed and verified by an officer of Buyer on behalf of Buyer certifying
to the matters set forth in Sections 9.1(a) and 9.1(b) above.
9.2 No Proceeding or Litigation.
---------------------------
(a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement.
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent the sale of the Purchased Assets or asserting that
the sale of the Assets would be illegal or create liability for damages.
9.3 Documents. This Agreement, any other instruments of conveyance and
---------
transfer and all other documents to be delivered by Buyer to Seller at the
Closing and all actions of Buyer
34
<PAGE>
required by this Agreement or incidental thereto, and all related matters, shall
be in form and substance reasonably satisfactory to Seller and Seller's counsel.
9.4 Governmental Filings. The parties shall have made any filing required
--------------------
with Governmental Entities, and any approvals shall have been obtained or any
applicable waiting periods shall have expired. If a proceeding or review
process by a Governmental Entity is pending in which a decision is expected,
Seller shall not be required to consummate the transactions contemplated by
this Agreement until such decision is reached or rendered, notwithstanding
Seller's legal ability to consummate the transactions contemplated by this
Agreement prior to such decision being reached or rendered.
35
<PAGE>
10. Indemnification
---------------
10.1 Survival of Representations and Warranties. All covenants to be
------------------------------------------
performed prior to the Closing Date, and all representations and warranties in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the consummation of the transactions contemplated hereby and continue
until three (3) years after Closing Date (the "Termination Date"); provided that
---------------- --------
if any claims for indemnification have been asserted with respect to any such
representations, warranties and covenants prior to the Termination Date, the
representations, warranties and covenants on which any such claims are based
shall continue in effect until final resolution of any claims. Except as
otherwise provided herein, all covenants to be performed after the Closing Date
shall continue indefinitely. Notwithstanding the foregoing, all
representations, warranties and covenants in this Agreement relating to Taxes
shall continue until thirty (30) days after expiration of all applicable
statutes of limitations.
10.2 Indemnification. Subject to the limitations set forth in this
---------------
Section 10, from and after the Closing Date, Seller shall protect, defend,
indemnify and hold harmless Buyer and Buyer's Affiliates, officers, directors,
employees, representatives and agents (each of the foregoing Persons is
hereinafter referred to individually as an "Indemnified Person" and collectively
------------------
as "Indemnified Persons") from and against any and all losses, costs, damages,
-------------------
liabilities, fees (including without limitation attorneys' fees) and expenses
(collectively, the "Damages"), that any of the Indemnified Persons incurs or
-------
reasonably anticipates incurring by reason of or in connection with (i) any
claim, demand, action or cause of action alleging misrepresentation, breach of,
or default in connection with, any of the representations, warranties, covenants
or agreements of the Seller contained in this Agreement, including any exhibits
or schedules attached hereto, known to Acquiror prior to the Escrow Termination
Date, (ii) any liabilities or obligations not specifically assumed by Buyer,
(iii) any failure of Seller to perform any of its obligations under this
Agreement or any agreement contemplated by this Agreement, (iv) any
noncompliance with or claims relating to applicable bulk sales laws, (v) any
claims brought by employees or consultants of Seller who were terminated prior
to the Closing Date, and (vi) any reduction in the value of the current assets
since the date of this Agreement. Damages in each case shall be net of the
amount of any insurance proceeds and indemnity and contribution actually
recovered by Buyer.
10.3 Method of Asserting Claims. All claims for indemnification by the
--------------------------
Buyer or any other Indemnified Person pursuant to this Section 10 shall be made
in accordance with the provisions of this section.
(a) Whenever any claim shall arise for indemnification hereunder, the
Buyer party or parties entitled to indemnification (the "indemnified party")
-----------------
shall promptly notify Seller or parties obligated to provide indemnification
(the "indemnifying party") of the claim and, when known, the facts constituting
------------------
the basis for such claim; provided, however, that the failure to so notify the
-------- -------
indemnifying party shall not relieve the indemnifying party of its obligation
hereunder to the extent such failure does not materially prejudice the
indemnifying party. In the event of any claim for indemnification hereunder
resulting from, arising out of, or in connection with any claim or legal
proceedings by a third party, the notice to the indemnifying party shall
specify, if known, the amount or an estimate of the amount of the liability
arising therefrom.
36
<PAGE>
(b) In connection with any claim giving rise to indemnity hereunder
resulting from or arising out of any claim or legal proceeding by a person who
is not a party to this Agreement, the indemnifying party at its sole cost and
expense and with counsel reasonably satisfactory to the indemnified party may,
upon written notice to the indemnified party, assume the defense of any such
claim or legal proceeding if:
(i) the indemnifying party acknowledges to the indemnified party
in writing, within fifteen (15) calendar days after receipt of notice from the
indemnified party, its obligations to indemnify the indemnified party with
respect to all elements of such claim;
(ii) the indemnifying party provides the indemnified party with
evidence reasonably acceptable to the indemnified party that the indemnifying
party will have the financial resources to defend against such third-party claim
and fulfill its indemnification obligations hereunder;
(ii) the third-party claim involves only money damages and does
not seek an injunction or other equitable relief; and
(iii) settlement or an adverse judgment of the third-party claim
is not, in the good faith judgment of the indemnified party, likely to establish
a pattern or practice adverse to the continuing business interests of the
indemnified party.
The indemnified party shall be entitled to participate in (but not control)
the defense of any such action, with its counsel and at its own expense;
provided, however, that if there are one or more legal defenses available to the
- -------- -------
indemnified party that conflict with those available to the indemnifying party,
or if the indemnifying party fails to take reasonable steps necessary to defend
diligently the claim after receiving notice from the indemnified party that it
believes the indemnifying party has failed to do so, the indemnified party may
assume the defense of such claim; provided, further, that the indemnified party
-------- -------
may not settle such claim without the prior written consent of the indemnifying
party, which consent may not be unreasonably withheld, delayed or conditioned.
If the indemnified party assumes the defense of the claim, the indemnifying
party shall reimburse the indemnified party on a monthly basis for the actual
fees and expenses of counsel retained by the indemnified party and the
indemnifying party shall be entitled to participate in (but not control) the
defense of such claim, with its counsel and at its own expense. If the
indemnifying party thereafter seeks to question the manner in which the
indemnified party defended such third party claim or the amount or nature of any
such settlement, the indemnifying party shall have the burden to prove by a
preponderance of the evidence that the indemnified party did not defend or
settle such third party claim in a reasonably prudent manner. The parties agree
to render, without compensation, to each other such assistance as they may
reasonably require of each other in order to ensure the proper and adequate
defense of any action, suit or proceeding, whether or not subject to
indemnification hereunder.
37
<PAGE>
(c) Any amount of money owed by an indemnifying party to an
indemnified party hereunder shall be paid with interest, at an annual rate equal
to the Prime Rate then in effect (or, if less, the maximum rate permitted by
law), from the date that the loss or damage was sustained or cash disbursement
made by the indemnified party until such amount is paid by the indemnifying
party.
(d) All indemnification payments hereunder shall be effected by
payment of cash or delivery of a certified or official bank check in the amount
of the indemnification liability. Each indemnified party shall be obligated in
connection with any claim for indemnification under this Section 10 to use
commercially reasonable efforts to mitigate damages upon and after becoming
aware of any event which could reasonably be expected to give rise to such
damages. Subject to the rights of the existing insurers of an indemnified party,
an indemnifying party shall be subrogated to any right of action which the
indemnified party may have against any other Person with respect to any matter
given rise to a claim for indemnification from such indemnitor hereunder.
11. Termination.
-----------
11.1 Termination of Agreement. This Agreement may be terminated at any
------------------------
time prior to the Closing:
(a) By mutual written consent of Buyer and Seller;
(b) By either party, if the other party goes into liquidation, has an
application or order made for its winding up or dissolution, has a resolution
passed or steps taken to pass a resolution for its winding up or dissolution,
becomes unable to pay its debts as and when they fall due, or has a receiver,
receiver and manager, administrator, liquidator, provisional liquidator,
official manager or administrator appointed to it or any of its assets; or
(c) By Buyer or Seller if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; or
(d) By either party if the Closing does not occur by April 25, 2000.
11.2 Procedure and Effect of Termination. In the event of termination of
-----------------------------------
this Agreement by any or all of the parties pursuant to Section 11.1, written
notice shall be given to each other party specifying the provision of Section
11.1, pursuant to which such termination is made and shall become void and there
shall be no liability on the part of Buyer or Seller (or their respective
officers, directors, partners or Affiliates), except as a result of any breach
of this Agreement by such party or to the extent such a party is entitled to
indemnification under Section 10 of this Agreement.
12. Miscellaneous.
-------------
12.1 Amendments and Waivers. Any term of this Agreement may be amended or
----------------------
waived with the written consent of the parties or their respective successors
and assigns. Any
38
<PAGE>
amendment or waiver effected in accordance with this Section 12.1 shall be
binding upon the parties and their respective successors and assigns.
12.2 Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
12.3 Governing Law. This Agreement and all acts and transactions pursuant
-------------
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of
California.
12.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
12.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
12.6 Notices. Any notice required or permitted by this Agreement shall be
-------
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice:
If to Buyer: @Road, Inc.
47200 Bayside Parkway
Fremont, California 94538
Attention: J.D. Fay
Fax: (510) 353-6028
If to Seller: Hynet Technologies
1927 Landings Drive
Mountain View, CA 94043
-----
Attention: Daniel Chang
Fax: (650) 637-8399
--------
12.7 Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
39
<PAGE>
12.8 Entire Agreement. This Agreement and the documents referred to
----------------
herein are the product of both of the parties hereto, and constitute the entire
agreement between such parties pertaining to the subject matter hereof and
thereof, and merge all prior negotiations and drafts of the parties with regard
to the transactions contemplated herein and therein. Any and all other written
or oral agreements existing between the parties hereto regarding such
transactions are expressly canceled.
12.9 Advice of Legal Counsel. Each party acknowledges and represents
-----------------------
that, in executing this Agreement, it has had the opportunity to seek advice as
to its legal rights from legal counsel and that the person signing on its behalf
has read and understood all of the terms and provisions of this Agreement. This
Agreement shall not be construed against any party by reason of the drafting or
preparation thereof.
12.10 Arbitration.
-----------
(a) Any controversy, dispute or claim arising under this Agreement
shall be settled by arbitration before a panel of three arbitrators conducted in
Santa Clara County, California in accordance with the then existing Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon any
award rendered by the arbitrator may be entered by any federal or state court
having jurisdiction thereof. The parties expressly provide that the provisions
of Section 1283.05 of the California Code of Civil Procedure are incorporated
into, and made a part of, this Section 12.10. The decision of the arbitrator
shall be final and binding upon the parties. The arbitrator shall be authorized
to award any relief, whether legal or equitable, to the party so entitled to
such relief. In respect of any action, suit or other proceeding relating to the
enforcement of the award rendered by the arbitrator pursuant to this Section
12.10, each party hereby irrevocably submits to the non-exclusive jurisdiction
of any state or federal court located in the Santa Clara County, State of
California. EACH PARTY HEREBY WAIVES ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS, TO ASSERT THAT IT IS NOT SUBJECT TO THE
----------
JURISDICTION OF THE AFORESAID COURTS, OR TO OBJECT TO VENUE TO THE EXTENT THAT
ANY ACTION, SUIT OR OTHER PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
12.10.
[SIGNATURE PAGE FOLLOWS]
40
<PAGE>
This Agreement has been duly executed and delivered by the duly authorized
officers of Seller and Buyer as of the date first above written.
@ROAD, INC.
By: /s/ Krish Panu
----------------
Name: Krish Panu
-------------
Title: Chairman and CEO
------------------
HYNET TECHNOLOGIES
By: /s/ Daniel Chang
-----------------------
Name: Daniel Chang
---------------------
Title: President and CEO
-------------------
EXECUTING AS TO SECTION
2.3(c): MAUI INVESTMENT HOLDING CO.
By: /s/ Nai-Yu Pai
------------------------
Name: Nai-Yu Pai
----------------------
Title: Executive Director
--------------------
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
41
<PAGE>
SCHEDULE 8.12
EMPLOYEES EXECUTING NONCOMPETITION AGREEMENTS
---------------------------------------------
Daniel Chang
Christine Chang
[any additional employee shareholders as of the Closing Date]
42
<PAGE>
SCHEDULE 8.13
KEY EMPLOYEES
-------------
Daniel Chang
Harry Chen
Tom Gafford
Vibhu Vivek
Mohammed Salman
Prabhaharan Maniraju
Paraq Pradhan
Allan Pratt
Kerri Golden
Donna Tosh
Nayantara Mangalore
David Chan
Catherine Dudley
Paul Chan
43
<PAGE>
LIST OF EXHIBITS
44
<PAGE>
Exhibit 21.1
Subsidiaries
@Road Software Private Co. Ltd. (Chennai, India)
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of @Road, Inc. on Form
S-1 of our report dated March 23, 2000 appearing in the Prospectus, which is
part of the Registration Statement and of our report dated March 23, 2000
relating to the financial statement schedule appearing elsewhere in this
Registration Statement. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
San Jose, California
March 23, 2000
