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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED JUNE 30, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File Number 0-4096
COMSHARE, INCORPORATED
(Exact name of registrant as specified in its charter)
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MICHIGAN 38-1804887
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
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555 BRIARWOOD CIRCLE, ANN ARBOR, MICHIGAN 48108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (313) 994-4800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock $1.00
Par Value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the Common Stock held by non-affiliates of the
Registrant as of August 31, 1995 based on $27.125 per share, the last sale price
for the Common Stock on such date as reported on the NASDAQ National Market
System, was approximately $112,618,000.
As of August 31, 1995 the Registrant had 5,493,515 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
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DOCUMENT
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Portions of Proxy Statement for the Part of Form 10-K Report
1995 Annual Meeting of Shareholders into which it is incorporated
("The 1995 Proxy Statement") III
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PART 1
ITEM 1. BUSINESS
GENERAL
Comshare, Incorporated and its subsidiaries (collectively referred to as
"Comshare" or the "Company") develop, license and support decision support
software products and related services that enable business professionals to
more effectively use data in decision making. Comshare's decision support
software applications are designed to provide these customers with planning,
analysis and reporting capabilities to assist them in improving their
productivity, decision making, and competitiveness. Comshare's decision support
software applications allow customers to access a variety of incompatible data
sources and, through the application of data manipulation, analysis and modeling
features, generate more meaningful information for use by business
professionals.
Comshare's decision support software products are complemented by Comshare's
product maintenance, implementation and consulting services. Product
maintenance, for which a fee is charged, includes telephone helpline support,
product enhancements and updates, bug fixing, and other services.
Comshare's strategy is to offer its customers whole product solutions by
providing core technologies, application software for specific markets or needs,
innovative technology which differentiates Comshare's products, consulting
services, customer training and ongoing product maintenance.
The Company's product offerings focus on client/server decision support software
applications with value-added capabilities designed to improve customer
productivity and decision making. Comshare, focused on providing value-added
applications, incorporates third party software tools into its products to
reduce product development risk and accelerate time to market. The Company
differentiates its products from competitive offerings through innovative
proprietary technology, such as the recently released Detect and Alert software
technology for exception monitoring and reporting.
Market trends such as company downsizing, decentralized decision making,
increased volumes of available data and faster-paced decision making are driving
the demand for decision support applications.
PRODUCTS
Comshare's decision support applications transform business data from an
organization's underlying transaction systems or data warehouses into critical
business information used for planning and decision making. Comshare focuses on
three decision support markets: Executive Information Systems, Financial
Reporting Systems and Retail Decision Support Systems.
EXECUTIVE INFORMATION SYSTEMS (EIS)
Within the EIS market, Comshare offers decision support software applications
designed to provide information to a wide range of business users. Typical
applications include customer and product profitability, sales analysis,
business unit profitability analysis, and critical success factor and key
performance indicator reporting. These applications may be customized either by
Comshare and/or the customer to meet specific customer requirements.
Comshare's flagship EIS product is Commander OLAP (On-Line Analytical
Processing), which is a suite of client/server software designed to provide a
complete decision support solution to the customer. Commander OLAP includes
software which extracts data from multiple, disparate data sources, and
summarizes and filters the data. The summarized data is then stored in a
multidimensional database, for which the Company uses Arbor Software
Corporation's ("Arbor Software") Essbase. The information is available to the
end user either through Comshare's proprietary information visualizer,
Execu-View, a briefing book series of pre-formatted reports, or Microsoft
Corporation's Excel.
The Company believes that most business analytical problems are best solved
through the use of multidimensional analysis. In a multidimensional approach,
business professionals are able to view information in a manner which parallels
their perception of the underlying business. For example, businesses are
frequently organized along
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geographic lines and product lines, and information is required across multiple
time periods. Commander OLAP facilitates multidimensional analysis by
structuring the underlying business data across multiple dimensions and, through
Execu-View, permitting the end user to easily and quickly query the information,
drill down for more detail, change dimensions and extract data for further
analysis.
Commander OLAP is enhanced by the Company's Detect and Alert software which
automates personalized surveillance of internal databases and external news
sources such as Dow Jones and Reuters. Detect and Alert reduces the amount of
data which the user must gather and review by automatically monitoring trends,
exceptions, variances and other critical business factors. The software then
delivers alerts to the user's desktop, along with tools that enable the user to
explore and select data that triggered the alert.
Comshare also markets System W and IFPS decision support software for use on
mainframe computers. System W and IFPS applications are similar to those
available under Commander OLAP, with the multidimensional engine residing on the
mainframe, rather than on the server. Because market demand has shifted towards
the newer client/server technology, the mainframe related portion of Comshare's
EIS business has declined. Although, EIS desktop and client/server software
license fee revenue grew 69% to $26.8 million in fiscal 1995 from $15.8 million
in fiscal 1994, total revenue in Comshare's EIS market remained relatively flat
in fiscal 1995 at $70.5 million, compared with $69.8 million in fiscal 1994.
Total EIS revenue in fiscal 1994 declined 17% from $84.1 million in fiscal 1993.
FINANCIAL REPORTING APPLICATIONS
Comshare offers a suite of decision support financial reporting, consolidation
and budgeting applications designed for use by financial departments, primarily
in medium to large-sized corporations.
Commander FDC and Commander Budget are complementary products which share a
single database to facilitate the integration of historic and budgetary
financial data for management reporting. Commander FDC collects and consolidates
financial data from different general ledgers within a multidivision or
multilocation company and produces financial reports for management and
statutory consolidations. Commander Budget provides an easy to use front end
format for developing budgets and provides the same consolidation and reporting
capabilities as Commander FDC. Other products offered by Comshare include
Execu-View/Finance and a multidimensional desktop modeler which provides further
analytical, query and reporting capabilities.
Total revenue in Comshare's Financial Reporting Applications market grew 43% to
$19.1 million in fiscal 1995 from $13.4 million in fiscal 1994. Total revenue in
this market grew 9% in fiscal 1994 from $12.3 million in fiscal 1993.
RETAIL DECISION SUPPORT APPLICATIONS
Comshare's decision support applications for the retail industry are offered
under the brand name ARTHURTM and focus on merchandise planning and sales
reporting. ARTHUR Merchandise Planning facilitates the development of
merchandise plans at various levels of detail. Through the manipulation of
financial and merchandising variables, this software permits the retailer to
test the impact of various merchandising and pricing strategies on operating
results.
Comshare also offers ARTHUR Plan Monitor, which is server based, and ARTHUR
Performance Tracking, which is mainframe based. Both of these products report
weekly sales information across the retailer's product lines and geographic
regions in various levels of detail. They provide up-to-date merchandise
performance information, giving retailers the opportunity to change merchandise
plans in response to consumer preferences and market trends. Comshare's Detect
and Alert software is also offered in connection with ARTHUR Plan Monitor, so
variances and trends can automatically and more easily be identified.
Total revenue in Comshare's Retail Decision Support Applications market grew 48%
to $18.6 million in fiscal 1995 from $12.6 million in fiscal 1994. Total revenue
in this market grew 56% in fiscal 1994 from $8.1 million in fiscal 1993.
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SALES
Comshare products and services are sold by a direct sales operation, and by
agents and distributors. Both of these complementary distribution channels
utilize Comshare's extensive industry and/or application knowledge and
experience, and offer pre-sales and post-sales technical customer support.
COMSHARE DIRECT SALES. Comshare employs direct sales, marketing, consulting and
customer support organizations in the United States, Canada, United Kingdom,
France, Germany and Australia. The direct sales operations are organized
geographically emphasizing industry and/or applications expertise.
AGENTS AND DISTRIBUTORS. The Company has an extensive agency/distributor network
covering 34 countries not directly served by the Company. The Company has
selected established software application vendors or systems integration firms
to act as agents/distributors to market, implement and support Comshare products
in their respective geographic areas. Key agents and distributors are supported
by experienced Comshare management. Comshare derived 17% of total revenue in
fiscal 1995 from the Company's agency/distributor network.
CUSTOMERS
Comshare has a strong customer base with more than 3,000 corporate and public
sector customers in 40 countries. Comshare's diversified customer base includes
many of the Fortune 1000 and Financial Times 1000 industrial companies, as well
as large and mid-sized companies in the financial services, retail, health care,
communications, insurance, transportation industries, as well as many
governmental and public sector organizations.
SUPPORT AND SERVICES
Comshare and its agents and distributors offer implementation and consulting
services throughout the world. Implementation and consulting services are
offered in all three of the decision support software markets. These services
focus on Comshare products and include application design, consulting,
installation assistance, implementation and troubleshooting support. Comshare
also offers training at customer sites, at the Company's sales offices and
central training centers in Ann Arbor, Michigan and London, England.
Customers who pay an annual maintenance fee receive product enhancements and
updates, bug fixing, customer telephone helpline support and access to
Comshare's CompuServe forum. CompuServe provides a worldwide communications
channel for Comshare and its customers. This forum allows a customer to download
technical tips and obtain application samples from other users and Comshare
experts; send messages directly to Comshare's worldwide product experts and
forum administrators; receive information about new software releases; and
request new versions of products on-line.
RESEARCH AND PRODUCT DEVELOPMENT
The computer software industry is characterized by rapid technological
advancements, evolving industry standards and frequent new product and platform
introductions, requiring a continuing commitment to enhancing and adapting
existing product offerings and to introducing new products. In the past, the
Company has accomplished several technological and product transitions. Most
recently, the Company has adapted its products from the mainframe to the
client/server environment and has modified its products to run on the Windows
operating system.
The Company's product development strategy is to focus on decision support
software applications for the client/server platform. Comshare development teams
located in Ann Arbor, Michigan and Leicester, England meet with customers to
identify customer needs, product enhancements and new applications. Based upon
these efforts, the development teams enhance existing applications and develop
new applications, always with a focus on applications with value-added
capabilities.
Value-added capabilities are principally developed in two ways. The Company
develops applications software and adds innovative proprietary technology.
Execu-View, which is offered with all major products, is an example of such
technology and allows users to query, browse and analyze databases. Detect and
Alert, which was released in May 1995 with Commander OLAP, is another example of
the Company's innovative technology. Because the Company is focused on
value-added capabilities, it actively seeks out third party software tools which
can be included in the
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Company's product offerings. Use of third party software tools reduces
development risk and time to market. Examples of such third party software tools
are Arbor Software's Essbase, Btrieve database, Microsoft's Excel and Strategic
Mapping, Inc.'s Atlas View SDK.
The Company's major client/server products run on Windows 3.1 for the client and
on Windows NT, OS/2, and HPUX operating systems for the server.
Reductions in internal research and product development expenses in fiscal 1995
reflect the cost savings as a result of staff reductions made at the end of
fiscal 1994. These reductions are primarily attributable to the Company's
increased utilization of technology developed by third parties. During the last
three years, worldwide internal research and product development expenses were
(in thousands):
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1995 1994 1993
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Internal research and product development $16,180 $19,293 $22,989
As a % of revenue 14.9% 20.0% 21.9%
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PATENTS AND LICENSES
Comshare distributes its software products under software license agreements
which generally grant customers a non-exclusive, non-transferable license to use
the Company's products. The Company considers its software products to be
valuable and unique assets and actively attempts to protect them contractually
by generally restricting usage to internal operations, and prohibiting the
unauthorized reproduction or transfer to third parties. The Company also
believes that the nature of its customers and the provision of continuing
maintenance and support services reduce the risk of unauthorized reproduction.
In addition, the Company relies on copyright protection and trade secret laws to
protect proprietary information. The laws of some foreign countries do not
protect the Company's proprietary rights to the same extent as do the laws of
the United States. In addition, certain provisions of the Company's contracts
prohibiting unauthorized reproduction or transfer of software products may be
unenforceable under the laws of certain foreign countries. Despite the
precautions taken by the Company, it may be possible for unauthorized parties to
copy or reverse-engineer portions of the Company's software products. The
Company is not aware of any significant unauthorized use of its proprietary
software.
The Company seeks to protect some of its trademarks and copyrights with
registrations. The Company is the owner of various trademarks, including
ARTHURTM, CommanderTM Budget, CommanderTM EIS, CommanderTM Execu-View Server,
CommanderTM FDC and CommanderTM NewsAlert. The Company's software bears
appropriate copyright notices. The Company has been issued a utility patent on
one of its inventions which expires on February 14, 2012. The patent is not
considered material to the Company's operations.
LICENSED TECHNOLOGY
The Company licenses certain software programs from third parties and
incorporates them into the Company's products. Generally, these licenses are
non-exclusive worldwide licenses providing for varying royalty payments and
expiration dates. The Company believes that it will be able to renew
non-perpetual licenses or will be able to obtain alternative technologies, if
required.
Essbase software, which is licensed from Arbor Software, is an integral part of
the Company's Commander OLAP and ARTHUR Plan Monitor product offerings. The
Company's worldwide license for Essbase expires December 31, 2001. The license
may be terminated by either party upon the occurrence of a material uncured
breach of the agreement.
COMPETITION
The markets for Comshare's software products are highly competitive and
characterized by continual change and rapid technological advancements. In
general, the Company competes principally on the basis of: (1) product
differentiation, which includes value-added software solutions to meet end user
needs; (2) functionality, which includes the breadth and depth of features,
functions and ease of use; (3) service and support, which includes the range and
quality of technical support, training and consulting services; (4) vendor
reputation and (5) product
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pricing in relation to performance. The Company believes it competes favorably
with respect to these factors due to the quality of its product offerings, and
its strategy of offering customers whole product solutions to their decision
support needs.
The Company has different competitors in each of the decision support
applications software markets addressed by the Company's product offerings. The
Company believes it is the market leader in the EIS market, based upon
International Data Corporation ("IDC") reports which ranked industry competitors
by revenues. Pilot Software, which was purchased by The Dun & Bradstreet
Corporation, Information Resources, Inc., and Oracle Corporation, who purchased
Express software from Information Resources, Inc., are the Company's main
competitors. The Company also competes with in-house information systems
departments, whose managers may decide to develop their own customized EIS using
data access and query tools in conjunction with SQL databases, as well as
smaller applications software vendors.
Hyperion Software Corporation (formerly IMRS) is believed to be the current
market leader for financial consolidation applications and the Company's major
competitor in the financial reporting applications market. The Company also
experiences competition in this market from general ledger software vendors and
in-house solutions.
The Company believes it is the market leader in the soft goods retail
applications planning market. The Company's retail decision support applications
have established strong brand name recognition in the soft goods retail
industry. The Company competes in this market with smaller applications software
vendors and traditional EIS providers that do not have specific merchandise
planning applications. The Company believes that its strong brand name
recognition and superior functionality have been significant factors in the
competitive success of the Company's retail applications.
While the Company believes that its products have competed effectively to date,
competition in providing decision support software and services is likely to
intensify as current competitors expand their product lines and new companies
enter the market. To remain successful in the future, the Company must respond
promptly and effectively to the challenges of technological change, evolving
standards and its competitors' innovations by continually enhancing its own
product and support offerings. There can be no assurance that the Company will
continue to be able to compete as successfully in the future.
INTERNATIONAL OPERATIONS
Approximately 55% of the Company's 1995 revenue is derived from foreign
operations. (For information regarding revenues, operating profits and
identifiable assets attributable to Comshare's foreign operations, see Note 10
of the Notes to Consolidated Financial Statements.) As a result, Comshare's
operations are subject to certain risks inherent in conducting international
business operations. In particular, currency exchange rate fluctuations can
impact Comshare's reported revenue, expenses and shareholders' equity and can
result in gains and losses from foreign currency exchange transactions. As
currency rates are constantly changing, the impact of such changes on Comshare
can, at times, fluctuate greatly. For a discussion of Comshare's current hedging
practices, see Note 1 of the Notes to Consolidated Financial Statements. See
Management's Discussion and Analysis of Results of Operations and Financial
Condition for a discussion of the impact of currency fluctuations on revenue and
expenses.
It is possible that Comshare's foreign operations could also be impacted by
laws, regulations, rules or policies of local foreign governments, such as those
relating to currency controls, import restrictions or the protection of
proprietary rights. To date, Comshare does not believe that these factors have
had a material impact on its operations.
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EMPLOYEES
Comshare employed 686 full-time employees as of June 30, 1995; including 262 in
sales and marketing, 146 in research and product development, 145 in consulting
and implementation services and 133 in customer support and administration. None
of the Company's employees is represented by a labor union. The Company has
experienced no work stoppages and believes that its relations with employees are
good.
MISCELLANEOUS
Compliance with federal, state and local laws and ordinances that regulate the
discharge of materials into the environment has not had and is not expected to
have a material effect upon the capital expenditures, earnings and competitive
position of Comshare.
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ITEM 2. PROPERTIES
REAL ESTATE
Comshare leases sales offices and general office space in 25 major cities
throughout the United States, Canada, Europe and Australia. Administrative
activities are carried out at leased locations identified in the following
table:
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APPROXIMATE
AREA IN LEASE EXPIRATION
LOCATION SQUARE FEET PRINCIPAL ACTIVITY DATE
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Ann Arbor, Michigan 61,200 Headquarters, Administration, Sales, February 2005(1)
Marketing, Research and Product Development
and Customer Support
London, England 52,100 Administration, Sales, Marketing and December 2007(2)
Implementation Services
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(1) Option to cancel February 2000.
(2) Comshare's London subsidiary consolidated its London Administration, Sales
and Marketing facility with its former Computer Center at the latter's
location in fiscal 1993. The Company's Consolidated Financial Statements
include a provision for estimated costs until the lease obligations of the
vacated premises are assumed by a new tenant. See Note 9 of the Notes to
Consolidated Financial Statements for further information. The Company is
actively seeking a new tenant.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any litigation that, in management's opinion,
could reasonably be expected to have a material adverse effect on the Company's
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on the NASDAQ National Market under the
symbol "CSRE". The following table sets forth the range of high and low closing
sales prices for the Company's Common Stock during the periods indicated.
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MARKET
PRICES
FISCAL YEAR ------------
ENDING JUNE 30 HIGH LOW
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1993 First Quarter 11 1/4 6 3/4
Second Quarter 14 3/4 7 1/4
Third Quarter 14 1/4 7
Fourth Quarter 7 3/4 5 3/4
1994 First Quarter 11 5 3/4
Second Quarter 11 3/4 9 1/2
Third Quarter 12 3/4 9
Fourth Quarter 14 9 1/4
1995 First Quarter 12 3/4 9
Second Quarter 14 3/4 10 3/4
Third Quarter 17 1/4 13 1/4
Fourth Quarter 21 1/2 15
1996 First Quarter 32 3/8 20 1/4
(through August 31, 1995)
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At August 31, 1995, there were approximately 1,217 registered holders of the
Company's Common Stock.
DIVIDEND POLICY
The Company has not paid dividends on its Common Stock since incorporation. It
is the Company's present policy to retain earnings for use in the Company's
business. Accordingly, the Company does not anticipate that cash dividends will
be paid in the foreseeable future. See Note 3 of the Notes to Consolidated
Financial Statements regarding restrictions on the payment of dividends.
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected financial data for the five fiscal years ended June 30, 1995 are
derived from the audited Consolidated Financial Statements of the Company. This
information should be read in conjunction with "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and the Consolidated
Financial Statements and related Notes included elsewhere in this annual report
on Form 10-K.
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FISCAL YEAR ENDED JUNE 30,
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1995 1994 1993 1992 1991
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(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
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STATEMENT OF OPERATIONS DATA:
Revenue $108,358 $96,626 $105,194 $119,174 $124,166
Income from operations before unusual and
restructuring charges 8,850 3,991 218 2,180 9,284
Income (loss) from operations 2,485 1,648 (1,271) (13,122) 9,284
Net income (loss) 5,328 222 (1,763) (11,133) 6,322
Per share .95 .04 (.33) (2.10) 1.16
Average shares (thousands) 5,599 5,489 5,319 5,310 5,464
Internal research and product development 16,180 19,293 22,989 24,318 20,934
As a % of revenue 14.9% 20.0% 21.9% 20.4% 16.9%
BALANCE SHEET DATA AT END OF PERIOD:
Total assets 79,310 88,944 92,582 107,963 106,574
Long-term debt 5,436 15,354 16,058 17,146 4,067
Total shareholders' equity 32,548 26,506 26,161 29,953 40,180
Number of employees at year-end 686 729 862 999 1,125
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NOTES: (1) The income (loss) from operations for the years ended June 30, 1995,
1994, 1993, and 1992 includes restructuring and unusual charges of
$6,365, $2,343, $1,489 and $15,302, respectively. See Note 2 of the
Notes to Consolidated Financial Statements for information regarding
restructuring and unusual charges.
(2) The fourth quarter ended June 30, 1995 included a $4,100 tax benefit
related to the recognition of prior years net operating losses and
tax credits, as well as tax reserves released.
(3) During the first quarter ended September 30, 1993, the Company
entered into an agreement to sell undeveloped land that it owned in
an Ann Arbor technology park to The University of Michigan. The sale
was concluded on October 25, 1993 with the property being sold for
$3,376 in cash.
(4) Comshare acquired the assets of Execucom Systems Corporation,
effective March 1, 1991.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
OVERVIEW
The Company's revenue consists of software license revenue, maintenance fees and
implementation and consulting services fees from products sold in three decision
support application market areas: Executive Information Systems (EIS), Financial
Reporting and Retail Decision Support. Comshare licenses its products worldwide.
In certain territories outside North America, products are licensed through
distributors, where revenue is reported net of distributor fees.
RESULTS OF OPERATIONS
The following table summarizes the percentage relationships of income and
expense items included in the Company's Consolidated Statement of Operations.
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PERCENT INCREASE
AS A PERCENT INCOME AND (DECREASE)
OF REVENUE EXPENSE ITEMS FROM PRIOR YEAR
- --------------------------------- ------------------------------- ---------------------
1995 1994 1993 1995 1994
- ----- ----- ----- ------ ------
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Revenue:
45.5% 39.2% 38.4% Software licenses 30.2% (6.3)%
33.8 43.1 41.0 Software maintenance (12.0) (3.3)
Implementation, consulting
20.7 17.7 20.6 and other services 30.9 (21.2)
- ----- ----- ----- ------ ------
100.0 100.0 100.0 Total revenue 12.1 (8.1)
Costs and expenses:
41.8 48.1 51.4 Selling and marketing (2.5) (14.1)
Cost of revenue and
22.9 18.3 19.5 support 40.3 (13.9)
Internal research and
14.9 20.0 21.9 product development (16.1) (16.1)
Internally capitalized
(10.8) (13.7) (14.3) software (11.6) (12.3)
12.2 13.0 10.2 Software amortization 5.9 16.3
General and
10.8 10.2 11.1 administrative 17.9 (15.2)
5.9 -- -- Unusual charge * --
-- 2.4 1.4 Restructuring related costs (100.0) 57.4
- ----- ----- ----- ------ ------
Income (loss) from
2.3 1.7 (1.2) operations 50.8 229.7
(0.2) (0.5) 0.2 Other income, net (60.1) (408.0)
- ----- ----- ----- ------ ------
Income (loss)
2.1 1.2 (1.0) before taxes 101.1 202.7
Provision (benefit) for
(2.8) 1.0 0.6 income taxes (434.2) (38.4)
- ----- ----- ----- ------ ------
4.9% .2% (1.6)% Net income (loss) 2300.0% 112.6%
===== ===== ===== ====== ======
</TABLE>
*Percent not meaningful.
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1995 COMPARED WITH 1994
Revenue for the fiscal year ended June 30, 1995 increased 12% to $108.4 million
from $96.6 million in fiscal 1994. The primary cause of this revenue growth was
the increase in desktop and client/server license fees, reflecting the release
of the Company's new products during the past 18 months.
Total software license fee revenue in fiscal 1995 grew 30% to $49.3 million from
$37.9 million in fiscal 1994. License fees from desktop and client/server
products in fiscal 1995 grew 61% to $45.5 million from $28.3 million in fiscal
1994 and represented 92% of total software license fee revenue in fiscal 1995,
compared with 75% in fiscal 1994. License fees from the Company's mainframe
products declined 60% in fiscal 1995 to $3.8 million from $9.4 million in fiscal
1994. Mainframe license fees are expected to continue to decline as the Company
continues to emphasize its newer client/server products which were introduced in
response to the market's shift from mainframe to client/server systems. Most of
the mainframe license fee decline was in the older Executive Information Systems
(EIS) products.
Software license fee growth was strong in all three decision support market
areas. In the EIS market, license fees grew 26% to $29.8 million in fiscal 1995
from $23.7 million in fiscal 1994. License fees for the Company's desktop and
client/server EIS products grew 69% to $26.8 million in fiscal 1995, compared
with $15.8 million in the prior year, principally due to the March 1994 release
of Commander OLAP. This increase in EIS desktop and client/server license fees
was partially offset by declines in EIS mainframe license fees.
License fees from financial reporting applications grew 40% to $10.2 million in
fiscal 1995 from $7.3 million in fiscal 1994, principally due to the release of
Windows versions of Commander FDC and Commander Budget.
In the retail decision support applications market area, license fees increased
41% to $9.1 million in fiscal 1995 from $6.5 million in fiscal 1994, principally
as a result of new releases of ARTHUR Merchandise Planning and ARTHUR Plan
Monitor.
Maintenance revenue in fiscal 1995 declined 12% to $36.6 million from $41.6
million in fiscal 1994. The decrease is primarily due to the decline in
maintenance revenue from mainframe products. Mainframe maintenance revenue in
fiscal 1995 declined 25% to $16.9 million from $22.6 million in fiscal 1994. The
decrease was principally due to the impact of cancellations, price discounts on
multi-year agreements and conversion of certain agents to distributors. Desktop
and client/server maintenance revenue in fiscal 1995 grew 6% to $19.6 million
from $18.5 million in fiscal 1994. The increase is due to the growth in license
fees, partially offset by the conversion of certain agents to distributors, as
described below. The comparability of maintenance revenue was impacted by the
conversion of certain agents to distributors in fiscal 1994. When an agent
converts to a distributor, sales are made directly to the distributor rather
than the end customer, and the distributor assumes the obligation of providing
maintenance. In addition, the revenue from distributors is recognized net of
fees (which fees are approximately the same as agency fees which are recorded as
selling expenses), and revenue from agents is recognized before their fees.
Therefore, the conversion of agents to distributors reduced reported maintenance
revenue in fiscal 1995, without a material impact on operating profits. In
addition, in fiscal 1994, maintenance revenue benefited from the nonrecurring
release of approximately $1.6 million of deferred revenue related to the
conversion of the Company's Belgium and Holland offices to an independent agency
and to the conversion of certain of the Company's agents to distributors.
Included in fiscal 1994 operating expenses was approximately $.9 million of
costs associated with the recording of the maintenance revenue.
Implementation, consulting and other services revenue in fiscal 1995 increased
31% to $22.4 million from $17.1 million in fiscal 1994. The increased number of
desktop and client/server licenses sold during the fiscal period, in all three
decision support market areas, created increased demand for implementation and
consulting services.
Operating expenses, excluding restructuring and unusual charges, were $99.5
million, with an operating profit margin of 8%, in fiscal 1995, compared with
operating expenses of $92.6 million and an operating profit margin of 4% in
fiscal 1994.
Selling and marketing expense in fiscal 1995 was $45.3 million, or 42% of
revenue, compared with $46.5 million, or 48% of revenue in fiscal 1994. The
decrease was principally due to a $5.4 million reduction in agency fees as a
result
12
<PAGE> 13
of the conversion of certain agents to distributors, as described above.
Partially offsetting this decline was a $3.8 million increase in direct selling
and marketing expenses during fiscal 1995 in support of increased revenue.
Cost of revenue and support in fiscal 1995 was $24.8 million, or 23% of revenue,
compared with $17.7 million, or 18% of revenue in fiscal 1994. The increase is
primarily attributed to both royalty fees related to the use of Arbor Software
Corporation's database engine, Essbase, in certain Comshare products and
personnel and outside contract costs associated with the growth in
implementation and consulting services.
Internal research and product development expense in fiscal 1995 was $16.2
million, or 15% of revenue, compared with $19.3 million, or 20% of revenue in
fiscal 1994. The decrease was primarily attributable to staff reductions made at
the end of fiscal 1994. These reductions principally reflect the Company's
development strategy which includes the increased utilization of technology
developed by third parties to shorten development cycles, minimize investment in
software tools and accelerate time to market. The decrease in research and
product development costs resulted in lower capitalization of internally
developed software in fiscal 1995 of $11.7 million, or 11% of revenue, compared
with $13.2 million, or 14% of revenue in fiscal 1994. Software amortization
expense was $13.2 million in the current fiscal year, or 12% of revenue,
compared with $12.5 million, or 13% of revenue in fiscal 1994. The increase in
amortization expense was a result of new client/server products released during
the last year. The Company does not expect amortization expenses related to
internally developed software to change materially in fiscal 1996.
General and administrative expense in fiscal 1995 was $11.7 million, or 11% of
revenue, compared to $9.9 million, or 10% of revenue in fiscal 1994. General and
administrative expense increased only 6% in fiscal 1995, as compared with the
prior year, after excluding the $1.1 million gain on the sale of undeveloped
land which was included in general and administrative expense in fiscal 1994.
General and administrative employee expenses relating to relocation, travel and
incentives contributed to the increase.
An unusual charge of $6.4 million was recorded in fiscal 1995, due to the
write-off of capitalized software associated with the Company's mainframe
products. The write-off was the result of the Company's fiscal 1996 product
plans to focus primarily on desktop and client/server software and the decreased
industry emphasis on mainframe decision support software products. In addition,
the Company recently implemented a marketing strategy to migrate its existing
clients using mature mainframe products to its new client/server products. The
above factors will reduce the future revenue from mainframe software, and as a
result the Company wrote-off the remaining capitalized mainframe software.
Interest expense in fiscal 1995 was $.7 million, compared with $.6 million is
fiscal 1994. The increase is primarily due to the loan origination fees
associated with amending and restating the domestic credit agreement.
The benefit from income taxes was $3.0 million in fiscal 1995, as compared with
an income tax provision of $.9 million for fiscal 1994. The income tax benefit
included the release of tax valuation reserves of $2.5 million related to tax
credits, this is attributable to the significant improvement in the Company's
profitability in fiscal 1995, which allowed the realization of a significant
portion of these credits. In addition, settlements with tax authorities
regarding certain outstanding issues allowed the Company to release tax reserves
of $1.6 million previously established against these exposures. The net tax
assets remaining are projected by the Company to be utilized by fiscal 1997,
well before expiration. A comparative analysis of the factors influencing the
effective income tax rate is presented in Note 8 of the Notes to Consolidated
Financial Statements.
Approximately 55% of Comshare's fiscal 1995 revenue and expenses were from
outside North America and most of the Company's international revenue is
denominated in foreign currencies. Foreign currency fluctuations in fiscal 1995
had minimal impact on operating income as currency fluctuations on revenue
denominated in a foreign currency were offset by expenses denominated in foreign
currency. Overall, revenue and expenses would have been approximately $3.6
million and $3.3 million lower, respectively, with an estimated $.3 million
negative impact on pre-tax profit for fiscal 1995, at comparable exchange rates.
The Company recognizes currency transaction gains and losses in the period of
occurrence. As currency rates are constantly changing, these gains and losses
can, at times, fluctuate greatly. The Company had an exchange gain of $.3
million in fiscal 1995, attributable to the strengthening of the Deutsche mark
and French franc against the British pound. The Company at various times
denominates borrowings in foreign currencies and enters into forward exchange
contracts to hedge exposures related to foreign currency transactions. The
Company does not use any
13
<PAGE> 14
other types of derivatives to hedge such exposures nor does it speculate in
foreign currency. In general, the Company only uses forward exchange contracts
to hedge against large selective transactions that present the most exposure to
exchange rate fluctuations. The Company had two forward contracts totaling $2.2
million outstanding at June 30, 1995.
Inflation did not have a material impact on the Company's revenue or income from
operations in fiscal 1995 or fiscal 1994.
1994 COMPARED WITH 1993
Revenue for the fiscal year ended June 30, 1994 declined by 8% to $96.6 million
from $105.2 million in fiscal 1993. The decrease was principally due to both the
decline in revenue from mainframe sources and the weakening of foreign
currencies against the U.S. dollar in fiscal 1994. Overall revenue for fiscal
1994 would have been approximately $5.5 million higher, compared with fiscal
1993 levels, at comparable exchange rates.
Total software license fees declined 6% to $37.9 million in fiscal 1994 from
$40.4 million in fiscal 1993. License fees from desktop and client/server
products grew 18% to $28.2 million in fiscal 1994 from $24.0 million in fiscal
1993. Desktop and client/server products license fees represented 75% of total
software license fee revenue in fiscal 1994, compared with 59% in fiscal 1993.
License fees from the Company's mainframe products declined 42% to $9.4 million
in fiscal 1994 from $16.3 million in fiscal 1993. The Company believes that this
decline was due to the industry slowdown in sales of mainframe computer software
as customers migrated to new generation client/server operating systems from
their traditional mainframe operating systems.
In the EIS market, license fees declined 18% to $23.7 million from $28.8 million
in fiscal 1993, primarily due to the decline in mainframe license fee revenue
offset by the revenue resulting from the March 1994 release of the Company's
Commander OLAP product. License fees from financial reporting applications
remained essentially unchanged in fiscal 1994 at $7.3 million, compared with the
prior year. Retail decision support license fees increased 54% to $6.5 million
in fiscal 1994 from $4.2 million in fiscal 1993, principally as a result of the
international release of a new Windows version of ARTHUR Merchandise Planning.
Total maintenance revenue declined by 3% to $41.6 million in fiscal 1994 from
$43.1 million in 1993. Mainframe maintenance revenue declined 13% to $22.6
million in fiscal 1994 from $25.9 million in fiscal 1993. Offsetting the decline
was the increase in maintenance revenue from desktop and client/server products
which increased 12% to $18.5 million in fiscal 1994 from $16.5 million in fiscal
1993.
During fiscal 1994 maintenance revenue benefited from the release of
approximately $1.6 million of deferred revenue related to the conversion of the
Company's Belgium and Holland offices to an independent agency and to the
conversion of certain of the Company's agents to distributors. Included in
operating expenses was approximately $.9 million of costs associated with the
recording of the maintenance revenue.
Implementation and consulting services revenue declined 21% to $17.1 million in
fiscal 1994 from $21.7 million in fiscal 1993. The decrease in implementation
and consulting services revenue was due partially to the decline in mainframe
software revenue and increased competition from small implementation and
consulting service companies, as well as to disruptions in France due to
management changes in the second quarter.
Operating expenses for fiscal 1994 and fiscal 1993 included $2.3 million and
$1.5 million, respectively, of restructuring charges. Excluding the
restructuring charges, operating expenses in fiscal 1994 decreased 12% to $92.6
million from $105.0 million in fiscal 1993. The weakening of foreign currencies
against the U.S. dollar in fiscal 1994 caused $4.8 million of the decline in
operating expenses from fiscal 1993 levels. The remaining $6.4 million of the
decline is primarily the result of cost containment actions taken by the Company
at the end of fiscal 1993, most of which related to personnel reductions
implemented in connection with the restructuring.
Selling and marketing expense in fiscal 1994 was $46.5 million, or 48% of
revenue, compared with $54.1 million, or 51% of revenue in fiscal 1993. The
decrease was principally due to cost containment actions taken by the Company at
the end of fiscal 1993.
Cost of revenue and support was $17.7 million, or 18% of revenue in fiscal 1994,
compared with $20.5 million or 20% of revenue in 1993. The decline was
principally caused by lower costs associated with the $4.4 million decline
14
<PAGE> 15
in implementation and consulting services revenue. This was partially offset by
the inclusion of $1.0 million of royalty expense in fiscal 1994 for products
licensed from others for use in the Company's product offerings. The increase in
royalty expense is principally due to an increase in sales to customers
selecting a newly licensed database engine, Essbase, as part of their
information system solution beginning in March 1994.
Internal research and product development expense was $19.3 million, or 20% of
revenue in fiscal 1994, compared with $23.0 million, or 22% of revenue in fiscal
1993. The decrease was principally due to cost containment actions. The decrease
in research and product development costs resulted in lower capitalization of
internally developed software in fiscal 1994 of $13.2 million, or 14% of
revenue, compared with $15.0 million, or 14% of revenue in fiscal 1993. Software
amortization in fiscal 1994 was $12.5 million, or 13% of revenue, compared with
$10.8 million, or 10% of revenue in fiscal 1993. The increase is a result of
numerous products that were commercially released during the fourth quarter of
fiscal 1993 and the first quarter of fiscal 1994.
General and administrative expense was $9.9 million, or 10% of revenue in fiscal
1994, compared with $11.7 million, or 11% of revenue in fiscal 1993. The
decrease is primarily attributable to the $1.1 million gain on the sale of
undeveloped land in the second quarter of fiscal 1994 which was included in
general and administrative expense.
Restructuring and unusual charges were $2.3 million in fiscal 1994 and
represented provisions for management actions or plans in connection with
restructuring, primarily related to staff reductions. For the period ended June
30, 1994, the restructuring charges include staff reductions of approximately 50
employees. Restructuring charges for fiscal 1993 were $1.5 million and also
related to management actions or plans in connection with restructuring,
primarily related to staff reductions.
Interest expense was $.6 million in fiscal 1994, essentially unchanged from
fiscal 1993. Reduced loan balances were partly offset by higher interest rates
and a reduction in the amount of interest capitalized as part of capitalized
computer software. The banks with which the Company has its domestic credit
agreement reduced the interest rate on the Company's borrowings, effective
November 1, 1993, from prime plus 3% to prime plus 1%. Interest expense was
capitalized as required under accounting principles and included in capitalized
computer software.
The effective income tax rate for the year ended June 30, 1994 was 80%. The
provision for the year ended June 30, 1994 resulted from a combination of
factors including not tax benefiting certain losses and the reversal of taxes
previously provided, partially offset by ongoing tax planning. For the prior
year, there was a provision for income taxes on a loss, rather than a tax
benefit as would usually be expected, primarily caused by losses occurring in
certain countries where no tax benefit could be provided while profits occurred
in countries where a tax provision was required. A detailed comparative analysis
of the numerous factors influencing the effective income tax rate is presented
in Note 8 of the Notes to Consolidated Financial Statements.
Approximately 55% of the Company's fiscal 1994 revenue and expenses were from
outside North America. Most of the Company's international revenue is
denominated in foreign currencies. Foreign currency fluctuations in fiscal 1994
impacted operating income as currency fluctuations on revenue denominated in a
foreign currency were only partially offset by expenses denominated in a foreign
currency. Overall, revenue and expenses would have been $5.5 million and $4.8
million lower, respectively, with an estimated $.7 million positive impact on
pre-tax profit for fiscal 1994, at comparable exchange rates.
The Company recognizes currency transaction gains and losses in the period of
occurrence. As currency rates are constantly changing, these gains and losses
can, at times, fluctuate greatly. Exchange losses were $25,000 in fiscal 1994,
compared with exchange gains of $.5 million in fiscal 1993. The unusually high
currency gain in fiscal 1993 was principally due to Britain's withdrawal from
the European Exchange Rate Mechanism. At June 30, 1994, the Company did not have
any forward contracts.
Inflation did not have a material impact on the Company's revenue or income from
operations in fiscal 1994 or fiscal 1993.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $23.3 million in fiscal 1995, up
$9.7 million over the prior year. Pretax profit excluding the non-cash write-off
of software was $8.6 million in fiscal 1995, contributing $7.5 million of the
15
<PAGE> 16
increase. Due to prior year net operating losses and tax credits, only $.6
million of taxes were paid in fiscal 1995. As a result, most of the operating
profits in fiscal 1995 generated positive cash flow. The $2.7 million reduction
in accounts receivable balances during fiscal 1995, attributable to improved
collections, also contributed to the increased cash flow.
Net cash used in investing activities was $14.1 million in fiscal 1995, up $1.7
million over the prior year, primarily due to the one-time benefit in fiscal
1994 from the proceeds of the sale of undeveloped land. Additions to capitalized
computer software declined during fiscal 1995 due to the decrease in internal
product development spending.
The Company used the net cash from operating activities to fund its investing
activities and reduce long-term debt by approximately $10.0 million during
fiscal 1995.
At June 30, 1995, the Company did not have any material capital expenditure
commitments. In fiscal 1996, property and equipment purchases and additions to
internally developed software are expected to continue at levels similar to
those of fiscal 1995 and fiscal 1994.
Working capital as of June 30, 1995 was a negative $2.2 million, compared with a
negative $.5 million from the same period last year. The decrease of $1.7
million was primarily due to the $2.7 million reduction in accounts receivable,
mentioned above, offset by the $1.0 million reduction in deferred, revenue which
is included in current liabilities. Deferred revenue as of June 30, 1995 and
1994 was $18.6 million and $19.6 million, respectively. Deferred revenue
principally relates to maintenance and is essentially non-cash in nature.
Total assets were $79.3 million at June 30, 1995, as compared with total assets
of $88.9 million at June 30, 1994. The primary contributing factor to the
decrease was the write-off of $6.4 million of capitalized software associated
with the Company's mainframe products.
On October 31, 1994 the Company entered into a $14.0 million amended and
restated, domestic credit agreement with its banks which matures on October 31,
1997. The amended and restated credit agreement contains covenants regarding
among other things, working capital, leverage, net worth and payment of
dividends. Under the terms of the agreement, the Company is not permitted to pay
dividends. Permitted borrowings under the credit agreement are based on a
percentage of worldwide eligible accounts receivable. At June 30, 1995,
permitted borrowings under the agreement totaled $14.0 million, of which $3.5
million was outstanding. At June 30, 1995 interest was at the bank's prime rate
(8.75% at June 30, 1995) plus 1% until July 1, 1995, at which time it changed to
the Eurodollar rate plus applicable margin, which varies between 1 1/2% and
2 1/2%. Subsequent to year end, the banks agreed to release all security
interests in the assets of the Company previously granted to the banks.
Separately, certain of the Company's subsidiaries have local currency credit
agreements or overdraft facilities with banks totaling $3.7 million, of which
$1.9 million was outstanding at June 30, 1995. The credit agreements expire on
October 1, 1997. The interest rates generally vary with the banks' base rate.
Most of such borrowings are guaranteed by the Company.
The Company believes that the combination of present cash balances, future
operating cash flows and credit facilities are sufficient for near term
operating needs. The Company intends to fund ongoing internal software additions
and equipment purchases through cash provided by operating activities. The
Company believes it will renew or repay its long-term debt prior to its
expiration.
ITEM 8. FINANCIAL STATEMENTS
The financial statements and schedule filed herewith are set forth on the Index
to Consolidated Financial Statements and Schedule on page 16 and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES
Not applicable.
16
<PAGE> 17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated herein by reference to the
Company's 1995 Proxy Statement under the captions "Election of Directors" and
"Further Information-Executive Officers."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to the
Company's 1995 Proxy Statement under the caption "Executive Compensation."
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Information required by this Item is incorporated herein by reference to the
Company's 1995 Proxy Statement under the captions "Further Information-Principal
Shareholders" and "Further Information-Stock Ownership of Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is incorporated herein by reference to the
Company's 1995 Proxy Statement under the captions "Certain Relationships and
Related Transactions."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
The Financial Statements filed with this report are listed in the Index
to Consolidated Financial Statements and Schedule which appears on page
19.
2. Financial Statement Schedule:
The Financial Statement Schedule filed with this report is listed in the
Index to Consolidated Financial Statements and Schedule which appears on
page 19.
3. The exhibits filed with this report are listed in the Exhibit Index which
appears on page 37. Following are the Company's management contracts and
compensatory plans and arrangements which are required to be filed as
exhibits to this Form 10-K:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------
<C> <S>
10.01 Benefit Adjustment Plan of Comshare, Incorporated, effective June 1, 1986, as
amended -- incorporated by reference to Exhibit 10.20 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1993.
10.02 Comshare, Incorporated 1988 Stock Option Plan, as amended -- incorporated by
reference to Exhibit 10.21 to the Registrant's Form 10-K Report for the fiscal
year ended June 30, 1990 and Exhibit 10.22 to the Registrant's Form 10-Q Report
for the quarter ended September 30, 1994.
10.03 Profit Sharing Plan of Comshare, Incorporated, effective July 1, 1974, as amended
-- incorporated by reference to Exhibit 10.05 to the Registrant's Form 10-K for
the fiscal year ended June 30, 1994.
10.04 Employee Stock Ownership Plan of Comshare, Incorporated, effective June 28, 1985,
as amended -- incorporated by reference to Exhibit 10.06 to the Registrant's Form
10-K for the fiscal year ended June 30, 1994.
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------
<C> <S>
10.05 Rules of the Comshare Retirement and Death Benefits Plan for employees of the
United Kingdom, effective January 1, 1991 -- as amended, incorporated by reference
to Exhibit 10.27 to the Registrant's Form 10-K Report for the fiscal year ended
June 30, 1993.
10.06 Interim Trust Deed establishing the Comshare Money Purchase Plan for employees of
the United Kingdom, effective March 1, 1994, incorporated by reference to Exhibit
10.08 to the Registrant's Form 10-K for the fiscal year ended June 30, 1994.
10.07 Employment and NonCompetition Agreement between Comshare, Incorporated and T.
Wallace Wrathall, effective as of April 1, 1994 -- incorporated by reference to
Exhibit 10.23 to the Registrant's Form 10-Q Report for the quarter ended December
31, 1994.
10.08 Amended and Restated Employee Agreement between Comshare, Incorporated and Richard
L. Crandall effective July 1, 1994, as amended -- incorporated by reference to
Exhibit 10.10 to the Registrant's Form 10-K for the fiscal year ended June 30,
1994.
10.09 Non-Competition Agreement between Comshare, Incorporated and Richard L. Crandall
incorporated by reference to Exhibit 10.11 of the Registrant's Form 10-K for the
fiscal year ended June 30, 1994.
10.10 Letter Agreement from Comshare, Incorporated to Kathryn A. Jehle regarding terms
of employment dated April 18, 1994 -- incorporated by reference to Exhibit 10.12
to the Registrant's Form 10-K for the fiscal year ended June 30, 1994.
10.11 Description of Incentive Agreements for certain executive officers for fiscal
years 1993, 1994 and 1995-1997 -- incorporated by reference to Exhibit 10.13 to
the Registrant's Form 10-K for the fiscal year ended June 30, 1994.
10.12 Trust Agreement under the Benefit Adjustment Plan of Comshare, Incorporated,
effective April 25, 1988 as amended -- incorporated by reference to Exhibit 10.31
to the Registrant's Form 10-K Report for the fiscal year ended June 30, 1993.
10.13 Trust Agreement between Comshare, Incorporated and Vanguard Fiduciary for
maintaining the Profit Sharing Plan of Comshare, Incorporated effective March 31,
1992, as amended -- incorporated by reference to Exhibit 10.15 to the Registrant's
Form 10-K for the fiscal year ended June 30, 1994.
10.14 1994 Executive Stock Purchase Program of Comshare, Incorporated -- incorporated by
reference to Exhibit 10.19 to the Registrant's Form 10-Q Report for the quarter
ended September 30, 1994.
10.15 Employee Stock Purchase Plan of Comshare, Incorporated -- incorporated by
reference to Exhibit 10.20 to the Registrant's Form 10-Q Report for the quarter
ended September 30, 1994.
10.16 1994 Directors Stock Option Plan of Comshare, Incorporated -- incorporated by
reference to Exhibit 10.21 to the Registrant's Form 10-Q Report for the quarter
ended September 30, 1994.
</TABLE>
(b) The Company did not file any reports on Form 8-K for the quarter ended June
30, 1995.
18
<PAGE> 19
COMSHARE, INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants............................................. 20
Consolidated Statement of Operations for the Fiscal Years Ended
June 30, 1995, 1994 and 1993....................................................... 21
Consolidated Balance Sheet as of June 30, 1995 and 1994.............................. 22-23
Consolidated Statement of Cash Flows for the Fiscal Years Ended
June 30, 1995, 1994 and 1993....................................................... 24
Consolidated Statement of Shareholders' Equity for the Fiscal Years Ended
June 30, 1995, 1994 and 1993....................................................... 25
Notes to Consolidated Financial Statements........................................... 26-34
SCHEDULE
II. Consolidated Schedule of Valuation and Qualifying Accounts....................... 35
</TABLE>
19
<PAGE> 20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Comshare, Incorporated:
We have audited the accompanying consolidated balance sheet of COMSHARE,
INCORPORATED (a Michigan corporation) and subsidiaries as of June 30, 1995 and
1994, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended June 30,
1995. These financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Comshare, Incorporated and
subsidiaries as of June 30, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1995 in conformity with generally accepted accounting principles.
As explained in Note 8 to the financial statements, effective July 1, 1992, the
Company changed its method of accounting for income taxes.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the accompanying
index is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
July 27, 1995
20
<PAGE> 21
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
REVENUE
Software licenses...................................... $ 49,294 $ 37,871 $ 40,397
Software maintenance................................... 36,649 41,625 43,064
Implementation, consulting and other services.......... 22,415 17,130 21,733
-------- -------- --------
108,358 96,626 105,194
COSTS AND EXPENSES
Selling and marketing.................................. 45,283 46,457 54,065
Cost of revenue and support............................ 24,799 17,670 20,528
Internal research and product development.............. 16,180 19,293 22,989
Internally capitalized software........................ (11,667) (13,193) (15,035)
Software amortization.................................. 13,250 12,517 10,761
General and administrative............................. 11,663 9,891 11,668
Unusual charge......................................... 6,365 -- --
Restructuring related costs............................ -- 2,343 1,489
-------- -------- --------
105,873 94,978 106,465
-------- -------- --------
Income (loss) from operations............................ 2,485 1,648 (1,271)
Other income (expense)
Interest income........................................ 157 79 298
Interest expense....................................... (669) (568) (611)
Exchange gain (loss)................................... 307 (25) 480
-------- -------- --------
(205) (514) 167
-------- -------- --------
INCOME (LOSS) BEFORE TAXES............................... 2,280 1,134 (1,104)
Provision (benefit) for income taxes..................... (3,048) 912 659
-------- -------- --------
NET INCOME (LOSS)........................................ $ 5,328 $ 222 $ (1,763)
======== ======== ========
Weighted average number of common and dilutive
common equivalent shares............................... 5,599 5,489 5,319
======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE....................... $ .95 $ .04 $ (.33)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
21
<PAGE> 22
COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF JUNE 30,
------------------
1995 1994
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash.................................................................... $ 1,398 $ 1,774
Accounts receivable, less allowance for doubtful accounts
of $887 in 1995, and $1,161 in 1994.................................. 29,531 30,846
Deferred income taxes................................................... 783 1,487
Prepaid expenses........................................................ 4,098 4,012
------- -------
Total current assets................................................. 35,810 38,119
PROPERTY AND EQUIPMENT, at cost
Computers and other equipment........................................... 24,023 24,278
Leasehold improvements.................................................. 3,053 4,258
------- -------
27,076 28,536
Less -- Accumulated depreciation........................................ 23,663 24,338
------- -------
Property and equipment, net............................................. 3,413 4,198
COMPUTER SOFTWARE, net of accumulated amortization of
$70,308 in 1995 and $50,114 in 1994..................................... 32,676 40,236
GOODWILL, net of accumulated amortization of
$1,751 in 1995 and $1,437 in 1994....................................... 2,246 2,033
OTHER ASSETS.............................................................. 5,165 4,358
------- -------
$79,310 $88,944
======= =======
</TABLE>
The accompanying notes are an integral part of this statement.
22
<PAGE> 23
COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF JUNE 30,
------------------
1995 1994
------- -------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable........................................................... $ -- $ 29
Accounts payable........................................................ 11,342 10,608
Accrued liabilities --
Payroll.............................................................. 3,467 4,910
Taxes, other than income taxes....................................... 1,486 1,399
Other................................................................ 1,465 1,364
------- -------
Total accrued liabilities.......................................... 6,418 7,673
Income taxes............................................................ 1,602 641
Deferred revenue........................................................ 18,599 19,617
------- -------
Total current liabilities.......................................... 37,961 38,568
LONG-TERM DEBT............................................................ 5,436 15,354
DEFERRED INCOME TAXES..................................................... 275 5,511
OTHER LIABILITIES......................................................... 3,090 3,005
SHAREHOLDERS' EQUITY
Capital stock:
Preferred stock, no par value;
authorized 5,000,000 shares;
none issued........................................................ -- --
Common stock, $1.00 par value;
authorized 10,000,000 shares;
outstanding 5,480,823 shares in
1995 and 5,357,811 shares in 1994.................................... 5,481 5,358
Capital contributed in excess of par.................................... 15,939 14,661
Retained earnings....................................................... 15,500 10,190
Currency translation adjustments........................................ (3,239) (3,504)
------- -------
33,681 26,705
Less -- Notes receivable................................................ 1,133 199
------- -------
Total shareholders' equity......................................... 32,548 26,506
------- -------
$79,310 $88,944
======= =======
</TABLE>
The accompanying notes are an integral part of this statement.
23
<PAGE> 24
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
NET INCOME (LOSS)............................................. $ 5,328 $ 222 $ (1,763)
Adjustments to reconcile net income (loss) to
Net cash provided by operating activities:
Depreciation and amortization............................... 15,873 15,893 15,491
Write-off of capitalized software........................... 6,365 -- --
Gain on sale of undeveloped land............................ -- (1,102) --
Provision for losses on accounts receivable................. (119) 140 586
Loss on sale of property and equipment...................... 28 3 71
Changes in operating assets and liabilities:
Accounts receivable...................................... 2,675 585 4,601
Prepaid expenses......................................... 77 929 1,142
Other assets............................................. -- 35 1,122
Accounts payable......................................... (469) (1,083) (2,716)
Accrued liabilities...................................... (337) 853 (2,927)
Deferred revenue......................................... (1,489) (3,875) (396)
Deferred income taxes.................................... (4,645) 732 528
Other liabilities........................................ 42 301 607
-------- -------- --------
Net cash provided by operating activities................ 23,329 13,633 16,346
INVESTING ACTIVITIES
Additions to computer software.............................. (11,667) (13,187) (15,811)
Payments for property and equipment......................... (1,207) (1,199) (1,645)
Proceeds from sale of undeveloped land...................... -- 3,376 --
Other....................................................... (1,227) (1,382) (235)
-------- -------- --------
Net cash used in investing activities.................... (14,101) (12,392) (17,691)
FINANCING ACTIVITIES
Net repayments under notes payable.......................... (33) (40) (590)
Net borrowings (repayments) under long-term debt............ (10,044) (2,046) 768
Stock options exercised..................................... 248 74 358
Other....................................................... 202 (42) --
-------- -------- --------
Net cash provided by (used in) financing activities...... (9,627) (2,054) 536
EFFECT OF EXCHANGE RATE CHANGES............................... 23 (6) (408)
-------- -------- --------
NET DECREASE IN CASH.......................................... (376) (819) (1,217)
-------- -------- --------
BALANCE AT BEGINNING OF YEAR.................................. 1,774 2,593 3,810
-------- -------- --------
BALANCE AT END OF YEAR........................................ $ 1,398 $ 1,774 $ 2,593
======== ======== ========
Supplemental disclosures:
Cash paid for interest...................................... $ 690 $ 624 $ 540
======== ======== ========
Cash paid for income taxes.................................. $ 558 $ 481 $ 1,113
======== ======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
24
<PAGE> 25
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
-----------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
COMMON STOCK
Balance beginning of year...................................... $ 5,358 $ 5,346 $ 5,287
Employee Stock Purchase Plan................................... 15 -- --
1994 Executive Stock Purchase Program.......................... 69 -- --
Retirement of shares........................................... (1) -- (18)
Stock options exercised........................................ 40 12 77
------- ------- -------
Balance end of year............................................ 5,481 5,358 5,346
------- ------- -------
CAPITAL CONTRIBUTED IN EXCESS OF PAR
Balance beginning of year...................................... 14,661 14,599 14,200
Employee Stock Purchase Plan................................... 162 -- --
1994 Executive Stock Purchase Program.......................... 890 -- --
Retirement of shares........................................... (4) -- (50)
Stock options exercised........................................ 230 60 436
Tax benefits related to stock options.......................... -- 2 13
------- ------- -------
Balance end of year............................................ 15,939 14,661 14,599
------- ------- -------
RETAINED EARNINGS
Balance beginning of year...................................... 10,190 9,968 11,831
Net income (loss).............................................. 5,328 222 (1,763)
Retirement of shares........................................... (18) -- (100)
------- ------- -------
Balance end of year............................................ 15,500 10,190 9,968
------- ------- -------
CURRENCY TRANSLATION ADJUSTMENTS
Balance beginning of year...................................... (3,504) (3,553) (1,165)
Translation adjustments........................................ 265 49 (2,388)
------- ------- -------
Balance end of year............................................ (3,239) (3,504) (3,553)
------- ------- -------
LESS -- NOTES RECEIVABLE
Balance beginning of year...................................... 199 199 199
1994 Executive Stock Purchase Program.......................... 934 -- --
------- ------- -------
Balance end of year............................................ 1,133 199 199
------- ------- -------
Total shareholders' equity.................................. $32,548 $26,506 $26,161
======= ======= =======
</TABLE>
The accompanying notes are an integral part of this statement.
25
<PAGE> 26
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Company and its subsidiaries, all of which are wholly owned. All
material intercompany accounts and transactions have been eliminated.
REVENUE. The Company's revenue consists of software license fees, software
maintenance service fees and implementation, consulting and other service fees.
Software license revenue, including sales to distributors, is recognized when a
customer contract is fully executed and the software has been shipped. Software
maintenance revenue, whether bundled with product license or priced separately,
is recorded as deferred revenue on the balance sheet when invoiced and is
recognized over the term of the maintenance contract. Implementation, consulting
and other services revenue is recognized as the services are performed.
EXPENSE CLASSIFICATION. Selling and marketing expense includes advertising and
agency fees. Cost of revenue and support includes personnel and other costs
related to produce the implementation and consulting services revenue, customer
support costs, direct cost of producing software and royalty expense for
products licensed from others for use in the Company's product offerings.
FOREIGN CURRENCY TRANSLATION. All assets and liabilities of the Company's
foreign operations are translated at current exchange rates and revenue and
expenses are translated at monthly exchange rates. Resulting translation
adjustments are reflected as a separate component of shareholders' equity.
Foreign currency transaction gains and losses are included in net income.
The Company at various times has entered into forward exchange contracts to
hedge exposures related to foreign currency transactions. The Company does not
use any other types of derivatives to hedge such exposures nor does it speculate
in foreign currency. The Company only uses forward exchange contracts to hedge
against large selective transactions that present the most exposure to exchange
rate fluctuations. The Company entered into a forward contract on September 9,
1994 where it purchased $1,500,000 for British pounds with a maturity date of
September 29, 1995. The Company also entered into a forward contract on June 30,
1995 where it sold $750,000 for Canadian dollars with a maturity date of August
31, 1995. The carrying value of these contracts approximates the fair market
value.
Statement of Financial Accounting Standards No. 119 "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments" requires
additional disclosures regarding the nature of derivatives held. This statement
is required to be adopted by the Company during its fiscal year ended June 30,
1996.
CASH. Cash includes investments in highly liquid investments with maturities of
three months or less at the time of acquisition.
INTERNAL RESEARCH AND PRODUCT DEVELOPMENT. Internal research and product
development includes all such expense before computer software capitalization
and amortization.
COMPUTER SOFTWARE. The costs of developing and purchasing new software products
and enhancements to existing software products are capitalized after
technological feasibility is established. These costs include capitalized
interest of $681,000, $814,000, and $906,000 in fiscal 1995, 1994 and 1993,
respectively. The capitalized development costs are amortized over their
estimated service lives which are generally a rolling three years in 1993, 1994
and 1995. The policy is reevaluated and adjusted as necessary at the end of each
accounting period. On an ongoing basis, management reviews the valuation and
amortization of capitalized development costs. As part of this review, the
Company considers the value of future cash flows attributable to the capitalized
development costs in evaluating potential impairment of the asset. In addition
to the internally capitalized software, the Company expended $776,000 on
purchased software during the year ended June 30, 1993. There were no
expenditures for purchased software for the years ended June 30, 1994 and 1995.
26
<PAGE> 27
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DEPRECIATION. The cost of depreciable assets is charged to operations on a
straight-line basis. Principal service lives for computers and other equipment
are three to five years. Leasehold improvements are amortized over the expected
life of the asset or term of the lease, whichever is shorter.
GOODWILL. Goodwill represents the unamortized cost in excess of fair value of
net assets acquired and is amortized on a straight-line basis over forty years.
On an ongoing basis, management reviews the valuation and amortization of
goodwill. As part of this review, the Company considers the value of future cash
flows attributable to the acquired operations in evaluating potential impairment
of goodwill.
OTHER ASSETS. Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" requires that long-lived assets be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of the asset may
not be recoverable. This statement is required to be adopted by the Company
during its fiscal year ended June 30, 1997. Although a detailed analysis has not
been performed, the Company believes there would be no material impact on its
financial statements, if this statement was adopted as of June 30, 1995.
EARNINGS PER SHARE. Earnings per share of common stock is based on the daily
weighted average number of shares of common stock outstanding considering the
dilutive effect of outstanding stock options when appropriate.
RECLASSIFICATIONS. For the year ended June 30, 1995, the Company changed its
presentation of cash flows from operating activities from the direct method to
the indirect method.
Certain amounts in the 1994 and 1993 financial statements have been reclassified
to conform with 1995 presentation.
2. RESTRUCTURING AND UNUSUAL CHARGES
During the year ended June 30, 1995, the Company recorded an unusual charge of
$6,365,000. This charge related to the write-off of capitalized software
associated with its mature mainframe products. The write-off of capitalized
software associated with the Company's mainframe products is the result of
current industry trends and reflects the Company's strategic product plan to
focus on desktop and client/server software products.
During the years ended June 30, 1994 and 1993, the Company made provisions
totaling $2,343,000 and $1,489,000, respectively, for management actions or
plans in connection primarily with staff reductions related to its
restructuring. For the period ended June 30, 1994, the restructuring charges
include staff reductions of approximately 50 employees and estimated savings of
$4,000,000 was achieved in fiscal 1995. At June 30, 1995, $554,000 remains to be
paid for contractual obligations related to restructuring actions taken during
1994.
3. BORROWINGS
Borrowing components are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
------ -------
<S> <C> <C>
Lines of credit............................................. $5,436 $15,354
Notes payable............................................... -- 29
------ -------
Total outstanding...................................... 5,436 15,383
Less current portion........................................ -- 29
------ -------
$5,436 $15,354
====== =======
</TABLE>
On October 31, 1994 the Company entered into a $14,000,000 amended and restated,
domestic credit agreement with its banks which matures on October 31, 1997. The
amended and restated credit agreement contains covenants regarding among other
things, working capital, leverage, net worth and payment of dividends. Under the
terms of the agreement, the Company is not permitted to pay dividends. Permitted
borrowings under the credit agreement are
27
<PAGE> 28
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
based on a percentage of worldwide eligible accounts receivable and worldwide
borrowings. At June 30, 1995, the permitted borrowings available under the
agreement were $14,000,000, of which $3,500,000 was outstanding. Interest was at
the bank's prime rate (8.75% at June 30, 1995) plus 1% and has been reduced
effective July 1, 1995, upon the Company's meeting certain financial criteria,
to the Eurodollar rate plus applicable margin, which varies between 1 1/2% and
2 1/2%. Subsequent to year end, the banks agreed to release all security
interests in the assets of the Company previously granted to the banks.
Separately, certain of the Company's subsidiaries entered into local currency
credit agreements or overdraft facilities in various currencies with banks
totaling $3,664,000. At June 30, 1995, the Company has outstanding borrowings of
$1,256,000 in British pounds and $680,000 in German marks. The credit agreements
expire on October 1, 1997. The interest rates generally vary with the banks'
base rate. Most of such borrowings are guaranteed by the Company.
4. SHAREHOLDERS' EQUITY
The Board of Directors has the authority to issue up to 5,000,000 shares of no
par value preferred stock. The shares can be issued in one or more series with
full, limited or no voting powers and with such special rights, qualifications,
limitations and restrictions as may be adopted by the Board of Directors.
The Company's senior executives are encouraged to own Comshare common stock. To
facilitate such ownership, the shareholders approved the 1994 Executive Stock
Purchase Program which enables such executives to purchase Comshare common stock
at then current market prices directly from the Company via a promissory note.
The promissory note cannot exceed the executive's base annual salary and is
secured by the related common stock issued by the Company. The promissory note
matures four years from the date of issuance. Interest is at the prime rate plus
1% and may be deferred until the promissory note matures. A total of 200,000
shares of the Company's common stock has been reserved for issuance under the
1994 Executive Stock Purchase Program. For the year ended June 30, 1995, a total
of 69,363 shares at prices ranging from $13.00 to $18.50 were issued in exchange
for notes totaling $934,000.
5. STOCK OPTIONS
The Company has two stock option plans, the 1988 Stock Option Plan (the "1988
Plan") and the 1994 Directors Stock Option Plan (the "Directors Plan") which was
adopted in November, 1994.
The Company's 1988 Plan provides for the grant of both incentive stock options
and non-qualified options to officers and key employees. Options under the 1988
Plan are granted at 100% of market price on date of grant, are exercisable at
the rate of 25% per year after one year from the date of grant and have a term
of five years. The Board of Directors may, at its discretion, grant stock
appreciation rights in connection with the grant of options, but to date has not
elected to do so.
Effective June 25, 1993, the Company offered current option holders except for
the Company's senior executive officers the opportunity to exchange outstanding
options, for an equal number of options of the Company's common stock, at the
current market price of $6.125. All eligible option holders accepted this offer
and the Company canceled the previous options and granted new options
representing 311,760 shares of common stock under the Company's 1988 Plan. The
new options vest over four years effective from the new date of grant.
Effective August 13, 1993 and September 23, 1993, the Company offered the senior
executives the opportunity to exchange certain outstanding options, for an equal
number of options of the Company's common stock, at the current market price of
$9.00 and $9.25, respectively. The executive option holders accepted this offer
and the Company canceled certain of the previous options and granted new options
representing 134,000 shares of common stock under the Company's 1988 Plan. The
new options vest over four years effective from the new date of grant.
The 1988 Stock Option Plan was amended in November, 1994 to increase the number
of shares of Common stock authorized for grant from 600,000 shares to 850,000.
28
<PAGE> 29
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As of June 30, 1995, the Company has reserved 795,285 shares of common stock for
the exercise of employee stock options.
Stock option activity for the 1988 Plan is summarized below:
<TABLE>
<CAPTION>
NUMBER PRICE
OF SHARES PER SHARE
--------- ----------------
<S> <C> <C>
Outstanding at June 30, 1992........................ 870,510 $5.75 to $22.00
Granted............................................. 352,760 6.13 to 10.50
Exercised........................................... (77,000) 5.75 to 7.25
Canceled............................................ (355,510) 7.25 to 20.88
---------
Outstanding at June 30, 1993........................ 790,760 6.13 to 22.00
Granted............................................. 235,000 9.00 to 13.75
Exercised........................................... (11,750) 6.13 to 6.13
Canceled............................................ (475,498) 6.13 to 22.00
---------
Outstanding at June 30, 1994........................ 538,512 6.13 to 16.75
Granted............................................. 144,000 11.00 to 19.50
Exercised........................................... (40,465) 6.13 to 6.13
Canceled............................................ (131,697) 6.13 to 16.75
---------
Outstanding at June 30, 1995........................ 510,350 $6.13 to $19.50
========
Exercisable at June 30, 1995........................ 121,850
========
</TABLE>
The 1994 Directors Stock Option plan was approved by the shareholders in
November, 1994. The Directors Plan provides for the issuance of options to
purchase up to 100,000 shares of the Company's common stock to nonemployee
directors of the Company. Options under the Directors Plan are granted at 100%
of the market price on the date of grant, are exercisable at a rate of 25% per
year after one year from the date of grant and have a term of five years. In
November, 1994, a total of 35,000 options were granted, with each of the
Company's seven outside directors receiving 5,000 options at $12.50. None of the
options was exercisable as of June 30, 1995.
6. EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan was approved by the shareholders in November,
1994. A total of 200,000 shares of the Company's common stock have been reserved
for issuance under the Employee Stock Purchase Plan. The Employee Stock Purchase
Plan allows participating employees to purchase through payroll deductions
shares of the Company's common stock at 85% of the fair market value at July 1
and January 1. Substantially all full time employees are eligible to participate
in the Employee Stock Purchase Plan. During the year ended June 30, 1995, 14,556
shares were issued at $12.11 per share under the Employee Stock Purchase Plan.
7. BENEFIT PLANS
The Company has profit sharing and employee stock ownership plans covering
substantially all United States employees. The profit sharing plan provides for
a minimum annual contribution of 2% of an employee's salary, and both plans
require the Company to make matching contributions based on employee 401K
contributions. The Company also has a deferred compensation plan for United
States officers for the payment of benefits which would not otherwise be
eligible under its tax-qualified retirement plans. The Company contributions,
other than the above, are discretionary and are determined by the Board of
Directors. The total contributions were $1,224,000 in 1995, $1,007,000 in 1994,
$1,129,000 in 1993.
A subsidiary in the United Kingdom maintains, through a trustee, a defined
benefit pension plan for substantially all of its employees hired before January
1, 1994 and a defined contribution plan for employees hired January 1, 1994
29
<PAGE> 30
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
or later. The defined contribution plan provides that employees contribute a
minimum of 5% of their pensionable salary with the Company contributing 5%. The
benefits of the defined pension plan, which are pay related, are integrated with
and supplement the benefits called for under the applicable laws of the United
Kingdom.
The components of pension expense are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Service cost for benefits earned during the year................. $ 540 $ 501 $ 485
Interest cost on projected benefit obligation.................... 1,292 1,111 962
Actual return on assets.......................................... (1,347) (1,347) (4,916)
Net amortization and deferral.................................... 101 261 3,770
------- ------- -------
Net pension expense.............................................. $ 586 $ 526 $ 301
======= ======= =======
</TABLE>
The funded status of the pension plan is as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits......................................................... $14,705 $11,801
Non-vested benefits..................................................... 29 41
------- -------
Accumulated benefit obligation....................................... 14,734 11,842
Effects of salary progression........................................... 1,664 1,241
------- -------
Projected benefit obligation......................................... 16,398 13,083
Plan assets at fair value................................................. 15,103 13,997
------- -------
Plan assets under (over) projected benefit obligation..................... $ 1,295 $ (914)
======= =======
Amounts not recognized in balance sheet:
Unamortized transition obligation....................................... $ 702 $ 748
Unamortized net (gain) loss............................................. 2,888 (81)
------- -------
$ 3,590 $ 667
======= =======
</TABLE>
The actuarial present value of the projected benefit obligation was determined
using a weighted average discount rate of 8.5% and an annual increase in future
compensation of 6.5% for fiscal 1995 calculations; for the fiscal years 1994 and
1993 a weighted average discount rate of 9% and an annual rate of increase in
future compensation of 7% was used to project benefit obligations. The long term
weighted average rate of return on assets used was 8.5%, 10% and 12% for 1995,
1994 and 1993, respectively.
The Company provides defined retirement benefits to the employees of the other
foreign subsidiaries through various contribution plans. The amount charged to
expense for these benefits was $142,000 in fiscal 1995, $201,000 in fiscal 1994
and $269,000 in fiscal 1993.
8. INCOME TAXES
During 1993, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". The statement
requires a change in the method of financial accounting and reporting for income
taxes from the deferral method to an asset and liability approach. The adoption
of this standard had no
30
<PAGE> 31
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
material effect on income. A summary of income (loss) before provision (benefit)
for income taxes and components of the provision (benefit) for income taxes for
the years ended June 30 is as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Income (loss) before provision (benefit) for income taxes:
Domestic.................................................. $ 486 $(2,270) $(1,884)
Foreign................................................... 1,794 3,404 780
------- ------- -------
$ 2,280 $ 1,134 $(1,104)
======= ======= =======
Domestic provision (benefit) for income taxes:
Current................................................... $ (15) $ (230) $ 229
Deferred.................................................. (2,773) (205) (678)
Foreign provision (benefit) for income taxes:
Current................................................... 1,499 281 (99)
Deferred.................................................. (1,759) 1,066 1,207
------- ------- -------
Provision (benefit) for income taxes........................ $(3,048) $ 912 $ 659
======= ======= =======
</TABLE>
The differences between the United States Federal statutory income tax provision
(benefit) and the consolidated income tax provision (benefit) for the years
ended June 30 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Federal statutory provision (benefit)....................... $ 775 $ 386 $ (375)
Non-deductible meals and entertainment...................... 109 83 44
State income taxes, net of federal tax benefit.............. 67 41 27
Increase in valuation reserve due to domestic and foreign
losses without tax benefit and tax credits................ 42 882 499
Recognition of tax credits.................................. (2,500) -- --
Tax reserves provided (released)............................ (1,600) 65 --
Tax rate differences........................................ (51) 189 343
FAS 109 adjustment.......................................... -- -- 131
Tax credits generated....................................... -- (665) --
Other, net.................................................. 110 (69) (10)
------- ------- -------
Actual income tax provision (benefit)....................... $(3,048) $ 912 $ 659
======= ======= =======
</TABLE>
31
<PAGE> 32
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes represent temporary differences in the recognition of
certain items for income tax and financial reporting purposes. The components of
the net deferred income tax liability (asset) as of June 30 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Deferred income tax liabilities:
Research and development............................................. $ 3,714 $ 7,005
Remittance of foreign earnings....................................... -- 1,151
Employee benefits.................................................... 727 535
Other................................................................ 190 208
------- -------
4,631 8,899
Deferred income tax assets:
Tax credits excluding foreign........................................ (1,534) (1,428)
Foreign tax credit................................................... (68) (1,160)
Depreciation and amortization........................................ (1,075) (1,196)
Net operating loss................................................... (493) (2,708)
Deferred revenue..................................................... (474) (997)
Employee benefits.................................................... (640) (680)
Other................................................................ (1,224) (1,044)
------- -------
(5,508) (9,213)
Valuation allowance.................................................... 369 4,338
------- -------
(5,139) (4,875)
------- -------
Net deferred income tax liability (asset).............................. $ (508) $ 4,024
======= =======
</TABLE>
At June 30, 1995, for income tax purposes, the Company and certain of its
foreign subsidiaries had available net operating loss carryforwards of
approximately $493,000. If not used, these net operating loss carryforwards, as
well as the Company's general business tax credits, will expire between 1998 and
2009.
Income taxes have been provided on all undistributed earnings of foreign
subsidiaries which are expected to be remitted to the Company.
9. LEASES
The Company leases most of its office space and certain of its equipment.
Initial lease terms vary in length; several of the leases contain renewal
options. Future minimum lease payments under noncancellable operating leases are
as follows (in thousands):
<TABLE>
<S> <C>
Fiscal Year ending June 30,
1996...................................................... $ 5,130
1997...................................................... 4,309
1998...................................................... 3,513
1999...................................................... 2,722
2000...................................................... 2,642
After 2000................................................ 18,955
-------
$37,271
=======
</TABLE>
During 1988, the Company purchased its London sales and administrative office
building; it was also sold in 1988 along with leasehold improvements and leased
back. The gain on the sale was deferred. During 1992, the Company consolidated
this facility with its former London computer center. The Company has thus
reduced the deferred gain
32
<PAGE> 33
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
on the sale by $1,135,000 to provide for the estimated costs until the lease
obligations are assumed by a new tenant.
Total rental expense was $7,252,000 in fiscal 1995, $7,231,000 in fiscal 1994
and $8,451,000 in fiscal 1993.
10. GEOGRAPHIC OPERATIONS AND SEGMENT INFORMATION
The following table summarizes selected financial information of the Company's
operations by geographic location (in thousands):
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Revenue from customers:
North America............................................... $ 48,478 $ 43,222 $ 45,596
International............................................... 59,880 53,404 59,598
-------- -------- --------
Total revenue............................................ $108,358 $ 96,626 $105,194
======== ======== ========
Operating income:
North America............................................... $ 15,205 $ 10,082 $ 10,118
International............................................... 15,392 13,938 12,163
-------- -------- --------
Total operating income................................... 30,597 24,020 22,281
Unallocated expenses, net..................................... (28,317) (22,886) (23,385)
-------- -------- --------
Income (loss) before taxes.................................... $ 2,280 $ 1,134 $ (1,104)
======== ======== ========
Identifiable assets:
North America............................................... $ 16,672 $ 21,356 $ 25,582
International............................................... 29,962 27,352 27,849
-------- -------- --------
Total identifiable assets................................ 46,634 48,708 53,431
Computer software............................................. 32,676 40,236 39,151
-------- -------- --------
Total assets.................................................. $ 79,310 $ 88,944 $ 92,582
======== ======== ========
</TABLE>
Unallocated expenses consist of general corporate expenses, internal research
and product development expenses, interest expense and interest income. In
fiscal 1995, unallocated expenses include $6,365,000 of unusual charges related
to the write-off of capitalized software associated with the Company's mature
mainframe products.
The presentation of information on a geographical basis requires the use of
estimation techniques and does not take into account the extent to which
Comshare's marketing and management skills are inter-dependent.
The Company operates in one business segment: the development and marketing of
computer software and related services.
No customer accounted for more than 5% of total revenues in the fiscal years
ended June 30, 1995, 1994 and 1993.
33
<PAGE> 34
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. QUARTERLY FINANCIAL DATA
Summarized quarterly financial data is as follows (unaudited) (in thousands
except per share data)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
1995
Revenue................................................. $24,158 $27,656 $27,704 $28,840
Income (loss) from operations........................... 1,418 2,846 1,828 (3,607)
Net income.............................................. 751 1,680 1,205 1,692
Net income per share.................................... .14 .30 .21 .30
1994
Revenue................................................. $23,730 $23,779 $23,202 $25,915
Income (loss) from operations........................... 997 1,701 193 (1,243)
Net income (loss)....................................... 657 1,052 94 (1,581)
Net income (loss) per share............................. .12 .19 .02 (.30)
</TABLE>
During the quarter ended June 30, 1995, the Company wrote-off $6,365,000 of
capitalized mainframe computer software.
The fourth quarter ended June 30, 1995 also included a $4,100,000 tax benefit
related to the recognition of prior years net operating losses and tax credits
as well as tax reserves released.
During the quarter ended June 30, 1994 the Company made provisions totaling
$2,343,000 for management actions or plans primarily in connection with staff
reductions related to restructuring.
During the quarter ended December 31, 1993, the Company concluded an agreement
to sell undeveloped land that it owned. This resulted in a gain of approximately
$1,100,000.
34
<PAGE> 35
COMSHARE, INCORPORATED
SCHEDULE II
CONSOLIDATED SCHEDULE
OF VALUATION & QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE CHARGED TO DEDUCTIONS BALANCE
BEGINNING COSTS AND FROM TRANSLATION END OF
DESCRIPTION OF PERIOD EXPENSES RESERVES ADJUSTMENTS OTHER PERIOD
- ---------------------------------- --------- ---------- ---------- ----------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
For the year ended June 30,:
1995......................... $ 1,161 $ (119) $ (173) $ 18 $ -- $ 887
====== ===== ===== ===== === ======
1994......................... $ 1,029 $ 140 $ (19) $ 11 $ -- $ 1,161
====== ===== ===== ===== === ======
1993......................... $ 1,366 $ 586 $ (802) $(121) $ -- $ 1,029
====== ===== ===== ===== === ======
</TABLE>
35
<PAGE> 36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Comshare, Incorporated
<TABLE>
<S> <C>
Date: September 28, 1995 By: /s/ KATHRYN A. JEHLE
---------------------------------------- ------------------------------------------
Kathryn A. Jehle
Senior Vice President,
Chief Financial Officer,
Treasurer and Assistant Secretary
</TABLE>
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
- ---------------------------------- ---------------------------------- -------------------
/s/ T. WALLACE WRATHALL President, Chief Executive September 28, 1995
- ---------------------------------- Officer, and a Director -------------------
T. Wallace Wrathall (Principal Executive Officer)
/s/ KATHRYN A. JEHLE Senior Vice President, September 28, 1995
- ---------------------------------- Chief Financial Officer, -------------------
Kathryn A. Jehle Treasurer and Assistant Secretary
(Principal Financial Officer)
/s/ R. MICHAEL MAHONEY Director of Finance, September 28, 1995
- ---------------------------------- Chief Accounting Officer, -------------------
R. Michael Mahoney (Principal Accounting Officer)
/s/ RICHARD L. CRANDALL Chairman of the Board September 28, 1995
- ---------------------------------- -------------------
Richard L. Crandall
/s/ CLAUDE H. ALLARD Director September 28, 1995
- ---------------------------------- -------------------
Claude H. Allard
/s/ DANIEL T. CARROLL Director September 28, 1995
- ---------------------------------- -------------------
Daniel T. Carroll
/s/ STANLEY R. DAY Director September 28, 1995
- ---------------------------------- -------------------
Stanley R. Day
/s/ W. JOHN DRISCOLL Director September 28, 1995
- ---------------------------------- -------------------
W. John Driscoll
/s/ ALAN G. MERTEN Director September 28, 1995
- ---------------------------------- -------------------
Alan G. Merten
/s/ JOHN F. ROCKART Director September 28, 1995
- ---------------------------------- -------------------
John F. Rockart
/s/ BRIAN SULLIVAN Director September 28, 1995
- ---------------------------------- -------------------
Brian Sullivan
</TABLE>
36
<PAGE> 37
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------------------------
<C> <S>
2.01 Asset Purchase Agreement dated March 11, 1991, and amendment to Asset Purchase
Agreement dated March 22, 1991, by and between Comshare, Incorporated and Execucom
Systems Corporation, and MPSI Systems Inc. relating to the sale of the operating
assets and business of Execucom Systems Corporation -- incorporated by reference to
Exhibit 2 to the Registrant's Form 8-K Report filed April 5, 1991.
3.01 Articles of Incorporation of the Registrant, as amended -- incorporated by reference
to Exhibit 3.01 to the Registrant's Form 10-K Report for the fiscal year ended June
30, 1988.
3.02 Bylaws of the Registrant, as amended.
4.01 Specimen form of Common Stock Certificate -- incorporated by reference to Exhibit
4(c) to the Registrant's Form S-1 Registration Statement No. 2-29663.
4.02 Comshare, Incorporated $14,000,000 Amended and Restated Credit Agreement between
Comshare, Incorporated and NBD Bank, N.A., Society Bank, Michigan, dated October 31,
1994 -- incorporated by reference to Exhibit 4.09 to the Registrant's Form 10-Q
Report for the quarter ended September 30, 1994.
4.03 First Amendment to Comshare, Incorporated $14,000,000 Amended and Restated Credit
Agreement between Comshare, Incorporated and NBD Bank, N.A., Society Bank, Michigan
dated May 19, 1995.
4.04 Second Amendment to Comshare, Incorporated $14,000,000 Amended and Restated Credit
Agreement between Comshare, Incorporated and NBD Bank, N.A., Society Bank, Michigan
dated July 31, 1995.
10.01 Benefit Adjustment Plan of Comshare, Incorporated, effective June 1, 1986, as amended
-- incorporated by reference to Exhibit 10.20 to the Registrant's Form 10-K Report
for the fiscal year ended June 30, 1993.
10.02 Comshare, Incorporated 1988 Stock Option Plan, as amended -- incorporated by
reference to Exhibit 10.21 to the Registrant's Form 10-K Report for the fiscal year
ended June 30, 1990 and Exhibit 10.22 to the Registrant's Form 10-Q Report for the
quarter ended September 30, 1994.
10.03 Profit Sharing Plan of Comshare, Incorporated, effective July 1, 1974, as amended --
incorporated by reference to Exhibit 10.05 to the Registrant's Form 10-K for the
fiscal year ended June 30, 1994.
10.04 Employee Stock Ownership Plan of Comshare, Incorporated, effective June 28, 1985, as
amended -- incorporated by reference to Exhibit 10.06 to the Registrant's Form 10-K
for the fiscal year ended June 30, 1994.
10.05 Rules of the Comshare Retirement and Death Benefits Plan for employees of the United
Kingdom, effective January 1, 1991, as amended -- incorporated by reference to
Exhibit 10.27 of the Registrant's Form 10-K Report for the fiscal year ended June 30,
1993.
10.06 Interim Trust Deed establishing the Comshare Money Purchase Plan for employees of the
United Kingdom, effective March 1, 1994 -- incorporated by reference to Exhibit
10.08 to the Registrant's Form 10-K for the fiscal year ended June 30, 1994.
10.07 Employment and NonCompetition Agreement between Comshare, Incorporated and T. Wallace
Wrathall, effective as of April 1, 1994 -- incorporated by reference to Exhibit 10.23
to the Registrant's Form 10-Q Report for the quarter ended December 31, 1994.
10.08 Amended and Restated Employee Agreement between Comshare, Incorporated and Richard L.
Crandall effective July 1, 1994, as amended -- incorporated by reference to Exhibit
10.10 to the Registrant's Form 10-K for the fiscal year ended June 30, 1994.
10.09 Non-Competition Agreement between Comshare, Incorporated and Richard L. Crandall --
incorporated by reference to Exhibit 10.11 of the Registrant's Form 10-K for the
fiscal year ended June 30, 1994.
10.10 Letter Agreement from Comshare, Incorporated to Kathryn A. Jehle regarding terms of
employment dated April 18, 1994 -- incorporated by reference to Exhibit 10.12 of the
Registrant's Form 10-K for the fiscal year ended June 30, 1994.
</TABLE>
<PAGE> 38
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------------------------
<C> <S>
10.11 Description of Incentive Agreements for certain executive officers for fiscal years
1993, 1994, and 1995-1997 -- incorporated by reference to Exhibit 10.13 to the
Registrant's Form 10-K for the fiscal year ended June 30, 1994.
10.12 Trust Agreement under the Benefit Adjustment Plan of Comshare, Incorporated,
effective April 25, 1988, as amended -- incorporated by reference to Exhibit 10.31 to
the Registrant's Form 10-K Report for the fiscal year ended June 30, 1993.
10.13 Trust Agreement between Comshare, Incorporated and Vanguard Fiduciary for maintaining
the Profit Sharing Plan of Comshare, Incorporated effective March 31, 1992, as
amended -- incorporated by reference to Exhibit 10.15 to the Registrant's Form 10-K
for the fiscal year ended June 30, 1994.
10.14 1994 Executive Stock Purchase Program of Comshare, Incorporated -- incorporated by
reference to Exhibit 10.19 to the Registrant's Form 10-Q Report for the quarter ended
September 30, 1994.
10.15 Employee Stock Purchase Plan of Comshare, Incorporated -- incorporated by reference
to Exhibit 10.20 to the Registrant's Form 10-Q Report for the quarter ended September
30, 1994.
10.16 1994 Directors Stock Option Plan of Comshare, Incorporated -- incorporated by
reference to Exhibit 10.21 to the Registrant's Form 10-Q Report for the quarter ended
September 30, 1994.
10.17 Offer to purchase land by the University of Michigan from Comshare, Incorporated,
dated September 20, 1993 -- incorporated by reference to Exhibit 4.06 of the
Registrant's Form 10-Q Report for the quarter ended September 30, 1993.
10.18 Lease dated September, 1994, between Comshare, Incorporated, Tenant and MGI Holding,
Inc., Landlord for office space located at 555 Briarwood Circle, Ann Arbor, Michigan
48108 -- incorporated by reference to Exhibit 10.18 to the Registrant's Form 10-Q
Report for the quarter ended September 30, 1994.
10.19 Agreement between Taurusbuild Limited, Comshare and Svenska Handelsbanken related to
the lease of office space for the Company's London office facility -- incorporated by
reference to Exhibit 10.17 of the Registrant's Form 10-K Report for the fiscal year
ended June 30, 1994.
10.20 Software License Agreement by and between Arbor Software Corporation and Comshare,
Incorporated dated December 23, 1993.
10.21 First Amendment to License Agreement by and between Arbor Software Corporation and
Comshare, Incorporated dated March 1, 1994.
21.01 Subsidiaries of the Registrant.
23.01 Consent of Independent Public Accountants.
27.00 Financial Data Schedule.
28.00* Employee Stock Ownership Plan of Comshare Incorporated, Form 11-K Annual Report --
filed pursuant to Section 15(d) of the Securities Exchange Act of 1934 for the fiscal
year ended June 30, 1995.
</TABLE>
_________________
*To be filed by amendment.
<PAGE> 1
EXHIBIT 3.02
RESTATED
BYLAWS
OF
COMSHARE, INCORPORATED
EFFECTIVE JUNE 22, 1995
ARTICLE I
OFFICES
1.01 Principal Office. The principal office of the corporation
shall be at such place within the State of Michigan as the Board of Directors
shall determine from time to time.
1.02 Other Offices. The corporation may also have offices at
such other places as the Board of Directors from time to time determines or
the business of the corporation requires.
1.03 Fiscal Year. The fiscal year of the corporation shall begin
on the first day of July and end on the 30th day of June in each year.
ARTICLE II
SEAL
2.01 Seal. The corporation may have a seal in such form as the
Board of Directors may from time to time determine. The seal may be
used by causing it or a facsimile to be impressed, affixed, reproduced or
otherwise.
ARTICLE III
CAPITAL STOCK
3.01 Issuance of Shares. The shares of capital stock of
the corporation shall be issued in such amounts, at such times, for such
consideration and on such terms and conditions as the Board shall deem
advisable, subject to the provisions of the Articles of Incorporation of the
corporation and the further provisions of these Bylaws, and subject also to
any requirements or restrictions imposed by the laws of the State of
Michigan.
<PAGE> 2
3.02 Certificates for Shares. The shares of the corporation
shall be represented by certificates signed by the Chairman of the Board,
President or a Vice President and also may be signed by the Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary of the corporation, and
may be sealed with the seal of the corporation or a facsimile thereof. The
signatures of the officers may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other
than the corporation itself or its employee. In case an officer who has signed
or whose facsimile signature has been placed upon a certificate ceases to be
such officer before the certificate is issued, it may be issued by the
corporation with the same effect as if he or she were such officer at the date
of issuance. A certificate representing shares shall state upon its face that
the corporation is formed under the laws of the State of Michigan, the name of
the person to whom it is issued, the number and class of shares, and the
designation of the series, if any, which the certificate represents, and
such other provisions as may be required by the laws of the State of Michigan.
3.03 Transfer of Shares. The shares of the capital stock of the
corporation are transferable only on the books of the corporation upon
surrender of the certificate therefor, properly endorsed for transfer, and
the presentation of such evidences of ownership and validity of the assignment
as the corporation may require.
3.04 Registered Shareholders. The corporation shall be entitled
to treat the person in whose name any share of stock is registered as the
owner thereof for purposes of dividends and other distributions in the course
of business, or in the course of recapitalization, merger, plan of share
exchange, reorganization, sale of assets, liquidation or otherwise and for the
purpose of votes, approvals and consents by shareholders, and for the purpose
of notices to shareholders, and for all other purposes whatever, and shall not
be bound to recognize any equitable or other claim to or interest in such
shares on the part of any other person, whether or not the corporation shall
have notice thereof, save as expressly required by the laws of the State of
Michigan.
3.05 Lost or Destroyed Certificates. Upon the presentation to
the corporation of a proper affidavit attesting the loss, destruction or
mutilation of any certificate or certificates for shares of stock of the
corporation, the Board of Directors shall direct the issuance of a new
certificate or certificates to replace the certificates so alleged to be
lost, destroyed or mutilated. The Board of Directors may require as a
condition precedent to the issuance of new certificates any or all of the
following: (a) presentation of additional evidence or proof of the
loss, destruction or mutilation claimed; (b) advertisement of loss in such
manner as the Board
-2-
<PAGE> 3
of Directors may direct or approve; (c) a bond or agreement of indemnity, in
such form and amount and with such sureties, or without sureties, as the
Board of Directors may direct or approve; (d) the order or approval of a
court or judge.
ARTICLE IV
SHAREHOLDERS AND MEETINGS OF SHAREHOLDERS
4.01 Place of Meetings. All meetings of shareholders shall be
held at the principal office of the corporation or at such other place as shall
be determined by the Board of Directors and stated in the notice of meeting.
4.02 Annual Meeting. The annual meeting of the shareholders
of the corporation shall be held in the fifth calendar month after the end of
the corporation's fiscal year, or at such other date as the Board of Directors
shall determine from time to time, and shall be held at such place and time of
day as shall be determined by the Board of Directors. Directors shall
be elected at each annual meeting and such other business transacted as may
come before the meeting.
4.03 Special Meetings. Special meetings of shareholders may be
called only by the Chairman of the Board (if such office is filled), or by the
President or pursuant to a resolution of the Board of Directors. Business
transacted at a special meeting of shareholders shall be confined to the
purpose or purposes of the meeting as stated in the notice of the meeting.
4.03.5 Business to Be Conducted at Meetings of Shareholders;
Shareholder Nominations and Proposals. At any meeting of shareholders or any
such adjourned meeting, only such business shall be conducted as shall have
been properly brought before such meeting or any such adjourned meeting. To
be properly brought before any meeting of shareholders or any such adjourned
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,
(b) otherwise properly brought before such meeting or any such adjourned
meeting by or at the direction of the Board of such Directors, or
(c) otherwise properly brought before such meeting or any such adjourned
meeting by a shareholder. For business to be properly brought by a
shareholder before any meeting of shareholders or any such adjourned meeting
the shareholder must have given timely notice thereof in writing to the
Secretary. To be timely, a shareholder's notice must be directed to the
Secretary and delivered to or mailed and received at the principal
executive offices of the corporation not less than fifty-five days nor more
than seventy days prior to such meeting; provided, however, that in the
event less than
-3-
<PAGE> 4
sixty-five days' prior public disclosure of the date of such meeting is made to
the shareholders or in the event the only public disclosure of the date of the
meeting is written notice in accordance with this Article IV, Section 4.04,
notice by such shareholder to be timely must be so received not later than the
close of business on the tenth day following the day on which such notice of
the date of such meeting was mailed or such public disclosure was made. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before such meeting (a) a brief description of
the business desired to be brought before such meeting and the reasons for
conducting such business at such meeting, the name and address, as they
appear on the corporation's books, of the shareholder proposing such
business, (c) the class and number of shares of the securities of the
corporation which are beneficially owned by such shareholder, and (d) any
material interest of such shareholder in such business.
No business shall be conducted at any meeting of shareholders
or any such adjourned meeting except in accordance with the procedures set
forth in this Article IV, Section 4.03.5. The Chairman of the shareholder
meeting or any adjourned meeting may refuse to acknowledge any business
attempted to be brought before any meeting or any adjourned meeting not made
in compliance with the foregoing procedure.
Only individuals who are nominated in accordance with the procedures
set forth in this Article IV, Section 4.03.5 shall be eligible for election
as directors. Nominations of individuals for election to the Board of
Directors may be made by or at the direction of the Board of Directors or by
any shareholder of the corporation entitled to vote in the election of
directors generally but only if such shareholder complies with the notice
procedures set forth in this Article IV, Section 4.03.5.
Nominations by shareholders can only be made pursuant to timely
notice in writing to the Secretary. To be timely, a shareholder's notice shall
be directed to the Secretary and delivered to or mailed and received at the
principal executive offices of the corporation not less than fifty-five days
nor more than seventy days prior to such meeting; provided, however,
that in the event less than sixty-five days' prior public disclosure of the
date of such meeting is made to the shareholders or in the event the only
public disclosure of the date of the meeting is written notice in accordance
with this Article IV, Section 4.04, notice by such shareholder to be timely
must be so received not later than the close of business on the tenth day
following the day on which such notice of the date of such meeting was mailed
or such public disclosure was made. Such shareholder's notice shall set forth
(a) as to each individual whom such shareholder proposes to nominate for
election or re-election as director, (i) the name, age,
-4-
<PAGE> 5
business address and residence address of such individual, (ii) the principal
occupation or employment of such individual, (iii) the class and number
of shares, or the amount of any securities of the corporation which are
beneficially owned by such individual, (iv) any other information relating to
such individual that is required to be disclosed in solicitations of proxies
for election of directors, or is otherwise required, in each case pursuant to
the Securities Exchange Act of 1934, as amended and (v) such individual's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected; and (b) as to the shareholder giving the
notice, (i) the name and address, as they appear on the corporation's
books, of such shareholder and (ii) the class and number of shares of the
securities of the corporation which are beneficially owned by such shareholder.
At the request of the Board of Directors, any individual nominated by the Board
of Directors for election as a director shall furnish to the Secretary
that information required to be set forth in a shareholder's notice of
nomination which pertains to the nominee. No individual shall be eligible
for election as a director of the corporation unless nominated in accordance
with the procedures set forth in this Article IV, Section 4.03.5. The Chairman
of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure.
4.04 Notice of Meetings. Except as otherwise
provided by statute, written notice of the time, place and purposes of a
meeting of shareholders shall be given not less than 10 nor more than 60 days
before the date of the meeting to each shareholder of record entitled to vote
at the meeting, either personally or by mailing such notice to his or her last
address as it appears on the books of the corporation. No notice need be
given of an adjourned meeting of the shareholders provided the time and
place to which such meeting is adjourned are announced at the meeting at
which the adjournment is taken and at the adjourned meeting only such business
is transacted as might have been transacted at the original meeting.
However, 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
shareholder of record on the new record date entitled to notice as provided in
this Bylaw.
4.05 Record Dates. The Board of Directors may fix in
advance a date as the record date for the purpose of determining
shareholders entitled to notice of and to vote at a meeting of shareholders
or an adjournment thereof, or to express consent to or dissent from a
proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of a dividend or allotment of a right,
or for the purpose of any other action. The date fixed shall not be more than
60 nor less than 10 days before the date
-5-
<PAGE> 6
of the meeting, nor more than 60 days before any other action. In such case
only such shareholders as shall be shareholders of record on the date so fixed
shall be entitled to notice of and to vote at such meeting or adjournment
thereof, or to express consent to or dissent from such proposal, or to receive
payment of such dividend or to receive such allotment of rights, or to
participate in any other action, as the case may be, notwithstanding
any transfer of any stock on the books of the corporation, or otherwise, after
any such record date. Nothing in this Bylaw shall affect the rights of a
shareholder and his transferee or transferor as between themselves.
4.06 List of Shareholders. The Secretary of the corporation
or the agent of the corporation having charge of the stock transfer records
for shares of the corporation shall make and certify a complete list of
the shareholders entitled to vote at a shareholders' meeting or any adjournment
thereof. The list shall be arranged alphabetically within each class and
series, with the address of, and the number of shares held by, each
shareholder; be produced at the time and place of the meeting; be subject to
inspection by any shareholder during the whole time of the meeting; and be
prima facie evidence as to who are the shareholders entitled to examine the
list or vote at the meeting.
4.07 Quorum. Unless a greater or lesser quorum is required in
the Articles of Incorporation or by the laws of the State of Michigan, the
shareholders present at a meeting in person or by proxy who, as of the
record date for such meeting, were holders of a majority of the outstanding
shares of the corporation entitled to vote at the meeting shall constitute a
quorum at the meeting. The shareholders present in person or by proxy at a
meeting at which such a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave
less than a quorum. If a quorum is not present or represented at the
commencement of any meeting of shareholders, the shareholders entitled to
vote thereat who are present in person or by proxy shall have the power to
adjourn the meeting from time to time without notice other than announcement
at the meeting, until the requisite amount of voting stock shall be present.
At such adjourned meeting at which the requisite amount of voting stock shall
be represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
4.08 Proxies. A shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may
authorize other persons to act for the shareholder by proxy. A proxy shall
be signed by the shareholder or the shareholder's authorized agent or
representative and shall not be valid after the expiration of three years from
its date unless otherwise provided in the proxy. A proxy is revocable at the
pleasure of the shareholder
-6-
<PAGE> 7
executing it except as otherwise provided by the laws of the State of Michigan.
4.09 Inspectors of Election. The Board of Directors, in
advance of a shareholders' meeting, may appoint one or more inspectors to
act at the meeting or any adjournment thereof. If inspectors are not so
appointed, the person presiding at the shareholders' meeting may, and on
request of a shareholder entitled to vote thereat shall, appoint one or more
inspectors. In case a person appointed fails to appear or act, the vacancy may
be filled by appointment made by the Board of Directors in advance of the
meeting or at the meeting by the person presiding thereat. If appointed, the
inspectors shall determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum
and the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine challenges and questions arising in connection
with the right to vote, count and tabulate votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all shareholders. On request of the person presiding at
the meeting or a shareholder entitled to vote thereat, the inspectors shall
make and execute a written report to the person presiding at the meeting of any
of the facts found by them and matters determined by them. The report shall be
prima facie evidence of the facts stated and of the vote as certified by the
inspectors.
4.10 Voting. Each outstanding share is entitled to one vote
on each matter submitted to a vote, unless otherwise provided in the Articles
of Incorporation. Votes shall be cast in writing signed by the shareholder
or the shareholder's proxy. When an action, other than the election of
directors, is to be taken by a vote of the shareholders, it shall be
authorized by a majority of the votes cast by the holders of shares entitled
to vote thereon, unless a greater vote is required by the Articles of
Incorporation or by the laws of the State of Michigan. Except as
otherwise provided by the Articles of Incorporation, directors shall
be elected by a plurality of the votes cast at any election.
ARTICLE V
DIRECTORS
5.01 Number. The business and affairs of the corporation
shall be managed by its Board of Directors. The number of Directors of the
Corporation shall be not less than three nor more than ten as may be determined
by the Board from time to time. The Directors need not be residents of
Michigan or shareholders of the Corporation.
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5.02 Election and Resignation. Directors shall be elected at each
annual meeting of the shareholders, each to hold office until the next annual
meeting of shareholders and until the director's successor is elected and
qualified, or until the director's resignation or removal. A director may
resign by written notice to the corporation. The resignation is effective
upon its receipt by the corporation or a subsequent time as set forth in
the notice of resignation.
5.03 Vacancies. Vacancies in the Board of Directors occurring by
reason of death, resignation, removal, increase in the number of directors
or otherwise shall be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors,
unless filled by proper action of the shareholders of the corporation. Each
person so elected shall be a director for a term of office continuing only
until the next election of directors by the shareholders. A vacancy that
will occur at a specific date, by reason of a resignation effective at a later
date or otherwise, may be filled before the vacancy occurs, but the newly
elected director may not take office until the vacancy occurs.
5.04 Annual Meeting. The Board of Directors shall meet each year
immediately after the annual meeting of the shareholders, or within three (3)
days of such time excluding Sundays and legal holidays if such later time is
deemed advisable, at the place where such meeting of the shareholders has been
held or such other place as the Board may determine, for the purpose of
election of officers and consideration of such business that may properly be
brought before the meeting; provided, that if less than a majority of the
directors appear for an annual meeting of the Board of Directors the holding of
such annual meeting shall not be required and the matters which might have
been taken up therein may be taken up at any later special or annual meeting,
or by consent resolution.
5.05 Regular and Special Meetings. Regular meetings of the Board
of Directors may be held at such times and places as the majority of the
directors may from time to time determine at a prior meeting or as shall be
directed or approved by the vote or written consent of all the directors.
Special meetings of the Board may be called by the Chairman of the Board (if
such office is filled) or the President and shall be called by the
President or Secretary upon the written request of any two directors.
5.06 Notices. No notice shall be required for annual or
regular meetings of the Board, or any committee of the Board, or for adjourned
meetings, whether regular or special. Two days' written notice shall be
given for special
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meetings of the Board or any committee of the Board, and such notice shall
state the time, place and purpose or purposes of the meeting. If notice is
given by radiogram, cablegram, or telecopy, only one day's notice shall be
necessary.
5.07 Quorum. A majority of the Board of Directors then in office,
or of the members of a committee thereof, constitutes a quorum for the
transaction of business. The vote of a majority of the directors present at
any meeting at which there is a quorum shall be the acts of the Board or of
the committee, except as a larger vote may be required by the laws of the State
of Michigan. A member of the Board or of a committee designated by the Board
may participate in a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can communicate with each other. Participation in a meeting in this
manner constitutes presence in person at the meeting.
5.08 Executive Committee. The Board of Directors may, by
resolution passed by a majority of the whole Board, establish an executive
committee, consisting of three or more members of the Board, to exercise all
powers and authorities of the Board in management of the business and affairs
of the corporation during the intervals between meetings of the Board,
provided, however, that such committee shall not have power or authority to:
(a) amend the Articles of Incorporation;
(b) adopt an agreement of merger of
consolidation;
(c) recommend to shareholders the sale, lease
or exchange of all or substantially all
of the corporation's property and assets;
(d) recommend to shareholders a dissolution
of the corporation or revocation of a
dissolution;
(e) amend these Bylaws;
(f) fill vacancies in the Board; or
(g) unless expressly authorized by the Board,
declare a dividend or authorize the
issuance of stock.
5.09 Compensation Committee. The Board of Directors may, by
resolution adopted by a majority of the whole Board, appoint one or more of
its members as a Compensation
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Committee. The Compensation Committee shall, from time to time, recommend
to the Board the salaries or range of salaries for members of the Board of
Directors who are officers or employees of the corporation and of all
officers of the corporation. It shall also perform such functions as may be
delegated to it under the provisions of any bonus, stock option or special
compensation plan of the corporation.
5.10 Other Committees. The Board of Directors from time to time
may, by resolution, adopted by a majority of the whole Board appoint such
other committees of one or more directors to have such authority as shall
be specified by the Board in the resolution making such appointments. The
Board of Directors may designate one or more directors as alternate members
of any committee who may replace an absent or disqualified member at any
meeting thereof.
5.11 Dissents. A director who is present at a meeting of the
Board of Directors, or a committee thereof of which the director is a member,
at which action on a corporate matter is taken is presumed to have concurred
in that action unless the director's dissent is entered in the minutes of the
meeting or unless the director files a written dissent to the action with the
person acting as secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
corporation promptly after the adjournment of the meeting. Such right to
dissent does not apply to a director who voted in favor of such action.
A director who is absent from a meeting of the Board, or a committee thereof of
which the director is a member, at which any such action is taken is presumed
to have concurred in the action unless the director files a written dissent
with the Secretary of the corporation within a reasonable time after the
director has knowledge of the action.
5.12 Compensation. The Board of Directors, by affirmative vote of
a majority of directors in office and irrespective of any personal interest
of any of them, may establish reasonable compensation of directors for
services to the corporation as directors or officers.
ARTICLE VI
NOTICES. WAIVERS OF NOTICE AND MANNER OF ACTING
6.01 Notices. All notices of meetings required to be given to
shareholders, directors or any committee of directors may be given by
mail, telecopy, telegram, radiogram or cablegram to any shareholder, director
or committee member at such person's last address as it appears on the books
of the corporation. Such notice shall be deemed to be given at the time when
the same shall be mailed or otherwise dispatched.
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6.02 Waiver of Notice. Notice of the time, place and purpose of
any meeting of shareholders, directors or committee of directors may be
waived by telecopy, telegram, radiogram, cablegram or other writing, either
before or after the meeting, or in such other manner as may be permitted by the
laws of the State of Michigan. Attendance of a person at any meeting of
shareholders, in person or by proxy, or at any meeting of directors or of
a committee of directors, constitutes a waiver of notice of the meeting
except as follows:
(a) In the case of a shareholder, unless the
shareholder at the beginning of the meeting objects to holding
the meeting or transacting business at the meeting, or unless
with respect to consideration of a particular matter at the
meeting that is not within the purpose or purposes
described in the meeting notice, the shareholder objects
to considering the matter when it is presented.
(b) In the case of a director, unless he or
she at the beginning of the meeting, or upon his or her
arrival, objects to the meeting or the transacting of business
at the meeting and does not thereafter vote for or assent to
any action taken at the meeting.
6.03 Action Without a Meeting. Any action required or permitted
at any meeting of shareholders or directors or committee of directors may be
taken without a meeting, without prior notice and without a vote, if all
of the shareholders or directors or committee members entitled to vote thereon
consent thereto in writing, before or after the action is taken.
ARTICLE VII
OFFICERS
7.01 Number. The Board of Directors shall elect or appoint a
President and Chief Executive Officer, Chief Financial Officer, a
Secretary, and a Treasurer, and may select a Chairman of the Board, and
one or more Senior Vice Presidents, Vice Presidents, Assistant Secretaries
or Assistant Treasurers. The President and Chairman of the Board, if any,
shall be members of the Board of Directors. Any two or more of the above
offices, except those of President and Vice President, may be held
by the same person. No officer shall execute, acknowledge or verify an
instrument in more than one capacity if the instrument is required by law, the
Articles of Incorporation or these Bylaws to be executed, acknowledged, or
verified by two or more officers.
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7.02 Term of Office. Resignation and Removal. An officer shall
hold office for the term for which such officer is elected or appointed and
until a successor is elected or appointed and qualified, or until such
officer's resignation or removal. An officer may resign by written notice
to the corporation. The resignation is effective upon its receipt by the
corporation or at a subsequent time specified in the notice of resignation.
An officer may be removed by the Board with or without cause. The removal of
an officer shall be without prejudice to his contract rights, if any. The
election or appointment of an officer does not of itself create contract
rights.
7.03 Vacancies. The Board of Directors may fill any vacancies in
any office occurring for whatever reason.
7.04 Authority. All officers, employees and agents of the
corporation shall have such authority and perform such duties in the conduct
and management of the business and affairs of the corporation as may be
designated by the Board of Directors and these Bylaws.
ARTICLE VIII
DUTIES OF OFFICERS
8.01 Chairman of the Board. The Chairman of the Board, if such
office is filled, shall preside at all meetings of the shareholders and of the
Board of Directors at which the Chairman is present.
8.02 President. The President shall be the Chief Executive
Officer of the corporation. The President shall see that all orders and
resolutions of the Board are carried into effect, and the President shall
have the general powers of supervision and management usually vested in
the chief executive officer of a corporation, including the authority to vote
all securities of other corporations and business organizations held by
the corporation. In the absence or disability of the Chairman of the
Board, or if that office has not been filled, the President also shall perform
the duties of the Chairman of the Board as set forth in these Bylaws.
8.03 Vice Presidents. The Senior Vice Presidents and Vice
Presidents, in order of their seniority, shall, in the absence or disability of
the President, perform the duties and exercise the powers of the President and
shall perform such other duties as the Board of Directors or the President may
from time to time prescribe. One of the Senior Vice Presidents or Vice
Presidents shall be designated as the Chief Financial Officer.
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8.04 Secretary. The Secretary shall attend all meetings of
the Board of Directors and of shareholders and shall record all votes and
minutes of all proceedings in a book to be kept for that purpose, shall give
or cause to be given notice of all meetings of the shareholders and of the
Board of Directors, and shall keep in safe custody the seal of the
corporation and, when authorized by the Board, affix the same to any instrument
requiring it, and when so affixed it shall be attested by the signature of the
Secretary, or by the signature of the Treasurer or an Assistant Secretary. The
Secretary may delegate any of the duties, powers and authorities of the
Secretary to one or more Assistant Secretaries, unless such delegation is
disapproved by the Board.
8.05 Treasurer. The Treasurer shall have the custody of the
corporate funds and securities; shall keep full and accurate accounts of
receipts and disbursements in books of the corporation; and shall deposit
all moneys and other valuable effects in the name and to the credit
of the corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall render to the President and directors,
whenever they may require it, an account of his or her transactions as
Treasurer and of the financial condition of the corporation. The
Treasurer may delegate any of his or her duties, powers and authorities to
one or more Assistant Treasurers unless such delegation is disapproved by
the Board of Directors.
8.06 Assistant Secretaries and Treasurers. The Assistant
Secretaries, in order of their seniority, shall perform the duties and
exercise the powers and authorities of the Secretary in case of the
Secretary's absence or disability. The Assistant Treasurers, in the order
of their seniority, shall perform the duties and exercise the powers and
authorities of the Treasurer in case of the Treasurer's absence or disability.
The Assistant Secretaries and Assistant Treasurers shall also perform such
duties as may be delegated to them by the Secretary and Treasurer,
respectively, and also such duties as the Board of Directors may prescribe.
ARTICLE IX
SPECIAL CORPORATE ACTS
9.01 Orders for Payment of Money. All checks, drafts,
notes, bonds, bills of exchange and orders for payment of money of the
corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time
designate.
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<PAGE> 14
9.02 Contracts and Conveyances. The Board of Directors of
the corporation may in any instance designate the officer and/or agent who
shall have authority to execute any contract, conveyance, mortgage or other
instrument on behalf of the corporation, or may ratify or confirm any
execution. When the execution of any instrument has been authorized without
specification of the executing officers or agents, the Chairman of the Board,
the President or any Vice President, and the Secretary or Assistant
Secretary or Treasurer or Assistant Treasurer, may execute the same in the
name and on behalf of this corporation and may affix the corporate seal
thereto.
9.03 Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such authority
may be general or confined to specific instances. The corporation may lend
money to, or guarantee an obligation of, or otherwise assist an officer or
employee of the corporation or of its subsidiary, including an officer or
employee who is a director of the corporation or its subsidiary, when, in the
judgment of the Board of Directors, the loan, guaranty, or assistance may
reasonably be expected to benefit the corporation, or is pursuant to a plan
authorizing loans, guarantees, or assistance, which plan the Board has
reasonably determined will benefit the corporation. The loan, guaranty, or
assistance may be with or without interest, and may be unsecured, or secured in
a manner as the Board approves, including without limitation, a pledge of
shares of stock of the corporation.
ARTICLE X
BOOKS AND RECORDS
10.01 Maintenance of Books and Records. The proper officers and
agents of the corporation shall keep and maintain such books, records and
accounts of the corporation's business and affairs, minutes of the proceedings
of its shareholders, Board and committees, if any, and such stock ledgers and
lists of shareholders, as the Board of Directors shall deem advisable,
and as shall be required by the laws of the State of Michigan and other states
or jurisdictions empowered to impose such requirements. Books, records and
minutes may be kept within or without the State of Michigan in a place which
the Board shall determine.
10.02 Reliance on Books and Records. In discharging his or her
duties, a director or an officer of the corporation, when acting in good faith,
may rely upon information, opinions, reports, or statements, including
financial statements and other financial data, if prepared or presented by
any of the following:
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(a) One or more directors, officers, or
employees of the corporation, or of a business organization
under joint control or common control, whom the director or
officer reasonably believes to be reliable and competent in the
matters presented.
(b) Legal counsel, public accountants, engineers,
or other persons as to matters the director or officer
reasonably believes are within the person's professional or
expert competence.
(c) A committee of the Board of which he or
she is not a member if the director or officer reasonably
believes the committee merits confidence.
A director or officer is not entitled to rely on the information set
forth above if he or she has knowledge concerning the matter in question
that makes reliance otherwise permitted unwarranted.
ARTICLE XI
AMENDMENTS
11.01 Amendments. The Board of Directors shall have the power to
make, alter, amend or repeal the Bylaws of the corporation by a vote of not
less than a majority of the entire Board then in office at any meeting of the
Board. The holders of the Common Stock shall have power to make, alter, amend
or repeal the Bylaws at any regular or special meeting if the substance of
such amendment be contained in the notice of the meeting of shareholders.
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EXHIBIT 4.03
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of May 19, 1995 (this "Amendment"), is among COMSHARE, INCORPORATED, a Michigan
corporation (the "Company"), the Banks set forth on the signature pages hereof
(collectively, the "Banks") and NBD BANK, formerly known as NBD Bank, N.A., as
agent for the Banks (in such capacity, the "Agent").
RECITALS
A. The Company, the Banks and the Agent are parties to an Amended and
Restated Credit Agreement, dated as of October 31, 1994, (the "Credit
Agreement"), pursuant to which the Banks agreed, subject to the terms and
conditions thereof, to extend credit to the Company.
B. The Company has requested the ability to request loans under the
Credit Agreement denominated in foreign currencies and the Agent and the Banks
are willing to do so strictly in accordance with the terms hereof, and provided
the Credit Agreement is amended as set forth herein, and the Company has agreed
to such amendments.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE 1. AMENDMENTS. Upon fulfillment of the conditions set forth in Article
III hereof, the Credit Agreement shall be amended as follows:
1.1 Section 1.1 shall be amended as follows:
(a) The definition of "Applicable Margin" shall be amended
by deleting the paragraph after the table set forth therein and inserting the
following in place thereof:
The Applicable Margin with respect to any Floating Rate
Loan shall be adjusted each time the Applicable Margin is
adjusted as described above, and the Applicable Margin with
respect to any Eurodollar Rate Loan shall be set at the
Applicable Margin in effect at the beginning of the related
Eurodollar Interest Period for such Eurodollar Rate Loan,
regardless of any change in the Applicable Margin during each
such Eurodollar Interest Period. Notwithstanding anything
herein to the contrary, (a) until such time as the Adjusted
Tangible Net Worth exceeds $30,000,000 as shown
<PAGE> 2
by financial statements of the Company and its Subsidiaries
acceptable to the Required Banks, (i) the Applicable Margin
for each Floating Rate Loan shall be 1%, (ii) Eurodollar Rate
Loans denominated in Dollars may not be elected and (iii) the
Applicable Margin for each Eurodollar Rate Loan denominated in
a Permitted Currency other than Dollars shall be 3.5%, and
(b) during any period of time an Event of Default has occurred
and is continuing and has not been waived, the Applicable
Margin shall be 1.0% with respect to Floating Rate Loans and
2.5% with respect to Eurodollar Rate Loans, except for
Eurodollar Rate Loans denominated in a Permitted Currency
other than Dollars, during such times when the Adjusted
Tangible Net Worth is less than or equal to $30,000,000, for
which the Applicable Margin shall be 3.5% as provided in
clause (a) above.
(b) The definition of "Commitment" shall be deleted in its
entirety and the following shall be inserted in place thereof:
"Commitment" shall mean, with respect to each Bank, the
commitment of each such Bank to make Loans pursuant to Section
2.1, in amounts not exceeding in aggregate principal amount
outstanding at any time the Dollar Equivalent of the
respective commitment amounts for each such Bank set forth
next to the name of each such Bank in the signature pages
hereof, as such amounts may be reduced from time to time
pursuant to Section 2.2.
(c) The definition of "Eurodollar Rate" shall be amended by
deleting the reference in clause (b) therein to "Dollars" and inserting the
following in place thereof: "the Permitted Currency in which such Eurodollar
Rate Loan is requested to be denominated" and by deleting the reference in the
fifth line of clause (b) to "interbank market" and inserting "eurocurrency
market" in place thereof.
(d) The following definitions shall be added in
appropriate alphabetical order:
"Applicable Lending Office" shall mean, with respect to any
Loan made by any Bank or with respect to such Bank's
Commitment, the office of such Bank or any Affiliate of such
Bank located at the address specified as the applicable
lending office for such Bank set forth next to the name of
such Bank in the signature pages hereof or any other office or
Affiliate of such Bank or of any Affiliate of such Bank
hereafter selected and notified to the Company and the Agent
by such Bank.
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"Equivalent" of an amount of one currency (the "first
currency") denominated in another currency (the "second
currency"), as of any date of determination, shall mean the
amount of the second currency which could be purchased with
the amount of the first currency at the spot or other relevant
rate of exchange quoted by the Agent at approximately 11:00
a.m. local time of the Applicable Lending Office on such date.
"First Amendment Effective Date" shall mean May 19, 1995.
"Optional Currency" shall mean any currency which is freely
transferrable and convertible into Dollars and is issued by an
Organization for Economic Cooperation and Development ("OECD")
country (as such designation shall change from time to time)
approved by the Banks. A list of all such approved OECD
countries as of the First Amendment Effective Date is set
forth on Schedule 1.1 which schedule shall be updated, if
necessary, by the Agent on each anniversary of the First
Amendment Effective Date.
"Original Dollar Amount" shall mean, with respect to any Loan,
the Equivalent in Dollars of the original principal amount of
such Loan specified in the related request therefor given by
the Company pursuant to Section 2.4, (a) as such amount is
reduced by payments of principal made in respect of such Loan
in Dollars (or the Dollar Equivalent thereof in the case of a
payment made in an Optional Currency) and (b) as such amount
is adjusted pursuant to Section 3.1(d).
"Permitted Currency" shall mean Dollars and any Optional
Currency.
1.2 Section 2.1 shall be amended by adding the following language
at the end thereof: "On the date of each Loan, the Equivalent in Dollars on
such date of all Loans, including the Loans to be made or requested on such
date, shall not exceed the aggregate Commitments."
l.3 Section 2.4 shall be amended by deleting Sections 2.4(a) and
(b) in their entirety and inserting the following in place thereof:
2.4 Disbursement of Borrowings. (a) The Company shall give
the Agent notice of its request for each Borrowing in
substantially the form of Exhibit D hereto by telecopy not
later than 10:00 a.m. Detroit time (i) four Eurodollar
Business Days prior to the date such Borrowing is requested to
be made if such Borrowing is to be
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made as a Eurodollar Rate Borrowing, and (ii) on the
Eurodollar Business Day such Borrowing is requested to be made
in all other cases, which notice shall specify whether a
Eurodollar Rate Borrowing or a Floating Rate Borrowing is
requested and, in the case of each requested Eurodollar Rate
Borrowing, the Interest Period to be initially applicable to
such Borrowing, and the Permitted Currency in which such
Borrowing is requested to be denominated. The Agent, by 2:00
p.m. Detroit time on the same day such notice is given in the
event of a Floating Rate Borrowing and not later than by 2:00
p.m. Detroit time on the Business Day next succeeding the day
such notice is given in all other cases, shall provide notice
of such requested Borrowing to each Bank by telecopy. Subject
to the terms and conditions of this Agreement, the proceeds of
each such requested Borrowing shall be made available to the
Company by depositing the proceeds thereof, in the case of any
Borrowing denominated in Dollars, in immediately available
funds, in an account maintained and designated by the Company
at the principal office of the Agent and, in all other cases,
in an account maintained and designated by the Company at a
bank acceptable to the Agent in the principal financial center
of the country issuing the Permitted Currency in which such
Borrowing is denominated or in such other place specified by
the Agent.
(b) Each Bank, on the date any Borrowing is requested to be
made, shall make its pro rata share of such Borrowing
available in immediately available, freely transferable,
cleared funds for disbursement to the Company pursuant to the
terms and conditions of this Agreement, in the case of any
Borrowing denominated in Dollars, at the principal office of
the Agent and, in all other cases, to the account of the
Agent at its designated branch or correspondent bank in the
country issuing the Permitted Currency in which such Borrowing
is denominated or in such other place specified by the Agent.
Unless the Agent shall have received notice from any Bank
prior to 2:3O p.m. Detroit time on the date such Borrowing is
to be made that such Bank will not make available to the Agent
such Bank's pro rata portion of such Borrowing, the Agent may
assume that such Bank has made such portion available to the
Agent on the date such Borrowing is requested to be made in
accordance with this Section 2.4. If and to the extent such
Bank shall not have so made such pro rata portion available to
the Agent, the Agent may (but shall not be obligated to) make
such amount available to the Company, and
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such Bank and the Company severally agree to pay to the Agent
forthwith on demand such amount together with interest
thereon, for each day from the date such amount is made
available to the Company by the Agent until the date such
amount is repaid to the Agent, at a rate per annum equal to
the interest rate applicable to such Borrowing during such
period, provided, that, in the case as of a Bank only, the
applicable interest rate for the first three days shall be the
Federal Funds Rate. If such Bank shall pay such amount to the
Agent together with interest, such amount so paid shall
constitute a Borrowing by such Bank as a part of such related
Borrowing for purposes of this Agreement. The failure of any
Bank to make its pro rata portion of any such Borrowing
available to the Agent shall not relieve any other Bank of its
obligations to make available its pro rata portion of such
Borrowing on the date such Borrowing is requested to be made,
but no Bank shall be responsible for failure of any other Bank
to make such pro rata portion available to the Agent on the
date of any such Borrowing.
1.4 Section 2.7 shall be amended by adding a new clause (d)
immediately after clause (c) to read as follows: "or (d) elect to convert a
Loan denominated in a Permitted Currency to a Loan denominated in another
Permitted Currency" and deleting the reference in the seventh line to "three
Eurodollar Business Days" and inserting "four Eurodollar Business Days" in
place thereof.
1.5 Section 2.8 shall be deleted in its entirety and the following
shall be inserted in place thereof:
2.8 Limitation of Requests and Elections. Notwithstanding
any other provision of this Agreement to the contrary, if,
upon receiving a request for a Eurodollar Rate Borrowing
pursuant to Section 2.4, or A request for a continuation of a
Eurodollar Rate Borrowing as a Eurodollar Rate Borrowing or a
request for a conversion of a Floating Rate Loan to a
Eurodollar Rate Loan pursuant to Section 2.7 or a request for
a conversion of a Loan denominated in a Permitted Currency to
a Loan denominated in another Permitted Currency,
(a)(i) deposits in the relevant Permitted Currency for periods
comparable to the Eurodollar Interest Period elected by the
Company are not available to any Bank in the relevant
interbank market, or (ii) the Eurodollar Rate will not
adequately and fairly reflect the cost to any Bank of making,
funding or maintaining the related Eurodollar Rate Borrowing
or (iii) by reason of national or
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international financial, political or economic conditions or
by reason of any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect, or
the interpretation or administration thereof by any
governmental authority charged with the interpretation or
administration thereof, or compliance by any Bank with any
guideline, request or directive of such authority (whether or
not having the force of law), including without limitation
exchange controls, it is impracticable, unlawful or impossible
for (A) any Bank to make or fund the relevant Eurodollar Rate
Borrowing, or (B) any Bank to continue such Eurodollar Rate
Borrowing as a Borrowing of the then existing type or to
convert a Borrowing to a Eurodollar Rate Borrowing or (C) the
Company to make or any Bank to receive any payment under this
Agreement at the place specified for payment hereunder or to
freely convert any amount paid into Dollars at market rates of
exchange or to transfer any amount paid or so converted to the
address of its principal office specified in Section 8.2, or
(b) except with respect to Eurocurrency Loans denominated in
a Permitted Currency other than Dollars, the Adjusted Tangible
Net Worth does not exceed $30,000,000 and the Interest
Coverage Ratio, as calculated for the period consisting of the
four most recently ended consecutive fiscal quarters of the
Company, is not greater than 5.0 to 1.0,
then the Company shall not be entitled, so long as such
circumstances continue, to request a Eurodollar Rate Borrowing
of the affected type pursuant to Section 2.4 or a continuation
of or conversion to a Eurodollar Rate Borrowing of the
affected type pursuant to Section 2.7. In the event that such
circumstances no longer exist, the Banks shall again consider
requests for Eurodollar Rate Borrowings of the affected type
pursuant to Section 2.4, and requests for continuations of and
conversions to Eurodollar Rate Borrowings of the affected type
pursuant to Section 2.7.
1.6 Section 3.1 shall be amended by adding a new Section 3.1(d)
at the end thereof to read as follows:
(d) If, pursuant to Section 2.7, a Borrowing, or portion
thereof, is continued or converted, such Borrowing or portion
thereof shall be repaid on the last day of the related
Interest Period in the Permitted Currency in which such
Borrowing is then denominated and, (i) in the case of any
conversion, the Agent shall readvance to the
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<PAGE> 7
Company the Equivalent of the Original Dollar Amount of the
Loan or portion thereof as has been so repaid by the Company
in the Permitted Currency requested pursuant to Section 2.7,
and (ii) in the case of any continuation, the Agent shall
readvance to the Company the same amount of such Permitted
Currency as has been so repaid. For purposes of effecting the
repayment required by this Section 3.1(d), the Agent shall
apply the proceeds of such readvance toward the repayment of
such Borrowing or portion thereof on the last day of the
related Interest Period. In the case of any conversion, the
Agent shall be deemed to have applied the proceeds of such
advance toward the purchase of the Permitted Currency to be
repaid and to have applied the proceeds of such purchase
toward such repayment. If after any such application there
shall remain owing an amount of the Permitted Currency due to
the Agent, for the benefit of the Banks, or if an excess of
such Permitted Currency shall result, the Company shall pay to
the Banks, or the Banks shall pay to the Company, as the case
may be, the amount of such deficiency or such excess. In the
case of any continuation, on the last day of such Interest
Period, the Original Dollar Amount of such Borrowing or
portion thereof shall be adjusted to the amount in Dollars
resulting from the conversion of the amount of such Permitted
Currency so readvanced to Dollars determined as of the second
Business Day preceding such day. On the date of each such
conversion or continuation, if the Dollar Equivalent on such
date of all Borrowings, including the Borrowings being
converted or continued, exceeds the aggregate amount of the
Commitments of the Banks, the Company shall take the following
action in the following order until such excess of the Dollar
Equivalent of all Borrowings over the aggregate Commitments of
the Banks is eliminated: (a) on such date, first, reduce or
withdraw any pending request for a new Borrowing in Dollars to
be made on such date, second, repay in Dollars any Floating
Rate Borrowing denominated in Dollars then outstanding, and
third, reduce the amount of, or repay, in the Permitted
Currency in which such Loan is denominated, any Borrowing
which the Company has requested to be converted or continued
on such date, and (b) on the last day of each Interest Period
ending thereafter, reduce the amount of, or repay in the
Permitted Currency in which such Borrowing is denominated, any
Borrowing which the Company has requested to be converted or
continued on such last day. The Company shall repay to the
Banks on the last day of such related Interest Period an
amount in the Permitted Currency in which such Borrowing is
denominated equal to the
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<PAGE> 8
amount of such excess or in full if such excess exceeds the
amount of such Borrowing, together with all amounts owing to
the Banks under Section 3.8 in connection therewith. The
repayments referenced in this Section 3.1(d) may be effected
through requests for conversions or continuations pursuant to
Section 2.7, subject to the terms and conditions of this
Agreement, and the repayments discussed in this Section 3.1
(d) provide the mechanics for effecting such continuations or
conversions from one Permitted Currency to another Permitted
Currency.
1.7 Section 3.3 shall be deleted in its entirety and the following
shall be inserted in place thereof:
3.3 Payment Method. (a) All payments to be made by the
Company hereunder will be made to the Agent for the account of
the Banks (i) in the case of principal and interest on any
Loan, in the Permitted Currency in which such Loan is
denominated, and (ii) in all other cases, in the otherwise
specified or relevant currency, and in all cases in
immediately available, freely transferable, cleared funds not
later than 1:00 p.m. at the place for payment on the date on
which such payment shall be come due (x) in the case of
principal and interest on any Loan denominated in a Permitted
Currency other than Dollars, by credit to the account of the
Agent at its designated branch or correspondent bank in the
country issuing the relevant Permitted Currency or in such
other place specified by the Agent with respect to such Loan
pursuant to Section 2.4(b), and (y) in all other cases to the
Agent at the address of its principal office specified in
Section 8.2. Payments received after 1:00 p.m. at the place
for payment shall be deemed to be payments made prior to 1:00
p.m. at the place for payment on the next succeeding Business
Day. If authorized by the Company or if payment is not made
when due hereunder, after any applicable grace period, if any,
the Company hereby authorizes the Agent to charge its account
with the Agent in order to cause timely payment of amounts due
hereunder to be made (subject to sufficient funds being
available in such account for that purpose).
(b) At the time of making each such payment, the Company
shall, subject to the other terms and conditions of this
Agreement, specify to the Agent that Loan or other obligation
of the Company hereunder to which such payment is to be
applied. In the event that the Company fails to so specify
the relevant obligation, the Agent may apply such payments as
it may determine in its sole
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<PAGE> 9
discretion or, if an Event of Default shall have occurred and
be continuing, in the order provided in Section 6.3.
(c) On the day such payments are deemed received, the Agent
shall remit to the Banks their pro rata shares of such
payments in immediately available same day funds, (i) in the
case of payments of principal and interest on any Loan
denominated in a Permitted Currency other than Dollars, at an
account maintained and designated by each Bank at a bank in
the principal financial center of the country issuing the
Permitted Currency in which such Loan is denominated or in
such other place specified by the Agent and (ii) in all other
cases, to the Banks at their respective address in the United
States specified for notices pursuant to Section 8.2. In the
case of payments of principal and interest on any Loan, such
pro rata shares shall be determined with respect to each such
Bank by the ratio which the outstanding principal balance of
its Loan included in such Loan bears to the outstanding
principal balance of the Loans of all the Banks included in
such Loan and in the case of fees paid pursuant to Section 2.3
and other amounts payable hereunder (other than the Agent's
fees payable pursuant to Section 2.3(c) and amounts payable to
any Bank under Section 2.4 or 3.6), such pro rata shares shall
be determined with respect to each such Bank by the ratio
which the Commitment of such Bank bears to the Commitments of
all the Banks.
(d) This Agreement arises in the context of an international
transaction, and the specification of payment in a specific
currency at a specific place pursuant to this Agreement is of
the essence. Such specified currency shall be the currency of
account and payment under this Agreement. The obligations of
the Company hereunder shall not be discharged by an amount
paid in any other currency or at another place, whether
pursuant to a judgment or otherwise, to the extent that the
amount so paid, on prompt conversion into the applicable
currency and transfer to the Banks under normal banking
procedure, does not yield the amount of such currency due
under this Agreement In the event that any payment, whether
pursuant to a judgment or otherwise, upon conversion and
transfer, does not result in payment of the amount of such
currency due under this Agreement, the Banks shall have an
independent cause of action against the Company for the
currency deficit.
(e) If for purposes of obtaining judgment in any court it
becomes necessary to convert any currency due hereunder into
any other
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<PAGE> 10
currency, the Company will pay such additional amount, if any
as may be necessary to ensure that the amount paid in respect
of such judgment is the amount in such other currency which
when converted at the Agent's spot rate of exchange prevailing
on the date of payment would yield the same amount of the
currency due hereunder. Any amount due from the Company under
this Section 3.3(e) will be due as a separate debt and shall
not be affected by judgment being obtained for any other sum
due under or in respect of this Agreement.
1.8 Section 3.7 shall be deleted in its entirety and the following
shall be inserted in place thereof.
3.7 Illegality and Impossibility. In the event that any
applicable law, treaty or other international agreement, rule
or regulation (whether domestic or foreign) now or hereafter
in effect and whether or not presently applicable to any
Bank, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or
administration thereof, or compliance by any Bank with any
guideline, request or directive of such authority (whether or
not having the force of law), including without limitation
exchange controls, (a) shall make it unlawful or impossible
for any Bank to maintain any Loan under this Agreement or (b)
shall make it impracticable, unlawful or impossible for, or
shall in any way limit or impair the ability of, the Company
to make or any Bank to receive any payment under this
Agreement at the place specified for payment hereunder or to
freely convert any amount paid into Dollars at market rates of
exchange or to transfer. any amount paid or so converted to
the address of its principal office specified in Section 8.2,
the Company shall upon receipt of notice thereof from such
Bank, repay in full the then outstanding principal amount of
each Loan so affected, together with all accrued interest
thereon to the date of payment and all amounts owing to such
Bank under Section 3.8, (i) on the last day of the then
current Interest Period applicable to such Loan if such Bank
may lawfully continue to maintain such Loan to such day, or
(ii) immediately if such Bank may not continue to maintain
such Loan to such day.
1.9 Schedule 1.1 shall be added to the Credit Agreement in the form
of Schedule 1.1 attached hereto.
-10-
<PAGE> 11
ARTICLE II. REPRESENTATIONS. The Company represents and warrants to the Agent
and the Banks that:
2.1 The execution, delivery and performance of this Amendment is
within its powers, has been duly authorized and is not in contravention with
any law, of the terms of its Articles of Incorporation or By-laws, or any
undertaking to which it is a party or by which it is bound.
2.2 This Amendment is the legal, valid and binding obligation of the
Company enforceable against it in accordance with the terms hereof.
2.3 After giving effect to the amendments herein contained, the
warranties contained in Article IV of the Credit Agreement are true on and as
of the date hereof with the same force and effect as if made on and as of the
date hereof.
2.4 No Event of Default or Default exists or has occurred and is
continuing on the date hereof.
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective until each of the following has been satisfied:
3.1 This Amendment shall be signed by the Company, the Agent and the
Banks.
ARTICLE IV. MISCELLANEOUS.
4.1 References in the Credit Agreement or in any note, certificate,
instrument or other document to the "Credit Agreement" shall be deemed to be
references to the Credit Agreement as amended hereby and as further amended from
time to time.
4.2 The Company agrees to pay and to hold the Agent and the Banks
harmless for the payment of all costs and expenses arising in connection with
this Amendment, including the reasonable fees of counsel to the Agent and each
of the Banks connection with preparing this Amendment and the related
documents.
4.3 Except as expressly amended hereby, the Company agrees that the
Credit Agreement, the Notes, the Security Documents and all other documents and
agreements executed by the Company in connection with the Credit Agreement in
favor of the Agent or the Banks are ratified and confirmed and shall remain in
full force and effect and that it has no set off, counterclaim or defense with
respect to any of the foregoing. Terms used but not defined herein shall have
the respective meanings ascribed thereto in the Credit Agreement.
4.4 This Amendment may be signed upon any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
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<PAGE> 12
IN WITNESS WHEREOF, the parties signing this Amendment have caused
this Amendment to be executed and delivered as of May 19, 1995 and, upon
execution by all parties, this Amendment shall be effective as of the First
Amendment Effective Date.
COMSHARE, INCORPORATED
BY: /s/ Kathryn Jehle
---------------------------
Kathryn Jehle
Its: Sr. Vice President & CFO
-------------------------
NBD BANK, formerly known as NBD Bank, N.A.,
Individually as a Bank and as agent
BY: /s/ Kelly J. Cotton
---------------------------
Kelly J. Cotton
Its: Vice President
-------------------------
SOCIETY BANK
BY: /s/ Michael F. Nold
---------------------------
Michael F. Nold
Its: Senior Vice President
-------------------------
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<PAGE> 13
SCHEDULE 1.1
Member Countries of the Organization for
Economic Cooperation and Development
as of the First Amendment Effective Date
Austria
Belgium
Canada
Denmark
France
Germany
Greece
Italy
Ireland
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
United Kingdom
United States
Japan
Finland
Australia
New Zealand
<PAGE> 1
EXHIBIT 4.04
EXECUTION COPY
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated
as of July 31, 1995 (this "Amendment"), is among COMSHARE, INCORPORATED, a
Michigan corporation (the "Company"), the Banks set forth on the signature
pages hereof (collectively, the "Banks") and NBD BANK, formerly known as NBD
Bank, N.A., as agent for the Banks (in such capacity, the "Agent").
RECITALS
A. The Company, the Banks and the Agent are parties to an Amended
and Restated Credit Agreement, dated as of October 31, 1994, as amended by a
First Amendment to Credit Agreement dated May 19, 1995 (the "Credit
Agreement"), pursuant to which the Banks agreed, subject to the terms and
conditions thereof, to extend credit to the Company.
B. The Company has requested that the Agent and the Banks release
the collateral held under the Credit Agreement, and the Agent and the Banks are
willing to do so strictly in accordance with the terms hereof, and provided the
Credit Agreement is amended as set forth herein, and the Company has agreed to
such amendments.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE 1. AMENDMENTS. Upon fulfillment of the conditions set forth in Article
III hereof, the Credit Agreement shall be amended as follows:
1.1 The definition of "Borrowing Base" contained in Section 1.1 is
restated in its entirety as follows:
"Borrowing Base" shall mean, as of any date, the difference of
(a) the sum of (i) an amount equal to 80% of the value of Eligible
Domestic Accounts Receivable, plus, (ii) an amount equal to 70% of
Eligible Foreign Accounts Receivable, minus (b) the aggregate amount
of all obligations of each Subsidiary of the Company for borrowed
money or its equivalent. The amount determined pursuant to clause
(a) of this definition of Borrowing Base as of any date shall be the
amount of clause (a) for the month end for which the most recent
Borrowing Base Certificate has been delivered and such amount shall
continue in effect until the next Borrowing Base Certificate is
delivered.
<PAGE> 2
1.2 The following definitions are hereby added in appropriate
alphabetical order to Section 1.1:
"Second Amendment" shall mean the Second Amendment to Credit
Agreement dated as of July __, 1995 among the Company, the Banks and
the Agent.
"Second Amendment Effective Date" shall mean the date the
Second Amendment is effective pursuant to Article III thereof.
1.3 The definition of "Security Documents" contained in Section 1.1
is restated in its entirety as follows:
"Security Documents" shall mean, collectively, any guaranties
executed by any of the Guarantors and any other security agreements
or documents executed by the Company or any of its Subsidiaries at
any time in connection with this Agreement; provided, however, it is
acknowledged and agreed that the existing security documents
described on Schedule 1.1-A hereto (the "Terminated Security
Documents") are terminated as of the Second Amendment Effective Date
and not included in this definition of Security Documents.
1.4 Sections 2.10 and 2.11 are restated in their entirety as
follows:
"2.10 Release of Collateral. The liens and security
interests granted pursuant to the Security Documents existing prior
to the Second Amendment Effective Date shall be released as of the
Second Amendment Effective Date.
2.11 Security and Collateral. [Intentionally Omitted]."
1.5 Section 5.1(f) is restated in its entirety to read as follows:
(f) [Intentionally Omitted].
1.6 Section 6.3 is restated in its entirety to read as follows:
6.3 Application of Proceeds. [Intentionally Omitted].
SECOND AMENDMENT TO CREDIT AGREEMENT Page 2
<PAGE> 3
ARTICLE 11. REPRESENTATIONS. The Company represents and warrants to the Agent
and the Banks that:
2.1 The execution, delivery and performance of this Amendment is
within its powers, has been duly authorized and is not in contravention with
any law, of the terms of its Articles of Incorporation or By-laws, or any
undertaking to which it is a party or by which it is bound.
2.2 This Amendment is the legal, valid and binding obligation of the
Company enforceable against it in accordance with the terms hereof.
2.3 After giving effect to the amendments herein contained, the
warranties contained in Article IV of the Credit Agreement are true on and as
of the date hereof with the same force and effect as if made on and as of the
date hereof.
2.4 No Event of Default or Default exists or has occurred and is
continuing on the date hereof.
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective until this Amendment shall be signed by the Company, the Agent and
the Banks.
ARTICLE IV. MISCELLANEOUS.
4.1 References in the Credit Agreement or in any note,
certificate, instrument or other document to the Credit Agreement shall be
deemed to be references to the Credit Agreement as amended hereby and as
further amended from time to time.
4.2 It is acknowledged and agreed that the Agent and the Banks
shall be terminating all financing statements and releasing the other existing
Security Documents described on Schedule 1.1-A of the Credit Agreement, and
the Banks hereby authorize the Agent to do so upon satisfaction of the
conditions described in Article III above.
4.3 The Company agrees to pay and to hold the Agent and the Banks
harmless for the payment of all costs and expenses arising in connection with
this Amendment, including the reasonable fees of counsel to the Agent in
connection with preparing this Amendment and the related documents and
releasing the liens and security interests.
4.4 Except as expressly amended hereby, the Company agrees that the
Credit Agreement, the Notes, the Security Documents (as such term is defined
after giving effect to this Amendment) and all other documents and agreements
(but not the Terminated Security Documents) executed by the Company in
connection with the Credit Agreement in favor of the Agent or the Banks are
ratified and confirmed and shall remain in full force and effect and that
SECOND AMENDMENT TO CREDIT AGREEMENT Page 3
<PAGE> 4
it has no set off, counterclaim or defense with respect to any of the
foregoing. Terms used but not defined herein shall have the respective
meanings ascribed thereto in the Credit Agreement.
4.5 This Amendment may be signed upon any number of counterparts
with the same effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the parties signing this Amendment have caused this
Amendment to be executed and delivered as of July, 31, 1995 and, upon
execution by all parties, this Amendment shall be effective as of the Second
Amendment Effective Date.
COMSHARE, INCORPORATED
/s/ Kathryn Jehle
By:_____________________________
ITS: Sr. VP & CFO
__________________________
NBD BANK, formerly known as NBD Bank,
N.A., Individually as a Bank and as Agent
/s/ Kelly J. Cotton
BY:______________________________
Its: Vice President
__________________________
SOCIETY BANK
/s/ John M. Lenckos
BY:______________________________
Its: Vice President
___________________________
SECOND AMENDMENT TO CREDIT AGREEMENT Page 4
<PAGE> 1
EXHIBIT 10.20
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made as of the 23rd day of December, 1993,
by and between Arbor Software Corporation, a Delaware corporation ("Arbor"),
and Comshare, Incorporated, a Michigan corporation ("Comshare").
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. License Grant. Subject to the restrictions contained herein,
Arbor grants to Comshare and its subsidiaries the worldwide right to use,
reproduce, adapt, distribute, and sublicense to third parties any or all of the
computer software owned or developed by Arbor during the term of this
Agreement, including but not limited to the programs and components listed on
Exhibit A (the "Software"), excluding only computer software that is developed
or acquired by Arbor after the date of this Agreement and that is unrelated to
multidimensional modeling software. Notwithstanding the above, however, Arbor
may but is not required to add to the Software any unique computer software
that Arbor develops and embeds in an Arbor customer's application, so long as
that application is not within the Comshare application markets as defined in
Section 6 hereof.
(a) Distribution. Comshare may distribute the Software
through its subsidiaries, distributors, resellers and agents ("Comshare
Distributors"), who may at Comshare's election grant sublicenses subject to the
terms contained in this Agreement. Arbor shall have no right of approval or
rejection of Comshare Distributors. The Software will be protected under the
terms of Comshare's contracts with Comshare Distributors to the same extent
Comshare protects its own software products under such contracts with respect
to proprietary rights and use restrictions. Comshare shall fulfill its
obligations to Arbor by enforcing such contracts to the same extent it enforces
confidentiality and use restrictions for Comshare products.
(b) Sublicenses. Comshare and the Comshare Distributors
may grant sublicenses to customers for a perpetual term or for a term of years,
as they choose. The sublicenses shall contain provisions as protective of
proprietary rights in
* Indicates that material has been omitted and
confidential treatment has been requested
therefore. All such omitted material has been
filed separately with the SEC pursuant to Rule
24b-2.
<PAGE> 2
the Software as they contain for Comshare's proprietary rights in its software.
A copy of Comshare's current standard license, without schedules is attached as
Schedule 1(b).
(c) Reproduction. On or before execution of this
Agreement, Arbor will provide to Comshare the number of demonstration and
development copies of the Software and documentation indicated on Exhibit A.
Thereafter, Arbor will provide the same numbers of demonstration and
development copies of new and revised programs and documentation for all new or
changed Software. Comshare may make additional copies as it deems necessary or
desirable for the purposes of this Agreement.
(d) Adaptation. Comshare may adapt or reconfigure the
Software solely for purposes of facilitating the Software's operation in
connection with Comshare's software; provided, however, that this provision
does not give Comshare any right of access to the source code. Comshare may
prepare foreign language translations of documentation and training materials
at its own expense, and with respect solely to limited use sublicenses (as
defined in Section I.A of Exhibit D Pricing), Comshare may modify, adapt or
excerpt documentation and training materials as it deems appropriate. Comshare
shall own all intellectual property rights to such modification or translation
of the documentation and training materials; provided, however, that the
foregoing shall not in any manner limit or inhibit Arbor's right to translate
or have the documentation and training materials translated and to own such
translation, provided Comshare's translation is not used to facilitate such
translation. Comshare shall ensure that all documentation delivered with the
Software contains appropriate attribution to Arbor.
(e) Arbor Attribution.
(i) With respect to full use sublicenses (as defined in
Section I.B of Exhibit D, Pricing) of the Software, Comshare shall
take the following steps to preserve Arbor's corporate identification:
(A) If Comshare elects to repackage some or all
of the Software in Comshare's own packaging, then the
packaging shall give attribution to Arbor in style and size no
less than the attribution Comshare gives to its own software.
Comshare understands and agrees that the intent of the
foregoing language is to ensure that Arbor preserves its
corporate and product identities.
(B) Comshare may elect to reprint the documentation
on a different color or type of
-2-
<PAGE> 3
stock, but (except with respect to translations,
which are addressed in Section 1(d)) shall not
change the text of the documentation. Comshare may,
however, produce and distribute supplements to the
documentation as it deems appropriate.
(ii) With respect to any Software sublicensed as
described in Section I.A of Exhibit D, Comshare shall ensure
that Arbor's copyright attribution will appear on the
documentation, disks, the screen used by Comshare as the
boot-up screen for its own notice for that application and
wherever else may be necessary to protect Arbor's copyrights.
2. Term. This Agreement shall be effective as of December
23rd, 1993 (the "Effective Date") and shall continue in effect until December
31, 2001, unless terminated sooner as provided in Section 8. As used herein,
"Year 1" means the period from the Effective Date through December 31, 1994;
"Year 2" means the period from January 1, 1995 through December 31, 1995; and
"Year 3" and succeeding Years mean the succeeding calendar years.
3. Development Services and Maintenance.
(a) Initial Support. For the payments described
in Section 4(b), during Year 1, Arbor shall provide technical support,
training, and hotline support for Comshare developers as described on Exhibit B
attached hereto.
(b) Ongoing Support and Training. For the
payments described in Section 4(c), after Year 1, Arbor shall provide ongoing
support, training, and hotline support for Comshare developers as described on
Exhibit B.
(c) Maintenance. For the payments described in
Section 4(d), during the Term and for so long thereafter as Comshare requests
and pays for as provided herein, Arbor shall provide maintenance services to
Comshare, consisting of updates, enhancements, bug fixes, "Star Account" and
other "severity 1" responses, and other services related to the Software, all
as described on Exhibit C attached hereto. Comshare and the Comshare
Distributors shall be responsible for passing on updates, enhancements and bug
fixes as appropriate to sublicensees.
4. Payments.
(a) License Fees. Comshare shall pay Arbor a fee
for each sublicense of the Software granted to a customer by Comshare or a
Comshare Distributor, based on the type of sublicense, as described on Exhibit
D attached hereto.
-3-
<PAGE> 4
Comshare shall not be required to pay additional fees for copies of the
Software that Comshare uses for its own internal purposes or that Comshare or
the Comshare Distributors use for development, marketing, demonstration or
other purposes contemplated by this Agreement, in accordance with Comshare's
standard practices.
(b) Initial Support Fee. For the initial support services
described in Section 3(a), Comshare shall pay Arbor a flat fee of *
plus reasonable travel, room and board, payable in the manner provided in
Section 5.
(c) Ongoing Support and Training Fees. For the ongoing
support and training described in Section 3(b), Comshare shall pay Arbor as
described on Exhibit D.
(d) Maintenance Fees. For the maintenance services
described in Section 3(c), Comshare shall pay Arbor a fee for each sublicensee
that has contracted for maintenance services, as described in Exhibit D.
(e) New Product Fees. As new Arbor products and
platforms are added to the Software, the license and support fees shall be
calculated as provided in Exhibit D.
5. Payment Method and Minimum Amounts.
(a) Payment Method. The * fee for all Year 1 services
shall be paid in twelve (12) installments of * with the first installment
due January 10 and the remaining eleven payments due on the same day of each
succeeding month. All other amounts are payable quarterly and are due sixty
(60) days after the end of the calendar quarter. License and maintenance fees
will be based on revenue recognized by Comshare during that quarter in
accordance with its standard accounting practices, less bad debt adjustments
and net of credits granted for that or previous quarters.
(b) Payment Reporting and Audit. Within forty-five (45)
days after the end of each calendar quarter, beginning with the first quarter
in which a sublicense of the Software is sold, Comshare will provide Arbor
with a report of sublicenses and maintenance contracts sold (by customer
identification number and Comshare sales territory and not by name) during
that quarter, in accordance with Comshare's standard accounting practices.
Arbor may, upon twenty (20) days' written notice and not more than once in
each Year, examine Comshare's books and records related to the amounts
due to Arbor. Such examination may be done, at Arbor's expense, by Arbor's
internal auditor or its certified public accounting firm; provided, however,
that if any such audit uncovers an
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
-4-
<PAGE> 5
underpayment in excess of * Comshare shall be liable for the full costs
of such audit.
(c) Year 2 Minimum. Regardless of the amount of
sublicense, maintenance and other payments due to Arbor as provided in Section
4, Comshare shall pay Arbor no less than * for Year 2, payable quarterly as
follows: if the payment otherwise due to Arbor for limited-use and System W
downsizing sublicenses (as defined in Section I.A and I.B.2 of Exhibit D) and
their associated maintenance fees (collectively referred to herein as "Eligible
Minimum Fees") for any quarter of Year 2 is less than * then Comshare
shall nevertheless pay a total of * for that quarter; provided, however,
that (i) payments of Eligible Minimum Fees made by Comshare in any prior
quarter of Year 2 that are in excess of * shall have the excess amount
subtracted from the prepayment minimum of succeeding quarter(s) of Year 2, and
(ii) over the Term of the Agreement, Comshare may credit any payments otherwise
due to Arbor that are attributable to Eligible Minimum Fees against any
unearned minimum payments made to Arbor under this Section 5(c). The * minimum
due and payable for Year 2, however, shall not be refundable to Comshare even
if succeeding Years' payment credits never total * . Examples of the
calculation of minimum payments are given in Exhibit E.
(d) Subsequent Years Minimum. For each quarter of Years
3 through 8, if Comshare's payments of Eligible Minimum Fees including any
prepayment carry-forward) do not equal * Arbor may elect to terminate
this Agreement, upon six months' notice given after the end of the quarter for
which the minimum was not achieved.
(e) Exclusivity Minimum. During the Term of this
Agreement, Arbor shall not grant, directly or indirectly, licenses or any
rights to market or sublicense the Software to the companies described on
Exhibit F attached hereto (the "Exclusivity Companies"), provided that Comshare
makes the following minimum payments:
(i) Beginning with the third quarter of Year 2 and continuing for
a total of four consecutive quarters ("Exclusive Year 1"):
* per quarter for a total of * in Exclusive Year 1.
(ii) For each four quarters after Exclusive Year 1: * per
quarter for a total of * in Exclusive Year 2, and so
on for succeeding Exclusive Years.
Notwithstanding the above, however, Arbor and its agents and
distributors are not prohibited from licensing the
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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<PAGE> 6
Software to the Exclusivity Companies strictly for their own internal business
use and not for resale or sublicensing.
These exclusivity payments shall be made and calculated in the manner
prescribed in Section 5(c) for the Year 2 minimums, and all excess exclusivity
payments shall be credited against any future amounts due from Comshare to
Arbor. The minimum payments described in Sections 5(c) and 5(d) are included
in and are not in addition to the amounts described in this Section 5(e).
6. Arbor Limitation.
(a) Two-year Limitation. For a period of two years after the
Effective Date of this Agreement, Arbor shall not license or distribute, either
itself or through its distributors or agents, application-specific value-added
code developed, owned or licensed by Arbor to be used as part of or in
conjunction with the Software to customers in the worldwide markets served by
Comshare's applications. Notwithstanding the above, Arbor may (i) distribute
samples to be used as application productivity tools that aid end users with
their own application development, such as sample data outlines, sample report
scripts, sample calculation scripts, and sample spreadsheets, and (ii) give
application demonstrations that provide visual demonstration to end users of
the implementation of specific applications. Comshare's current application
markets include: executive information systems, profit reporting and analysis,
financial consolidation and management reporting, budgeting, sales and
marketing reporting and analysis, and merchandise planning and performance
analysis. Comshare may add new application markets to this Section 6 list as
it introduces new products; provided, however, that such additions shall not
affect any licenses granted by Arbor or Arbor's marketing in such new
applications market of any new products developed prior to such addition or any
derivatives thereof.
(b) Payment Reductions. In the event that Arbor breaches its
obligations under Section 6(a) above during the first two years immediately
following the Effective Date, Comshare may elect to terminate this Agreement,
and the amounts payable to Arbor hereunder shall be reduced by * percent and
all minimum payment requirements shall be eliminated. In the event that Arbor
acts in the manner described in Section 6(a) after a date two years from the
Effective Date of this agreement, such act shall not be a breach of this
Agreement, but the payments due to Arbor defined as Eligible Minimum Fees shall
be reduced by * percent, the minimum payments under Sections 5(d) shall be
eliminated, and the exclusivity minimum payments under Section 5(e) shall be
reduced by * percent.
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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<PAGE> 7
(c) Comshare Distributors. In addition, during the Term
of this Agreement, Arbor shall not, directly (or indirectly with respect to the
Exclusivity Companies or the parent or direct or indirect subsidiary of Arbor),
market its Software through Comshare Distributors. It is understood, however,
that the restriction in this Section 6(c) shall not apply if a Comshare
Distributor ceases to be a Comshare Distributor, without solicitation by Arbor.
Comshare has provided, solely for purposes of this Section 6(c), a list of
Comshare Distributors according to geographic territory as of the date hereof
(the "List"), attached as Schedule 6(c), and may add to the List, subject to
the following:
(i) Comshare may not add names to the List for the territory
of the United States.
(ii) Comshare may not add a name to the List unless that
entity has the right to grant full use sublicenses of the Software.
(iii) If Comshare adds an entity with a territory outside the
United States with which Arbor does not at that time have a
distribution arrangement pursuant to a written contract, then Arbor
may distribute its software through that Comshare Distributor,
provided that Arbor pays to Comshare, for the three-year period from
the beginning date of Arbor's arrangement with that Comshare
Distributor and with respect to the territory for which it is a
Comshare Distributor: * of the revenues received by Arbor from the
activities of that Comshare Distributor, except that with respect to
revenues from limited use licenses (that is, similar to limited use as
defined in this Agreement or to those customarily referred to as OEM)
the percentage shall be * provided, however, that Arbor shall not be
required to make payments for limited use licenses unless Comshare has
permitted that Comshare Distributor to sell limited use licenses for
the Software, and further provided that in no event shall Arbor be
required to make payments with respect to *
*
(iv) Notwithstanding the above subsection, however, Arbor
may distribute its software through an entity that is added to the
List without payment to Comshare if Arbor has established a
distribution arrangement with that Comshare Distributor for that
territory pursuant to a written contract prior to the date on which
the entity is added to List.
(d) Representation. As of the date of this Agreement,
Arbor represents that Arbor has not granted any license or distribution rights
that would be prohibited by this Section 6.
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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<PAGE> 8
7. Right of Offer.
(a) Competitor Proposal. In the event that Arbor
or an Arbor shareholder receives from a Comshare Competitor (as defined below)
a bona fide offer which it intends to accept for an equity interest in Arbor,
substantially all of the assets of Arbor, or substantially all of the
intellectual property rights to the Software (such offer is referred to herein
as a "Competitor Proposal"), then before Arbor or the shareholder(s) may accept
the Competitor Proposal or effect any such transaction:
(i) Arbor shall promptly give Comshare written notice of
the Proposal, including the name of the offering Competitor, the
proposed price, whether the Competitor Proposal is for a minority
portion, controlling portion or all of Arbor's business or assets,
which portions shall be specified, and to the extent not directly
prohibited by the Competitor, all other details of the Competitor
Proposal.
(ii) Within five days after giving the initial notice, Arbor
shall provide to Comshare all information provided to the Competitor,
and all information customarily provided by a seller to a buyer if
requested by Comshare.
(iii) Comshare shall have twenty (20) days after receipt of
all of the material information described in subparagraph (a)(ii) in
which to make a competing offer, which Arbor (and, as applicable, the
Arbor shareholders) shall consider in good faith but shall not be
required to accept.
(b) Competitor Definition. For purposes of this
Section 7, a Competitor is defined as any of the companies identified on
Schedule 7(b) attached hereto, including any entity controlling, controlled by
or under common control with them, and any assignee of or successor to the
competing portion of their business. Comshare may, at any time after 6 months
from the date of this Agreement, but in no event more than once per year, add
the name of any company that is a bona fide substantial direct competitor of
Comshare to Schedule 7(b), which shall then become a Competitor; provided,
however, that in no event shall there be more than fifteen (15) competitors.
If Arbor reasonably believes that an entity added by Comshare is not a bona
fide substantial direct competitor of Comshare, then Arbor may submit the issue
for resolution under the arbitration procedures of Section 15.
(c) Comshare Remedy. At any time a Competitor becomes the
owner of at least * of the outstanding equity of
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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<PAGE> 9
Arbor, substantially all of the assets of Arbor, or substantially all of the
intellectual property rights to the Software, then all amounts payable to Arbor
under Sections 4(a) and 4(d) shall be reduced by * percent, all minimum
payments under Section 5 shall be eliminated, and Comshare may elect to
terminate this Agreement effective at any time thereafter.
(d) Expiration. Upon the earlier of (i) the effective
date of Arbor's initial public offering or (ii) the sale or transfer to a
Competitor of * or more of the outstanding equity of Arbor, substantially all
of the assets of Arbor, or substantially all of the intellectual property
rights to the Software, then the rights granted to Comshare in Section 7(a)
shall expire, but Comshare's rights under Section 7(c) shall continue.
(e) Purpose. Arbor understands that Comshare would not
enter into a long-term arrangement for embedding third-party software into
Comshare's products if a direct Competitor of Comshare had an interest in that
embedded software, and Arbor represents that it has no present intention of
transferring, directly or indirectly, any such interest to a Competitor. The
parties will interpret and implement the provisions of this Section 7 in good
faith in accordance with this purpose.
8. Termination.
(a) By Either Party. Either party may terminate this
Agreement on ninety (90) days' written notice to the other for any breach of a
material provision of this Agreement by the other, unless the breach complained
of in the termination notice is cured within the ninety (90) day notice period;
provided, however, that if the breach complained of concerns a disputed
nonpayment or payment by Comshare, Comshare shall pay to Arbor any undisputed
amount and this Agreement may not be terminated unless the dispute has been
settled in Arbor's favor under the arbitration procedure provided in Section
15.
(b) By Comshare. Comshare may terminate this
Agreement effective at any time (i) after thirty (30) days' written notice, in
the event that Arbor breaches its obligations under Section 6(a) and fails to
cure such breach within the thirty (30) day notice period, or (ii) as provided
in Section 7(c).
(c) Early Termination. In the event that Comshare
rightfully terminates or Arbor wrongfully terminates this Agreement either at
or prior to the end of Year 2 or prior to the first grant by Comshare of an end
user sublicense of the Software, then Comshare shall not be required to make
any monthly or quarterly payment that would otherwise be payable
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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<PAGE> 10
after the date of such termination, notwithstanding anything to the contrary
in Section 4 or 5.
(d) Effect of Termination. All sublicenses to the
Software granted by Comshare to customers under this Agreement shall
continue in effect, in accordance with their terms, after termination of this
Agreement. Regardless of the reason for such termination, Arbor shall, upon
Comshare's request, continue to maintain and provide technical support for the
Software on the terms provided in this Agreement for all existing customer
sublicensees and Comshare may continue to use the Software for its internal
business purposes and may also possess a copy of the Software solely for the
purpose of customer support.
9. Source Code. Within thirty (30) days after execution
of this Agreement, Arbor shall place a copy of the source code to the Software
in escrow with Data Securities International, Inc., under an escrow agreement
in the form attached hereto as Exhibit G (the "Escrow Agreement"). The Deposit
Material shall consist of the items listed in Section 16 of the Escrow
Agreement for all of the Software. Arbor shall update the Deposit Material
after each major release of the Software and at least once every twelve (12)
months. The Release Conditions under Section 21 of the Escrow Agreement shall
be: (i) Arbor shall become subject to any proceeding under the Federal
Bankruptcy Act (except that, with respect to an involuntary petition with
which Arbor disagrees Arbor shall have 120 days to have the petition dismissed)
or any other statute relating to insolvency or the protection of creditors,
become insolvent, or make a general assignment for the benefit of creditors; or
(ii) Arbor shall, at any time during or after the term of this Agreement, fail
or refuse to provide maintenance of the Software as provided in Exhibit C or
shall materially breach those maintenance obligations and shall fail to cure
such breach within thirty (30) days of receiving written notice of the breach.
10. Confidentiality. The Mutual Non-Disclosure Agreement
between the parties dated November _ , 1993, a copy of which is attached hereto
as Exhibit H (the "Non-Disclosure Agreement") remains in effect. In case of a
conflict between a provision of this Agreement and a provision of the
Non-Disclosure Agreement, the provision of this Agreement shall prevail.
11. Intellectual Property Rights.
(a) Warranty. Arbor warrants that to the
best of its knowledge and as of the effective date of this Agreement, it is the
copyright owner and the owner of all other intellectual property rights,
including trademarks, in and of
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<PAGE> 11
the Arbor Software, source code, and all corrections, modifications,
enhancements and adaptations made thereto by or for Arbor, except for software
owned by * for which Arbor has sufficient license rights, and Arbor has
and shall retain the authority to enter into and perform this Agreement and to
grant licenses to Comshare to the Arbor Software, in conformance with the
terms of this Agreement. Arbor has provided Comshare with copies of all
registration applications for all Software that is registered with the
U.S. Copyright Office and will continue to do so, upon Comshare's request, for
additional registrations during the term of this Agreement.
(b) Indemnification. Arbor shall be responsible for any
and all losses, costs, expenses, liabilities, or damages (including without
limitation attorneys' fees and costs) and shall defend, indemnify and
hold Comshare and Comshare's licensees, agents, distributors and
representatives harmless from and with respect to any and all claims that the
Software infringes allegedly or in fact any present or future copyright,
patent, trade secret or other proprietary right of any third party in any
country which is a signatory to the Berne Convention and/or the Universal
Copyright Convention. Comshare shall promptly notify Arbor of any such claim
and provide Arbor such reasonable cooperation and assistance, at Comshare's
expense, as Arbor may request from time to time in the defense thereof, but
Arbor shall have sole control of any defense or settlement. If an injunction
or order is obtained against Comshare or its licensees, agents, distributors
and representatives' use or distribution of the Software, or if Arbor
determines that the Software is likely to become the subject of a claim of
infringement or violation of a patent, copyright, trade secret or other
proprietary right of any third party, Arbor will, at its option and expense: (i)
procure for Comshare the right to continue using, reproducing, and distributing
the Software and for Comshare's licensees, agents, distributors and
representatives the right to continue using the Software; or (ii) replace or
modify the same so that it becomes non-infringing, provided such modification
or replacement does not adversely affect the specifications for or the use or
operation of the Software by Comshare or its licensees, agents, distributors
and representatives. If neither (i) nor (ii) is feasible, Arbor shall refund
the payments made by Comshare for the Software. Arbor shall not be liable
hereunder to Comshare for, and Comshare shall indemnify Arbor against, in the
same manner provided in this Section 11(b), any claim to the extent based upon
the combination, operation or use of the Software with equipment, data or
software supplied by Comshare, or based upon any modification made by or for
Comshare to the Software other than those made by Arbor or to specifications
supplied by Arbor in writing.
* Indicates that material has been omitted and
confidential treatment has been requested
therefore. All such omitted material has been
filed separately with the SEC pursuant to Rule
24b-2.
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<PAGE> 12
12. Representations and Warranties. Arbor represents and
warrants that:
(a) Performance. The Software substantially conforms to
the specifications in its technical and user documentation, and all releases
will be upwardly compatible with the previous release of the same product, as
is further described in Exhibit C.
(b) No Virus, etc. To the best knowledge of Arbor, after
due care and testing, the Software does not and during the Term will not
contain any instructions, Algorithms, or code, except as specifically
set forth in the documentation, which would cause the product (including any
component, routine, or sub-routine thereof or other data relating thereto) or
any data contained within the computer facilities of the user in any format,
regardless of the method of storage, to, in a malicious and destructive
fashion, (a) be modified or damaged, (b) modify, damage or delete itself or
cause other software, programs, routines or sub-routines or data to be
modified, damaged or deleted or to modify, damage or delete themselves, (c)
replicate and propagate itself throughout other software, programs, routines or
sub-routines or data, (d) search for and consume memory in the user's
computers, (e) transmit data, (f) usurp the normal operation of the computer
facilities of the user, or (g) alter or place itself within or substitute
itself for any of the Software (including any component, routine, or sub-routine
thereof and other data relating thereto).
(c) Authority. The execution and performance of
this Agreement will not conflict with any agreement, understanding, law or
regulation to which Arbor is a party or by which it is bound. Comshare, for
its part, represents and warrants that the execution and performance of this
Agreement will not conflict with any agreement, understanding, law or
regulation to which Comshare is a party or by which it is bound.
(d) No Claim. No claim or assertion of infringement of
any copyright, patent or other intellectual property right has been made or is
pending against Arbor, and Arbor knows of no valid basis for any such claim.
(e) Equity. As of the date hereof, no Comshare
Competitor (as defined in Section 7) holds shares or options to purchase shares
in Arbor.
(f) Financial Statements. The financial statements
provided by Arbor, a list of which is attached hereto as Schedule 12(f), are
in accordance with the books and records of Arbor, present fairly the financial
condition of Arbor as at the respective dates thereof and the results of its
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<PAGE> 13
operations for the periods covered by such statements, and have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis. Arbor shall provide such current statements on an annual
basis until such time as Arbor becomes a public reporting company under the
Securities Exchange Act of 1934. All information disclosed pursuant to this
subsection shall be deemed confidential information and governed by Section 10
above.
13. WARRANTY DISCLAIMER. EXCEPT AS EXPRESSLY SET FORTH HEREIN,
ARBOR MAKES NO WARRANTIES AND EXPRESSLY DISCLAIMS THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
14. LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE
LIABLE TO THE OTHER FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL OR EXEMPLARY
DAMAGES, WHETHER IN CONTRACT, TORT, OR OTHERWISE, EXCEPT FOR INDEMNIFICATION
FOR INFRINGEMENT AS AND TO THE EXTENT PROVIDED IN SECTION 11. NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT, HOWEVER, NOTHING HEREIN SHALL LIMIT
THE LIABILITY OF EITHER PARTY FOR FRAUD OR INTENTIONAL OR NEGLIGENT
MISREPRESENTATION.
15. Arbitration. In the event of a dispute that remains unresolved
despite the parties' good faith negotiations over (i) the applicable
Commonly Used Retail Price, or (ii) amounts properly payable by Comshare
hereunder, the dispute shall be resolved through binding arbitration under the
procedures specified in this Section 15. Either party may make a written
demand for arbitration (the "Demand") setting forth the specific matters that
remain in dispute. The parties shall jointly select and engage, and shall
share equally the expense of, an independent auditor to resolve the disputed
matters. In the event that the parties cannot agree on an auditor within twenty
(20) days after the Demand is received, then the parties' certified public
accounting firms shall select the independent auditor no later than thirty (30)
days after the Demand is received. The independent auditor shall deliver a
written report setting forth the resolution of the disputed matters no later
than sixty (60) days after his or her selection. Judgment upon the
arbitrators' award may be entered in any court of competent jurisdiction.
16. General.
(a) Remedies Cumulative. The remedies provided in this
Agreement shall be cumulative, and the assertion by any party of any right or
remedy shall not preclude the assertion by such party of any other rights or
the seeking of any other remedies.
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<PAGE> 14
(b) Disclaimer of Agency. This Agreement shall not be
construed as creating an agency, partnership, joint venture or any other
form of legal association between the parties.
(c) Notices. All notices and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed given when delivered personally or by confirmed telecopy or five (5)
days after being sent by registered mail, or certified mail, return receipt
requested, postage prepaid and addressed as follows:
ARBOR NOTICE ADDRESS COMSHARE NOTICE ADDRESS
Arbor Software Comshare, Incorporated
Corporation 3001 S. State Street
3211 Scott Blvd. Wolverine Tower
Santa Clara, CA 95054 Ann Arbor, MI 48108
Attention: President Attention: President
or to such other address as each party may designate in writing.
(d) Force Majeure. Neither party shall be responsible
for any failure to perform due to causes beyond such party's reasonable control.
(e) Non-Solicitation. During the Term of this Agreement,
neither party shall solicit the employees of the other for employment.
(f) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Michigan, except
for the enforcement of Arbor's intellectual property rights in the Software,
which shall be governed by California law, and applicable federal law.
The United Nations Convention on Contracts for the International Sale of
Goods shall not apply to any transactions under this Agreement between Arbor
and Comshare.
(g) Partial Invalidity. Wherever possible, each
provision of this Agreement shall be interpreted in such a way as to be
effective and valid under applicable law. If a provision is prohibited by or
invalid under applicable law, it shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. The parties agree to
replace any such prohibited or invalid provision with a new provision which has
the most nearly similar permissible economic effect.
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<PAGE> 15
(h) Assignment. This Agreement or any of its rights or
obligations hereunder shall not be assignable by either party to any third
party or entity, and this Agreement may not be involuntarily assigned or
assigned by operation of law, without the prior written consent of the
nonassigning party, in its sole and absolute discretion. Notwithstanding the
foregoing, (i) the rights granted to Comshare under this Agreement are
divisible and assignable in whole or in part without permission in connection
with a merger, consolidation, reorganization, assignment to direct or indirect
subsidiaries or sale, exclusive license, or other transfer of assets, including
without limitation any Comshare software used in conjunction with any portion
of the Software, and (ii) Arbor may assign its rights and obligations under
this Agreement as part of a sale of substantially all of its assets or
substantially all of its intellectual property rights in the Software, provided
that Arbor has complied with its obligations under Section 7 hereof. Any
attempted assignment in contravention of this Section shall be null and void.
(i) Entire Agreement and Amendments. This Agreement, including
the attached Exhibits, represents the entire agreement between the parties, and
expressly replaces, supersedes and cancels any prior oral or written agreements
or communications on this subject. Each party acknowledges that it is not
entering into this Agreement on the basis of any representations not expressly
contained herein. Other than as specified herein, this Agreement may only be
supplemented, modified or waived in a writing executed by an officer of Arbor
and a duly authorized representative of Comshare and expressly referring to
this Agreement. No additional or conflicting term in a purchase order or other
document shall have any effect.
(j) Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties, their successors
and permitted assigns.
(k) Waiver. The waiver by either party of one breach or default
under this Agreement shall not constitute the waiver of any subsequent breach
or default, and shall not act to amend or negate the rights of the parties
under this Agreement.
(l) Exhibits, Titles and Headings. The attached Exhibits referred
to in this Agreement are incorporated by reference as though set forth in full,
and shall be construed as an integral part of this Agreement. Titles and
headings to sections or paragraphs in this Agreement are inserted for
convenience of reference only and are not intended to affect the interpretation
or construction of this Agreement.
ARBOR SOFTWARE CORPORATION COMSHARE, INCORPORATED
By: Andrew Stern By: T. Wallace Wratnall
------------ -------------------
Its: Vice President Its: Sr. Vice President
-------------- ------------------
Date: 12-23-93 Date: 12-23-93
-------- --------
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<PAGE> 16
EXHIBIT A
CURRENT ARBOR SOFTWARE
1. Programs and Components
Essbase Application Manager
Essbase Spreadsheet Clients
Excel for Windows
Excel for Macintosh
1-2-3 W
1-2-3 R 2.4 for DOS
Currency Conversion Module
SQL Interface Module
DOS/WIN client API
Server Systems API
Data Analysis Server for NT and OS/2
Extended Spreadsheet Macros
Installation Software
Testing and Debugging Utilities (not for sublicense to
customers)
2. Documentation
Product Documentation - all commercial product documentation,
including:
Technical Reference Manual
Application Designer Guide
API Reference Manuals
Command Line Interface Manual
User Guide
Developer Documentation - all pertinent internal technical
documentation materials which would assist Comshare in
developing its applications, including any API's for which
commercial documentation does not exist and for testing and
debugging utilities.
3. Training Materials
Training manuals, slides, sample training applications, video
tapes, written and electronic tutorials, and the like.
4. Copies
Number of Demonstration and development copies of programs,
documentation, and training materials to be delivered: 3 master copies, to be
delivered to locations designated by Comshare, plus demonstration copies for
Comshare Distributors and sales offices (number to be supplied by Comshare
within thirty days) to be delivered to Comshare's Ann Arbor headquarters.
<PAGE> 17
EXHIBIT B
SUPPORT AND TRAINING
INITIAL SUPPORT
During Year 1 Arbor will provide the following:
1. Technical Training.
(a) Developers and Support Personnel. Arbor will
provide as much training as is reasonably necessary on-site at Comshare for
Comshare developers and support personnel on a schedule requested by Comshare.
Training will include product usage, support techniques, application and
database design and efficiencies, and other appropriate technical concepts.
Comshare will develop the schedule on a four week basis and will consult with
Arbor and adjust the schedule as reasonably necessary within that four week
time frame, taking into account Arbor's resources.
(b) Comshare Field Consultants. Arbor will
provide as much training as is reasonably necessary at the appropriate Comshare
regional sites on a schedule requested by Comshare. This will include detailed
technical training to cover end-user application development with Essbase.
Comshare will develop the schedule on a four week basis and will consult with
Arbor and adjust the schedule as reasonably necessary within that four week
time frame, taking into account Arbor's resources.
2. Sales Training. Arbor will provide as much sales
training as is reasonably necessary to Comshare sales personnel on a schedule
requested by Comshare. Comshare will develop the schedule on a four week basis
and will consult with Arbor and adjust the schedule as reasonably necessary
within that four week time frame, taking into account Arbor's resources.
3. Consulting. Arbor will provide a high level of
consulting to Comshare developers on application and database considerations,
product efficiencies, and other technical considerations. As part of such
technical consulting, Arbor will provide a full-time expert resource dedicated
to Comshare who will as requested by Comshare spend approximately half-time at
Comshare facilities.
<PAGE> 18
4. Technical Support.
(a) Product and Development Information. Arbor
will respond to Comshare questions regarding Essbase product and API usage, use
of Arbor testing and debugging utilities, and other technical questions as they
arise. Arbor will use commercially reasonable efforts to respond promptly
(within 1 business day) to information queries.
(b) Designated Contacts. Comshare will designate
primary and secondary US and UK contacts for coordinating information questions
with Arbor. Arbor will designate primary and secondary contacts for
communicating with Comshare. Primary and secondary contacts will redirect
communications to other personnel as needed. Communication may be either via
phone or E-mail as appropriate.
ONGOING SUPPORT
After Year 1, Arbor will provide the above described training,
consulting and technical support as Comshare shall reasonably request, at the
prices described in Exhibit D.
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<PAGE> 19
EXHIBIT C
MAINTENANCE SERVICES
Maintenance Services to be provided by Arbor shall consist of the following:
1. Updates
Comshare should receive master media of all product components
created for all Arbor Alpha, Beta and commercial releases. Alpha software
includes versions of software that would be of benefit when accessed by other
product developers but not deemed ready for customer access. Beta software
includes versions of software considered ready for customer pre-commercial
testing, but not deemed ready for commercial release.
Arbor should provide the updates and final drafts of
documentation within three (3) working days of their internal completion and
availability at Arbor, and the documentation copy should be sent to Comshare at
the same time it is sent to the printer. Software should be on diskette or any
other media reasonably requested by Comshare. Documentation masters will be
delivered in electronic form to Comshare within three (3) working days of
becoming completed and available internally within Arbor, and three (3) copies
in hard copy form within three (3) working days of when Arbor inventory exists.
Training Material copy will be sent to Comshare at the same time it is sent to
the printer, and masters will be delivered in written, electronic or other form
appropriate to the materials as mutually agreed upon, within three (3) working
days of their internal availability at Arbor.
2. Enhancements.
In planning each major release, Arbor will consult with Comshare
and will provide Comshare with a list of proposed contents. If Arbor does not
wish to develop an enhancement that is requested by Comshare and required for
Comshare customers, Comshare may require Arbor to use its best efforts to
develop the enhancement at a reasonable charge to Comshare, subject to Arbor's
resource availability.
<PAGE> 20
3. Bug Fixes.
Arbor shall provide bug fixes in accordance with Comshare's
internal standards for responsiveness. Comshare will classify the bugs it
reports and Arbor will respond according to the following severities (provided,
however, that it shall not be a breach of this Agreement if Arbor's performance
is within Comshare's own general actual performance for response to the
applicable bug classification):
(1) A severity 1 bug is a debilitating bug that stops a
customers's application from running. It should be treated as a "drop
everything until it's resolved" situation. Resolutions may include get-arounds
(provided they are acceptable to the customer), patch disks, or a formal
release if necessary. A severity 1 bug must be resolved within 5 working days
of notice. The bug fix shall be included in the next available interim
release, and no later than 60 days.
(2) Severity 2 bugs are bugs which need to be fixed,
but don't have the degree of urgency associated with a severity 1. These
bugs are usually easy to get around or obscure cases discovered internally or
by only one or two customers. The bug fix shall be included in the next
available major release, and no later than 180 days.
(3) A severity 3 bug is the least serious
classification. These bugs are largely annoyances more than problems that get
in the way of getting the job done. These are most often cosmetic issues.
Severity 3 bugs should be fixed when the affected area of code is next
modified, or within one year of notice, whichever is sooner. The fix is then
included in the next available major release.
4. STAR Accounts.
Under Comshare's customer service policies, certain customers
that experience particularly serious problems are assigned STAR account status.
Comshare's STAR account manager is empowered to assign necessary Comshare
resources, including on-site visits, to investigate and resolve the customer's
problems on an urgent basis. Arbor will provide any necessary cooperation,
including participating in on-site visits, as requested by Comshare.
5. Hot Line.
Comshare support personnel shall have priority access to Arbor's
telephone hot line as necessary to resolve Comshare's customer questions.
Comshare customers shall not have direct access to Arbor's hot line.
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<PAGE> 21
6. Prior Releases.
Arbor shall continue to support prior commercial releases of all
products for at least six months after the new commercial release is issued.
7. Upward Compatibility.
All Arbor releases must be upward compatible with the previous
release of that product. This applies both to running client applications and
to Comshare's ability to build its applications using the Arbor APIs. Comshare
must approve any incompatibility and any proposed method for handling such
incompatibility.
8. Intent. Arbor agrees that overall customer satisfaction
is important to both companies and that it will treat Comshare on a priority
basis. However, in the event that Arbor cannot fulfill its obligations
hereunder due to resource constraints, the parties will work together to find
a mutually acceptable solution.
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<PAGE> 22
EXHIBIT D
PRICING
Comshare shall pay Arbor for sublicenses of Software and for
Arbor services as follows:
I. SOFTWARE SUBLICENSE PRICES.
A. For Software sublicensed as a component module of a Comshare
packaged application solution and contractually limited to use with a Comshare
application, Comshare shall pay Arbor: * of Arbor's Commonly Used Retail
Price.
1. For the first thirty (30) months of the Term of this Agreement,
however, the price paid by Comshare for the Software on the *
shall not exceed the sum of * plus * per port (calculated
in * increments) for each port over * for each
server on which the Software runs.
2. The sublicense price in this Section I.A is further subject to
the volume discounts described in Section I.C.
3. For purposes of the pricing in this Section I.A, the Software
provided to the customer will not include those portions that
would enable the customer to use the Software to develop its own
(non-Comshare) applications; provided, however, that Comshare
may provide the customer with any portion of the Software that
the customer needs in order to execute the application provided
by Comshare. As part of any delivered Comshare application,
Comshare may include the Essbase Application Manager ("EAM"),
provided that the EAM is programmatically, or if programmatic
restriction is not feasible then contractually, limited to the
specific Comshare application with which it is delivered.
Delivering Essbase without the above restrictions, with or
without other Comshare products, would constitute delivery of a
full use Essbase license.
B . For Software sublicensed for full use (i.e., that is not
limited as described in Section I.A), Comshare shall pay Arbor the following
percentages of Arbor's Commonly Used Retail Price, based on the total amounts
payable by Comshare under this Section I.B for each Year:
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
<PAGE> 23
Price in Price
Annual Amounts Payable Years 1 and 2 After Year 2
- ---------------------- ------------- ------------
*
*
*
*
above
1. The payment volumes in the table do not cumulate from Year to
Year. During the course of a Year, as amounts so far payable
exceed the threshold for the next price category, Comshare
shall adjust the payments due, retroactively for the previous
portion of the Year and continuing during that Year until the
next threshold is reached. At the end of each Year, the
annual payment volume will be finally calculated for that
Year, and the corresponding price percentage will be (i)
retroactively applied to that Year, and (ii) used as the
preliminary price applicable to the next Year. Any remaining
overpayment by Comshare in one Year will be credited against
payments due in the succeeding Year. Any underpayment in a
Year would be paid to Arbor sixty (60) days after the end of
that Year.
2. The percentages in the above table shall be reduced by *
percentage points for full-use sublicenses of the Software
granted to current licensees of Comshare's System W mainframe
software that are replacing System W. For such sublicenses,
Comshare shall pay only one sublicense fee per server (any
fees based on the number of ports, shall be calculated as
otherwise provided herein), regardless of the number of
Comshare applications that are being downsized.
3. The percentages in the above table shall be reduced by *
percentage points for full-use sublicenses of Software granted
to customers who have also licensed Comshare software with a
value equal to at least * of the combined price paid by the
customer for both the Software and the Comshare software.
This reduction is not, however, applicable to any sublicense
which has received the * percentage point reduction under
Section I.B.2.
4. The sublicense prices in the above table are further subject
to the volume discounts described in Section I.C.
5. In the case of a customer that has previously purchased a
limited use sublicense in accordance with
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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<PAGE> 24
Section I.A, for each server the price of an upgrade to a full
use sublicense shall be the difference between the price as
calculated in this Section I.B and the amount Comshare has
previously paid to Arbor for that customer's limited use
sublicense on that server. Comshare will require the customer
to return the limited use sublicense diskette(s) of the
Software in order to receive the substituted full use
diskette(s) and sublicense. In the event that Comshare has
previously paid Arbor higher fees for the limited use
sublicenses on a server than would be due for the substituted
full use sublicense, Comshare shall not be entitled to a
refund.
6. Arbor will provide Comshare with all copies of the Software,
including Arbor's standard number of copies of documentation,
for full-use sublicenses in Arbor's standard packaging, at no
extra charge. Comshare will give Arbor reasonable advance
forecasts of its inventory requirements for documentation, and
Arbor will use commercially reasonable efforts to provide
Comshare with the required inventory level. Arbor will
deliver to Comshare (at locations designated by Comshare)
three camera ready as well as master copies of documentation
as it changes from time to time, and if Comshare produces the
documentation itself, then Comshare may subtract its
reasonable costs of producing the documentation from amounts
otherwise owed to Arbor; provided, however, that such costs
shall not exceed Arbor's own costs by more than *
C. The sublicense prices described in Section I.A and
in the table in Section I.B shall be further reduced in each contract Year as
follows in the event the amounts payable by Comshare to Arbor under all
sections of this Agreement reach the following levels in that Year:
SECTION I.A SECTION I.B
RATES RATES
----- -----
For Reduction Reduction Rate
Amounts in Percentage Rate Percentage (example
Excess of: ---------- ---- ---------- only)
- ---------- --------
*
*
*
*
Each reduction percentage in the table applies only to sublicenses
granted after the corresponding amount in the table has been achieved.
* Indicates that material has been omitted and confidential treatment has
been requested therefore. All such omitted material has been filed separately
with the SEC pursuant to Rule 24b-2.
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<PAGE> 25
II. MAINTENANCE PRICES.
For the maintenance services described on Exhibit C, Comshare shall
pay, for each of the sublicensees that purchase annual maintenance of the
Software, the customer maintenance percentage rate actually realized by Arbor
(the "Realized Maintenance Rate") times the license fee actually paid to Arbor
for the sublicensed Software under maintenance.
III. SUPPORT AND TRAINING PRICES.
For the support and training services described on Exhibit B, Comshare
shall pay $ * in Year 1, as provided in Section 4(b), plus reasonable
travel, room and board, and thereafter shall pay * of Arbor's standard hourly
rate for that service, plus reasonable travel, room and board. Travel, room
and board expenses shall conform to Comshare's standard policies and must be
approved in advance by Comshare (i) during Year 1, if they exceed more than *
in any one month and (ii) after Year 2, at the time Comshare requests Arbor to
provide the services.
IV. DEFINITIONS AND ADDITIONAL TERMS.
A. "Commonly Used Retail Price" ("CUR") is defined as the average
price which Arbor realizes for the corresponding units of Software being
sublicensed by Comshare.
1. The CUR will be calculated and reported by Arbor on a calendar
quarterly basis, for each Software product, by country. The
CUR for each software product (including, as applicable, any
component that Arbor separately prices) will be calculated for
each server and port configuration, by number of copies
licensed per order and in accordance with the manner in which
Arbor actually prices and sells Software to its customers.
2. Arbor's quarterly report will list the number of sales on
which each CUR is calculated. If there have not been at least
* sales of an item in the United States, then Arbor shall
provide a reasonable estimate of what CUR would have been if
at least * sales had occurred. If with respect to a country
other than the United States, there have not been at least *
sales in that country in the previous six months, then the
U.S. CUR shall be used. If Comshare disputes the
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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<PAGE> 26
estimate, Comshare and Arbor shall negotiate in good faith to
arrive at a mutually agreeable CUR. Comshare shall have
reasonable access to Arbor's books and records to verify any
CUR.
3. Comshare has established and observes a consistent,
corporate-wide policy for allocation and recognition of
licensing revenues in transactions involving sublicenses of
third-party software, "free" maintenance, consulting services,
sales of other software packages and other items affecting
overall revenues from the transaction. Comshare's policy
shall be used by Arbor in calculating CUR.
B. The Realized Maintenance Rate shall be calculated and reported
in the same manner provided for the Commonly Used Retail Price.
C. Comshare may examine Arbor's books and records related to the
calculation of CUR or Realized Maintenance Rate at Comshare's expense, by
Comshare's internal auditor or its certified public accounting firm; provided,
however, that if any such audit uncovers an overpayment amount in excess of *
then Arbor shall be liable for the full costs of such audit.
D. With respect to sublicense and maintenance fees in countries
other than the United States, Comshare will pay Arbor in U.S. dollars or local
currency, at Comshare's election and if permitted by applicable law, at the
exchange rates used by Comshare for its own internal transaction purposes in
effect at the time of payment to Arbor, less any exchange fees actually
incurred. Any tax, duty or withholding on such funds (other than a tax on
Comshare's income) shall be the responsibility of Arbor, and all payments will
be net thereof.
E. In the event that Arbor enters into an agreement with any
third party that contains, calculated separately with respect to limited use
and full use sublicenses, any of the following terms more favorable to the
third party than to Comshare: (i) base sublicense fee rates and any volume
discount on such rates, adjusted for the value of any prepaid amounts, and (ii)
maintenance fees, then Arbor shall immediately notify Comshare and shall grant
Comshare, effective with the date on which those terms become effective for
the third party, all of such more favorable rates that are lower than the
applicable Comshare rate by at least two percentage points. Arbor represents
that it has not entered into any such more favorable agreements as of the date
of this Agreement. Any dispute concerning the application of this subsection
shall be settled by the arbitration provisions of Section 15.
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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<PAGE> 27
EXHIBIT E
EXAMPLES OF MINIMUM PAYMENT CALCULATIONS
1. Assume the following Eligible Minimum Fees due to Arbor from
actual sales in each quarter:
01 02 * 03 04
Then payments actually made to Arbor in each quarter would be:
01 02 * 03 04
2. Assume the following Eligible Minimum Fees due to Arbor from
actual sales in each quarter:
01 02 * 03 04
Then payments actually made to Arbor in each quarter would be:
01 02 * 03 04
3. Assume the following Eligible Minimum Fees due to Arbor from
actual sales in each quarter:
01 02 * 03 04
Then payments actually made to Arbor in each quarter would be:
01 02 * 03 04
And: * is carried forward as a credit against future
amounts owed.
* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
<PAGE> 28
EXHIBIT F
---------
EXCLUSIVITY COMPANIES
---------------------
*
*
*
*
*
*Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
<PAGE> 29
EXHIBIT G
PREFERRED REGISTRATION
TECHNOLOGY ESCROW AGREEMENT
Account Number ____________________________
Recitals
This Preferred Registration Technology Escrow Agreement including any Exhibits
("Agreement") is effective this _____ day of _________ 199__, by and among Data
Securities International, Inc. ("DSI"), a Delaware corporation, Arbor Software
("Depositor"), and Comshare, Inc. ("Preferred Registrant").
WHEREAS, Depositor has entered or will enter into a contract with the Preferred
Registrant regarding certain proprietary technology and other materials of
Depositor;
WHEREAS, Depositor and Preferred Registrant desire the Agreement to be
supplementary to said contract pursuant to 11 United States Code Section
365(n);
WHEREAS, availability of or access to certain proprietary data related to
certain proprietary technology and other material is critical to Preferred
Registrant in the conduct of its business;
WHEREAS, Depositor has deposited or will deposit with DSI proprietary data to
provide for retention, administration and controlled access for Preferred
Registrant under the conditions specified herein;
NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and in consideration of the promises, mutual covenants and
conditions contained herein, the parties hereto agree as follows:
1. Deposit Account. Following the delivery of the executed Agreement, DSI
shall open a deposit account ("Deposit Account") for Depositor. The opening of
the Deposit Account means that DSI shall establish an account ledger in the
name of Depositor, assign a deposit account number ("Deposit Account Number"),
calendar renewal notices to be sent to Depositor as provided in Section 29, and
request the initial deposit ("Initial Deposit") from Depositor. Depositor has
an obligation to make the Initial Deposit. Unless and until Depositor makes the
Initial Deposit with DSI, DSI shall request the Initial Deposit from Depositor.
DSI, Inc. 1992
<PAGE> 30
2. Preferred Registration Account. Following the execution and delivery of the
Agreement, DSI shall open a registration account ("Registration Account") for
Preferred Registrant. The opening of the Registration Account means that DSI
shall establish under the Deposit Account an account ledger with a unique
registration number ("Registration Number") in the name of Preferred
Registrant, calendar renewal notices to be sent to Preferred Registrant as
provided in Section 29, and request the Initial Deposit from Depositor. DSI
shall notify Preferred Registrant upon receipt of Initial Deposit.
3. Term of Agreement. The Agreement will have an initial term of one (1) year,
commencing on the effective date, and shall continue in full force unless
terminated earlier as provided in the Agreement. The Agreement may be extended
for additional one (1) year terms.
4. Exhibit A, Notices and Communications. Notices and invoices to Depositor,
Preferred Registrant or DSI should be sent to the parties at the addresses
identified in the Exhibit A.
Documents, payment of fees, deposits of material, and any written communication
should be sent to the DSI offices as identified in the Exhibit A.
Depositor and Preferred Registrant agree to each name their respective
designated contact ("Designated Contact") to receive notices from DSI and to
act on their behalf in the performance of their obligations as set forth in the
agreement. Depositor and Preferred Registrant agree to notify DSI immediately
in the event of a change of their Designated Contact in the manner stipulated
in Exhibit A.
5. Exhibit B and Deposit Material. Depositor will submit proprietary data and
related material ("Deposit Material") to DSI for retention and administration
in the Deposit Account.
The Deposit Material will be submitted together with a completed document
called a "Description of Deposit Material", hereinafter referred to as
Exhibit B. Each Exhibit B should be signed by Depositor prior to submission to
DSI and will be signed by DSI upon completion of the Deposit Material
inspection.
Depositor represents and warrants that it lawfully possesses all Deposit
Material, can transfer Deposit Material to DSI and has the authority to store
Deposit Material in accordance with the terms of the Agreement.
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<PAGE> 31
6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit
Material, DSI will be responsible only for reasonably matching the labeling of
the materials to the item descriptions listed on the Exhibit B and validating
the count of the materials to the quantity listed on the Exhibit B. DSI will
not be responsible for any other claims made by the Depositor on the Exhibit B.
Acceptance will occur when DSI concludes that the Deposit Material Inspection
is complete. Upon acceptance DSI will sign the Exhibit B and assign the next
Exhibit B number. DSI shall issue a copy of the Exhibit B to Depositor and
Preferred Registrant within ten (10) days of acceptance.
7. Initial Deposit. The Initial Deposit will consist of all material
initially supplied by Depositor to DSI.
8. Deposit Changes. Depositor may desire or may be obligated to update the
Deposit Account with supplemental or replacement Deposit Material of Technology
releases.
Supplemental Deposit ("Supplemental") is Deposit Material which is to be added
to the deposit account.
Replacement Deposit ("Replacement") is Deposit Material which will replace
existing Deposit material as identified by any one or more Exhibit B(s) in the
Deposit Account. Replaced Deposit Material will be destroyed or returned to
Depositor.
9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and their
associated Deposit Material currently in DSI's possession. Destroyed or
returned Deposit Material is not part of the Deposit; however, DSI shall keep
records of the destruction or return of Deposit Material.
10. Replacement Option. Within ten (10) days of receipt of Replacement from
Depositor, DSI will send a letter to Preferred Registrant stating that
Depositor requests to replace existing Deposit Material, and DSI will include a
copy of the new Exhibit B(s) listing the new Deposit Material.
Preferred Registrant has twenty (20) days from the mailing of such letter by
DSI to instruct DSI to retain the existing Deposit Material held by DSI, and if
so instructed, DSI will change the Replacement to a Supplemental. Conversion to
Supplemental may cause an additional storage unit fee as specified by DSI's Fee
and Services Schedule.
If Preferred Registrant does not instruct DSI to retain the existing Deposit
Material, DSI shall permit such Deposit Material to be replaced with the
Replacement. Within ten (10) days of acceptance of the Replacement by DSI, DSI
shall issue a copy of the executed Exhibit B(s) to Depositor and Preferred
Registrant. DSI will either destroy or return to Depositor all Deposit Material
replaced by the Replacement.
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<PAGE> 32
11. Storage Unit. DSI will store the Deposit in defined units of space,
called storage units. The cost of the first storage unit will be included in
the annual Deposit Account fee.
12. Deposit Obligations of Confidentiality. DSI agrees to establish a locked
receptacle in which it shall place the Deposit and shall put the receptacle
under the administration of one or more of its officers, selected by DSI, whose
identity shall be available to Depositor at all times. DSI shall exercise a
professional level of care in carrying out the terms of the Agreement.
DSI acknowledges Depositor's assertion that the Deposit shall contain
proprietary data and that DSI has an obligation to preserve and protect the
confidentiality of the Deposit.
Except as provided for in the Agreement, DSI agrees that it shall not divulge,
disclose, make available to third parties, or make any use whatsoever of the
Deposit.
13. Audit Rights. DSI agrees to keep records of the activities undertaken and
materials prepared pursuant to the Agreement. DSI will issue to Depositor and
Preferred Registrant an annual report profiling the Deposit Account. Such
annual report will identify the Depositor, Preferred Registrant, the current
Designated Contacts, selected special services, and the Exhibit B history,
which includes Deposit Material acceptance and destruction or return dates.
Upon reasonable notice, during normal business hours and during the term of the
Agreement, Depositor or Preferred Registrant will be entitled to inspect the
records of DSI pertaining to the Agreement, and accompanied by an employee of
DSI, inspect the physical status and condition of the Deposit. The Deposit may
not be changed during the audit.
14. Renewal Period of Agreement. Upon payment of the initial fee or renewal
fee, the Agreement will be in full force and will have an initial period of at
least one (1) year unless otherwise specified. The Agreement may be renewed for
additional periods upon receipt by DSI of the specified renewal fees prior to
the last day of the period ("Expiration Date"). DSI may extend the period of
the Agreement to cover the processing of any outstanding instruction made
during any period of the Agreement.
Preferred Registrant has the right to pay renewal fees and other related fees.
In the event Preferred Registrant pays the renewal fees and Depositor is of the
opinion that any necessary condition for renewal is not met, Depositor may so
notify DSI and Preferred Registrant in writing. The resulting dispute will be
resolved pursuant to the dispute resolution process defined in Section 25.
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<PAGE> 33
15. Expiration. If the Agreement is not renewed or is otherwise terminated,
all duties and obligations of DSI to Depositor and Preferred Registrant will
terminate. If Depositor requests the return of the Deposit, DSI shall return the
Deposit to Depositor only after any outstanding invoices and the Deposit return
fee are paid. If the fees are not received by the Expiration Date of the
Agreement, DSI, at its option, may destroy the Deposit.
16. Certification by Depositor. Depositor represents to Preferred Registrant
that:
a. The Deposit delivered to DSI consists of the following: source code
deposited on computer magnetic media, all necessary and
available information, proprietary information, and technical
documentation which will enable a reasonably skilled programmer of
Preferred Registrant to create, maintain and/or enhance the
proprietary technology without the aid of Depositor or any other
person or reference to any other materials; maintenance tools (test
programs and program specifications); proprietary or third party
system utilities (compiler and assembler descriptions); description of
the system/program generation; descriptions and locations of programs
not owned by Depositor but required for use and/or support; and names
of key developers for the technology on Depositor's staff.
b. The Deposit will be defined in the Exhibit B(s).
These representations shall be deemed to be made continuously throughout the
term of the Agreement.
17. Indemnification. Depositor and Preferred Registrant agree to defend and
indemnify DSI and hold DSI harmless from and against any and all claims,
actions and suits, whether in contract or in tort, and from and against any and
all liabilities, losses, damages, costs, charges, penalties, counsel fees, and
other expenses of any nature (including, without limitation, settlement costs)
incurred by DSI as a result of performance of the Agreement except in the event
of a judgment which specifies that DSI acted with gross negligence or willful
misconduct.
18. Filing For Release of Deposit by Preferred Registrant. Upon notice to
DSI by Preferred Registrant of the occurrence of a release condition as defined
in Section 21 and payment of the release request fee, DSI shall notify
Depositor by certified mail or commercial express mail service with a copy of
the notice from Preferred Registrant. If Depositor provides contrary
instruction within ten (10) days of the mailing of the notice to Depositor, DSI
shall not deliver a copy of the Deposit to Preferred Registrant.
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<PAGE> 34
19. Contrary Instruction. "Contrary Instruction" is the filing of an
instruction with DSI by Depositor stating that a Contrary Instruction is in
effect. Such Contrary Instruction means an officer of Depositor warrants that a
release condition has not occurred or has been cured. DSI shall send a copy of
the instruction by certified mail or commercial express mail service to
Preferred Registrant. DSI shall notify both Depositor and Preferred Registrant
that there is a dispute to be resolved pursuant to Section 25. Upon receipt of
Contrary Instruction, DSI shall continue to store the Deposit pending Depositor
and Preferred Registrant joint instruction, resolution pursuant to Section 25,
order by a court of competent jurisdiction, or termination by non-renewal of the
Agreement.
20. Release of Deposit to Preferred Registrant. Pursuant to Section 18, if
DSI does not receive Contrary Instruction from Depositor, DSI is authorized to
release the Deposit, or if more than one Preferred Registrant is registered to
the Deposit, a copy of the Deposit, to the Preferred Registrant filing for
release following receipt of any fees due to DSI including Deposit copying and
delivery fees.
21. Release Conditions of Deposit to Preferred Registrant.
Release condition is:
The ocurrence of a Release Condition described in Section 9 of the License
Agreement between Preferred Registrant and Depositor.
22. Grant of Use License. Subject to the terms and conditions of the
Agreement, Depositor hereby transfers and upon execution by DSI, DSI hereby
accepts a non-exclusive, irrevocable, perpetual, and royalty-free Use License
which DSI will transfer to Preferred Registrant upon controlled release of the
Deposit as described in the Agreement. The Use License will be for the sole
purpose of continuing the benefits afforded to Preferred Registrant through any
existing license, maintenance, or other agreement with Depositor.
23. Use License Representation. Depositor represents and warrants to
Preferred Registrant and DSI that it has no knowledge of any incumbrance or
infringement of the Deposit, or that any claim has been made that the Deposit
infringes any patent, trade secret, copyright or other proprietary right of any
third party. Depositor warrants that it has the full right, power, and ability
to enter into and perform the Agreement, to grant the foregoing Use License,
and to permit the Deposit to be placed with DSI.
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<PAGE> 35
24. Conditions Following Release. Following a release and subject to payment
to DSI of all outstanding fees, DSI shall transfer the Use License to Preferred
Registrant. Additionally, Preferred Registrant shall be required to maintain
the confidentiality of the released Deposit.
25. Disputes. In the event of a dispute, DSI shall so notify Depositor and
Preferred Registrant in writing. Such dispute will be settled by arbitration
(which arbitration shall be binding for purposes of this Agreement only) as
follows: (a) the parties shall each select one independent arbitrator within
ten (10) days, (b) such arbitrators shall select in good faith a third
arbitrator within five (5) days, (c) each party will have one (1) day to
present its case (presentation shall be at least five (5) and no more than
fifteen (15) days after selection of the third arbitrator), (d) the arbitrators
shall have ten (10) days after completion of such presentation to render their
decision (the decision of a majority of the arbitrators), (e) if one party
fails to timely appoint an arbitrator, the arbitration shall be conducted
solely by the other party's arbitrator, and (f) such arbitration shall be
conducted under the commerical rules of the American Arbitration Association in
Detroit, Michigan.
26. General. DSI may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee giving any
written notice, request, advice or instruction in connection with or relating
to the Agreement has apparent authority and has been duly authorized to do so.
DSI may provide copies of the Agreement or account history information to any
employee of Depositor or Preferred Registrant upon their request. For purposes
of termination or replacement, Deposit Material shall be returned only to
Depositor's Designated Contact, unless otherwise instructed by Depositor's
Designated Contact.
DSI is not responsible for failure to fulfill its obligations under the
Agreement due to causes beyond DSI's control.
The Agreement is to be governed by and construed in accordance with the laws of
the State of California.
The Agreement constitutes the entire agreement between the parties concerning
the subject matter hereof, and supersedes all previous communications,
representations, understandings, and agreements, either oral or written,
between the parties. The Agreement may be amended only in a writing signed by
the parties.
If any provision of the Agreement is held by any court to be invalid or
unenforceable, that provision will be severed from the Agreement and any
remaining provisions will continue in full force.
Page 7
<PAGE> 36
27. Title to Media. Subject to the terms of the Agreement, title to the
media, upon which the proprietary data is written or stored, is and shall be
irrevocably vested in DSI. Notwithstanding the foregoing, Depositor will retain
ownership of the proprietary data contained on the media including all
copyright, trade secret, patent or other intellectual property ownership rights
subsisting in such proprietary data.
28. Termination of Rights. The Use License as described above will terminate
in the event that the Agreement is terminated without the Use License
transferring to Preferred Registrant.
29. Fees. Fees are due upon receipt of signed contract, receipt of Deposit
Material, or when service is requested, whichever is earliest. If invoiced fees
are not paid within sixty (60) days of the date of the invoice, DSI shall
notify Preferred Registrant of Depositor's failure to pay. DSI shall give
Preferred Registrant thirty (30) days to cure such default before terminating
the agreement.
Renewal fees will be due in full upon the receipt of invoice unless otherwise
specified by the invoice. In the event that renewal fees are not received
thirty (30) days prior to the Expiration Date, DSI shall so notify Depositor
and Preferred Registrant. If the renewal fees are not paid within thirty (30)
days of such notice, DSI shall have the right to terminate the Agreement without
further notice and without liability of DSI to Depositor or Preferred
Registrant.
DSI shall not be required to process any request for service unless the payment
for such request shall be made or provided for in a manner satisfactory to DSI.
All service fees will be those specified in DSI's Fee and Services Schedule in
effect at the time of renewal or request for service, except as otherwise
agreed. For any increase in DSI's standard fees, DSI shall notify Depositor and
Preferred Registrant at least ninety (90) days prior to the renewal of the
Agreement. For any service not listed on the Fee and Services Schedule, DSI
shall provide a quote prior to rendering such service.
Arbor Software
- ------------------- --------------------
Depositor Preferred Registrant Data Securities
International, Inc.
By: _______________ By: ________________ By: _________________
Name: _____________ Name: ______________ Name: _______________
Title: ____________ Title: _____________ Title: ______________
Date: _____________ Date: ______________ Date: _______________
Page 8
<PAGE> 37
EXHIBIT A
DESIGNATED CONTACT
Account Number 0118033-00001
Notices, Deposit Material returns
and communication, including Invoices to Depositor
delinquencies to Depositor should be addressed to:
should be addressed to:
Company Name: Arbor Software _________________________________
Address: 3211 Scott Blvd. _________________________________
Santa Clara, CA 95054 _________________________________
Designated Invoice
Contact: Andrew Stern Contact: ________________________
Telephone: 408-727-7166 _________________________________
Facsimile: 408-727-7140 _________________________________
State of Incorporation: Delaware
Notices and communication,
including delinquencies to Invoices to Preferred
Preferred Registrant should be Registrant should be
addressed to: addressed to:
Company Name: _________________________ ________________________________
Address: _________________________ ________________________________
_________________________ ________________________________
_________________________ ________________________________
Designated Invoice
Contract: _________________________ Contact: _______________________
Telephone: _________________________ ________________________________
Facsimile: _________________________ ________________________________
Requests from Depositor or Preferred Registrant to change the Designated
Contact should be given in writing by the Designated Contact or an authorized
employee of Depositor or Preferred Registrant.
Contracts, Deposit Material Invoice inquiries and
and notices to DSI should fee remittances to DSI
be addressed to: should be addressed to:
DSI DSI
Attn: Contract Administration Attn: Accounts Receivable
6165 Greenwich Drive 49 Stevenson Street
Suite 220 Suite 550
San Diego, CA 92122 San Francisco, CA 94105
Telephone: (619) 457-5199 Telephone: (415) 541-9013
Facsimile: (619) 457-4252 Facsimile: (415) 541-9424
Date: ____________________________
DSI, Inc. 1992
<PAGE> 38
EXHIBIT H
ARBOR SOFTWARE CORPORATION
MUTUAL NON-DISCLOSURE AGREEMENT
This Agreement dated November 15, 1995 is made by and between Arbor Software
Corporation ("Arbor") and Comshare, Incorporated ("Company") and replaces
the Mutual Confidentiality and Exploratory Agreement dated May 13, 1993 between
Arbor and Company and the Mutual Non-Disclosures Agreement dated May 13, 1993
between Arbor and Company (collectively, the "Prior Agreements").
In consideration of the mutual promises and covenants contained in this
Agreement, each party's intention to enter into discussions regarding a
potential business relationship and each party's disclosure of Confidential
Information (as defined below) to the other party, the parties hereby agree as
follows:
1. Confidential Information and Materials
(a) "Confidential Information" means the software published by either
party ("Software") and any tangible or intangible information or material
which is proprietary to either party or designated as Confidential
Information. Such information shall be deemed Confidential Information
whether or not owned or developed by either party and which the other party
may obtain knowledge of through or as a result of the relationship
established hereunder, access to each other's premises, or communications
with the other party's employees or independent contractors.
(b) Confidential Information includes, but is not limited to, information
relating to the parties' software products and their features and modes of
operation, trade secrets, know-how, inventions (whether or not patentable),
programs, alogorithams, schematics, testing procedures, software design and
architecture, computer code, internal documentation, design and function
specifications, problem reports, analysis and performance information,
software documents and other technical, business, product, marketing and
financial information and plans. Confidential Information shall also
include all tangible materials including without limitation written or
printed materials and documents and computer disks or tapes, whether
machine or user-readable.
(c) Confidential Information shall also include the fact that discussions
are taking place between Arbor and Company regarding a potential
relationship and the content of the discussions.
(d) Confidential Information does not include information, technical data
or know-how which (i) became known to the receiving party prior to disclosure
of such information by the disclosing party; (ii) is or subsequently becomes
publicly available without either party's breach of any obligation owed to the
other party; (iii) is subsequently disclosed to the receiving party from a
third-party source without an obligation of confidentiality to the disclosing
party; (iv) is independently developed by the receiving party without reliance
upon the disclosing party's Confidential Information. Notwithstanding the
above, the parties agree that for purposes of this Agreement the Software shall
not be deemed "publicly available" despite the fact that the Software is
licensed to third-parties.
2. Restrictions
(a) Each party understands and acknowledges that Confidential Information
has been developed or obtained by the other party by investment of significant
time, effort and/or expense, and that such Confidential Information provides
such party with a significant competitive advantage in its business.
(b) All Confidential Information shall be used by the recipient solely for
the purpose of exploring a business relationship with the disclosing party and
for no other purposes. The furnishing of Confidential Information does not
constitute the grant or waiver by either party of any of their respective
proprietary interests, including without limitation, patents, trade secrets,
copyrights or trademarks.
(c) For a period of five (5) years following the date of its disclosure,
each party shall take reasonable security procautions, at least as great as the
precautions it takes to protect its own confidential information, to prevent
the disclosure of any Confidential Information to any third party. Dissemination
of Confidential Information shall be limited to only (i) those employees or
consultants of the receiving party as are necessary to perform the limited
purpose for which the Confidential Information was supplied, provided, however,
that such employees or
<PAGE> 39
consultants have executed appropriate written agreements sufficient
to enable the parties to comply with all the provisions of this
Agreement, or (ii) in the event disclosure is reasonably required by
applicable law or legal process and provided the receiving party
given reasonable advance notice to the other party so that the
requirement of such disclosure may be contested.
(d) Each party agrees to not make copies of any software disclosed
to each other except as is required solely for replacement of
the original in the event the original becomes unuseable. Neither
party may make copies of any written materials or documents without the
prior written consent of the other party.
(e) Each party may use any software disclosed by the other
party in machine-readable form only and will not reverse
engineer, decompile or disassemble any software so disclosed. Each
party agrees to not modify nor create a derivative of any part of any
software disclosed, nor remove any product identification, copyright or
other notice.
(f) Each party agrees to return all materials, software or documents
which have been furnished as part of this Agreement, together
with any copies thereof, promptly upon the request of the other party,
or, if not requested earlier, promptly after the limited function for
which they were furnished has been accomplished or abandoned.
3. Software License
(a) Arbor hereby grants to Company a non-exclusive,
non-transferable limited license to use the Software internally for
evaluation purposes only. Company may not sublicense, assign, or
otherwise transfer any of its rights in such license. The license
granted hereunder will expire ninety (90) days from the date of this
Agreement unless otherwise terminated earlier or extended by Arbor, in
its sole discretion, upon which Company must erase or otherwise destroy
the Software, all copies, and all materials unless directed to return
all of the above to Arbor at Arbor's sole discretion.
(b) Company agrees to not make copies of the Software except as is
required solely for replacement of the original in the event
the original becomes unuseable. Company agrees to use the Software in
machine-readable form only and not to reverse engineer, decompile or
disassemble the Software. Company agrees that it will not modify nor
create a derivative of any part of the Software nor remove any product
identification, copyright or other notices. In the event a maintenance
release or an update of the Software is provided to Company. Company
agrees to destroy and not use, nor permit the use of, any previous
release or version of the Software in its possession.
4. Similar Products
Nothing in this Agreement shall prohibit either party from independently
developing, acquiring, marketing or selling products which are
similar to or competitive with the products of the other party provided
that (i) the proprietary rights of the other party are not infringed
upon, and (ii) neither party uses nor copies any of the Confidential
Information of the other party, including, without limitation, the
Software, for any such independent development, marketing or selling.
5. Exploratory Discussion Not Binding
The parties agree that this Agreement, continuing discussions, future
exchange of Confidential Information and nonconfidential
information, past and future correspondence (including without
limitation, correspondence indicating interest or intent) and other
communications between the parties shall not commit either party to
continue discussions or negotiate, or be legally binding as an
informal agreement or agreement to agree to a potential business
relationship. The only way the parties shall be bound to a business
relationship, if at all, shall be by a mutually satisfatory definitive
written agreement signed by the parties. Any research and development
prototyping, or other action or expense which either party takes or
incurs in anticipation that a business relationship will be consummated
shall be entirely at the acting party's risk and expense and shall not
impose any liability on the other party.
6. Miscellaneous
(a) All Confidential Information is and shall remain the property of
the disclosing party. Nothing in this Agreement, nor any
disclosures of Confidential Information, shall grant any express or
implied right to the receiving party to or under disclosing party
patents, copyrights, trademarks or trade secret information.
(b) This Agreement is made in the State of California and shall be
governed and interpreted in accordance with California law.
<PAGE> 40
(c) Headings and captions are for convenience only and are not to be
used in the interpretation of this Agreement.
(d) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and merges all prior
discussions between them as to Confidential Information and merges all
prior discussions or agreements as to Confidential Information. This
Agreement may not be modified except by a written agreement dated
subsequent to the date of this Agreement and signed by both parties.
No waiver of any provision of this Agreement shall constitute a waiver
of any other provision(s) or of the same provision on a different
occasion. This Agreement supersedes the Prior Agreements, and such
Prior Agreements are hereby terminated.
(e) If any provision of this Agreement shall be held by a court
of competent jurisdiction to be illegal, invalid or unenforceable, that
provision shall be limited or eliminated to the maximum extent
necessary so that the remaining provisions remain in full force and
effect.
(f) This Agreement shall be binding upon and for the benefit of
the undersigned parties, their successors and assigns, provided,
however, that neither party may assign Confidential Information without
the prior written consent of the other party.
(g) Each party agrees that its obligations hereunder are
necessary and reasonable to protect the business of the other party,
and expressly agrees that monetary damages would be inadequate to
compensate the other party for any breach of any covenant set forth
herein. Accordingly, each party agrees and acknowledges that any such
violation or threatened violation will cause irreparable injury to the
other party and that, in addition to any other remedies that may be
available in law, in equity or otherwise, the other party shall be
entitled to obtain injunctive or equitable relief as may be deemed
proper by a court of compentent jurisdiction.
(h) All confidentiality obligations created by this Agreement
shall survive change or termination of the parties' business
relationship.
IN WITNESS WHEREOF, duly authorized representatives of the parties hereto have
executed this agreement.
Arbor Company
Arbor Software Corporation Comshare, Inc.
3211 Scott Boulevard 3001 South State Street
Santa Clara, CA 95054 Ann Arbor, MI 48108
Signature: /s/ Andrew Stern Signature: /s/ T. Wallace Wrathall
----------------------- --------------------------
Name: /s/ Andrew Stern Name: /s/ T. Wallace Wrathall
---------------------------- -------------------------------
Title: Vice President Title: Senior Vice President
--------------------------- -----------------------------
<PAGE> 41
SCHEDULE 1(b)
[COMSHARE LOGO]
COMSHARE, INCORPORATED
3001 South State Street
Ann Arbor, Michigan 48108
SOFTWARE LICENSE AGREEMENT
Date ___________________
Customer _____________________________________________________________________
Address ______________________________________________________________________
City _________________________________________ State __________ Zip ________
Thank you for choosing Comshare. The terms appearing below and on the enclosed
ordering and pricing schedules (Schedules A and B), which are incorporated by
this reference, form Our contract for licensing software and documentation.
Please read carefully, fill out Schedule A, and sign this Agreement in
duplicate. Both copies (including the Schedules) should be returned to Comshare
for processing. All Agreements are subject to Comshare Headquarters written
acceptance.
1. LICENSE TERM:
The license term starts on the above date and continues for the period
described in Schedule A unless terminated earlier in accordance with this
Agreement.
2. LICENSE GRANT:
a. We grant You a license to use Our software in object code form. Our
user documentation, and Our materials (collectively "Comshare Products")
selected from Schedule A under the terms of this Agreement. This license is
nonexclusive and nontransferable by You. You may not make any copies unless
You have paid the applicable fees and You are otherwise authorized by the
Schedules, except that You may make one complete backup copy of the
software for emergency or archival use. You may not use more than the number
of copies You have licensed. You agree to keep records of the number and
location of copies in Your possession and to permit Us to audit such
records and Your use of Comshare Products during normal business hours upon
reasonable notice to You. Copies of our copyright notice and other
proprietary legends and labels must be included on and in all copies. See
the Schedules for information on ordering additional copies.
b. Use of software designated by Us as mainframe or host software is
restricted to residence and use on specified equipment. Each copy of
software designated by Us as microcomputer software is restricted to
residence and use on one microcomputer at a time. However, you may use
Comshare Products in local area networks or other multi-processor
environments provided You have paid the applicable fee and You are
authorized to do so by the Schedules. All software installation and use is
restricted to the United States. Host software is restricted to use at a
specified location. We will not unreasonably withhold Our consent to
movement to another United States location or different equipment, although
We will have the right to charge additional maintenance and license fees at
Our then current rates for upgrades if You want to use Our software on a
larger machine. All software requires, and is limited to use with, the
operating environment specified in the Schedules or documentation. Some
Comshare products can be utilized only in combination with other Comshare
products. These restrictions are in addition to any set forth in the
Schedules.
c. Any attempted assignment, sublicense, or other transfer by You of
this Agreement or the Comshare Products shall be void. You may use Comshare
Products only to process your own data and only for internal operations.
You may not use Comshare Products to offer timesharing or other computer
based
1
<PAGE> 42
services to third parties. Any of Your majority or wholly owned
subsidiaries or Your parent corporation (if any) may enjoy the benefits of
this Agreement along with You as a licensee, provided they first agree in
writing to be bound by it in the same manner as You and a copy of that
writing is forwarded to Us.
d. We may terminate Your license only in the event of a material breach by You
not cured within 30 days after the giving of notice by us. However, no
notice will be required in the event of a material breach by You of
confidentiality or Our proprietary rights. Upon termination for any reason,
You agree to return the Comshare Products, destroy all copies (including
those in computer memory), and stop all usage.
3. PRICING:
Schedule B fees apply to Your Selection of Comshare Products, maintenance, and
other services described in Schedule A. You agree to pay Us the applicable fees
and charges as described in Schedule B. In addition, You agree to pay all sales,
use, personal property, or other taxes associated with this Agreement or the
Comshare Products and services, except taxes on Our net income. Our terms are 30
days net from date of invoice. Past due payments bear interest of 1 1/2% per
month from the due date or the highest rate permitted by law if a lesser amount.
4. DELIVERY AND INSTALLATION:
a. Schedule A delivery dates are approximate. Risk of loss will not pass to
You until delivery to Your designated address. Replacement copies of
software included in Comshare Products may be obtained so long as they are
being made commercially available at Our standard media and physical
preparation charge if Your copies become lost or damaged while in Your
possession.
b. If You choose to have Us do the installation of the host or mainframe
software, You will let Us use Your system and equipment necessary for
testing and installation. You must provide the necessary specified operating
environment.
5. MAINTENANCE AND TRAINING:
You may purchase, at the prices and for the term set forth in Schedule B, Our
standard Program Maintenance Services which consists of the following: (i) New
standard releases of software specified by Us as part of Program Maintenance
Services and (ii) problem solving as described below. New releases shall be
considered as part of the Comshare Products. Program Maintenance Services
specifically exclude new releases and/or new versions of computer programs which
are offered to the general public at an additional charge or which are
contracted for by a third party. When a problem occurs which You determine is
caused by the use of the Comshare Product, and the diagnosis by Our
representative indicates a problem is caused by a defect in an unaltered current
release of the Comshare Product. Our representative will (1) supply You with
correction information to the extent available; and (2) advise You concerning
any planned resolution. We will make a reasonable effort to correct materials
defects confirmed by Us. The foregoing sets forth Our entire maintenance
obligation. We shall have the right to charge reasonable fees if we spend time
investigating or fixing a problem which is not caused by a current standard
release of a Comshare Product. Due to difficulties in providing maintenance on a
piecemeal or component basis. We reserve the right to refuse to provide
maintenance for less than all systems and components under license. See the
Schedules for information on Training.
6. IMPLEMENTATION SERVICES:
Unless we enter into a separate written implementation Services Agreement,
Implementation Services will be performed under the terms and conditions of this
Agreement. Implementation Services are performed on a time and materials basis
at the rates in Schedule B. We reserve the right to perform similar
implementation Services for others. Any application produced as part of
implementation Services for You will become Comshare Products licensed under
this Agreement.
7. WARRANTY AND REMEDY:
We warrant that we have the right to grant You this license. We further warrant
that the first release of each Comshare Product delivered to You will at time of
delivery (or installation if We install) perform substantially in accordance
with Our user documentation as same may change from time to time, provided You
supply the specified operating environment. This warranty does not apply to
Implementation Services and any product thereof; Our warranty is that
Implementation Services will be performed by reasonably skilled personnel as
described in Schedule B. OUR SOLE OBLIGATION AND YOUR EXCLUSIVE REMEDY FOR ANY
WARRANTY FAILURE IS THE CORRECTION OR REPLACEMENT, AT OUR OPTION, OF THE
NONCONFORMING SERVICES OR COMPONENTS.
2
<PAGE> 43
8. WARRANTY DISCLAIMER:
THE WARRANTIES CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE. THEY ARE IN LIEU OF
ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
ARISING BY STATUTE OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF
TRADE.
9. OWNERSHIP AND CONFIDENTIALITY:
a. As between You and Us, all Comshare Products remain Our sole and exclusive
property and trade secret. You agree not to attempt to reverse engineer
or otherwise recreate source code for Comshare Products. You acquire
neither title nor ownership rights in the Comshare Products or the media on
which they are given to You. You agree to take reasonable security
precautions to prevent disclosure of Comshare Products to third parties and
to protect and maintain confidentiality. You agree to notify Us of any
unauthorized disclosure immediately. We will have the same confidentiality
obligations for any specific confidential information You supply to Us
provided You supply it in writing and mark it as confidential. The
recipient of confidential material or information will have no
confidentiality obligation with regard to information to the extent it is:
generally disclosed by the disclosing party without restrictions on
confidentiality, rightfully supplied to the recipient by a third party
without restrictions on confidentiality, or otherwise becomes generally
publicly known without any fault on the part of the recipient. Injunctive
relief, in addition to any other right or remedy, shall be an appropriate
remedy to enforce the provisions of this paragraph should the need arise.
b. As between You and Us, You acknowledge that We hold the copyright on the
Comshare Products and that they have not been published. Placement of
copyright notices on the Comshare Products shall not be deemed a
publication.
10. RESPONSIBILITY:
a. You will be responsible for establishing reasonable backups, accuracy
checks, and security precautions to guard against possible
malfunctions, loss of data, or unauthorized access.
b. Subject to Our obligations under Paragraph 12, "Patents and Copyrights",
You agree to indemnify and hold Us harmless from any claim, loss, or
liability arising out of Your use of Comshare Products or services, except
to the extent caused by Our gross negligence or willful misconduct.
11. LIMITATION OF LIABILITY:
a. EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH 12. "PATENTS AND COPYRIGHTS", OUR
LIABILITY AND THAT OF OUR AGENTS, REPRESENTATIVES AND EMPLOYEES TO YOU
FOR DAMAGES WITH RESPECT TO THIS AGREEMENT, COMSHARE PRODUCTS, OR OTHER
ITEMS OR SERVICES SHALL NOT EXCEED IN THE AGGREGATE THE FEE OR PRICE FOR
THE PARTICULAR COMSHARE PRODUCT OR OTHER ITEM OR SERVICE INVOLVED IN THE
CLAIM. IN NO EVENT SHALL WE HAVE ANY LIABILITY FOR INCIDENTAL,
CONSEQUENTIAL, OR SPECIAL DAMAGES INCLUDING, WITHOUT LIMITATION, LOST
REVENUES OR PROFITS. THE LIMITATIONS AND EXCLUSIONS IN THIS PARAGRAPH SHALL
APPLY TO ALL CLAIMS OF EVERY NATURE, KIND AND DESCRIPTION WHETHER ARISING
FROM BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE OR OTHER TORT, OR
OTHERWISE. DAMAGES AS LIMITED BY THIS PARAGRAPH IS YOUR SOLE AND EXCLUSIVE
ALTERNATIVE REMEDY IN THE EVENT THAT ANY OTHER REMEDY PROVIDED IN THIS
AGREEMENT FAILS OF ITS ESSENTIAL PURPOSE.
b. We will not be responsible for any delay or failure in performance for
causes beyond Our reasonable control, including without limitation,
acts of God, any government, Our suppliers or any other similar or
dissimilar cause.
12. PATENTS AND COPYRIGHTS:
We will defend and indemnify You, at Our expense, against any claim or suit
against You based on an alleged violation of a United States patent or
copyright through Your use of the Comshare Products in accordance with this
Agreement and will pay all costs, settlements, or judgment finally awarded,
provided We have the right to control the defense of the litigation. You take
such actions as we may reasonably request at Our expense, and You give Us
prompt written notice of any claim. If a judgment is obtained against Your use
of any part of the Comshare Products, or if We feel that there is a likelihood
of a claim of infringement. We shall, at Our option and expense: modify or
substitute Comshare Products (but provide You with substantially the same
functionality); obtain the right to continued use; or terminate the license
3
<PAGE> 44
and take back the Comshare Products. In the event of termination, We will
refund Your license fees, less a reasonable charge for use to the date of
termination. We will have no obligation to defend and indemnify You to the
extent that the claim or liability is based upon use of a noncurrent release of
Comshare Products and could have been avoided by use of a current release or if
the claim or liability is based upon modifications made by You or work
performed to Your specifications. THIS PARAGRAPH STATES OUR ENTIRE LIABILITY
FOR PATENT AND COPYRIGHT INFRINGEMENT.
13. EMPLOYEES:
In the event that You directly or indirectly (other than through Us) hire,
whether as an employee, independent contractor, or in any other capacity, any
person who was, within one year prior to the hiring, an employee of Ours or any
of Our subsidiaries, You agree to pay Us a finder's fee equal to 26 times that
employee's biweekly gross compensation at the time he or she left Our
employment. This provision shall apply only to those employees who either
worked for Us on Your account in some capacity or worked with software or
applications which were in some fashion generally similar to any offered or
provided to You.
14. GENERAL:
a. This Agreement shall be governed by and construed under the laws of
the State of Michigan, exclusive of its choice of law rules. This in an
integrated Agreement. It contains the full understanding of the parties and
supersedes all other understandings, proposals, samples, models, agreements,
warranties, representations, or conditions, written or oral, regarding its
subject matter. You acknowledge that You are not relying upon any
representations or statements as to the subject matter of this Agreement
except as specifically set forth in this writing. This Agreement may be
amended, modified, or waived only by another writing signed by the
authorized representatives of both parties. No trade usage, course of
dealing, or course of performance shall be used to supplement or explain it.
Headings are for convenience; they have no contractual significance. In the
event You issue a purchase order or other document covering the subject
matter of this Agreement, it is agreed that such purchase order or other
document is for Your internal purposes only and is not legally effective,
except to the extent specified otherwise in the Schedules. No orders placed
under this Agreement, including the initial order, shall be effective unless
accepted in writing at Our headquarters. The effective date of this
Agreement shall be the date first above written. Sections 8 through 14 and
the record keeping and audit provisions of Section 2a, shall survive
termination. Any action against Us under this Agreement or related to its
subject matter must be brought within one year after the cause of action
accrues.
b. All notices shall be by personal delivery, by U.S. mail postage
prepaid, or facsimile. Notices to You shall be sent to Your billing address.
Notices to Us shall be sent to Comshare, Incorporated, attention Senior Vice
President, Sales, at the address shown above. Notices are effective upon
delivery in the case of personal delivery, on receipt in the case of
facsimile, and five days after mailing in the case of posting. Prices, terms
and conditions, Comshare Products and other items and services are subject
to change in the future without notice. (Current pricing schedules will be
supplied upon request.)
THE ABOVE TERMS AND CONDITIONS ARE AGREED TO AND ACCEPTED.
(PLEASE SIGN AND RETURN TWO COPIES OF THIS AGREEMENT.)
ACCEPTED AT COMSHARE HEADQUARTERS:
_________________________________ COMSHARE, INCORPORATED
CUSTOMER
BY: _____________________________ BY: ______________________________
NAME: ___________________________ NAME: ____________________________
(Print or Type) (Print or Type)
TITLE: __________________________ TITLE: ___________________________
VICE PRESIDENT OR
SENIOR VICE PRESIDENT
12/90
Copyright @ 1990 COMSHARE, Incorporated
Serial Number 437201 Printed in U.S.A.
-4-
<PAGE> 45
SCHEDULE 6(c)
COMSHARE DISTRIBUTORS
For the purposes of Section 6(c), the following are currently Comshare
Distributors:
Distribution Territory Distributors
---------------------- ------------
*
*
*
*
*
*
*
*
*
*
*
*
*Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 406.
<PAGE> 46
*
*
*
*
*
*
*
*
*
*
*
*
*
*
3732
*Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 406.
-2-
<PAGE> 47
SCHEDULE 7(b)
Comshare Competitors:
- ---------------------
*
*
*
*
*
3698
*Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the SEC pursuant to Rule 406.
<PAGE> 48
SCHEDULE 12(f)
Arbor Financial Statements
Balance Sheet as of November 30, 1993.
Income Statement, April 1, 1993 to November 30, 1993.
Future financial statements shall be as of the end of Arbor's fiscal year.
3726
<PAGE> 1
EXHIBIT 10.21
FIRST AMENDMENT TO LICENSE AGREEMENT
THIS FIRST AMENDMENT TO LICENSE AGREEMENT is made the 14th day of
December, 1994, by and between Arbor Software Corporation, a Delaware
corporation ("Arbor") and Comshare, Incorporated, a Michigan corporation
("Comshare").
The parties hereby amend the License Agreement between them dated
December 23, 1993 (the "License Agreement"), as follows, effective March 1,
1994:
In Exhibit D, Pricing, add the following as Subsection I.B.7:
7. Notwithstanding the above, however, Comshare shall pay
Arbor * of the applicable Commonly Used Retail Price for all
full use sublicenses granted by Comshare's agents,
resellers and distributors (provided the agent's, reseller's or
distributor's fee is at least * ) located outside the United
States ("International Distributors"), but not by Comshare's or
its subsidiaries' direct sales force. This sublicense fee is
further subject to the volume discounts described in Section
I.C. and to the following qualifications:
a. If an International Distributor grants a sublicense that
includes use of the Software in a country outside that
International Distributor's territory and Comshare employs
a direct sales force (i.e., employees of Comshare or a
Comshare subsidiary) for that product in that country,
then the sublicense fee and the corresponding percentage
due to Arbor shall be prorated between the International
Distributor's territory and the direct sales force country
in accordance with Comshare's customary international
revenue allocation practices.
b. If an International Distributor grants * or more licenses
for a Competing Product in its territory, then all
sublicenses of the Software granted by that International
Distributor from and after the date on which the * license
of the Competing Product
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
<PAGE> 2
was granted shall not benefit from the special
sublicense fee under this Subsection I.B.7. Comshare shall
inform Arbor at the time such sales of Competing Products
are first authorized and at the times when * sales have been
made in each International Distributor's territory.
c. As used in this Subsection I.B.7, a "Competing Product"
is defined as a stand-alone on line analytical processing
(OLAP) engine that (i) competes directly with the Essbase
Software product, (ii) is sold on a platform on which
Essbase is commercially available and installed, (iii) has
data capacity, local language support, and features that are
similar to those in Essbase, (iv) is licensed by the
International Distributor by authority of its distribution
agreement with Comshare, and (v) is not a Comshare product
existing on the date of this Amendment, the direct evolution
of such a product, or a compatible descendant of an existing
Comshare product on any platform. It is understood that a
packaged application (i.e., an application that does not
require substantial customization) that has embedded
capabilities similar to those of Essbase is not a
"stand-alone" engine for purposes of this provision.
d. Comshare and Arbor shall mutually agree about whether a
particular product qualifies as a Competing Product. By
way of illustration, the parties would expect that products
developed by *
would qualify
as Competing Products, but such products must
nevertheless meet the definition in Subsection c above in
order to be classed as Competing Products. If Comshare and
Arbor cannot, after good faith negotiation, agree on whether
a particular product is a Competing Product, they shall
submit the dispute to arbitration in accordance with the
procedures of Section 15 of the License Agreement,
substituting for the auditor as arbitrator a person familiar
with the computer software industry.
- 2 -
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
<PAGE> 3
e. Total full-use sublicense fees payble to Arbor with
respect to sublicenses granted by International Distributors
must be at least * in calendar year 1995, * in 1996,
and * in 1997 for the special rate granted in this
Subsection I.B.7 to apply. For any year in which the
minimum amount is not ultimately achieved, the full-use
sublicense fees shall be recalculated in accordance with the
rates that would otherwise apply under Section I.B, and any
difference shall be paid to Arbor.
In Exhibit D, Pricing, amend the first paragraph of Section I.C to read:
C. The sublicense prices described in Section I.A, Section I.B.7,
and in the table in Section I.B shall be further reduced in each contract Year
as follows in the event the amounts payable by Comshare to Arbor under all
sections of this Agreement reach the following levels in that Year:
ARBOR SOFTWARE CORPORATION COMSHARE, INCORPORATED
BY: Signature BY: Signature
----------------- -------------------
Its: Vice President Its: President - CEO
------------------ ----------------
Date: 12-16-94 Date: 12-14-94
------------------ -----------------
4242
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
- 3-
<PAGE> 1
Exhibit 21.01
SUBSIDIARIES OF COMSHARE, INCORPORATED
SUBSIDIARIES OF REGISTRANT (A) INCORPORATED In
------------------------------ ---------------
Comshare Limited Canada
Comshare International BV (CIBV) Netherlands
Comshare Holdings Unlimited United Kingdom
Comshare Limited United Kingdom
Comshare International Limited United Kingdom
Comshare, GmbH Germany
Comshare SA France
Comshare (Ireland) Limited Ireland
Comshare BV Netherlands
Comshare (Belgium) BV Netherlands
Comshare Belgium, S.A. Belgium
CSI International Holdings, Inc, Delaware
Comshare Australia Pty., Ltd. Australia
CS Holdings, Inc. Delaware
Comshare Scandanavia ApS Denmark
(a) All subsidiaries are wholly owned by their immediate parent.
<PAGE> 1
EXHIBIT 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report on the June 30, 1995 consolidated financial statements
of Comshare, Incorporated and subsidiaries dated July 27, 1995, included in
this Form 10-K, into the Company's previously filed Form S-8 and S-3
registration statements (File No. 33-6730, File No. 33-9755-3, File No.
33-28437, File No. 33-27002, File No. 33-85720, File No. 33-87706, File No.
33-87708 and File No. 33-86908).
ARTHUR ANDERSEN LLP
Detroit, Michigan
September 26, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 1,398,000
<SECURITIES> 0
<RECEIVABLES> 29,531,000<F1>
<ALLOWANCES> 887,000
<INVENTORY> 0
<CURRENT-ASSETS> 35,810,000
<PP&E> 27,076,000
<DEPRECIATION> 23,663,000
<TOTAL-ASSETS> 79,310,000
<CURRENT-LIABILITIES> 37,961,000
<BONDS> 0
<COMMON> 5,481,000
0
0
<OTHER-SE> 27,067,000
<TOTAL-LIABILITY-AND-EQUITY> 79,310,000
<SALES> 0
<TOTAL-REVENUES> 108,358,000
<CGS> 0
<TOTAL-COSTS> 105,873,000
<OTHER-EXPENSES> (464,000)<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 669,000
<INCOME-PRETAX> 2,280,000
<INCOME-TAX> (3,048,000)
<INCOME-CONTINUING> 5,328,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,328,000
<EPS-PRIMARY> .95
<EPS-DILUTED> 0
<FN>
<F1>Accounts receivable are stated at net of allowance for doubtful accounts.
<F2>Comparised of $157,000 of interest income and $307,000 of exchange gain.
</FN>
</TABLE>
